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Illumina Annual Report, Year Ended Dec 31, 2006

Filing Date
Filed February 28, 2007
Period End
December 31, 2006
Security
ILMN
In the record · 2016–202610-K1110-Q338-K167

ILMN filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 167 current reports (8-K) between 2016 and 2026.

  1. Leadership change8-K · Feb ’17Feb ’17
  2. Material agreement8-K · Sep ’19Sep ’19
  3. Deal closed8-K · Oct ’21Oct ’21
  4. Leadership change8-K · Jan ’26Jan ’26

01—Abstract

Summary

Summary of the 10-K filed February 28, 2007. Cited figures are marked; the original filing is the authoritative source.

Illumina, Inc. (NASDAQ: ILMN) reported total revenue of $184.6 milliona for the year ended December 31, 2006, up 151% from $73.5 million in 2005, with product revenue of $155.8 million and service and other revenue of $27.5 million.

The company posted net income of $40.0 millionb, or $0.82 per diluted share, compared with a net loss of $20.9 million in 2005, and reported income from operations of $37.8 million. Its accumulated deficit narrowed to $104.6 million, and it had cash, cash equivalents and short-term investments of $130.8 million at year-end. The filing notes that gross margin on product revenue rose to 67.1%, and that stock-based compensation under SFAS No. 123R reduced diluted EPS by $0.29.

Subsequent to year-end, Illumina completed its merger with Solexa, Inc. on January 26, 2007, issuing approximately 13.1 million shares, and on February 16, 2007 issued $400 millionc of 0.625% Convertible Senior Notes due 2014, using about $202 million of the net proceeds to repurchase common stock. The company expects research and development and selling, general and administrative expenses to increase in 2007, and says the merger is expected to be dilutive to earnings per share at least through 2007. The principal risk highlighted is ongoing patent litigation with Affymetrix, which filed suit in 2004 alleging infringement of six patents; trial was scheduled to begin in phases starting March 5, 2007.

Additional matters include a suit by Applied Biosystems against Solexa over Sequencing-by-Ligation patents, which the company says is not material, and a former employee's inventorship claim. Foreign sales were 44%d of 2006 revenue, and the company has only recently achieved annual profitability.

02—Key points

Key Highlights

  1. Total revenue rose 151% to $184.6 million in 2006 from $73.5 million in 2005, led by product revenue of $155.8 million.
  2. Net income of $40.0 million ($0.82 per diluted share) in 2006 versus a net loss of $20.9 million in 2005; income from operations was $37.8 million.
  3. Consumable products were 66% of product revenue in 2006, compared with 47% in 2005, driven by whole-genome genotyping BeadChips such as the HumanHap300 and HumanHap550.
  4. Acquired Solexa, Inc. on January 26, 2007 in a stock-for-stock merger, issuing approximately 13.1 million shares; the company expects the merger to be dilutive to EPS at least through 2007.
  5. Issued $400 million of 0.625% Convertible Senior Notes due 2014 in February 2007 (net proceeds about $390.3 million), using about $202 million to repurchase common stock.
  6. Cash, cash equivalents and short-term investments totaled $130.8 million at December 31, 2006; the accumulated deficit decreased to $104.6 million.
  7. Affymetrix patent infringement litigation (six patents, filed July 2004) remains pending, with the first trial phase scheduled to begin March 5, 2007.

03—Questions

Frequently Asked Questions

  1. What drove the large increase in Illumina's 2006 revenue?

    Total revenue increased $111.1 million, or 151%, to $184.6 million. The filing attributes the product revenue increase mainly to higher consumable and BeadStation sales, including launches of the HumanHap300 and HumanHap550 whole-genome genotyping BeadChips, and service revenue growth to completed Infinium and GoldenGate SNP genotyping service contracts.

  2. Did Illumina become profitable in 2006?

    Yes. The company reported net income of $39.968 million, or $0.82 per diluted share, for 2006, compared with a net loss of $20.9 million in 2005. The filing notes that stock-based compensation under SFAS No. 123R reduced diluted EPS by $0.29 in 2006.

  3. What major transactions occurred after the fiscal year ended?

    On January 26, 2007, Illumina completed its merger with Solexa, Inc., issuing about 13.1 million shares. On February 16, 2007, it issued $400 million of 0.625% Convertible Senior Notes due 2014, with net proceeds of about $390.3 million, of which about $202 million was used to buy back common stock.

  4. What are the main litigation risks disclosed?

    The most significant matter is Affymetrix's suit alleging infringement of six patents by BeadArray products; the company says an adverse ruling could have a material adverse effect and that the stock price could be affected. Applied Biosystems also sued Solexa over Sequencing-by-Ligation patents, which the company believes is not material to its business.

04—Continue

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