8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 26, 2010

Illumina, Inc.

(Exact name of registrant as specified in its charter)

000-30361
(Commission File Number)

Delaware	33-0804655
(State or other jurisdiction of incorporation)	(I.R.S. Employer Identification No.)

9885 Towne Centre Drive, San Diego, CA 92121
(Address of principal executive offices) (Zip code)

(858) 202-4500
(Registrant’s telephone number, including area code)

N/A
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

On October 26, 2010 Illumina, Inc. issued a press release announcing financial results for the three and nine months ended October 3, 2010. The full text of the Company’s press release is attached hereto as Exhibit 99.1.

This Form 8-K, including the exhibit hereto, is being furnished to the Securities and Exchange Commission and shall not be deemed to be “filed” for purposes of Section 18 of, or otherwise regarded as “filed” under, the Securities Exchange Act of 1934, as amended. The information in this report shall not be incorporated by reference into any filing of Illumina, Inc. with the Securities and Exchange Commission, whether made before, on, or after the date hereof, regardless of any general incorporation language in such filing.

Item 9.01 Financial Statements and Exhibits.

(c) Exhibits.

99.1 Press release dated October 26, 2010, announcing Illumina, Inc.’s financial results for the three and nine months ended October 3, 2010.

SIGNATURES

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 hereunto duly authorized.

	ILLUMINA, INC.
Date: October 26, 2010	By:	/s/ Christian O. Henry
		Christian O. Henry
		Senior Vice President and Chief Financial Officer

EXHIBIT INDEX

Exhibit No.		Description
	99.1	Press release dated October 26, 2010, announcing Illumina, Inc.’s financial results for the three and nine months ended October 3, 2010.

EX-99.1

Exhibit 99.1

Illumina Reports Financial Results for Third Quarter 2010

San Diego, Calif., October 26, 2010 — Illumina, Inc. (NASDAQ:ILMN) today announced its financial results for the third quarter of 2010.

Third quarter 2010 results:

• Revenue of $237.3 million, a 50% increase over the $158.4 million reported in the third quarter of 2009.

• GAAP net income for the quarter of $35.4 million, or $0.24 per diluted share, compared to net income of $17.1 million, or $0.12 per diluted share, for the third quarter of 2009. Net income for the third quarter of 2010 included $5.3 million in non-cash interest expense and other items listed in the table entitled “An Itemized Reconciliation Between GAAP and Non-GAAP Net Income.”

• Non-GAAP net income for the quarter of $40.7 million, or $0.30 per diluted share, compared to $22.6 million, or $0.17 per diluted share, for the third quarter of 2009.

Gross margin in the third quarter of 2010 was 66.2% compared to 67.6% in the comparable period of 2009. Excluding the effect of non-cash charges associated with stock compensation and the amortization of intangibles, non-GAAP gross margin was 67.8% for the third quarter of 2010 compared to 69.5% in the prior year period.

Research and development (R&D) expenses for the third quarter of 2010 were $44.8 million compared to $34.4 million in the third quarter of 2009. R&D expenses include $6.5 million and $4.8 million of non-cash stock compensation expense in the third quarter of 2010 and 2009, respectively. R&D expenses in both periods also include $0.9 million of accrued contingent compensation. Excluding these charges, R&D expenses as a percentage of revenue were 15.7% compared to 18.1% in the prior year period.

Selling, general, and administrative (SG&A) expenses for the third quarter of 2010 were $55.0 million compared to $42.1 million for the third quarter of 2009. SG&A expenses include $9.9 million and $8.5 million of non-cash stock compensation expense in the third quarter of 2010 and 2009, respectively. Excluding these charges, SG&A expenses as a percentage of revenue were 19.0% compared to 21.2% in the prior year period.

The company generated $54.8 million in cash flow from operations during the third quarter of 2010 compared to $20.0 million in the prior year period. Depreciation and amortization expenses were $11.2 million and capital expenditures were $13.1 million during the third quarter. The company ended the third quarter with $806.8 million in cash and investments compared to $693.5 million as of January 3, 2010.

Highlights since our last earnings release:

• Launched the HiSeq 1000, a single flow cell sequencing system with half the throughput of the HiSeq 2000. The HiSeq 1000 is field upgradeable to the HiSeq 2000.

• Shipped first commercial units of the Eco™ Real-Time PCR System.

• Together with the Wellcome Trust Sanger Institute completed the de novo genome sequence of the endangered Tasmanian Devil genome for the purpose of finding genetic mutations in the transmissible cancer that is ravaging its population.

Quarterly Conference Call Information

The conference call will begin at 2:30pm Pacific Time (5:30pm Eastern Time) on Tuesday, October 26, 2010. Interested parties may listen to the call by dialing 800.291.5365 (passcode: 77315540), or if outside North America, by dialing +617.614.3922 (passcode: 77315540). Individuals may access the live teleconference under the “Corporate/Investor Information” tab of Illumina’s web site at www.illumina.com.

A replay of the conference call will be available from 6:30pm Pacific Time (9:30pm Eastern Time) on October 26, 2010 through November 2, 2010 by dialing 888.286.8010, or if outside North America, by dialing +1.617.801.6888 (passcode: 18304626).

Statement Regarding Use of Non-GAAP Financial Measures

The company reports non-GAAP results for diluted net income per share, net income, gross margins, operating margins, and free cash flow in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.

The company’s financial results under GAAP include substantial non-cash and other charges related to stock compensation expense, incremental interest expense and a gain on debt

extinguishment associated with the company’s convertible debt instruments that may be settled in cash, a gain on the acquisition of an investee accounted for using the cost method of accounting prior to acquisition, amortization expense related to intangible assets, in-process research and development and contingent compensation expense related to the acquisition of Avantome, Inc., acquisition expense, and expense related to acquired research and development. Per share amounts also include the double dilution associated with the accounting treatment of the company’s convertible debt outstanding and the corresponding call option overlay. Management believes that presentation of operating results that excludes these charges provides useful supplemental information to investors and facilitates the analysis of the company’s core operating results and comparison of operating results across reporting periods. Management also believes that this supplemental non-GAAP information is therefore useful to investors in analyzing and assessing the company’s past and future operating performance.

The company encourages investors to carefully consider its results under GAAP, as well as its supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand its business. Reconciliations between GAAP and non-GAAP results are presented in the tables of this release.

Use of Forward Looking Statements

This release contains projections, information about our financial outlook, earnings guidance, and other forward-looking statements that involve risks and uncertainties. These forward-looking statements are based on our expectations as of the date of this release and may differ materially from actual future events or results. Among the important factors that could cause actual results to differ materially from those in any forward-looking statements are (i) our ability to develop and commercialize further our BeadArray™, VeraCode®, and Solexa® technologies and to deploy new sequencing, gene expression, and genotyping products and applications for our technology platforms, (ii) our ability to manufacture robust instrumentation and reagents technology, and (iii) reductions in the funding levels to our primary customers, including as a result of the timing and amount of funding provided by the American Recovery and Reinvestment Act of 2009, together with other factors detailed in our filings with the Securities and Exchange Commission, including our most recent filings on Forms 10-K and 10-Q, or in information disclosed in public conference calls, the date and time of which are released beforehand. We undertake no obligation, and do not intend, to update these forward-looking

statements, to review or confirm analysts’ expectations, or to provide interim reports or updates on the progress of the current financial quarter.

About Illumina

Illumina (www.illumina.com) is a leading developer, manufacturer, and marketer of life science tools and integrated systems for large-scale analysis of genetic variation and function. We provide innovative sequencing and array-based solutions for genotyping, copy number variation analysis, methylation studies, gene expression profiling, and low-multiplex analysis of DNA, RNA and protein. We also provide tools and services that are fueling advances in consumer genomics and diagnostics. Our technology and products accelerate genetic analysis research and its application, paving the way for molecular medicine and ultimately transforming healthcare.

# # #

CONTACT:

Investors:	Peter J. Fromen	Media:	Wilson Grabill
	Senior Director		Senior Manager
	Investor Relations		Public Relations
	858-202-4507		858-882-6822
	pfromen@illumina.com		wgrabill@illumina.com

Illumina, Inc.
Condensed Consolidated Balance Sheets
(In thousands)

	October 3, 2010		January 3, 2010
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	210,767	$	144,633
Short-term investments		596,049		548,894
Accounts receivable, net		170,618		157,751
Inventory, net		130,029		92,776
Deferred tax assets, current portion		16,808		20,021
Prepaid expenses and other current assets		16,076		17,515
Total current assets		1,140,347		981,590
Property and equipment, net		126,269		117,188
Goodwill		278,112		213,452
Intangible assets, net		72,333		43,788
Deferred tax assets, long-term portion		37,538		47,371
Other assets		70,622		26,548
Total assets	$	1,725,221	$	1,429,937
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	59,792	$	52,781
Accrued liabilities		134,526		98,253
Long-term debt, current portion		306,106		290,202
Total current liabilities		500,424		441,236
Other long-term liabilities		32,783		24,656
Conversion option subject to cash settlement		83,893		99,797
Stockholders’ equity		1,108,121		864,248
Total liabilities and stockholders’ equity	$	1,725,221	$	1,429,937

Illumina, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(unaudited)

	Three Months Ended						Nine Months Ended
	October 3,			September 27,			October 3,			September 27,
	2010			2009			2010			2009
Revenue:
Product revenue	$	224,668		$	150,306		$	596,885		$	459,708
Service and other revenue		12,641			8,054			44,558			26,052
Total revenue		237,309			158,360			641,443			485,760
Cost of Revenue:
Cost of product revenue (a)		72,248			45,858			184,814			142,377
Cost of service and other revenue (a)		5,621			3,706			15,705			10,024
Amortization of intangible assets		2,295			1,670			5,510			5,010
Total cost of revenue		80,164			51,234			206,029			157,411
Gross profit		157,145			107,126			435,414			328,349
Operating Expenses:
Research and development (a)		44,804			34,406			132,146			100,248
Selling, general and administrative (a)		55,006			42,096			158,956			126,866
Acquired in-process research and development		—			1,325			1,325			1,325
Total operating expense		99,810			77,827			292,427			228,439
Income from operations		57,335			29,299			142,987			99,910
Other income (expense), net:
Interest income		2,791			2,536			6,746			8,027
Interest expense		(6,190	)		(5,964	)		(18,279	)		(17,361	)
Other income, net		774			1,592			3,142			1,261
Total other expense, net		(2,625	)		(1,836	)		(8,391	)		(8,073	)
Income before income taxes		54,710			27,463			134,596			91,837
Provision for income taxes		19,263			10,386			48,145			31,261
Net income	$	35,447		$	17,077		$	86,451		$	60,576
Net income per basic share	$	0.28		$	0.14		$	0.70		$	0.49
Net income per diluted share	$	0.24		$	0.12		$	0.61		$	0.44
Shares used in calculating basic net income per share		124,684			124,557			122,816			123,274
Shares used in calculating diluted net income per share		145,205			139,874			140,854			137,438

(a) Includes total stock-based compensation expense for employee stock options and stock purchases:

	Three Months Ended				Nine Months Ended
	October 3,		September 27,		October 3,		September 27,
	2010		2009		2010		2009
Cost of product revenue	$	1,359	$	1,144	$	3,869	$	3,617
Cost of service and other revenue		137		112		394		397
Research and development		6,521		4,788		18,451		14,389
Selling, general and administrative		9,943		8,528		29,090		25,931
Stock-based compensation expense before taxes	$	17,960	$	14,572	$	51,804	$	44,334

Illumina, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(unaudited)

	Three Months Ended						Nine Months Ended
	October 3,			September 27,			October 3,			September 27,
	2010			2009			2010			2009
Net cash provided by operating activities	$	54,828		$	19,997		$	191,092		$	110,902
Net cash used in investing activities		(93,872	)		(158,994	)		(214,996	)		(272,122	)
Net cash provided by financing activities		12,408			25,341			89,930			72,287
Effect of exchange rate changes on cash and cash equivalents		216			87			108			437
Net (decrease) increase in cash and cash equivalents		(26,420	)		(113,569	)		66,134			(88,496	)
Cash and cash equivalents, beginning of period		237,187			352,097			144,633			327,024
Cash and cash equivalents, end of period	$	210,767		$	238,528		$	210,767		$	238,528
Calculation of free cash flow (a):
Net cash provided by operating activities	$	54,828		$	19,997		$	191,092		$	110,902
Purchases of property and equipment		(13,111	)		(19,697	)		(37,434	)		(46,288	)
Free cash flow	$	41,717		$	300		$	153,658		$	64,614

(a) Free cash flow, which is a non-GAAP financial measure, is calculated as net cash provided by operating activities reduced by purchases of property and equipment. Free cash flow is useful to management as it is one of the metrics used to evaluate our performance and to compare us with other companies in our industry. However, our calculation of free cash flow may not be comparable to similar measures used by other companies.

Illumina, Inc.
Results of Operations — Non-GAAP
(In thousands, except per share amounts)
(unaudited)

AN ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP NET INCOME PER SHARE:

	Three Months Ended						Nine Months Ended
	October 3,			September 27,			October 3,			September 27,
	2010			2009			2010			2009
GAAP net income per share — diluted	$	0.24		$	0.12		$	0.61		$	0.44
Pro forma impact of weighted average shares		0.02			0.01			0.04			0.02
Adjustments to net income:
Pro forma impact of non-cash interest expense (a)		0.02			0.02			0.07			0.07
Other pro forma adjustments		0.02			0.02			0.04			0.06
Non-GAAP net income per share — diluted (b)	$	0.30		$	0.17		$	0.76		$	0.59
Shares used in calculating non-GAAP diluted net income per share		135,913			132,839			132,473			130,907
AN ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP NET INCOME:
GAAP net income	$	35,447		$	17,077		$	86,451		$	60,576
Non-cash interest expense (a)		5,258			4,849			15,468			14,325
Amortization of intangible assets		2,295			1,670			5,510			5,010
Compensation expense (c)		919			919			2,757			2,757
Gain on acquisition (d)		—			—			(2,914	)		—
Acquired in-process research and development		—			1,325			1,325			1,325
Acquisition expense		—			—			536			—
Acquired research and development		—			—			—			2,000
Gain on extinguishment of debt		—			—			—			(767	)
Pro forma impact on tax expense:
Non-cash interest expense (a)		(2,065	)		(2,006	)		(6,077	)		(5,609	)
Other pro forma adjustments		(1,114	)		(1,273	)		(1,721	)		(2,467	)
Incremental non-GAAP tax expense (e)		(3,179	)		(3,279	)		(7,798	)		(8,076	)
Non-GAAP net income (b)	$	40,740		$	22,561		$	101,335		$	77,150

(a)	Non-cash interest expense is calculated in accordance with the authoritative accounting guidance for convertible debt instruments that may be settled in cash.
(b)	Non-GAAP net income per share and net income exclude the effect of the pro forma adjustments as detailed above. Non-GAAP diluted net income per share and net income are key drivers of our core operating performance and major factors in management’s bonus compensation each year. Management has excluded the effects of these items in these measures to assist investors in analyzing and assessing our past and future core operating performance.
(c)	Compensation expense represents contingent consideration for post-combination services associated with a prior acquisition. This expense is included within research and development on our statements of operations.
(d)	Gain on acquisition represents the difference between the carrying value of a cost method investment in Helixis, Inc. prior to acquisition and the fair value of that investment at the time of acquisition.
(e)	Incremental non-GAAP tax expense reflects the increase to GAAP tax expense related to the non-GAAP adjustments listed above.

Illumina, Inc.
Results of Operations — Non-GAAP (continued)
(unaudited)

AN ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP RESULTS OF OPERATIONS AS A PERCENT OF REVENUE:

	Three Months Ended										Nine Months Ended
	October 3, 2010					September 27, 2009					October 3, 2010					September 27, 2009
GAAP gross profit	$	157,145		66.2	%	$	107,126		67.6	%	$	435,414		67.9	%	$	328,349		67.6	%
Stock-based compensation expense		1,496		0.6	%		1,256		0.8	%		4,263		0.7	%		4,014		0.8	%
Amortization of intangible assets		2,295		1.0	%		1,670		1.1	%		5,510		0.9	%		5,010		1.0	%
Non-GAAP gross profit	$	160,936		67.8	%	$	110,052		69.5	%	$	445,187		69.4	%	$	337,373		69.5	%
Research and development expense	$	44,804		18.9	%	$	34,406		21.7	%	$	132,146		20.6	%	$	100,248		20.6	%
Stock-based compensation expense		(6,521	)	(2.7	%)		(4,788	)	(3.0	%)		(18,451	)	(2.9	%)		(14,389	)	(3.0	%)
Compensation Expense (a)		(919	)	(0.4	%)		(919	)	(0.6	%)		(2,757	)	(0.4	%)		(2,757	)	(0.6	%)
Acquired research and development		—		—			—		—			—		—			(2,000	)	(0.4	%)
Non-GAAP research and development expense	$	37,364		15.7	%	$	28,699		18.1	%	$	110,938		17.3	%	$	81,102		16.7	%
Selling, general and administrative expense	$	55,006		23.2	%	$	42,096		26.6	%	$	158,956		24.8	%	$	126,866		26.1	%
Stock-based compensation expense		(9,943	)	(4.2	%)		(8,528	)	(5.4	%)		(29,090	)	(4.5	%)		(25,931	)	(5.3	%)
Acquisition expense		—		—			—		—			(536	)	(0.1	%)		—		—
Non-GAAP selling, general and administrative expense	$	45,063		19.0	%	$	33,568		21.2	%	$	129,330		20.2	%	$	100,935		20.8	%
GAAP operating profit	$	57,335		24.2	%	$	29,299		18.5	%	$	142,987		22.3	%	$	99,910		20.6	%
Stock-based compensation expense		17,960		7.6	%		14,572		9.2	%		51,804		8.1	%		44,334		9.1	%
Amortization of intangible assets		2,295		1.0	%		1,670		1.1	%		5,510		0.9	%		5,010		1.0	%
Compensation expense (a)		919		0.4	%		919		0.6	%		2,757		0.4	%		2,757		0.6	%
Acquired in-process research and development		—		—			1,325		0.8	%		1,325		0.2	%		1,325		0.3	%
Acquisition expense		—		—			—		—			536		0.1	%		—		—
Acquired research and development		—		—			—		—			—		—			2,000		0.4	%
Non-GAAP operating profit (b)	$	78,509		33.1	%	$	47,785		30.2	%	$	204,919		31.9	%	$	155,336		32.0	%

(a)

Compensation expense represents contingent consideration for post-combination services associated with a prior acquisition. This expense is included within research and development on our statements of operations.

(b)

Non-GAAP operating profit excludes the effect of the pro forma adjustments as detailed above. Management has excluded the effects of these items in these measures to assist investors in analyzing and assessing our past and future core operating performance. Non-GAAP gross profit, included within the non-GAAP operating profit, is a key measure of the effectiveness and efficiency of our manufacturing processes, product mix and the average selling prices of our products and services.