01—Abstract
Summary
Summary of the 10-K filed February 26, 2009. Cited figures are marked; the original filing is the authoritative source.
Illumina, Inc. reported total revenue of $573.2 milliona for fiscal 2008 (52 weeks ended December 28, 2008), up 56% from $366.8 million in 2007, with product revenue rising 63% to $532.4 million.
The company returned to profitability with net income of $50.5 millionb, or $0.38 per diluted share, compared with a net loss of $278.4 million in 2007, which had included a $303.4 million acquired in-process R&D charge tied to the Solexa acquisition and a $54.5 million charge for the Affymetrix litigation settlement. Income from operations was $80.5 million in 2008. Growth was driven mainly by Infinium BeadChip and sequencing consumables, along with sequencing instrument shipments of the Genome Analyzer II.
Shipments outside the United States were 51% of 2008 revenue. The company ended 2008 with cash, cash equivalents and investments of $696.0 millionc and total stockholders' equity of $848.6 million. It raised $342.6 million net in an August 2008 public offering, but $400.0 million of 0.625% convertible senior notes due 2014 are classified as a current liability because they were convertible through December 31, 2008.
The notes ceased to be convertible from January 1, 2009 through March 31, 2009 unless another trigger occurs. The company also holds $55.9 milliond of auction rate securities that remain illiquid, offset by a UBS settlement that lets it sell them at par between June 30, 2010 and July 2, 2012. Management expects current cash and operating income to fund operations for at least the next twelve months.
Looking ahead, Illumina expects to enter the molecular diagnostics market in 2009 and plans to submit its VeraCode platform to the FDA in 2009. It also expects research and development and selling, general and administrative expenses to increase in absolute dollars. The company faces intense competition from firms such as Affymetrix, Life Technologies and Roche Diagnostics, and it notes that its gross margin and operating results depend on product mix and the timing of large service projects.
02—Key points
Key Highlights
- Total revenue rose 56% to $573.2 million in 2008 from $366.8 million in 2007; product revenue grew 63% to $532.4 million.
- Net income was $50.5 million ($0.38 diluted EPS) in 2008, versus a net loss of $278.4 million in 2007 that included a $303.4 million acquired IPR&D charge.
- Income from operations was $80.5 million in 2008, compared with a loss of $301.2 million in 2007.
- Cash, cash equivalents and investments totaled $696.0 million at December 28, 2008; stockholders' equity was $848.6 million.
- The $400.0 million 0.625% convertible senior notes due 2014 are classified as current liabilities, as they were convertible through December 31, 2008.
- $55.9 million of auction rate securities remain illiquid, with a UBS settlement allowing sale at par from June 30, 2010 to July 2, 2012.
- Shipments outside the United States were 51% of 2008 revenue, and the company plans to enter molecular diagnostics in 2009.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2008, Illumina kept $0.07.
- Revenue$573.2M100.0%
- Cost of revenue−$220.1M38.4%
- Gross profit$353.1M61.6%
- Operating costs−$272.6M47.6%
- Operating income$80.5M14.0%
- Interest, other & tax−$41.0M7.2%
- Net income$39.4M6.9%
Where FY2008 revenue went
$573.2M- Cost of revenue: $220.1M, 38% of revenue
- SG&A: $148.0M, 26% of revenue
- R&D: $100.0M, 17% of revenue
- Net income: $39.4M, 6.9% of revenue
- Other operating costs: $24.7M, 4.3% of revenue
- Interest, other & tax: $41.0M, 7.2% of revenue
Kept 6.9% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2008filed February 26, 2009Financial Statements
| Revenue | $573.23M |
| Cost of Revenue | $220.13M |
| Gross Profit | $353.09M |
| R&D Expenses | $99.96M |
| SG&A Expenses | $148.01M |
| Operating Expenses | $272.64M |
| Operating Income | $80.46M |
| Interest Expense | $22.21M |
| Net Income | $39.42M |
| EPS (Basic) | $0.34 |
| EPS (Diluted) | $0.30 |
| Shares Outstanding (Basic) | 116.86M |
| Shares Outstanding (Diluted) | 133.61M |
05—Questions
Frequently Asked Questions
What drove Illumina's revenue growth in 2008?
Product revenue increased $205.7 million, led mainly by Infinium BeadChip sales, which rose $104.8 million, and sequencing consumables, which rose $35.4 million. Instrument revenue rose $64.8 million, of which $63.0 million came from sequencing systems, primarily the Genome Analyzer II.
Why did the company report a net loss in 2007 but net income in 2008?
The 2007 results included a $303.4 million acquired in-process R&D charge from the Solexa acquisition and a $54.5 million charge for litigation settlements, primarily the Affymetrix settlement. The 2008 results included a $24.7 million IPR&D charge related to the Avantome acquisition, and 2008 operating income was $80.5 million.
What is the status of the convertible notes?
The $400.0 million of 0.625% convertible senior notes due 2014 are classified as current liabilities because they were convertible through December 31, 2008. The notes were not convertible from January 1, 2009 through March 31, 2009 unless another conversion condition was met. Upon conversion, the company must pay the principal in cash, with any excess over principal payable in shares.
What risks does the company identify around its auction rate securities?
The company holds $55.9 million of auction rate securities that have been illiquid since February 2008. It recorded an $8.7 million unrealized loss and reduced their fair value to $47.2 million. Under a November 2008 settlement with UBS, it may sell them at par between June 30, 2010 and July 2, 2012, but UBS has disclaimed assurance that it will have sufficient financial resources to meet its obligations.
What are the company's plans for 2009?
Illumina expects to enter the molecular diagnostics market in 2009 and plans to submit its VeraCode platform to the Food and Drug Administration that year. It expects research and development expense and selling, general and administrative expense to increase in absolute dollars, and it expects to significantly increase sales and distribution resources as it launches new products.
06—Continue