Cover Page
Cover Page - shares shares in Millions | 6 Months Ended | |
Jul. 02, 2023 | Aug. 04, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jul. 02, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-35406 | |
Entity Registrant Name | Illumina, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 33-0804655 | |
Entity Address, Address Line One | 5200 Illumina Way | |
Entity Address, City or Town | San Diego | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 92122 | |
City Area Code | 858 | |
Local Phone Number | 202-4500 | |
Title of 12(b) Security | Common Stock, $0.01 par value | |
Trading Symbol | ILMN | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 158.3 | |
Entity Central Index Key | 0001110803 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Millions | Jul. 02, 2023 | Jan. 01, 2023 |
Current assets: | ||
Cash and cash equivalents | $ 1,553 | $ 2,011 |
Short-term investments | 6 | 26 |
Accounts receivable, net | 741 | 671 |
Inventory, net | 617 | 568 |
Prepaid expenses and other current assets | 306 | 285 |
Total current assets | 3,223 | 3,561 |
Property and equipment, net | 1,069 | 1,091 |
Operating lease right-of-use assets | 638 | 653 |
Goodwill | 3,239 | 3,239 |
Intangible assets, net | 3,188 | 3,285 |
Other assets | 417 | 423 |
Total assets | 11,774 | 12,252 |
Current liabilities: | ||
Accounts payable | 244 | 293 |
Accrued liabilities | 1,309 | 1,232 |
Term notes, current portion | 0 | 500 |
Convertible senior notes, current portion | 750 | 748 |
Total current liabilities | 2,303 | 2,773 |
Operating lease liabilities | 726 | 744 |
Term notes | 1,488 | 1,487 |
Other long-term liabilities | 702 | 649 |
Stockholders’ equity: | ||
Common stock | 2 | 2 |
Additional paid-in capital | 9,397 | 9,207 |
Accumulated other comprehensive income | 12 | 3 |
Retained earnings | 911 | 1,142 |
Treasury stock, at cost | (3,767) | (3,755) |
Total stockholders’ equity | 6,555 | 6,599 |
Total liabilities and stockholders’ equity | $ 11,774 | $ 12,252 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2023 | Jul. 03, 2022 | Jul. 02, 2023 | Jul. 03, 2022 | |
Revenue: | ||||
Total revenue | $ 1,176 | $ 1,162 | $ 2,263 | $ 2,386 |
Cost of revenue: | ||||
Amortization of acquired intangible assets | 48 | 40 | 96 | 79 |
Total cost of revenue | 444 | 395 | 877 | 803 |
Gross profit | 732 | 767 | 1,386 | 1,583 |
Operating expense: | ||||
Research and development | 358 | 327 | 699 | 650 |
Selling, general and administrative | 450 | 410 | 824 | 719 |
Legal contingency and settlement | 12 | 609 | 15 | 609 |
Total operating expense | 820 | 1,346 | 1,538 | 1,978 |
Loss from operations | (88) | (579) | (152) | (395) |
Other income (expense): | ||||
Interest income | 17 | 1 | 34 | 1 |
Interest expense | (19) | (6) | (39) | (12) |
Other income (expense), net | 1 | (53) | (10) | (91) |
Total other expense, net | (1) | (58) | (15) | (102) |
Loss before income taxes | (89) | (637) | (167) | (497) |
Provision (benefit) for income taxes | 145 | (102) | 64 | (48) |
Net loss | $ (234) | $ (535) | $ (231) | $ (449) |
Loss per share: | ||||
Basic (in dollars per share) | $ (1.48) | $ (3.40) | $ (1.46) | $ (2.85) |
Diluted (in dollars per share) | $ (1.48) | $ (3.40) | $ (1.46) | $ (2.85) |
Shares used in computing loss per share: | ||||
Basic (in shares) | 158 | 157 | 158 | 157 |
Diluted (in shares) | 158 | 157 | 158 | 157 |
Product revenue | ||||
Revenue: | ||||
Total revenue | $ 1,001 | $ 1,006 | $ 1,923 | $ 2,076 |
Cost of revenue: | ||||
Cost of revenue | 305 | 286 | 591 | 586 |
Service and other revenue | ||||
Revenue: | ||||
Total revenue | 175 | 156 | 340 | 310 |
Cost of revenue: | ||||
Cost of revenue | $ 91 | $ 69 | $ 190 | $ 138 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2023 | Jul. 03, 2022 | Jul. 02, 2023 | Jul. 03, 2022 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (234) | $ (535) | $ (231) | $ (449) |
Unrealized gain on cash flow hedges, net of deferred tax | 13 | 12 | 9 | 13 |
Total comprehensive loss | $ (221) | $ (523) | $ (222) | $ (436) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders’ Equity - USD ($) shares in Millions, $ in Millions | Total | Cumulative-effect adjustment from adoption of ASU 2016-02, net of deferred tax | Common Stock | Additional Paid-in Capital | Additional Paid-in Capital Cumulative-effect adjustment from adoption of ASU 2016-02, net of deferred tax | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Retained Earnings Cumulative-effect adjustment from adoption of ASU 2016-02, net of deferred tax | Treasury Stock |
Beginning Balance (in shares) at Jan. 02, 2022 | 197 | ||||||||
Beginning balance (in shares) at Jan. 02, 2022 | (40) | ||||||||
Beginning balance at Jan. 02, 2022 | $ 10,740 | $ (32) | $ 2 | $ 8,938 | $ (93) | $ 17 | $ 5,485 | $ 61 | $ (3,702) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net income (loss) | 86 | 86 | |||||||
Unrealized gain (loss) on cash flow hedges, net of deferred tax | 1 | 1 | |||||||
Issuance of common stock, net of repurchases | 21 | 33 | $ (12) | ||||||
Share-based compensation | 79 | 79 | |||||||
Ending Balance (in shares) at Apr. 03, 2022 | 197 | ||||||||
Ending balance (in shares) at Apr. 03, 2022 | (40) | ||||||||
Ending balance at Apr. 03, 2022 | 10,895 | $ 2 | 8,957 | 18 | 5,632 | $ (3,714) | |||
Beginning Balance (in shares) at Jan. 02, 2022 | 197 | ||||||||
Beginning balance (in shares) at Jan. 02, 2022 | (40) | ||||||||
Beginning balance at Jan. 02, 2022 | 10,740 | $ (32) | $ 2 | 8,938 | $ (93) | 17 | 5,485 | $ 61 | $ (3,702) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net income (loss) | (449) | ||||||||
Unrealized gain (loss) on cash flow hedges, net of deferred tax | 13 | ||||||||
Ending Balance (in shares) at Jul. 03, 2022 | 197 | ||||||||
Ending balance (in shares) at Jul. 03, 2022 | (40) | ||||||||
Ending balance at Jul. 03, 2022 | 10,444 | $ 2 | 9,033 | 30 | 5,097 | $ (3,718) | |||
Beginning Balance (in shares) at Apr. 03, 2022 | 197 | ||||||||
Beginning balance (in shares) at Apr. 03, 2022 | (40) | ||||||||
Beginning balance at Apr. 03, 2022 | 10,895 | $ 2 | 8,957 | 18 | 5,632 | $ (3,714) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net income (loss) | (535) | (535) | |||||||
Unrealized gain (loss) on cash flow hedges, net of deferred tax | 12 | 12 | |||||||
Issuance of common stock, net of repurchases | (4) | $ (4) | |||||||
Share-based compensation | 76 | 76 | |||||||
Ending Balance (in shares) at Jul. 03, 2022 | 197 | ||||||||
Ending balance (in shares) at Jul. 03, 2022 | (40) | ||||||||
Ending balance at Jul. 03, 2022 | $ 10,444 | $ 2 | 9,033 | 30 | 5,097 | $ (3,718) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Accounting Standards Update [Extensible List] | Accounting Standards Update 2020-06 [Member] | ||||||||
Net income (loss) | $ (3,816) | (3,816) | |||||||
Unrealized gain (loss) on cash flow hedges, net of deferred tax | 9 | 9 | |||||||
Issuance of common stock, net of repurchases | 28 | 30 | $ (2) | ||||||
Share-based compensation | 66 | 66 | |||||||
Ending Balance (in shares) at Oct. 02, 2022 | 197 | ||||||||
Ending balance (in shares) at Oct. 02, 2022 | (40) | ||||||||
Ending balance at Oct. 02, 2022 | 6,731 | $ 2 | 9,129 | 39 | 1,281 | $ (3,720) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net income (loss) | (139) | (139) | |||||||
Unrealized gain (loss) on cash flow hedges, net of deferred tax | (36) | (36) | |||||||
Issuance of common stock, net of repurchases (in shares) | 1 | ||||||||
Issuance of common stock, net of repurchases | (35) | $ (35) | |||||||
Share-based compensation | 78 | 78 | |||||||
Ending Balance (in shares) at Jan. 01, 2023 | 198 | ||||||||
Ending balance (in shares) at Jan. 01, 2023 | (40) | ||||||||
Ending balance at Jan. 01, 2023 | 6,599 | $ 2 | 9,207 | 3 | 1,142 | $ (3,755) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net income (loss) | 3 | 3 | |||||||
Unrealized gain (loss) on cash flow hedges, net of deferred tax | (4) | (4) | |||||||
Issuance of common stock, net of repurchases | 28 | 37 | $ (9) | ||||||
Share-based compensation | 67 | 67 | |||||||
Ending Balance (in shares) at Apr. 02, 2023 | 198 | ||||||||
Ending balance (in shares) at Apr. 02, 2023 | (40) | ||||||||
Ending balance at Apr. 02, 2023 | 6,693 | $ 2 | 9,311 | (1) | 1,145 | $ (3,764) | |||
Beginning Balance (in shares) at Jan. 01, 2023 | 198 | ||||||||
Beginning balance (in shares) at Jan. 01, 2023 | (40) | ||||||||
Beginning balance at Jan. 01, 2023 | 6,599 | $ 2 | 9,207 | 3 | 1,142 | $ (3,755) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net income (loss) | (231) | ||||||||
Unrealized gain (loss) on cash flow hedges, net of deferred tax | 9 | ||||||||
Ending Balance (in shares) at Jul. 02, 2023 | 198 | ||||||||
Ending balance (in shares) at Jul. 02, 2023 | (40) | ||||||||
Ending balance at Jul. 02, 2023 | 6,555 | $ 2 | 9,397 | 12 | 911 | $ (3,767) | |||
Beginning Balance (in shares) at Apr. 02, 2023 | 198 | ||||||||
Beginning balance (in shares) at Apr. 02, 2023 | (40) | ||||||||
Beginning balance at Apr. 02, 2023 | 6,693 | $ 2 | 9,311 | (1) | 1,145 | $ (3,764) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net income (loss) | (234) | (234) | |||||||
Unrealized gain (loss) on cash flow hedges, net of deferred tax | 13 | 13 | |||||||
Issuance of common stock, net of repurchases | (3) | 0 | $ (3) | ||||||
Share-based compensation | 77 | 77 | |||||||
Reclassification of liability-classified awards | 9 | 9 | |||||||
Ending Balance (in shares) at Jul. 02, 2023 | 198 | ||||||||
Ending balance (in shares) at Jul. 02, 2023 | (40) | ||||||||
Ending balance at Jul. 02, 2023 | $ 6,555 | $ 2 | $ 9,397 | $ 12 | $ 911 | $ (3,767) |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions | 6 Months Ended | |
Jul. 02, 2023 | Jul. 03, 2022 | |
Cash flows from operating activities: | ||
Net loss | $ (231) | $ (449) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation expense | 116 | 102 |
Amortization of intangible assets | 99 | 83 |
Share-based compensation expense | 199 | 183 |
Deferred income taxes | 36 | (34) |
Impairment of long-lived assets | 7 | 0 |
Net losses on strategic investments | 19 | 76 |
(Gain) loss on Helix contingent value right | (3) | 3 |
Change in fair value of contingent consideration liabilities | 28 | (11) |
Other | 14 | 4 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (78) | 1 |
Inventory | (49) | (86) |
Prepaid expenses and other current assets | (6) | 4 |
Operating lease right-of-use assets and liabilities, net | (10) | (7) |
Other assets | 4 | 13 |
Accounts payable | (44) | (52) |
Accrued liabilities | 29 | 470 |
Other long-term liabilities | (15) | (3) |
Net cash provided by operating activities | 115 | 297 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (99) | (132) |
Purchases of strategic investments | (11) | (22) |
Sales of strategic investments | 18 | 0 |
Net cash paid for acquisitions | 0 | (85) |
Cash paid for intangible asset | (1) | 0 |
Net cash used in investing activities | (93) | (239) |
Cash flows from financing activities: | ||
Debt issuance costs paid for credit facility | (1) | 0 |
Payments on term notes | (500) | 0 |
Taxes paid related to net share settlement of equity awards | (12) | (17) |
Proceeds from issuance of common stock | 37 | 33 |
Net cash (used in) provided by financing activities | (476) | 16 |
Effect of exchange rate changes on cash and cash equivalents | (4) | (17) |
Net (decrease) increase in cash and cash equivalents | (458) | 57 |
Cash and cash equivalents at beginning of period | 2,011 | 1,232 |
Cash and cash equivalents at end of period | $ 1,553 | $ 1,289 |
Organization and Significant Ac
Organization and Significant Accounting Policies | 6 Months Ended |
Jul. 02, 2023 | |
Accounting Policies [Abstract] | |
Organization and Significant Accounting Policies | 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Business Overview We are a provider of sequencing- and array-based solutions, serving customers in the research, clinical and applied markets. Our products are used for applications in the life sciences, oncology, reproductive health, agriculture and other emerging segments. Our customers include leading genomic research centers, academic institutions, government laboratories, and hospitals, as well as pharmaceutical, biotechnology, commercial molecular diagnostic laboratories, and consumer genomics companies . On August 18, 2021, we acquired GRAIL, a healthcare company focused on early detection of multiple cancers. The acquisition is subject to ongoing legal proceedings and, currently, GRAIL must be held and operated separately and independently from Illumina pursuant to interim measures ordered by the European Commission, which prohibited our acquisition of GRAIL on September 6, 2022. GRAIL is a separate reportable segment. Refer to note “ 7. Legal Proceedings ” and note “ 9. Segment Information ,” respectively, for additional details. 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 January 1, 2023, 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. Though the COVID-19 pandemic, the armed conflict between Russia and Ukraine, and macroeconomic factors such as inflation, exchange rates and concerns about an economic downturn present additional uncertainty, we continue to use the best information available to form our critical accounting estimates. Actual results could differ from those estimates. The unaudited condensed consolidated financial statements include our accounts, our wholly-owned subsidiaries, and majority-owned or controlled companies. All intercompany transactions and balances have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to the current period presentation. 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. 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. References to Q2 2023 and Q2 2022 refer to the three months ended July 2, 2023 and July 3, 2022, respectively, which were both 13 weeks, and references to year-to-date (YTD) 2023 and 2022 refer to the six months ended July 2, 2023 and July 3, 2022, respectively, which were both 26 weeks. Significant Accounting Policies During YTD 2023, there were no changes to our significant accounting policies as described in our Annual Report on Form 10-K for the fiscal year ended January 1, 2023, with the exception of the following for income taxes: Historically we calculated the provision/(benefit) for income taxes for interim periods utilizing an estimated annual effective tax rate applied to the income/(loss) for the reporting period. In accordance with the authoritative guidance for accounting for income taxes in interim periods, we concluded for Q2 2023 and YTD 2023 that it was appropriate to determine the provision for income taxes utilizing the year-to-date effective tax rate method. Since minor changes in the estimated income/(loss) before income taxes would result in significant changes in the estimated annual effective tax rate, we determined the year-to-date effective tax rate method would provide a more reliable estimate of the provision for income taxes for Q2 2023 and YTD 2023. Loss per Share Basic loss per share is computed based on the weighted average number of common shares outstanding during the period. Diluted loss per share is computed based on the sum of the weighted average number of common shares and potentially dilutive common shares outstanding during the period. In loss periods, basic and diluted loss per share are identical since the effect of potentially dilutive common shares is antidilutive and therefore excluded. Potentially dilutive common shares consist of shares issuable under convertible senior notes and equity awards. We utilize the if-converted method to calculate the impact of convertible senior notes on diluted loss per share. 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 weighted average shares used to calculate basic and diluted loss per share: In millions Q2 2023 Q2 2022 YTD 2023 YTD 2022 Weighted average shares used in calculating basic loss per share 158 157 158 157 Weighted average shares used in calculating diluted loss per share 158 157 158 157 Antidilutive shares: Convertible senior notes 2 2 2 2 Equity awards 3 2 3 2 Potentially dilutive shares excluded from calculation due to antidilutive effect 5 4 5 4 |
Revenue
Revenue | 6 Months Ended |
Jul. 02, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | 2. REVENUE 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, instrument service contracts, development and licensing agreements, and cancer detection testing services related to the GRAIL business. Revenue by Source Q2 2023 Q2 2022 In millions Sequencing Microarray Total Sequencing Microarray Total Consumables $ 734 $ 70 $ 804 $ 739 $ 74 $ 813 Instruments 193 4 197 190 3 193 Total product revenue 927 74 1,001 929 77 1,006 Service and other revenue 156 19 175 136 20 156 Total revenue $ 1,083 $ 93 $ 1,176 $ 1,065 $ 97 $ 1,162 YTD 2023 YTD 2022 In millions Sequencing Microarray Total Sequencing Microarray Total Consumables $ 1,419 $ 148 $ 1,567 $ 1,516 $ 149 $ 1,665 Instruments 346 10 356 401 10 411 Total product revenue 1,765 158 1,923 1,917 159 2,076 Service and other revenue 293 47 340 257 53 310 Total revenue $ 2,058 $ 205 $ 2,263 $ 2,174 $ 212 $ 2,386 Revenue by Geographic Area Based on region of destination (in millions) Q2 2023 Q2 2022 (1) YTD 2023 YTD 2022 (1) Americas $ 640 $ 639 $ 1,256 $ 1,288 Europe 303 274 564 560 Greater China (2) 115 118 206 245 Asia-Pacific, Middle East, and Africa (3) 118 131 237 293 Total revenue $ 1,176 $ 1,162 $ 2,263 $ 2,386 _____________ (1) We implemented a new global commercial structure in Q1 2023 to improve operating efficiencies and better align with local markets. We integrated Asia-Pacific and Japan with emerging markets across the Middle East, Africa, Turkey, and Commonwealth of Independent States (CIS). Beginning in Q1 2023, and going forward, we will report regional results for the following regions: Americas, Europe, Greater China, and Asia-Pacific, Middle East and Africa (AMEA). Prior period amounts have been reclassified to conform to this new presentation. (2) Region includes revenue from China, Taiwan, and Hong Kong. (3) Region includes revenue from Russia and Turkey. Performance Obligations We regularly enter into contracts with multiple performance obligations. These contracts are believed to be firm as of the balance sheet date. However, we may allow customers to make product substitutions as we launch new products. The timing of shipments depends on several factors, including agreed upon shipping schedules, which may span multiple quarters. Most performance obligations are generally satisfied within a short time frame, approximately three Contract Assets and Liabilities Contract assets, which consist of revenue recognized and performance obligations satisfied or partially satisfied in advance of customer billing, were $17 million as of July 2, 2023 and January 1, 2023 and were recorded in prepaid expenses and other current assets. Contract liabilities, which consist of deferred revenue and customer deposits, as of July 2, 2023 and January 1, 2023 were $323 million and $308 million, respectively, of which the short-term portions of $250 million and $245 million, respectively, were recorded in accrued liabilities and the remaining long-term portions were recorded in other long-term liabilities. Revenue recorded in Q2 2023 and YTD 2023 included $68 million and $163 million, respectively, of previously deferred revenue that was included in contract liabilities as of January 1, 2023. |
Investments and Fair Value Meas
Investments and Fair Value Measurements | 6 Months Ended |
Jul. 02, 2023 | |
Fair Value Disclosures [Abstract] | |
Investments and Fair Value Measurements | 3. INVESTMENTS AND FAIR VALUE MEASUREMENTS Strategic Investments Marketable Equity Securities Our short-term investments consist of marketable equity securities. As of July 2, 2023 and January 1, 2023, the fair value of our marketable equity securities totaled $6 million and $26 million, respectively. Gains and losses recognized in other income (expense), net on our marketable equity securities were as follows: In millions Q2 2023 Q2 2022 YTD 2023 YTD 2022 Net losses recognized during the period on marketable equity securities $ — $ (27) $ (2) $ (69) Less: Net gains (losses) recognized during the period on marketable equity securities sold during the period 1 — (2) — Net unrealized losses recognized during the period on marketable equity securities still held at the reporting date $ (1) $ (27) $ — $ (69) Non-Marketable Equity Securities As of July 2, 2023 and January 1, 2023, the aggregate carrying amounts of our non-marketable equity securities without readily determinable fair values, included in other assets, were $28 million. Revenue recognized from transactions with our strategic investees was $28 million and $64 million for Q2 2023 and YTD 2023, respectively, and $25 million and $55 million for Q2 2022 and YTD 2022, respectively. Venture Funds We invest in two venture capital investment funds (the Funds) with capital commitments of $100 million, callable through April 2026, and up to $150 million, callable through July 2029, respectively, of which $6 million and up to $81 million, respectively, remained callable as of July 2, 2023. Our investments in the Funds are accounted for as equity-method investments. The aggregate carrying amounts of the Funds, included in other assets, were $177 million and $183 million as of July 2, 2023 and January 1, 2023, respectively. We recorded unrealized losses of $2 million and $14 million in Q2 2023 and YTD 2023, respectively, and unrealized losses of $4 million and $6 million in Q2 2022 and YTD 2022, respectively, in other income (expense), net. Helix Contingent Value Right In conjunction with the deconsolidation of Helix Holdings I, LLC (Helix) in April 2019, we received a contingent value right with a 7-year term that entitles us to consideration dependent upon the outcome of Helix’s future financing and/or liquidity events. Changes in the fair value of our contingent value right resulted in an unrealized gain of $3 million in YTD 2023 and unrealized losses of $8 million and $3 million in Q2 2022 and YTD 2022, respectively, which were included in other income (expense), net. There was no change in fair value of the contingent value right in Q2 2023. Fair Value Measurements The following table presents the hierarchy for assets and liabilities measured at fair value on a recurring basis: July 2, 2023 January 1, 2023 In millions Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets: Money market funds (cash equivalents) $ 1,250 $ — $ — $ 1,250 $ 1,642 $ — $ — $ 1,642 Marketable equity securities 6 — — 6 26 — — 26 Helix contingent value right — — 61 61 — — 58 58 Deferred compensation plan assets — 57 — 57 — 52 — 52 Total assets measured at fair value $ 1,256 $ 57 $ 61 $ 1,374 $ 1,668 $ 52 $ 58 $ 1,778 Liabilities: Contingent consideration liabilities $ — $ — $ 440 $ 440 $ — $ — $ 412 $ 412 Deferred compensation plan liability — 54 — 54 — 51 — 51 Total liabilities measured at fair value $ — $ 54 $ 440 $ 494 $ — $ 51 $ 412 $ 463 Our marketable equity securities are measured at fair value based on quoted trade prices in active markets. Our deferred compensation plan assets consist primarily of investments in life insurance contracts carried at cash surrender value, which reflects the net asset value of the underlying publicly traded mutual funds. We perform control procedures to corroborate the fair value of our holdings, including comparing valuations obtained from our investment service provider to valuations reported by our asset custodians, validating pricing sources and models, and reviewing key model inputs, if necessary. We elected the fair value option to measure the contingent value right received from Helix. The fair value of such contingent value right, included in other assets, is derived using a Monte Carlo simulation. Estimates and assumptions used in the Monte Carlo simulation include probabilities related to the timing and outcome of future financing and/or liquidity events, assumptions regarding collectibility and volatility, and an estimated equity value of Helix. These unobservable inputs represent a Level 3 measurement because they are supported by little or no market activity and reflect our own assumptions in measuring fair value. We reassess the fair value of contingent consideration related to acquisitions on a quarterly basis. Changes in the fair value of contingent consideration subsequent to the acquisition date are recognized in selling, general and administrative expense. The contingent value rights issued as part of the GRAIL acquisition entitle the holders to receive future cash payments on a quarterly basis (Covered Revenue Payments) representing a pro rata portion of certain GRAIL-related revenues (Covered Revenues) each year for a 12-year period. As defined in the Contingent Value Rights Agreement , this will reflect a 2.5% payment right to the first $1 billion of revenue each year for 12 years. Revenue above $1 billion each year will be subject to a 9% contingent payment right during this same period. Covered Revenues for Q4 2022 and Q1 2023 were $42 million in aggregate and Covered Revenues for Q4 2021 and Q1 2022 were $20 million in aggregate, driven primarily by sales of GRAIL’s Galleri test. Covered Revenue Payments relating to such periods were approximately $400,000 and $187,000 in YTD 2023 and YTD 2022, respectively. Pursuant to the Contingent Value Rights Agreement, a portion of the Covered Revenue Payments in YTD 2022 were applied to reimburse us for certain expenses. We use a Monte Carlo simulation to estimate the fair value of contingent consideration related to the GRAIL acquisition. Estimates and assumptions used in the Monte Carlo simulation include forecasted revenues for GRAIL, a revenue risk premium, a revenue volatility estimate, an operational leverage ratio and a counterparty credit spread. These unobservable inputs represent a Level 3 measurement because they are supported by little or no market activity and reflect our own assumptions in measuring fair value. The fair value of our contingent consideration liability related to GRAIL was $440 million and $412 million as of July 2, 2023 and January 1, 2023, respectively, of which $439 million and $411 million, respectively, was included in other long-term liabilities, with the remaining balances included in accrued liabilities. Changes in the estimated fair value of our contingent consideration liabilities during YTD 2023 were as follows: In millions Balance as of January 1, 2023 $ 412 Change in estimated fair value 28 Balance as of July 2, 2023 $ 440 |
Debt
Debt | 6 Months Ended |
Jul. 02, 2023 | |
Debt Disclosure [Abstract] | |
Debt | 4. DEBT Summary of Term Debt Obligations In millions July 2, January 1, Principal amount of 2031 Term Notes outstanding $ 500 $ 500 Principal amount of 2027 Term Notes outstanding 500 500 Principal amount of 2025 Term Notes outstanding 500 500 Principal amount of 2023 Term Notes outstanding — 500 Unamortized discounts and debt issuance costs (12) (13) Net carrying amount of term notes 1,488 1,987 Less: current portion — (500) Term notes, non-current $ 1,488 $ 1,487 Fair value of term notes outstanding (Level 2) $ 1,418 $ 1,913 Interest expense recognized on our term notes, which included amortization of debt discounts and issuance costs, was $18 million and $37 million in Q2 2023 and YTD 2023, respectively, and $4 million and $9 million in Q2 2022 and YTD 2022, respectively. 0.550% Term Notes due 2023 (2023 Term Notes) and 2.550% Term Notes due 2031 (2031 Term Notes) In March 2021, we issued $500 million aggregate principal amount of 2023 Term Notes and $500 million aggregate principal amount of 2031 Term Notes. The 2023 Term Notes matured and were repaid in cash on March 23, 2023. The 2031 Term Notes, which mature on March 23, 2031, accrue interest at a rate of 2.550% per annum, payable semi-annually on March 23 and September 23 of each year. We may redeem for cash all or any portion of the 2031 Term Notes, at our option, at any time prior to maturity. Prior to December 23, 2030, the 2031 Term Notes are redeemable at make-whole premium redemption prices as defined in the applicable forms of note. After December 23, 2030, the notes are redeemable at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus any accrued and unpaid interest up to, but excluding, the redemption date. 5.800% Term Notes due 2025 (2025 Term Notes) and 5.750% Term Notes due 2027 (2027 Term Notes) In December 2022, we issued $500 million aggregate principal amount of 2025 Term Notes and $500 million aggregate principal amount of 2027 Term Notes. The 2025 Term Notes, which mature on December 12, 2025, and the 2027 Term Notes, which mature on December 13, 2027, accrue interest at a rate of 5.800% and 5.750% per annum, respectively, payable semi-annually. Interest for the 2025 Term Notes is payable on June 12 and December 12 of each year, beginning on June 12, 2023. Interest for the 2027 Term Notes is payable on June 13 and December 13 of each year, beginning on June 13, 2023. We may redeem for cash all or any portion of the 2025 or 2027 Term Notes, at our option, at any time prior to maturity. Prior to November 12, 2025 for the 2025 Term Notes and prior to November 13, 2027 for the 2027 Term Notes, the notes are redeemable at make-whole premium redemption prices as defined in the applicable forms of note. After November 12, 2025 for the 2025 Term Notes and after November 13, 2027 for the 2027 Term Notes, the notes are redeemable at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus any accrued and unpaid interest up to, but excluding, the redemption date. 0% Convertible Senior Notes due 2023 (2023 Convertible Notes) In millions July 2, January 1, Principal amount outstanding $ 750 $ 750 Unamortized debt issuance costs — (2) Net carrying amount of convertible senior notes, current portion $ 750 $ 748 Fair value of convertible senior notes outstanding (Level 2) $ 745 $ 726 In August 2018, we issued $750 million aggregate principal amount of 2023 Convertible Notes, which carry no coupon interest and mature on August 15, 2023. The notes became convertible on May 15, 2023 and remain convertible until August 11, 2023. As of August 9, 2023, none of the notes had been converted. The 2023 Convertible 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 Convertible 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 Convertible 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. Credit Agreement On January 4, 2023, we entered into a new credit agreement (the Credit Agreement), which provides us with a $750 million senior unsecured five-year revolving credit facility, including a $40 million sublimit for swingline borrowings and a $50 million sublimit for letters of credit (the Credit Facility). The proceeds of the loans under the Credit Facility may be used to finance working capital needs and for general corporate purposes. The credit agreement dated as of March 8, 2021 and the commitments thereunder were terminated as of January 4, 2023. The Credit Facility matures, and all amounts outstanding thereunder become due and payable in full, on January 4, 2028, subject to two one-year extensions at our option, the consent of the extending lenders and certain other conditions. We may prepay amounts borrowed and terminate commitments under the Credit Facility at any time without premium or penalty. As of July 2, 2023, there were no borrowings or letters of credit outstanding under the Credit Facility and we were in compliance with all financial and operating covenants. Any loans under the Credit Facility will have a variable interest rate based on either the term secured overnight financing rate or the alternate base rate, plus an applicable rate that varies with the Company’s debt rating and, in the case of loans bearing interest based on the term secured overnight financing rate, a credit spread adjustment equal to 0.10% per annum. The Credit Agreement includes an option for us to elect to increase the commitments under the Credit Facility or to enter into one or more tranches of term loans in the aggregate principal amount of up to $250 million, subject to the consent of the lenders providing the additional commitments or term loans, as applicable, and certain other conditions. The Credit Agreement contains financial and operating covenants. Pursuant to the Credit Agreement, we are required to maintain a ratio of total debt to annual earnings before interest, taxes, depreciation and amortization (EBITDA), calculated based on the four consecutive fiscal quarters ending with the most recent fiscal quarter, of not greater than 3.50 to 1.00 as of the end of each fiscal quarter. Upon the consummation of any Qualified Acquisition (as defined in the Credit Agreement) and us providing notice to the Administrative Agent, the ratio increases to 4.00 to 1.00 for the fiscal quarter in which the acquisition is consummated and the three consecutive fiscal quarters thereafter. The operating covenants include, among other things, limitations on (i) the incurrence of indebtedness by our subsidiaries, (ii) liens on our and our subsidiaries assets, and (iii) certain fundamental changes and the disposition of assets by us and our subsidiaries. The Credit Agreement contains other customary covenants, representations and warranties, and events of default. |
Stockholders_ Equity
Stockholders’ Equity | 6 Months Ended |
Jul. 02, 2023 | |
Equity [Abstract] | |
Stockholders’ Equity | 5. STOCKHOLDERS’ EQUITY In Q2 2023, the Company’s stockholders approved an amended and restated version of the Company’s 2015 Stock Incentive Plan (2015 Stock Plan) and increased the maximum number of shares authorized for issuance by 8.0 million shares. As of July 2, 2023, approximately 7.8 million shares remained available for future grants under the 2015 Stock Plan. Restricted Stock Restricted stock activity was as follows: Restricted Performance Stock Units (PSU) (1) Weighted-Average Grant Date Fair Value per Share Units in thousands RSU PSU Outstanding at January 1, 2023 1,611 74 $ 311.23 $ 446.74 Awarded 1,979 228 $ 197.36 $ 231.59 Vested (85) — $ 304.91 $ — Cancelled (186) (51) $ 268.37 $ 308.63 Outstanding at July 2, 2023 3,319 251 $ 246.12 $ 279.51 _____________ (1) The number of units reflect the estimated number of shares to be issued at the end of the performance period. Awarded units are presented net of performance adjustments. Liability-Classified RSU In Q1 2023, we granted RSU that were to be settled in cash if stockholder approval to increase our share reserve under the amended and restated 2015 Stock Plan was not obtained. In Q2 2023, the Company’s stockholders approved an amended and restated version of the 2015 Stock Plan and increased the maximum number of shares authorized for issuance. Upon such approval, all RSU previously accounted for as liability-classified awards, approximately 557,000 RSU, were reclassified to stockholders’ equity and accounted for prospectively as equity awards. There were no RSU liability-classified awards outstanding as of July 2, 2023. Market-Based PSU During YTD 2023, we granted PSU with a market condition that vest based on the Company’s relative total shareholder return (rTSR) as compared to a peer group of companies measured over a three-fiscal year Stock Options Stock option activity was as follows: Units in thousands Options Weighted-Average Performance Options (1) Weighted-Average Outstanding at January 1, 2023 187 $ 319.72 17 $ 85.54 Exercised (8) $ 71.09 (1) $ 16.69 Cancelled (82) $ 330.25 — $ — Outstanding at July 2, 2023 97 $ 330.25 16 $ 87.74 Exercisable at July 2, 2023 45 $ 330.25 — $ — _____________ (1) The number of units reflect awards that have been granted and for which it is assumed to be probable that the underlying performance goals will be achieved. Other Liability-Classified Awards We grant cash-based equity incentive awards to GRAIL employees. For purposes of valuation and performance measurement of the awards, GRAIL’s stand-alone valuation, as determined by GRAIL using a reasonable calculation and based on advice from independent valuation experts and analyses, is used. The awards generally have terms of four years with equal vesting annually, subject to continued employment through the vesting period. Cash-based equity incentive award activity was as follows: In millions Outstanding at January 1, 2023 $ 293 Granted 116 Vested and paid in cash (25) Cancelled (17) Change in fair value (13) Outstanding at July 2, 2023 $ 354 Estimated liability as of July 2, 2023 (included in accrued liabilities) $ 57 We recognized share-based compensation expense of $25 million and $46 million in Q2 2023 and YTD 2023, respectively, and $16 million and $29 million in Q2 2022 and YTD 2022, respectively. As of July 2, 2023, approximately $297 million of total unrecognized compensation cost related to awards issued to date was expected to be recognized over a weighted-average period of approximately 3.0 years. In connection with the acquisition of GRAIL, we assumed a performance-based award for which vesting is based on GRAIL’s future revenues. The award has an aggregate potential value of up to $78 million and expires, to the extent unvested, in August 2030. As of July 2, 2023, it was not probable that the performance conditions associated with the award will be achieved and, therefore, no share-based compensation expense, or corresponding liability, has been recognized in the condensed consolidated financial statements to-date. Employee Stock Purchase Plan The price at which common stock is purchased under the Employee Stock Purchase Plan (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 YTD 2023, approximately 0.2 million shares were issued under the ESPP. As of July 2, 2023, there were approximately 12.6 million shares available for issuance under the ESPP. The assumptions used and the resulting estimate of weighted-average fair value per share for stock purchased under the ESPP during YTD 2023 were as follows: Risk-free interest rate 0.78% - 4.79% Expected volatility 41% - 51% Expected term 0.5 - 1.0 year Expected dividends 0 % Weighted-average grant-date fair value per share $ 57.96 Share Repurchases We did not repurchase any shares during YTD 2023. As of July 2, 2023, authorizations to repurchase approximately $15 million of our common stock remained available under the $750 million share repurchase program authorized by our Board of Directors on February 5, 2020. The repurchases may be completed under a 10b5-1 plan or at management’s discretion. Share-Based Compensation Share-based compensation expense, which includes expense for both equity and liability-classified awards, reported in our condensed consolidated statements of operations was as follows: In millions Q2 2023 Q2 2022 YTD 2023 YTD 2022 Cost of product revenue $ 8 $ 7 $ 15 $ 13 Cost of service and other revenue 6 1 12 2 Research and development 43 39 79 75 Selling, general and administrative 48 44 93 93 Share-based compensation expense, before taxes 105 91 199 183 Related income tax benefits (24) (20) (45) (41) Share-based compensation expense, net of taxes $ 81 $ 71 $ 154 $ 142 As of July 2, 2023, approximately $704 million of total unrecognized compensation cost related to restricted stock, including RSU and PSU, stock options, including performance stock options, and ESPP shares issued to date was expected to be recognized over a weighted-average period of approximately 2.7 years. |
Supplemental Balance Sheet Deta
Supplemental Balance Sheet Details | 6 Months Ended |
Jul. 02, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Supplemental Balance Sheet Details | 6. SUPPLEMENTAL BALANCE SHEET DETAILS Accounts Receivable In millions July 2, January 1, Trade accounts receivable, gross $ 748 $ 675 Allowance for credit losses (7) (4) Total accounts receivable, net $ 741 $ 671 Inventory In millions July 2, January 1, Raw materials $ 281 $ 247 Work in process 415 386 Finished goods 29 28 Inventory, gross 725 661 Inventory reserve (108) (93) Total inventory, net $ 617 $ 568 Accrued Liabilities In millions July 2, January 1, Legal contingencies (1) $ 471 $ 473 Contract liabilities, current portion 250 245 Accrued compensation expenses (2) 249 188 Accrued taxes payable 84 97 Operating lease liabilities, current portion 84 76 Liability-classified equity incentive awards 57 36 Other, including warranties (3) 114 117 Total accrued liabilities $ 1,309 $ 1,232 _____________ (1) See note “ 7. Legal Proceedings ” for additional details. (2) Included employee separation costs related to restructuring activities. (3) See table below for changes in the reserve for product warranties. Changes in the reserve for product warranties were as follows: In millions Q2 2023 Q2 2022 YTD 2023 YTD 2022 Balance at beginning of period $ 19 $ 21 $ 18 $ 22 Additions charged to cost of product revenue 11 6 20 12 Repairs and replacements (10) (6) (18) (13) Balance at end of period $ 20 $ 21 $ 20 $ 21 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 Restructuring In Q2 2023, we implemented a cost reduction initiative that included workforce reductions, the consolidation of certain facilities and other actions to reduce expenses, all as part of a plan to realign operating expenses while maintaining focus on our innovation roadmap and sustainable long-term growth. In Q2 2023, we recorded a total pre-tax restructuring charge of $33 million, primarily related to severance pay and other employee separation costs. A summary of the pre-tax restructuring charge is as follows: In millions Employee separation costs $ 25 Asset impairment charges (1) 7 Other costs 1 Total restructuring charges (2) $ 33 _____________ (1) Primarily related to impairment of right-of-use assets and leasehold improvements. (2) $18 million was recorded in SG&A expense, $12 million in R&D expense, with the remainder recorded in cost of revenue. A summary of the restructuring liability is as follows: In millions Employee Separation Costs Other Costs Total Expense recorded in Q2 2023 $ 25 $ 1 $ 26 Cash paid during Q2 2023 (2) — (2) Amount recorded in accrued liabilities as of July 2, 2023 $ 23 $ 1 $ 24 Estimated total restructuring costs to still be incurred $ 7 $ — $ 7 It is expected that substantially all of the employee separation related restructuring charges will be incurred and paid by the end of 2023. We also plan to exit our i3 campus in San Diego, California by the end of 2023 and we are evaluating options with respect to our campus in Foster City, California. As of July 2, 2023, we had assets, consisting primarily of right-of-use assets and leasehold improvements, related to our i3 and Foster City campuses of approximately $52 million and $185 million, respectively. Goodwill Goodwill is reviewed for impairment annually, during the second quarter of our fiscal year, or more frequently if an event occurs indicating the potential for impairment. In May 2023, we performed our annual goodwill impairment test for our two reporting units: Core Illumina and GRAIL. We performed a quantitative assessment for both reporting units. No impairment was recorded for either Core Illumina or GRAIL, in Q2 2023, as the fair value for each reporting unit exceeded its carrying value by approximately $34 billion and $555 million, respectively. We performed our annual goodwill impairment test using a combination of both an income and a market approach to determine the fair value of each reporting unit. The income approach utilized the estimated discounted cash flows for each reporting unit, while the market approach utilized comparable company information. Estimates and assumptions used in the income approach included projected cash flows and a discount rate for each reporting unit. Discount rates were determined using a weighted average cost of capital for risk factors specific to each reporting unit and other market and industry data. For GRAIL, the selected discount rate was 21.5%. The estimates and assumptions used in our assessment represent a Level 3 measurement because they are supported by little or no market activity and reflect our own assumptions in measuring fair value. The assumptions used are inherently subject to uncertainty and we note that small changes in these assumptions could have a significant impact on the concluded value. An increase of 100 to 150 basis points to the discount rate used in our annual assessment for GRAIL would have resulted in an outcome ranging from no impairment to an impairment of approximately $250 million for GRAIL. In order to further validate the reasonableness of the fair values concluded for our reporting units, a reconciliation to market capitalization was performed by estimating a reasonable implied control premium and other market factors. As of July 2, 2023, remaining goodwill allocated to GRAIL was $2,178 million. In conjunction with our annual goodwill impairment test, we also evaluated the in-process research and development (IPR&D) asset assigned to the GRAIL reporting unit for potential impairment. We performed our impairment test by comparing the carrying value of the IPR&D asset to its estimated fair value, which was determined by the income approach, using a discounted cash flow model. Estimates and assumptions used in the income approach, which represent a Level 3 measurement, included projected cash flows and a discount rate. Based on our impairment test, the carrying value of the IPR&D asset did not exceed its estimated fair value. We also performed a recoverability test for the definite-lived intangible assets assigned to the GRAIL reporting unit, which includes developed technology and trade name, noting no impairment. Derivative Financial Instruments We are exposed to foreign exchange rate risks in the normal course of business and use derivative financial instruments to partially offset this exposure. We do not use derivative financial instruments for speculative or trading purposes. Foreign exchange contracts are carried at fair value in other current assets, other assets, accrued liabilities, or other long-term liabilities, as appropriate, on the condensed consolidated balance sheets. We use foreign exchange forward contracts to manage foreign currency risks related to monetary assets and liabilities denominated in currencies other than the U.S. dollar. These derivative financial instruments have terms of one month or less and are not designated as hedging instruments. Changes in fair value of these derivatives are recognized in other income (expense), net, along with the re-measurement gain or loss on the foreign currency denominated assets or liabilities. As of July 2, 2023, we had foreign exchange forward contracts in place to hedge exposures in the euro, Japanese yen, Australian dollar, Canadian dollar, Singapore dollar, Chinese Yuan Renminbi, and British pound. As of July 2, 2023 and January 1, 2023, the total notional amounts of outstanding forward contracts in place for these foreign currency purchases were $503 million and $485 million, respectively. On July 25, 2023, we entered into forward contracts for a total notional amount of €432 million to hedge the foreign currency exposure for the approximately €432 million fine imposed by the European Commission on July 12, 2023. |
Legal Proceedings
Legal Proceedings | 6 Months Ended |
Jul. 02, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal Proceedings | 7. 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 condensed 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. Acquisition of GRAIL Our acquisition of GRAIL remains subject to ongoing legal and regulatory proceedings in the United States and in the European Union. On March 30, 2021, the U.S. Federal Trade Commission (the FTC) filed an administrative complaint and a motion for a preliminary injunction in the United States District Court for the District of Columbia. In both actions, the FTC alleged that our acquisition of GRAIL would violate Section 7 of the Clayton Act, as amended, 15 U.S.C. § 18. We filed an answer to the FTC’s complaint in federal district court on April 6, 2021, and in the administrative court on April 13, 2021. On April 20, 2021, the United States District Court for the District of Columbia granted our motion to transfer venue to the United States District Court for the Southern District of California. On May 28, 2021, the district court granted the FTC’s motion to dismiss the complaint without prejudice. The administrative trial commenced on August 24, 2021. On September 1, 2022, the administrative law judge (the ALJ) ruled in favor of Illumina and found that the acquisition of GRAIL did not violate Section 7 of the Clayton Act. In the decision, the ALJ found that the FTC’s complaint counsel had failed to prove its prima facie case that Illumina’s acquisition of GRAIL would result in harm to competition in a putative market for multi-cancer early detection (MCED) tests. The FTC’s complaint counsel appealed the ALJ’s decision to the full FTC on September 2, 2022. The appeal was fully briefed as of November 10, 2022 and oral argument occurred on December 13, 2022. On March 31, 2023, the FTC issued an opinion and order (the FTC Order) requiring Illumina to divest GRAIL, reversing the ALJ’s ruling. On April 5, 2023, Illumina filed a petition for review of the FTC Order in the U.S. Court of Appeals for the Fifth Circuit. On April 24, 2023, the FTC granted a motion staying in its entirety the FTC Order pending resolution of Illumina’s Fifth Circuit appeal. Illumina submitted its opening appeal brief on June 5, 2023. The FTC submitted its opposition brief on July 26, 2023, and Illumina’s reply brief is due on August 16, 2023. Oral argument is scheduled for September 12, 2023. We intend to continue to vigorously defend against the FTC action. On April 19, 2021, the European Commission accepted a request for a referral of the GRAIL acquisition for European Union merger review, submitted by a Member State of the European Union (France), and joined by several other Member States (Belgium, Greece, Iceland, the Netherlands and Norway), under Article 22(1) of Council Regulation (EC) No 139/2004 (the EU Merger Regulation). The European Commission had never solicited referrals to take jurisdiction over an acquisition of a U.S. company that had no revenue in Europe. On April 29, 2021, we filed an action in the General Court of the European Union (the EU General Court) asking for annulment of the European Commission’s assertion of jurisdiction to review the acquisition under Article 22 of the EU Merger Regulation, as the acquisition does not meet the jurisdictional criteria under the EU Merger Regulation or under the national merger control laws of any Member State of the European Union. On December 16, 2021, the EU General Court held a hearing regarding the European Commission’s assertion of jurisdiction. On July 13, 2022, the EU General Court reached a decision in favor of the European Commission, holding that the European Commission has jurisdiction under the EU Merger Regulation to review the acquisition. On September 22, 2022, we filed an appeal in the Court of Justice of the European Union asking for annulment of the EU General Court’s decision. On October 29, 2021, the European Commission adopted an order imposing interim measures (the Initial Interim Measures Order). As the Initial Interim Measures Order was set to expire on November 3, 2022, the European Commission adopted a new order imposing interim measures (the New Interim Measures Order) on October 28, 2022. On December 1, 2021, we filed an action with the EU General Court asking for annulment of the Initial Interim Measures Order. The hearing of that application has been stayed pending our appeal of the judgment of the EU General Court regarding the European Commission’s assertion of jurisdiction. On January 10, 2023, we filed an action with the EU General Court asking for annulment of the New Interim Measures Order. On January 20, 2023, the European Commission requested that these proceedings be stayed pending our appeal on jurisdiction. We submitted a filing indicating that we had no objections to the European Commission’s request, and the EU General Court stayed the proceedings on February 21, 2023. On September 6, 2022, the European Commission announced that it had completed its Phase II review of the acquisition of GRAIL and adopted a final decision (the Prohibition Decision), which found that, in its view, our acquisition of GRAIL was incompatible with the internal market in Europe because it results in a significant impediment to effective competition. On November 17, 2022, we filed an action with the EU General Court asking for annulment of the Prohibition Decision. On December 5, 2022, the European Commission issued a Statement of Objections informing Illumina of the order it intends to adopt requiring us (among other things) to divest GRAIL (the EC Divestment Decision). We filed our response to the Statement of Objections on January 16, 2023. Neither the Prohibition Decision nor such public statements indicate when any such EC Divestment Decision may be adopted. We may pursue other appeals to the EC Divestment Decision. On July 12, 2023, the European Commission adopted a final decision finding that we breached the EU Merger Regulation by, in its view, acquiring the possibility to exert decisive influence over GRAIL and exerting such influence during the pendency of the European Commission’s review (the Article 14(2)(b) Decision). The European Commission therefore imposed a fine on us pursuant to Article 14(2)(b) of the EU Merger Regulation of approximately €432 million, representing the maximum fine of 10% of our consolidated annual revenues for fiscal year 2022. As of July 2, 2023, we accrued $471 million included in accrued liabilities. We intend to appeal this decision. SEC Inquiry Letter In July 2023, we were informed that the staff of the SEC was conducting an investigation relating to Illumina and was requesting documents and communications primarily related to Illumina’s acquisition of GRAIL and certain statements and disclosures concerning GRAIL, its products and its acquisition, and related to the conduct and compensation of certain members of Illumina and GRAIL management, among other things. Illumina is cooperating with the SEC in this investigation. |
Income Taxes
Income Taxes | 6 Months Ended |
Jul. 02, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 8. 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. Our effective tax rates for Q2 2023 and YTD 2023 were (163.8)% and (38.5)%, respectively, compared to 16.0% and 9.7% in Q2 2022 and YTD 2022, respectively. The variance from the U.S. federal statutory tax rate of 21% in Q2 2023 and YTD 2023 was primarily attributable to the $112 million and net $64 million income tax expense impact of research and development expense capitalization for tax purposes, respectively, and the $69 million and net $25 million income tax expense impact of GRAIL pre-acquisition net operating losses on global intangible low-taxed income (GILTI) and the utilization of U.S. foreign tax credits, respectively. This was partially offset by 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. Historically we calculated the provision/(benefit) for income taxes for interim periods utilizing an estimated annual effective tax rate applied to the income/(loss) for the reporting period. In accordance with the authoritative guidance for accounting for income taxes in interim periods, we concluded for Q2 2023 and YTD 2023 that it was appropriate to determine the provision for income taxes utilizing the year-to-date effective tax rate method. Since minor changes in the estimated income/(loss) before income taxes would result in significant changes in the estimated annual effective tax rate, we determined the year-to-date effective tax rate method would provide a more reliable estimate of the provision for income taxes for Q2 2023 and YTD 2023. As of July 2, 2023 and January 1, 2023, prepaid income taxes included within prepaid expenses and other current assets on the condensed consolidated balance sheets were $123 million and $116 million, respectively. |
Segment Information
Segment Information | 6 Months Ended |
Jul. 02, 2023 | |
Segment Reporting [Abstract] | |
Segment Information | 9. SEGMENT INFORMATION We have two reportable segments, Core Illumina and GRAIL. We report segment information based on the management approach, which 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. Our CODM does not evaluate our operating segments using discrete asset information. We do not allocate expenses between segments. Core Illumina sells products and provides services to GRAIL, and vice versa, in accordance with contractual agreements between the entities. 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 GRAIL. GRAIL: GRAIL is a healthcare company focused on early detection of multiple cancers. In millions Q2 2023 Q2 2022 YTD 2023 YTD 2022 Revenue: Core Illumina $ 1,159 $ 1,156 $ 2,235 $ 2,377 GRAIL 22 12 42 22 Eliminations (5) (6) (14) (13) Consolidated revenue $ 1,176 $ 1,162 $ 2,263 $ 2,386 Income (loss) from operations: Core Illumina $ 115 $ (396) $ 257 $ (34) GRAIL (204) (187) (408) (359) Eliminations 1 4 (1) (2) Consolidated loss from operations $ (88) $ (579) $ (152) $ (395) Total other expense, net primarily relates to Core Illumina and we do not allocate income taxes to our segments. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||||||
Jul. 02, 2023 | Apr. 02, 2023 | Jan. 01, 2023 | Oct. 02, 2022 | Jul. 03, 2022 | Apr. 03, 2022 | Jul. 02, 2023 | Jul. 03, 2022 | |
Pay vs Performance Disclosure | ||||||||
Net loss | $ (234) | $ 3 | $ (139) | $ (3,816) | $ (535) | $ 86 | $ (231) | $ (449) |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended | 6 Months Ended |
Jul. 02, 2023 shares | Jul. 02, 2023 shares | |
Trading Arrangements, by Individual | ||
Material Terms of Trading Arrangement | ADOPTIONS, MODIFICATIONS OR TERMINATIONS OF TRADING PLANS During the quarterly period ended July 2, 2023, the following directors and officers adopted, modified or terminated 10b5-1 plans: • On May 30, 2023, Phil Febbo, Chief Medical Officer, entered in a new arrangement intended to satisfy the affirmative defense conditions of Rule 10b5-1(c). The arrangement terminates on December 31, 2024 and provides for the sale of up to 9,294 shares. • On May 9, 2023, Alex Aravanis, Chief Technology Officer, Head of Research and Product Development, entered in a new arrangement intended to satisfy the affirmative defense conditions of Rule 10b5-1(c). The arrangement terminates on May 9, 2024 and provides for the sale of up to 15,486 shares. On August 7, 2023, Phil Febbo departed the Company, and on August 9, 2023, the Company announced that Alex Aravanis will also depart the Company. | |
Rule 10b5-1 Arrangement Adopted | true | |
Non-Rule 10b5-1 Arrangement Adopted | false | |
Rule 10b5-1 Arrangement Terminated | false | |
Non-Rule 10b5-1 Arrangement Terminated | false | |
Phil Febbo [Member] | ||
Trading Arrangements, by Individual | ||
Name | Phil Febbo | |
Title | Chief Medical Officer | |
Adoption Date | On May 30, 2023 | |
Termination Date | December 31, 2024 | |
Arrangement Duration | 581 days | |
Aggregate Available | 9,294 | 9,294 |
Alex Aravanis [Member] | ||
Trading Arrangements, by Individual | ||
Name | Alex Aravanis | |
Title | Chief Technology Officer, Head of Research and Product Development | |
Adoption Date | On May 9, 2023 | |
Termination Date | May 9, 2024 | |
Arrangement Duration | 366 days | |
Aggregate Available | 15,486 | 15,486 |
Organization and Significant _2
Organization and Significant Accounting Policies (Policies) | 6 Months Ended |
Jul. 02, 2023 | |
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, and majority-owned or controlled companies. All intercompany transactions and balances have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to the current period presentation. 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. |
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. References to Q2 2023 and Q2 2022 refer to the three months ended July 2, 2023 and July 3, 2022, respectively, which were both 13 weeks, and references to year-to-date (YTD) 2023 and 2022 refer to the six months ended July 2, 2023 and July 3, 2022, respectively, which were both 26 weeks. |
Loss per Share | Basic loss per share is computed based on the weighted average number of common shares outstanding during the period. Diluted loss per share is computed based on the sum of the weighted average number of common shares and potentially dilutive common shares outstanding during the period. In loss periods, basic and diluted loss per share are identical since the effect of potentially dilutive common shares is antidilutive and therefore excluded.Potentially dilutive common shares consist of shares issuable under convertible senior notes and equity awards. We utilize the if-converted method to calculate the impact of convertible senior notes on diluted loss per share. 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. |
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 |
Derivatives | We are exposed to foreign exchange rate risks in the normal course of business and use derivative financial instruments to partially offset this exposure. We do not use derivative financial instruments for speculative or trading purposes. Foreign exchange contracts are carried at fair value in other current assets, other assets, accrued liabilities, or other long-term liabilities, as appropriate, on the condensed consolidated balance sheets. |
Organization and Significant _3
Organization and Significant Accounting Policies (Tables) | 6 Months Ended |
Jul. 02, 2023 | |
Accounting Policies [Abstract] | |
Schedule of Calculation of Weighted Average Shares Used to Calculate Basic and Diluted Net (Loss) Income Per Share | The following table presents the weighted average shares used to calculate basic and diluted loss per share: In millions Q2 2023 Q2 2022 YTD 2023 YTD 2022 Weighted average shares used in calculating basic loss per share 158 157 158 157 Weighted average shares used in calculating diluted loss per share 158 157 158 157 Antidilutive shares: Convertible senior notes 2 2 2 2 Equity awards 3 2 3 2 Potentially dilutive shares excluded from calculation due to antidilutive effect 5 4 5 4 |
Revenue (Tables)
Revenue (Tables) | 6 Months Ended |
Jul. 02, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue | Revenue by Source Q2 2023 Q2 2022 In millions Sequencing Microarray Total Sequencing Microarray Total Consumables $ 734 $ 70 $ 804 $ 739 $ 74 $ 813 Instruments 193 4 197 190 3 193 Total product revenue 927 74 1,001 929 77 1,006 Service and other revenue 156 19 175 136 20 156 Total revenue $ 1,083 $ 93 $ 1,176 $ 1,065 $ 97 $ 1,162 YTD 2023 YTD 2022 In millions Sequencing Microarray Total Sequencing Microarray Total Consumables $ 1,419 $ 148 $ 1,567 $ 1,516 $ 149 $ 1,665 Instruments 346 10 356 401 10 411 Total product revenue 1,765 158 1,923 1,917 159 2,076 Service and other revenue 293 47 340 257 53 310 Total revenue $ 2,058 $ 205 $ 2,263 $ 2,174 $ 212 $ 2,386 Revenue by Geographic Area Based on region of destination (in millions) Q2 2023 Q2 2022 (1) YTD 2023 YTD 2022 (1) Americas $ 640 $ 639 $ 1,256 $ 1,288 Europe 303 274 564 560 Greater China (2) 115 118 206 245 Asia-Pacific, Middle East, and Africa (3) 118 131 237 293 Total revenue $ 1,176 $ 1,162 $ 2,263 $ 2,386 _____________ (1) We implemented a new global commercial structure in Q1 2023 to improve operating efficiencies and better align with local markets. We integrated Asia-Pacific and Japan with emerging markets across the Middle East, Africa, Turkey, and Commonwealth of Independent States (CIS). Beginning in Q1 2023, and going forward, we will report regional results for the following regions: Americas, Europe, Greater China, and Asia-Pacific, Middle East and Africa (AMEA). Prior period amounts have been reclassified to conform to this new presentation. (2) Region includes revenue from China, Taiwan, and Hong Kong. (3) Region includes revenue from Russia and Turkey. |
Investments and Fair Value Me_2
Investments and Fair Value Measurements (Tables) | 6 Months Ended |
Jul. 02, 2023 | |
Fair Value Disclosures [Abstract] | |
Schedule of Marketable Securities | Gains and losses recognized in other income (expense), net on our marketable equity securities were as follows: In millions Q2 2023 Q2 2022 YTD 2023 YTD 2022 Net losses recognized during the period on marketable equity securities $ — $ (27) $ (2) $ (69) Less: Net gains (losses) recognized during the period on marketable equity securities sold during the period 1 — (2) — Net unrealized losses recognized during the period on marketable equity securities still held at the reporting date $ (1) $ (27) $ — $ (69) |
Schedule 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: July 2, 2023 January 1, 2023 In millions Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets: Money market funds (cash equivalents) $ 1,250 $ — $ — $ 1,250 $ 1,642 $ — $ — $ 1,642 Marketable equity securities 6 — — 6 26 — — 26 Helix contingent value right — — 61 61 — — 58 58 Deferred compensation plan assets — 57 — 57 — 52 — 52 Total assets measured at fair value $ 1,256 $ 57 $ 61 $ 1,374 $ 1,668 $ 52 $ 58 $ 1,778 Liabilities: Contingent consideration liabilities $ — $ — $ 440 $ 440 $ — $ — $ 412 $ 412 Deferred compensation plan liability — 54 — 54 — 51 — 51 Total liabilities measured at fair value $ — $ 54 $ 440 $ 494 $ — $ 51 $ 412 $ 463 |
Schedule of Changes in Estimated Fair Value of Acquisition Related Contingent Consideration Liabilities | Changes in the estimated fair value of our contingent consideration liabilities during YTD 2023 were as follows: In millions Balance as of January 1, 2023 $ 412 Change in estimated fair value 28 Balance as of July 2, 2023 $ 440 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jul. 02, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Debt Obligations | Summary of Term Debt Obligations In millions July 2, January 1, Principal amount of 2031 Term Notes outstanding $ 500 $ 500 Principal amount of 2027 Term Notes outstanding 500 500 Principal amount of 2025 Term Notes outstanding 500 500 Principal amount of 2023 Term Notes outstanding — 500 Unamortized discounts and debt issuance costs (12) (13) Net carrying amount of term notes 1,488 1,987 Less: current portion — (500) Term notes, non-current $ 1,488 $ 1,487 Fair value of term notes outstanding (Level 2) $ 1,418 $ 1,913 0% Convertible Senior Notes due 2023 (2023 Convertible Notes) In millions July 2, January 1, Principal amount outstanding $ 750 $ 750 Unamortized debt issuance costs — (2) Net carrying amount of convertible senior notes, current portion $ 750 $ 748 Fair value of convertible senior notes outstanding (Level 2) $ 745 $ 726 |
Stockholders_ Equity (Tables)
Stockholders’ Equity (Tables) | 6 Months Ended |
Jul. 02, 2023 | |
Equity [Abstract] | |
Schedule of Restricted Stock Activity and Related Information, Restricted Stock | Restricted stock activity was as follows: Restricted Performance Stock Units (PSU) (1) Weighted-Average Grant Date Fair Value per Share Units in thousands RSU PSU Outstanding at January 1, 2023 1,611 74 $ 311.23 $ 446.74 Awarded 1,979 228 $ 197.36 $ 231.59 Vested (85) — $ 304.91 $ — Cancelled (186) (51) $ 268.37 $ 308.63 Outstanding at July 2, 2023 3,319 251 $ 246.12 $ 279.51 _____________ (1) The number of units reflect the estimated number of shares to be issued at the end of the performance period. Awarded units are presented net of performance adjustments. |
Schedule of Restricted Stock Activity and Related Information, Performance Units | Restricted stock activity was as follows: Restricted Performance Stock Units (PSU) (1) Weighted-Average Grant Date Fair Value per Share Units in thousands RSU PSU Outstanding at January 1, 2023 1,611 74 $ 311.23 $ 446.74 Awarded 1,979 228 $ 197.36 $ 231.59 Vested (85) — $ 304.91 $ — Cancelled (186) (51) $ 268.37 $ 308.63 Outstanding at July 2, 2023 3,319 251 $ 246.12 $ 279.51 _____________ (1) The number of units reflect the estimated number of shares to be issued at the end of the performance period. Awarded units are presented net of performance adjustments. |
Schedule of Stock Option Activity Under all Stock Option Plans | Stock option activity was as follows: Units in thousands Options Weighted-Average Performance Options (1) Weighted-Average Outstanding at January 1, 2023 187 $ 319.72 17 $ 85.54 Exercised (8) $ 71.09 (1) $ 16.69 Cancelled (82) $ 330.25 — $ — Outstanding at July 2, 2023 97 $ 330.25 16 $ 87.74 Exercisable at July 2, 2023 45 $ 330.25 — $ — _____________ (1) The number of units reflect awards that have been granted and for which it is assumed to be probable that the underlying performance goals will be achieved. |
Schedule of Share-based Payment Arrangement, Liability - Classified Awards, Activity | Cash-based equity incentive award activity was as follows: In millions Outstanding at January 1, 2023 $ 293 Granted 116 Vested and paid in cash (25) Cancelled (17) Change in fair value (13) Outstanding at July 2, 2023 $ 354 Estimated liability as of July 2, 2023 (included in accrued liabilities) $ 57 |
Schedule of Assumptions used to Estimate the Weighted-Average Fair Value Per Share for Stock Purchase under the Employee Stock Purchase Plan | The assumptions used and the resulting estimate of weighted-average fair value per share for stock purchased under the ESPP during YTD 2023 were as follows: Risk-free interest rate 0.78% - 4.79% Expected volatility 41% - 51% Expected term 0.5 - 1.0 year Expected dividends 0 % Weighted-average grant-date fair value per share $ 57.96 |
Schedule of Share-based Compensation Expense for all Stock Awards | Share-based compensation expense, which includes expense for both equity and liability-classified awards, reported in our condensed consolidated statements of operations was as follows: In millions Q2 2023 Q2 2022 YTD 2023 YTD 2022 Cost of product revenue $ 8 $ 7 $ 15 $ 13 Cost of service and other revenue 6 1 12 2 Research and development 43 39 79 75 Selling, general and administrative 48 44 93 93 Share-based compensation expense, before taxes 105 91 199 183 Related income tax benefits (24) (20) (45) (41) Share-based compensation expense, net of taxes $ 81 $ 71 $ 154 $ 142 |
Supplemental Balance Sheet De_2
Supplemental Balance Sheet Details (Tables) | 6 Months Ended |
Jul. 02, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Accounts Receivable | Accounts Receivable In millions July 2, January 1, Trade accounts receivable, gross $ 748 $ 675 Allowance for credit losses (7) (4) Total accounts receivable, net $ 741 $ 671 |
Schedule of Inventory | Inventory In millions July 2, January 1, Raw materials $ 281 $ 247 Work in process 415 386 Finished goods 29 28 Inventory, gross 725 661 Inventory reserve (108) (93) Total inventory, net $ 617 $ 568 |
Schedule of Accrued Liabilities | Accrued Liabilities In millions July 2, January 1, Legal contingencies (1) $ 471 $ 473 Contract liabilities, current portion 250 245 Accrued compensation expenses (2) 249 188 Accrued taxes payable 84 97 Operating lease liabilities, current portion 84 76 Liability-classified equity incentive awards 57 36 Other, including warranties (3) 114 117 Total accrued liabilities $ 1,309 $ 1,232 _____________ (1) See note “ 7. Legal Proceedings ” for additional details. (2) Included employee separation costs related to restructuring activities. (3) See table below for changes in the reserve for product warranties. |
Schedule of Changes in Reserve for Product Warranties | Changes in the reserve for product warranties were as follows: In millions Q2 2023 Q2 2022 YTD 2023 YTD 2022 Balance at beginning of period $ 19 $ 21 $ 18 $ 22 Additions charged to cost of product revenue 11 6 20 12 Repairs and replacements (10) (6) (18) (13) Balance at end of period $ 20 $ 21 $ 20 $ 21 |
Schedule Of Restructuring and Related Costs | A summary of the pre-tax restructuring charge is as follows: In millions Employee separation costs $ 25 Asset impairment charges (1) 7 Other costs 1 Total restructuring charges (2) $ 33 _____________ (1) Primarily related to impairment of right-of-use assets and leasehold improvements. (2) $18 million was recorded in SG&A expense, $12 million in R&D expense, with the remainder recorded in cost of revenue. A summary of the restructuring liability is as follows: In millions Employee Separation Costs Other Costs Total Expense recorded in Q2 2023 $ 25 $ 1 $ 26 Cash paid during Q2 2023 (2) — (2) Amount recorded in accrued liabilities as of July 2, 2023 $ 23 $ 1 $ 24 Estimated total restructuring costs to still be incurred $ 7 $ — $ 7 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jul. 02, 2023 | |
Segment Reporting [Abstract] | |
Schedule of Operating Performance and Assets by Segment | In millions Q2 2023 Q2 2022 YTD 2023 YTD 2022 Revenue: Core Illumina $ 1,159 $ 1,156 $ 2,235 $ 2,377 GRAIL 22 12 42 22 Eliminations (5) (6) (14) (13) Consolidated revenue $ 1,176 $ 1,162 $ 2,263 $ 2,386 Income (loss) from operations: Core Illumina $ 115 $ (396) $ 257 $ (34) GRAIL (204) (187) (408) (359) Eliminations 1 4 (1) (2) Consolidated loss from operations $ (88) $ (579) $ (152) $ (395) Total other expense, net primarily relates to Core Illumina and we do not allocate income taxes to our segments. |
Organization and Significant _4
Organization and 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 | ||
Jul. 02, 2023 | Jul. 03, 2022 | Jul. 02, 2023 | Jul. 03, 2022 | |
Weighted average shares used to calculate basic and diluted earnings per share | ||||
Weighted average shares used in calculating basic loss per share (in shares) | 158 | 157 | 158 | 157 |
Weighted average shares used in calculating diluted loss per share (in shares) | 158 | 157 | 158 | 157 |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Potentially dilutive shares excluded from calculation due to antidilutive effect (in shares) | 5 | 4 | 5 | 4 |
Convertible senior notes | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Potentially dilutive shares excluded from calculation due to antidilutive effect (in shares) | 2 | 2 | 2 | 2 |
Equity awards | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Potentially dilutive shares excluded from calculation due to antidilutive effect (in shares) | 3 | 2 | 3 | 2 |
Revenue - Disaggregation of Rev
Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2023 | Jul. 03, 2022 | Jul. 02, 2023 | Jul. 03, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Consolidated revenue | $ 1,176 | $ 1,162 | $ 2,263 | $ 2,386 |
Americas | ||||
Disaggregation of Revenue [Line Items] | ||||
Consolidated revenue | 640 | 639 | 1,256 | 1,288 |
Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Consolidated revenue | 303 | 274 | 564 | 560 |
Greater China | ||||
Disaggregation of Revenue [Line Items] | ||||
Consolidated revenue | 115 | 118 | 206 | 245 |
Asia-Pacific, Middle East, and Africa | ||||
Disaggregation of Revenue [Line Items] | ||||
Consolidated revenue | 118 | 131 | 237 | 293 |
Total product revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Consolidated revenue | 1,001 | 1,006 | 1,923 | 2,076 |
Consumables | ||||
Disaggregation of Revenue [Line Items] | ||||
Consolidated revenue | 804 | 813 | 1,567 | 1,665 |
Instruments | ||||
Disaggregation of Revenue [Line Items] | ||||
Consolidated revenue | 197 | 193 | 356 | 411 |
Service and other revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Consolidated revenue | 175 | 156 | 340 | 310 |
Sequencing | ||||
Disaggregation of Revenue [Line Items] | ||||
Consolidated revenue | 1,083 | 1,065 | 2,058 | 2,174 |
Sequencing | Total product revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Consolidated revenue | 927 | 929 | 1,765 | 1,917 |
Sequencing | Consumables | ||||
Disaggregation of Revenue [Line Items] | ||||
Consolidated revenue | 734 | 739 | 1,419 | 1,516 |
Sequencing | Instruments | ||||
Disaggregation of Revenue [Line Items] | ||||
Consolidated revenue | 193 | 190 | 346 | 401 |
Sequencing | Service and other revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Consolidated revenue | 156 | 136 | 293 | 257 |
Microarray | ||||
Disaggregation of Revenue [Line Items] | ||||
Consolidated revenue | 93 | 97 | 205 | 212 |
Microarray | Total product revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Consolidated revenue | 74 | 77 | 158 | 159 |
Microarray | Consumables | ||||
Disaggregation of Revenue [Line Items] | ||||
Consolidated revenue | 70 | 74 | 148 | 149 |
Microarray | Instruments | ||||
Disaggregation of Revenue [Line Items] | ||||
Consolidated revenue | 4 | 3 | 10 | 10 |
Microarray | Service and other revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Consolidated revenue | $ 19 | $ 20 | $ 47 | $ 53 |
Revenue - Performance Obligatio
Revenue - Performance Obligation (Details) $ in Millions | 6 Months Ended |
Jul. 02, 2023 USD ($) | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | $ 881 |
Minimum | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Product or service delivery period (in months) | 3 months |
Maximum | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Product or service delivery period (in months) | 6 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-07-03 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Percent of remaining performance obligation (as a percent) | 86% |
Expected timing of remaining performance obligation (in months) | 12 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-07-02 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Percent of remaining performance obligation (as a percent) | 7% |
Expected timing of remaining performance obligation (in months) | 12 months |
Revenue - Narrative (Details)
Revenue - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |
Jul. 02, 2023 | Jul. 02, 2023 | Jan. 01, 2023 | |
Revenue from Contract with Customer [Abstract] | |||
Contract asset | $ 17 | $ 17 | $ 17 |
Contract with customer, liability | 323 | 323 | 308 |
Contract liabilities, current portion | 250 | 250 | $ 245 |
Revenue recognized | $ 68 | $ 163 |
Investments and Fair Value Me_3
Investments and Fair Value Measurements - Narrative (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||||||
Aug. 18, 2021 USD ($) | Apr. 30, 2019 | Jul. 02, 2023 USD ($) | Apr. 02, 2023 USD ($) | Jan. 01, 2023 USD ($) | Jul. 03, 2022 USD ($) | Apr. 03, 2022 USD ($) | Jan. 02, 2022 USD ($) | Jul. 02, 2023 USD ($) fund | Jul. 03, 2022 USD ($) | |
Schedule of Investments [Line Items] | ||||||||||
Marketable equity securities | $ 6,000 | $ 26,000 | $ 6,000 | |||||||
Strategic equity investments, without readily determinable fair values | 28,000 | 28,000 | 28,000 | |||||||
Total revenue | 1,176,000 | $ 1,162,000 | 2,263,000 | $ 2,386,000 | ||||||
(Gain) loss on Helix contingent value right | 3,000 | (3,000) | ||||||||
GRAIL Inc | ||||||||||
Schedule of Investments [Line Items] | ||||||||||
Contingent value right, terms (in years) | 12 years | |||||||||
Covered revenues of GRAIL, contingent consideration liability | $ 42,000 | 42,000 | $ 20,000 | $ 20,000 | ||||||
Payment for contingent consideration | 400 | 187 | ||||||||
Contingent consideration liabilities | 440,000 | 412,000 | 440,000 | |||||||
Contingent consideration, noncurrent | 439,000 | 411,000 | 439,000 | |||||||
GRAIL Inc | Payment Rights Of One Billion, Each Twelve Years | ||||||||||
Schedule of Investments [Line Items] | ||||||||||
Contingent payment rights (as a percent) | 2.50% | |||||||||
Business acquisition, contingent value rights, revenue threshold | $ 1,000,000 | |||||||||
GRAIL Inc | Payment Rights Of Above One Billion, Each Twelve Years | ||||||||||
Schedule of Investments [Line Items] | ||||||||||
Business acquisition, contingent value rights, revenue threshold | $ 1,000,000 | |||||||||
Contingent payment rights, second percentage (as a percent) | 9% | |||||||||
Helix Holdings I, LLC | ||||||||||
Schedule of Investments [Line Items] | ||||||||||
Contingent value right, terms (in years) | 7 years | |||||||||
(Gain) loss on Helix contingent value right | 0 | (8,000) | $ 3,000 | (3,000) | ||||||
Venture Capital Investment Fund (the Fund) | ||||||||||
Schedule of Investments [Line Items] | ||||||||||
Number of venture capital investment funds | fund | 2 | |||||||||
Equity method investments | 177,000 | $ 183,000 | $ 177,000 | |||||||
Unrealized (loss) gain on investments | (2,000) | (4,000) | (14,000) | (6,000) | ||||||
Venture Capital Investment Fund (the Fund), One | ||||||||||
Schedule of Investments [Line Items] | ||||||||||
Commitment in new venture capital investment fund | 100,000 | 100,000 | ||||||||
Remaining capital commitment | 6,000 | 6,000 | ||||||||
Venture Capital Investment Fund (the Fund), Two | ||||||||||
Schedule of Investments [Line Items] | ||||||||||
Commitment in new venture capital investment fund | 150,000 | 150,000 | ||||||||
Remaining capital commitment | 81,000 | 81,000 | ||||||||
Investee | ||||||||||
Schedule of Investments [Line Items] | ||||||||||
Total revenue | $ 28,000 | $ 25,000 | $ 64,000 | $ 55,000 |
Investments and Fair Value Me_4
Investments and Fair Value Measurements - Schedule of Marketable Equity Securities (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2023 | Jul. 03, 2022 | Jul. 02, 2023 | Jul. 03, 2022 | |
Fair Value Disclosures [Abstract] | ||||
Net losses recognized during the period on marketable equity securities | $ 0 | $ (27) | $ (2) | $ (69) |
Less: Net gains (losses) recognized during the period on marketable equity securities sold during the period | 1 | 0 | (2) | 0 |
Net unrealized losses recognized during the period on marketable equity securities still held at the reporting date | $ (1) | $ (27) | $ 0 | $ (69) |
Investments and Fair Value Me_5
Investments and Fair Value Measurements - Fair Value Hierarchy of Assets and Liabilities (Details) - USD ($) $ in Millions | Jul. 02, 2023 | Jan. 01, 2023 |
Assets: | ||
Marketable equity securities | $ 6 | $ 26 |
Fair Value, Measurements, Recurring | ||
Assets: | ||
Money market funds (cash equivalents) | 1,250 | 1,642 |
Marketable equity securities | 6 | 26 |
Helix contingent value right | 61 | 58 |
Deferred compensation plan assets | 57 | 52 |
Total assets measured at fair value | 1,374 | 1,778 |
Liabilities: | ||
Contingent consideration liabilities | 440 | 412 |
Deferred compensation plan liability | 54 | 51 |
Total liabilities measured at fair value | 494 | 463 |
Fair Value, Measurements, Recurring | Level 1 | ||
Assets: | ||
Money market funds (cash equivalents) | 1,250 | 1,642 |
Marketable equity securities | 6 | 26 |
Helix contingent value right | 0 | 0 |
Deferred compensation plan assets | 0 | 0 |
Total assets measured at fair value | 1,256 | 1,668 |
Liabilities: | ||
Contingent consideration liabilities | 0 | 0 |
Deferred compensation plan liability | 0 | 0 |
Total liabilities measured at fair value | 0 | 0 |
Fair Value, Measurements, Recurring | Level 2 | ||
Assets: | ||
Money market funds (cash equivalents) | 0 | 0 |
Marketable equity securities | 0 | 0 |
Helix contingent value right | 0 | 0 |
Deferred compensation plan assets | 57 | 52 |
Total assets measured at fair value | 57 | 52 |
Liabilities: | ||
Contingent consideration liabilities | 0 | 0 |
Deferred compensation plan liability | 54 | 51 |
Total liabilities measured at fair value | 54 | 51 |
Fair Value, Measurements, Recurring | Level 3 | ||
Assets: | ||
Money market funds (cash equivalents) | 0 | 0 |
Marketable equity securities | 0 | 0 |
Helix contingent value right | 61 | 58 |
Deferred compensation plan assets | 0 | 0 |
Total assets measured at fair value | 61 | 58 |
Liabilities: | ||
Contingent consideration liabilities | 440 | 412 |
Deferred compensation plan liability | 0 | 0 |
Total liabilities measured at fair value | $ 440 | $ 412 |
Investments and Fair Value Me_6
Investments and Fair Value Measurements - Changes in Estimated Fair Value of Acquisition Related Contingent Consideration Liabilities (Details) - Business Combination Contingent Consideration Liability $ in Millions | 6 Months Ended |
Jul. 02, 2023 USD ($) | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Beginning balance | $ 412 |
Change in estimated fair value | 28 |
Ending balance | $ 440 |
Debt - Summary of Term Debt Obl
Debt - Summary of Term Debt Obligations (Details) - Term Notes - USD ($) | Jul. 02, 2023 | Jan. 01, 2023 | Dec. 13, 2022 | Mar. 23, 2021 |
Debt Instrument [Line Items] | ||||
Unamortized discounts and debt issuance costs | $ (12,000,000) | $ (13,000,000) | ||
Net carrying amount of term notes | 1,488,000,000 | 1,987,000,000 | ||
Less: current portion | 0 | (500,000,000) | ||
Term notes, non-current | 1,488,000,000 | 1,487,000,000 | ||
Level 2 | ||||
Debt Instrument [Line Items] | ||||
Fair value of term notes outstanding (Level 2) | 1,418,000,000 | 1,913,000,000 | ||
2031 Term Notes | ||||
Debt Instrument [Line Items] | ||||
Principal amount outstanding | 500,000,000 | 500,000,000 | $ 500,000,000 | |
2027 Term Notes | ||||
Debt Instrument [Line Items] | ||||
Principal amount outstanding | 500,000,000 | 500,000,000 | $ 500,000,000 | |
2025 Term Notes | ||||
Debt Instrument [Line Items] | ||||
Principal amount outstanding | 500,000,000 | 500,000,000 | $ 500,000,000 | |
2023 Term Notes | ||||
Debt Instrument [Line Items] | ||||
Principal amount outstanding | $ 0 | $ 500,000,000 | $ 500,000,000 |
Debt - Narrative (Details)
Debt - Narrative (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||||
Jan. 04, 2023 USD ($) consecutive_fiscal_quarter one_year_extension | Aug. 31, 2018 USD ($) day $ / shares | Jul. 02, 2023 USD ($) | Jul. 03, 2022 USD ($) | Jul. 02, 2023 USD ($) | Jul. 03, 2022 USD ($) | Jan. 01, 2023 USD ($) | Dec. 13, 2022 USD ($) | Mar. 23, 2021 USD ($) | |
Term Notes | |||||||||
Debt Instrument [Line Items] | |||||||||
Interest expense recognized | $ 18,000,000 | $ 4,000,000 | $ 37,000,000 | $ 9,000,000 | |||||
Redemption price (as a percent) | 100% | ||||||||
2023 Term Notes | Term Notes | |||||||||
Debt Instrument [Line Items] | |||||||||
Stated rate (as a percent) | 0.55% | ||||||||
Principal amount outstanding | 0 | $ 0 | $ 500,000,000 | $ 500,000,000 | |||||
2031 Term Notes | Term Notes | |||||||||
Debt Instrument [Line Items] | |||||||||
Stated rate (as a percent) | 2.55% | ||||||||
Principal amount outstanding | 500,000,000 | 500,000,000 | 500,000,000 | $ 500,000,000 | |||||
2025 Term Notes | Term Notes | |||||||||
Debt Instrument [Line Items] | |||||||||
Stated rate (as a percent) | 5.80% | ||||||||
Principal amount outstanding | 500,000,000 | 500,000,000 | 500,000,000 | $ 500,000,000 | |||||
2027 Term Notes | Term Notes | |||||||||
Debt Instrument [Line Items] | |||||||||
Stated rate (as a percent) | 5.75% | ||||||||
Principal amount outstanding | $ 500,000,000 | $ 500,000,000 | 500,000,000 | $ 500,000,000 | |||||
2023 Convertible Notes | Convertible Senior Notes | |||||||||
Debt Instrument [Line Items] | |||||||||
Stated rate (as a percent) | 0% | 0% | |||||||
Principal amount outstanding | $ 750,000,000 | $ 750,000,000 | $ 750,000,000 | $ 750,000,000 | |||||
Redemption price (as a percent) | 100% | ||||||||
Debt conversion ratio | 0.0021845 | ||||||||
Conversion price (in dollars per share) | $ / shares | $ 457.77 | ||||||||
Threshold common stock trading days (in days) | day | 20 | ||||||||
Threshold consecutive common stock trading days (in days) | day | 30 | ||||||||
Threshold percentage of common stock price trigger (as a percent) | 130% | ||||||||
Threshold note trading days (in days) | day | 5 | ||||||||
Threshold consecutive note trading days (in days) | day | 10 | ||||||||
Threshold percentage of note price trigger (as a percent) | 98% | ||||||||
Convertible stock price trigger (in dollars per share) | $ / shares | $ 595.10 | ||||||||
The Credit Agreement | Line of Credit | Revolving Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | $ 750,000,000 | ||||||||
Debt instrument term (in years) | 5 years | ||||||||
The Credit Agreement | Line of Credit | Swingline Borrowings | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | $ 40,000,000 | ||||||||
Number of one year extension, credit facility | one_year_extension | 2 | ||||||||
Period of extension option, credit facility | 1 year | ||||||||
The Credit Agreement | Line of Credit | Letter of Credit | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | $ 50,000,000 | ||||||||
The Credit Agreement | Unsecured Debt | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, face amount, optional increase in additional borrowings | $ 250,000,000 | ||||||||
Number of consecutive fiscal quarters, minimum debt to EBITDA ratio | consecutive_fiscal_quarter | 4 | ||||||||
Debt instrument, covenant, minimum debt to EBITDA ratio | 3.50 | ||||||||
Debt instrument, covenant, minimum debt to EBITDA ratio upon consummation of acquisition | 4 | ||||||||
Number of consecutive fiscal quarters, minimum debt to EBITDA ratio upon consummation of acquisition | consecutive_fiscal_quarter | 3 | ||||||||
The Credit Agreement | Unsecured Debt | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | |||||||||
Debt Instrument [Line Items] | |||||||||
Credit spread adjustment rate (as a percent) | 0.10% |
Debt - Summary of Convertible D
Debt - Summary of Convertible Debt Obligations (Details) - 2023 Convertible Notes - Convertible Senior Notes - USD ($) | Jul. 02, 2023 | Jan. 01, 2023 | Aug. 31, 2018 |
Debt Instrument [Line Items] | |||
Stated rate (as a percent) | 0% | ||
Principal amount outstanding | $ 750,000,000 | $ 750,000,000 | $ 750,000,000 |
Unamortized debt issuance costs | 0 | (2,000,000) | |
Net carrying amount of term notes | 750,000,000 | 748,000,000 | |
Level 2 | |||
Debt Instrument [Line Items] | |||
Fair value of convertible senior notes outstanding (Level 2) | $ 745,000,000 | $ 726,000,000 |
Stockholders_ Equity - Narrativ
Stockholders’ Equity - Narrative (Details) shares in Thousands | 6 Months Ended |
Jul. 02, 2023 shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Additional shares authorized | 8,000 |
Liability-Classified RSU | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares outstanding | 557,000 |
Market-Based PSU | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Share based compensation vesting performance period (in years) | 3 years |
Granted award (as a percent) | 175% |
Outstanding (in shares) | 133 |
2015 Stock Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares available for issuance (in shares) | 7,800 |
Stockholders_ Equity - Summary
Stockholders’ Equity - Summary of Restricted Stock Activity and Related Information (Details) shares in Thousands | 6 Months Ended |
Jul. 02, 2023 $ / shares shares | |
Restricted Stock Units (RSUs) | |
Stock Units | |
Outstanding at period start (in shares) | shares | 1,611,000 |
Awarded (in shares) | shares | 1,979,000 |
Vested (in shares) | shares | (85,000) |
Cancelled (in shares) | shares | (186,000) |
Outstanding at period end (in shares) | shares | 3,319,000 |
Weighted-Average Grant Date Fair Value per Share | |
Outstanding at period start (in dollars per share) | $ / shares | $ 311.23 |
Awarded (in dollars per share) | $ / shares | 197.36 |
Vested (in dollars per share) | $ / shares | 304.91 |
Cancelled (in dollars per share) | $ / shares | 268.37 |
Outstanding at period end (in dollars per share) | $ / shares | $ 246.12 |
Performance Stock Units (PSU) | |
Stock Units | |
Outstanding at period start (in shares) | shares | 74 |
Awarded (in shares) | shares | 228 |
Vested (in shares) | shares | 0 |
Cancelled (in shares) | shares | (51) |
Outstanding at period end (in shares) | shares | 251 |
Weighted-Average Grant Date Fair Value per Share | |
Outstanding at period start (in dollars per share) | $ / shares | $ 446.74 |
Awarded (in dollars per share) | $ / shares | 231.59 |
Vested (in dollars per share) | $ / shares | 0 |
Cancelled (in dollars per share) | $ / shares | 308.63 |
Outstanding at period end (in dollars per share) | $ / shares | $ 279.51 |
Stockholders_ Equity - Summar_2
Stockholders’ Equity - Summary of Stock Option Activity Under all Stock Option Plans (Details) shares in Thousands | 6 Months Ended |
Jul. 02, 2023 $ / shares shares | |
Options | |
Options | |
Outstanding at period start (in shares) | shares | 187 |
Exercised (in shares) | shares | (8) |
Cancelled (in shares) | shares | (82) |
Outstanding at period end (in shares) | shares | 97 |
Exercisable at period end (in shares) | shares | 45 |
Weighted-Average Exercise Price | |
Outstanding at period start (in dollars per share) | $ / shares | $ 319.72 |
Exercised (in dollars per share) | $ / shares | 71.09 |
Cancelled (in dollars per share) | $ / shares | 330.25 |
Outstanding at period end (in dollars per share) | $ / shares | 330.25 |
Exercisable at period end (in dollars per share) | $ / shares | $ 330.25 |
Performance stock options | |
Options | |
Outstanding at period start (in shares) | shares | 17 |
Exercised (in shares) | shares | (1) |
Cancelled (in shares) | shares | 0 |
Outstanding at period end (in shares) | shares | 16 |
Exercisable at period end (in shares) | shares | 0 |
Weighted-Average Exercise Price | |
Outstanding at period start (in dollars per share) | $ / shares | $ 85.54 |
Exercised (in dollars per share) | $ / shares | 16.69 |
Cancelled (in dollars per share) | $ / shares | 0 |
Outstanding at period end (in dollars per share) | $ / shares | 87.74 |
Exercisable at period end (in dollars per share) | $ / shares | $ 0 |
Stockholders_ Equity - Narrat_2
Stockholders’ Equity - Narrative - Other Liability - Classified Awards (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2023 | Jul. 03, 2022 | Jul. 02, 2023 | Jul. 03, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense before taxes | $ 105 | $ 91 | $ 199 | $ 183 |
Unrecognized compensation cost | 704 | $ 704 | ||
Weighted-average period of unrecognized compensation cost (in years) | 2 years 8 months 12 days | |||
Liability-Based Awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share based compensation vesting performance period (in years) | 4 years | |||
Share-based compensation expense before taxes | 25 | $ 16 | $ 46 | $ 29 |
Unrecognized compensation cost | 297 | $ 297 | ||
Weighted-average period of unrecognized compensation cost (in years) | 3 years | |||
Aggregated potential value | $ 78 | $ 78 |
Stockholders_ Equity - Other Li
Stockholders’ Equity - Other Liability - Classified Awards (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jul. 02, 2023 | Jan. 01, 2023 | |
Share-Based Compensation Arrangement By Share-Based Payment Award Liability-Classified Awards, Outstanding [Roll Forward] | ||
Liability-classified equity incentive awards | $ 57 | $ 36 |
Liability-Based Awards | ||
Share-Based Compensation Arrangement By Share-Based Payment Award Liability-Classified Awards, Outstanding [Roll Forward] | ||
Estimated liability, Beginning balance | 293 | |
Granted | 116 | |
Vested and paid in cash | (25) | |
Cancelled | (17) | |
Change in fair value | (13) | |
Estimated liability, Ending balance | 354 | |
Liability-classified equity incentive awards | $ 57 |
Stockholders_ Equity - Narrat_3
Stockholders’ Equity - Narrative - Employee Stock Purchase Plan (Details) - ESPP - Employee Stock shares in Millions | 6 Months Ended |
Jul. 02, 2023 shares | |
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 (as a percent) | 85% |
Total shares issued under the ESPP (in shares) | 0.2 |
Shares available for issuance (in shares) | 12.6 |
Stockholders_ Equity- Summary o
Stockholders’ Equity- Summary of Assumptions Used to Estimate the Weighted Average Fair Value Per Share (Details) - Employee Stock | 6 Months Ended |
Jul. 02, 2023 $ / shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Risk free interest rate minimum (as a percent) | 0.78% |
Risk free interest rate maximum (as a percent) | 4.79% |
Expected volatility, minimum (as a percent) | 41% |
Expected volatility, maximum (as a percent) | 51% |
Expected dividends | 0% |
Weighted-average fair value per share (in dollars per share) | $ 57.96 |
Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected term (in years) | 6 months |
Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected term (in years) | 1 year |
Stockholders_ Equity - Narrat_4
Stockholders’ Equity - Narrative - Share Repurchases (Details) - Common Stock - USD ($) | 6 Months Ended | |
Jul. 02, 2023 | Feb. 05, 2020 | |
Class of Stock [Line Items] | ||
Repurchased common stock (in shares) | 0 | |
Dollar amount remaining in authorized stock repurchase program | $ 15,000,000 | |
Stock repurchase program, authorized amount | $ 750,000,000 |
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 | ||
Jul. 02, 2023 | Jul. 03, 2022 | Jul. 02, 2023 | Jul. 03, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense before taxes | $ 105 | $ 91 | $ 199 | $ 183 |
Related income tax benefits | (24) | (20) | (45) | (41) |
Share-based compensation expense, net of taxes | 81 | 71 | 154 | 142 |
Cost of product revenue | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense before taxes | 8 | 7 | 15 | 13 |
Cost of service and other revenue | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense before taxes | 6 | 1 | 12 | 2 |
Research and development | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense before taxes | 43 | 39 | 79 | 75 |
Selling, general and administrative | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense before taxes | $ 48 | $ 44 | $ 93 | $ 93 |
Supplemental Balance Sheet De_3
Supplemental Balance Sheet Details - Schedule of Accounts Receivable (Details) - USD ($) $ in Millions | Jul. 02, 2023 | Jan. 01, 2023 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Trade accounts receivable, gross | $ 748 | $ 675 |
Allowance for credit losses | (7) | (4) |
Total accounts receivable, net | $ 741 | $ 671 |
Supplemental Balance Sheet De_4
Supplemental Balance Sheet Details - Summary of Inventory (Details) - USD ($) $ in Millions | Jul. 02, 2023 | Jan. 01, 2023 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Raw materials | $ 281 | $ 247 |
Work in process | 415 | 386 |
Finished goods | 29 | 28 |
Inventory, gross | 725 | 661 |
Inventory reserve | (108) | (93) |
Total inventory, net | $ 617 | $ 568 |
Supplemental Balance Sheet De_5
Supplemental Balance Sheet Details - Summary of Accrued Liabilities (Details) - USD ($) $ in Millions | Jul. 02, 2023 | Jan. 01, 2023 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Legal contingencies | $ 471 | $ 473 |
Contract liabilities, current portion | 250 | 245 |
Accrued compensation expenses | 249 | 188 |
Accrued taxes payable | 84 | 97 |
Operating lease liabilities, current portion | 84 | 76 |
Liability-classified equity incentive awards | 57 | 36 |
Other, including warranties | 114 | 117 |
Total accrued liabilities | $ 1,309 | $ 1,232 |
Supplemental Balance Sheet De_6
Supplemental Balance Sheet Details - Summary of Changes in Reserve for Product Warranties (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2023 | Jul. 03, 2022 | Jul. 02, 2023 | Jul. 03, 2022 | |
Reserve for product warranties [Roll Forward] | ||||
Balance at beginning of period | $ 19 | $ 21 | $ 18 | $ 22 |
Additions charged to cost of product revenue | 11 | 6 | 20 | 12 |
Repairs and replacements | (10) | (6) | (18) | (13) |
Balance at end of period | $ 20 | $ 21 | $ 20 | $ 21 |
Supplemental Balance Sheet De_7
Supplemental Balance Sheet Details - Pre-Tax Restructuring Charge (Details) $ in Thousands | Jul. 02, 2023 USD ($) |
Restructuring Cost and Reserve [Line Items] | |
Total pre-tax restructuring charge | $ 33,000 |
Selling, general and administrative | |
Restructuring Cost and Reserve [Line Items] | |
Total pre-tax restructuring charge | 18,000 |
Research and development | |
Restructuring Cost and Reserve [Line Items] | |
Total pre-tax restructuring charge | 12,000 |
Employee separation costs | |
Restructuring Cost and Reserve [Line Items] | |
Total pre-tax restructuring charge | 25,000 |
Asset impairment charges | |
Restructuring Cost and Reserve [Line Items] | |
Total pre-tax restructuring charge | 7,000 |
Other Costs | |
Restructuring Cost and Reserve [Line Items] | |
Total pre-tax restructuring charge | $ 1,000 |
Supplemental Balance Sheet De_8
Supplemental Balance Sheet Details - Pre-Tax Charges and Total Costs (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jul. 02, 2023 | Jan. 01, 2023 | |
Restructuring Cost and Reserve [Line Items] | ||
Expense recorded in Q2 2023 | $ 26 | |
Cash paid during Q2 2023 | (2) | |
Amount recorded in accrued liabilities as of July 2, 2023 | 24 | |
Estimated total restructuring costs to still be incurred | 7 | |
Operating lease right-of-use assets | 638 | $ 653 |
CALIFORNIA | ||
Restructuring Cost and Reserve [Line Items] | ||
Operating lease right-of-use assets | 52 | |
Leasehold improvements | 185 | |
Employee Separation Costs | ||
Restructuring Cost and Reserve [Line Items] | ||
Expense recorded in Q2 2023 | 25 | |
Cash paid during Q2 2023 | (2) | |
Amount recorded in accrued liabilities as of July 2, 2023 | 23 | |
Estimated total restructuring costs to still be incurred | 7 | |
Other Costs | ||
Restructuring Cost and Reserve [Line Items] | ||
Expense recorded in Q2 2023 | 1 | |
Cash paid during Q2 2023 | 0 | |
Amount recorded in accrued liabilities as of July 2, 2023 | 1 | |
Estimated total restructuring costs to still be incurred | $ 0 |
Supplemental Balance Sheet De_9
Supplemental Balance Sheet Details - Narrative - Warranties (Details) | 6 Months Ended |
Jul. 02, 2023 | |
Instruments | |
Product Warranty Liability [Line Items] | |
Warranty period (in months) | 1 year |
Consumables | Minimum | |
Product Warranty Liability [Line Items] | |
Warranty period (in months) | 6 months |
Consumables | Maximum | |
Product Warranty Liability [Line Items] | |
Warranty period (in months) | 12 months |
Supplemental Balance Sheet D_10
Supplemental Balance Sheet Details - Narrative - Goodwill (Details) $ in Millions | 6 Months Ended | |
Jul. 02, 2023 USD ($) unit | Jan. 01, 2023 USD ($) | |
Indefinite-lived Intangible Assets [Line Items] | ||
Number of reporting units | unit | 2 | |
Goodwill | $ 3,239 | $ 3,239 |
Minimum | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Credit spread adjustment rate (as a percent) | 1% | |
Maximum | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Credit spread adjustment rate (as a percent) | 1.50% | |
Core Illumina | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Fair value of goodwill above carrying value | $ 34,000 | |
GRAIL | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Fair value of goodwill above carrying value | 555 | |
Goodwill | $ 2,178 | |
Fair value of discount rate (as a percent) | 21.50% | |
GRAIL | Minimum | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Goodwill impairment | $ 0 | |
GRAIL | Maximum | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Goodwill impairment | $ 250 |
Supplemental Balance Sheet D_11
Supplemental Balance Sheet Details - Narrative - Derivatives (Details) € in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Jul. 02, 2023 USD ($) | Jul. 03, 2022 USD ($) | Jul. 02, 2023 USD ($) | Jul. 03, 2022 USD ($) | Jul. 12, 2023 EUR (€) | Jan. 01, 2023 USD ($) | |
Derivative [Line Items] | ||||||
Reclassification to revenue | $ 2 | $ 10 | $ 3 | $ 16 | ||
GRAIL | Subsequent Event | ||||||
Derivative [Line Items] | ||||||
Loss contingency accrual | € | € 432 | |||||
Foreign Exchange Forward | ||||||
Derivative [Line Items] | ||||||
Foreign currency forward contracts assets | 19 | 19 | ||||
Foreign currency forward contracts liabilities | 6 | $ 6 | ||||
Derivative asset, current amount | $ 8 | |||||
Derivative liability, current amount | 6 | |||||
Foreign Exchange Forward | Not Designated as Hedging Instrument | ||||||
Derivative [Line Items] | ||||||
Derivative, term of contract (in months) | 1 month | |||||
Derivative, notional amount | 503 | $ 503 | 485 | |||
Foreign Exchange Forward | Designated as Hedging Instrument | ||||||
Derivative [Line Items] | ||||||
Derivative, term of contract (in months) | 24 months | |||||
Derivative, notional amount | $ 787 | $ 787 | $ 425 |
Legal Proceedings (Details)
Legal Proceedings (Details) € in Millions, $ in Millions | 6 Months Ended | |||
Jul. 03, 2022 | Jul. 12, 2023 EUR (€) | Jul. 02, 2023 USD ($) | Jan. 01, 2023 USD ($) | |
Loss Contingencies [Line Items] | ||||
Legal contingencies | $ | $ 471 | $ 473 | ||
GRAIL | ||||
Loss Contingencies [Line Items] | ||||
Potential fine as a percent of consolidated annual revenues | 0.10 | |||
GRAIL | Subsequent Event | ||||
Loss Contingencies [Line Items] | ||||
Loss contingency accrual | € | € 432 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jul. 02, 2023 | Jul. 03, 2022 | Jul. 02, 2023 | Jul. 03, 2022 | Jan. 01, 2023 | |
Income Tax Disclosure [Abstract] | |||||
Effective tax rate (as a percent) | (163.80%) | 16% | (38.50%) | 9.70% | |
Impact on tax rate due to capitalization of research and development expenses | $ 112 | $ 64 | |||
Impact on tax rate due to GILTI and U.S. foreign tax credits | 69 | ||||
Income tax receivable | $ 123 | 123 | $ 116 | ||
Foreign income tax expense (benefit) | $ 25 |
Segment Information - Summary o
Segment Information - Summary of Operating Performance and Assets by Segment (Details) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2023 USD ($) | Jul. 03, 2022 USD ($) | Jul. 02, 2023 USD ($) segment | Jul. 03, 2022 USD ($) | |
Segment Reporting [Abstract] | ||||
Number of reportable segments | segment | 2 | |||
Segment Reporting Information [Line Items] | ||||
Consolidated revenue | $ 1,176 | $ 1,162 | $ 2,263 | $ 2,386 |
Consolidated loss from operations | (88) | (579) | (152) | (395) |
Operating Segments | Core Illumina | ||||
Segment Reporting Information [Line Items] | ||||
Consolidated revenue | 1,159 | 1,156 | 2,235 | 2,377 |
Consolidated loss from operations | 115 | (396) | 257 | (34) |
Operating Segments | GRAIL | ||||
Segment Reporting Information [Line Items] | ||||
Consolidated revenue | 22 | 12 | 42 | 22 |
Consolidated loss from operations | (204) | (187) | (408) | (359) |
Eliminations | ||||
Segment Reporting Information [Line Items] | ||||
Consolidated revenue | (5) | (6) | (14) | (13) |
Consolidated loss from operations | $ 1 | $ 4 | $ (1) | $ (2) |