UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For Quarterly Period Ended September 30, 2000
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(_) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _______________ to ________________
Commission File Number 000-30361
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Illumina, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 33-0804655
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9390 Towne Centre Drive San Diego, CA 92121-3015
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(Address of principal executive offices) (Zip Code)
(858) 587-4290
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No __
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Indicate the number of shares outstanding of each of issuer's classes of common
stock, as of the latest practicable date.
Common Stock, $0.01 par value 31,939,420 Shares
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Class Outstanding at September 30, 2000
ILLUMINA, INC.
INDEX
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Page No.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets - September 30, 2000 (unaudited)
and December 31, 1999 3
Condensed Statements of Operations - Three and Nine
Month Periods Ended September 30, 2000 and 1999 (unaudited) 4
Condensed Statements of Cash Flows - Nine Month
Periods Ended September 30, 2000 and 1999 (unaudited) 5
Notes to Condensed Financial Statements 6
Signatures 9
Index of Exhibits 10
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ILLUMINA, INC.
Condensed Balance Sheets
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September 30, December 31,
2000 1999
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ASSETS (unaudited) (Note)
Current assets:
Cash and cash equivalents $121,582,842 $21,164,114
Investments 2,585,799 11,924,163
Note receivable 6,200,000 --
Other current assets 2,025,477 404,768
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Total current assets 132,394,118 33,493,045
Property and equipment, net 2,125,131 291,314
Intangible and other assets, net 445,755 110,299
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Total assets $134,965,004 $33,894,658
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LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued liabilities $ 1,946,518 $ 612,408
Current portion of equipment note obligations 252,628 --
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Total current liabilities 2,199,146 612,408
Equipment note obligations, less current portion 955,016 --
Deferred revenue 5,000,000 1,250,000
Commitments
Stockholders' equity 126,810,842 32,032,250
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Total liabilities and stockholders' equity $134,965,004 $33,894,658
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Note: The Balance Sheet at December 31 has been derived from the audited
financial statements as of that date.
See accompanying notes.
3
ILLUMINA, INC.
Condensed Statements of Operations
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(Unaudited)
Three months ended Nine months ended
September 30, September 30,
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2000 1999 2000 1999
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Revenue $ 662,589 $ 100,269 $ 824,446 $ 272,365
Costs and expenses:
Research and development
(exclusive of stock based
compensation of $951,015 and
$157,617 for the three months
ended September 30, 2000 and
1999, respectively, and
$2,279,357 and $283,873 for the
nine months ended September 30,
2000 and 1999, respectively) 3,048,305 1,191,447 9,720,232 2,733,817
General and administrative
(exclusive of stock based
compensation of $853,244 and
$21,314 for the three months
ended September 30, 2000 and
1999, respectively, and
$2,560,204 and $124,048 for the
nine months ended September 30,
2000 and 1999, respectively) 1,192,307 274,200 2,749,193 823,266
Amortization of deferred
compensation and other non-cash
compensation charges 1,804,259 178,931 4,839,561 407,921
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Total costs and expenses 6,044,871 1,644,578 17,308,986 3,965,004
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Loss from operations (5,382,282) (1,544,309) (16,484,540) (3,692,639)
Interest income, net 1,507,629 65,189 2,494,491 252,605
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Net loss $(3,874,653) $(1,479,120) $(13,990,049) $(3,440,034)
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Historical net loss per share,
basic and diluted $ (0.19) $ (0.94) $ (1.66) $ (2.75)
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Shares used in calculating
historical net loss per share,
basic and diluted 20,548,421 1,575,504 8,429,597 1,251,465
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Pro forma net loss per share,
basic and diluted $ (0.15) $ (0.11) $ (0.61) $ (0.26)
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Shares used in calculating pro
forma net loss per share, basic
and diluted 26,408,602 13,411,801 22,940,522 13,087,762
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See accompanying notes.
4
ILLUMINA, INC.
Condensed Statements of Cash Flows
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(Unaudited)
Nine months
ended
September 30,
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2000 1999
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Operating activities:
Net loss $(13,990,049) $(3,440,034)
Adjustments to reconcile net loss to net cash
used in operating activities:
Issuance of stock for technology and services 1,722,000 11,336
Depreciation and amortization 308,168 29,962
Amortization of premium (discount) on investments (71,535) 60,967
Amortization of deferred compensation and other 4,839,561 407,921
non-cash compensation charges
Changes in operating assets and liabilities:
Current assets (1,620,710) (51,996)
Deferred revenue 3,750,000 --
Other assets (363,856) --
Accounts payable and accrued liabilities 1,334,110 74,000
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Net cash used in operating activities (4,092,311) (2,907,844)
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Investing activities:
Purchase of investment securities (10,295,209) (6,727,005)
Maturity of investment securities 19,715,720 2,725,000
Note receivable (6,200,000) --
Purchase of property and equipment (2,113,583) (11,767)
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Net cash provided by (used in) investing activities 1,106,928 (4,013,772)
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Financing activities:
Borrowings under equipment and convertible note 1,317,682 1,000,000
obligations
Payments on equipment note obligations (110,038) --
Proceeds from stock subscription receivable 4,500 --
Proceeds from issuance of common stock, net of 102,191,967 4,180
repurchased shares and offering expenses ------------ -----------
Net cash provided by financing activities 103,404,111 1,004,180
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Net increase (decrease) in cash and cash 100,418,728 (5,917,436)
equivalents
Cash and cash equivalents at beginning of period 21,164,114 8,233,729
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Cash and cash equivalents at end of period $121,582,842 $ 2,316,293
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See accompanying notes.
5
ILLUMINA, INC.
Notes to Condensed Financial Statements (continued)
(Unaudited)
Note 1. General
Illumina, Inc. (the "Company") was incorporated on April 28, 1998. The Company
is developing next-generation tools that will permit the large-scale analysis of
genetic variation and function. The Company's proprietary BeadArray technology
will provide the throughput, cost effectiveness and flexibility necessary to
enable researchers in the life sciences and pharmaceutical industries to perform
the billions of tests necessary to extract medically valuable information from
advances in genomics. This information will correlate genetic variation and
gene function with particular disease states, enhancing drug discovery, allowing
diseases to be detected earlier and more specifically and permitting better
choices of drugs for individual patients. In addition to the life sciences and
pharmaceutical industries, the Company's technology will have applicability
across a wide variety of industries, including agriculture, petrochemicals and
food, flavor and beverages.
The unaudited financial statements included herein have been prepared by the
Company pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. In management's opinion, the accompanying financial statements
have been prepared on a basis consistent with the audited financial statements
and contain adjustments, consisting of only normal, recurring accruals,
necessary to present fairly the Company's financial position and results of
operations. Interim financial results are not necessarily indicative of results
anticipated for the full year. These unaudited financial statements should be
read in conjunction with the Company's 1999 audited financial statements and
footnotes included in the Company's Registration Statement on Form S-1, as
amended (File No. 333-33922).
The preparation of financial statements in conformity with generally accepted
accounting principles requires that management make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amount of expenses incurred during the reporting period. Actual
results could differ from those estimates.
Note 2. Stock Based Compensation
As permitted by SFAS No. 123, Accounting for Stock-Based Compensation, the
Company accounts for common stock granted, and restricted stock sold, to
employees, founders and directors using the intrinsic value method and, thus,
recognizes no compensation expense for options granted, or restricted stock
sold, with exercise prices equal or greater than the fair market value of the
Company's common stock at the date of grant. The Company has recorded deferred
stock compensation related to certain stock options, and restricted stock, which
were granted with exercise prices below estimated fair value, which is being
amortized on an accelerated amortization methodology in accordance with FIN 28.
Deferred compensation for options granted, and restricted stock sold, to
consultants has been determined in accordance with SFAS No. 123 and EITF 96-18
as the fair value of the consideration received or the fair value of the equity
instruments issued, whichever is more reliably measured. Deferred charges for
options granted, and restricted stock sold, to consultants are periodically
remeasured as the underlying options vest.
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ILLUMINA, INC.
Notes to Condensed Financial Statements (continued)
(Unaudited)
Since the inception of the Company, in connection with the grant of certain
stock options and sales of restricted stock to employees, founders and directors
through September 30, 2000, the Company has recorded deferred stock compensation
totaling approximately $18.1 million, representing the difference between the
exercise or purchase price and the fair value of the Company's common stock as
estimated by the Company's management for financial reporting purposes on the
date such stock options were granted or restricted common stock was sold.
Deferred compensation is included as a reduction of stockholders equity and is
being amortized to expense over the vesting period of the options and restricted
stock. The Company recorded deferred compensation of $13.5 million and $0.7
million related to grants of stock options and sales of restricted stock in the
nine months ended September 30, 2000 and 1999, respectively. During the nine
months ended September 30, 2000, the Company amortized approximately $4.0
million of this deferred compensation.
In February 2000, the Company modified the consulting agreements with all of its
outside consultants. Under the modified consulting agreements, the consultants
agreed to pay a substantial financial penalty if they did not fulfill their
performance obligations under the agreements. The amount of the penalty was
determined for each consultant based on the intrinsic value of the unvested
restricted common stock based on the original purchase price and the fair value
of the common stock as estimated by the Company's management for financial
reporting purposes on the date of modification. Each consultant had already
vested a portion of the original restricted common stock in accordance with the
services already provided, and the amounts related to the vested common stock
was expensed. Deferred consultant compensation of $3.0 million related to
unvested stock was recorded in February 2000 and is amortized ratably over the
contracted service periods. The Company amortized approximately $558,000 of
this deferred compensation in the nine months ended September 30, 2000. Prior
to the modification of the consulting agreements, the Company recorded
approximately $315,000 of compensation expense related to restricted stock sold
to consultants in the nine months ended September 30, 2000.
Note 3. Net Loss per Share
Basic and diluted net loss per common share are presented in conformity with
SFAS No. 128. Earnings per Share, and SAB 98, for all periods presented.
Basic and diluted net loss per share has been computed using the weighted-
average number of shares of common stock outstanding during the period, less
shares subject to repurchase. Pro forma basic and diluted net loss per common
share, as presented in the statements of operations, has been computed as
described above, and also gives effect to the conversion of preferred stock
which automatically converted to common stock upon the closing of the Company's
initial public offering in July 2000, as of the original date of issuance.
Note 4. Initial Public Offering
On July 28, 2000 the Company completed an initial public offering in which it
sold 6,000,000 shares of common stock at $16 per share for net proceeds of
approximately $88.0 million, net of underwriting discounts, commissions and
estimated offering expenses. Upon the closing of the offering, all the Company's
convertible preferred stock converted into 18,836,297 shares of common stock.
After the offering, the Company's authorized capital consisted of 120,000,000
shares of common stock, $0.01 par value, and 10,000,000 shares of preferred
stock, $0.01 par value.
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ILLUMINA, INC.
Notes to Condensed Financial Statements (continued)
(Unaudited)
On August 2, 2000 the underwriters exercised an over-allotment option to
purchase an additional 900,000 shares resulting in net proceeds of approximately
$13.4 million. The Company has invested the net proceeds of the initial public
offering primarily in money market funds.
Note 5. Commitments
The Company leases approximately 35,000 square feet of office and laboratory
facilities under an operating lease expiring as to 15,000 square feet in August
2001 and the remaining 20,000 square feet in August 2002. In July, the Company
entered into an agreement to lease a total of 97,000 square feet in buildings
that will be constructed over the next year. The lease contains an option to
purchase the buildings together with additional land on the same site. The
Company has provided the lessor with a secured letter of credit for $1.5 million
and a $6.2 million secured interest bearing loan, which will mature no later
than September 2001. Upon exercise of the option, which expires December 1,
2000, the Company would be required to make an additional cash payment of $2.3
million and the note receivable would convert to part of the cash consideration
for the property; an additional $3.0 million would be required in August 2001,
the estimated closing date of the sale.
Note 6. Asset and Technology Purchase
In March 2000, the Company signed an agreement to acquire certain tangible
assets and rights to certain in-process technologies in exchange for $100,000
and 175,000 shares of common stock valued at $1,575,000 ($9.00 per share). The
Company recorded the tangible assets at their fair value of approximately
$50,000. As of the date these technologies were acquired, they had not achieved
technological or commercial feasibility and there is no significant alternative
future use should the Company's development efforts prove unsuccessful.
Accordingly, the Company recorded an acquired in-process technology charge of
$1,625,000 in March 2000 related to the purchase of these technologies.
Four projects were acquired in the purchase of these technologies. Three
projects are related to the development of instrumentation for oligonucleotide
synthesis. These three projects differ in the size and capacity of the
instrumentation. The first of these projects was approximately 50% complete at
the time of acquisition and is expected to be completed in approximately nine
months at a total cost of $0.8 million. The second of these projects was
approximately 20% complete at the date of acquisition and is expected to be
completed in approximately 21 months at a total cost of $1.5 million. The third
of these projects was approximately 10% complete at the date of acquisition and
is expected to be completed in approximately 21 months at a total cost of $1.2
million. Revenue from these projects, if successful, is expected subsequent to
their respective completion dates. The fourth project is related to the
development of instrumentation for peptide synthesis. This project was
approximately 20% complete at the date of acquisition and has no projected
completion date at this time.
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Illumina , Inc.
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(Registrant)
Date: September 13, 2000 /s/ Timothy Kish
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Timothy Kish
Vice President of Finance
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ILLUMINA, INC.
Index of Exhibits
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Exhibit No.
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27.1 Financial Data Schedule.
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