Business Context and Reporting Period
Company: ILLUMINA, INC.
Filing Type: Form 8-K (Current Report)
Date of Report: January 14, 2014
Context: The Company presented preliminary financial results and fiscal year 2014 guidance at the J.P. Morgan Healthcare Conference. The Q4 2013 revenue figure is preliminary and subject to audit.
Key Financial Metrics
Fourth Quarter 2013 (Preliminary)
- Total Revenue: $387 million (for the quarter ended December 29, 2013).
- Non-GAAP Earnings Per Share (EPS): Expected to be slightly above the top end of the prior guidance range (specific value not provided).
Fiscal Year 2014 Guidance
- Revenue Growth: Approximately 15% to 17%.
- Non-GAAP Diluted EPS: $2.00 to $2.06.
- GAAP Diluted EPS: $1.50 to $1.56.
- Non-GAAP Gross Margin: Approximately 70.0%.
- GAAP Gross Margin: Approximately 65.9%.
- Pro Forma Tax Rate: Approximately 29.5%.
- Stock Compensation Expense: Approximately $128 million.
- Weighted Average Diluted Shares: Approximately 148 million (assuming a stock price of $114).
Material Changes and Adjustments
The filing details specific adjustments reconciling Non-GAAP to GAAP figures for the 2014 outlook:
- Gross Margin Adjustments: Includes amortization of acquired intangible assets (-2.3%), legal contingencies (-1.2%), and stock-based compensation (-0.6%).
- EPS Adjustments: Includes amortization of acquired intangible assets (-$0.20), non-cash interest expense (-$0.16), legal contingencies (-$0.10), contingent compensation (-$0.02), headquarter relocation (-$0.01), and acquisition-related expenses (-$0.01).
Outlook, Risks, and Contingencies
Management Commentary
Management expects full quarterly results to be announced during the Q4 and fiscal year 2013 earnings call. The 2014 projections assume specific tax rates, share counts, and expense levels as noted above.
Risks and Contingencies
- Legal Contingencies: Charges relate to a judgment in patent litigation brought by Syntrix BioSystems, Inc. Illumina believes the claims are without merit and filed an appeal on December 3, 2013.
- Non-Cash Interest: Calculated per accounting guidance for convertible debt instruments.
- Acquisition Costs: Includes contingent payments for post-combination services and transaction costs from prior acquisitions.
- Headquarters Relocation: Includes accretion of interest expense on lease exit liability.
Note: The filing states that actual results could differ materially from guidance due to risks and uncertainties.
Investor Verification Checklist
- Verify the final audited Q4 2013 revenue and EPS figures when the official earnings call is released.
- Monitor the status of the appeal regarding the Syntrix BioSystems patent litigation judgment.
- Confirm the actual stock price and share count used for the 2014 EPS calculation, as guidance assumes a $114 stock price.
- Review the upcoming Form 10-K for the fiscal year ended December 29, 2013, for detailed risk factors and full financial statements.