ILLUMINA INC, 10-K filed on 2/18/2015
Annual Report
Document and Entity Information Document (USD $)
In Billions, except Share data in Millions, unless otherwise specified
12 Months Ended
Dec. 28, 2014
Jan. 30, 2015
Jun. 29, 2014
Document and Entity Information [Abstract]
 
 
 
Entity Registrant Name
Illumina Inc 
 
 
Entity Central Index Key
0001110803 
 
 
Current Fiscal Year End Date
--12-28 
 
 
Entity Filer Category
Large Accelerated Filer 
 
 
Document Type
10-K 
 
 
Document Period End Date
Dec. 28, 2014 
 
 
Document Fiscal Year Focus
2014 
 
 
Document Fiscal Period Focus
FY 
 
 
Amendment Flag
false 
 
 
Entity Common Stock, Shares Outstanding
 
143.8 
 
Entity Well-known Seasoned Issuer
Yes 
 
 
Entity Voluntary Filers
No 
 
 
Entity Current Reporting Status
Yes 
 
 
Entity Public Float
 
 
$ 21.2 
Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Dec. 28, 2014
Dec. 29, 2013
Current assets:
 
 
Cash and cash equivalents
$ 636,154 
$ 711,637 
Short-term investments
702,217 
453,966 
Accounts receivable, net
289,458 
238,946 
Inventory
191,144 
154,099 
Deferred tax assets, current portion
40,786 
36,076 
Prepaid expenses and other current assets
29,844 
22,811 
Total current assets
1,889,603 
1,617,535 
Property and equipment, net
265,264 
202,666 
Goodwill
724,904 
723,061 
Intangible assets, net
314,500 
331,173 
Deferred tax assets, long-term portion
49,848 
88,480 
Other assets
95,521 
56,091 
Total assets
3,339,640 
3,019,006 
Current liabilities:
 
 
Accounts payable
82,626 
73,655 
Accrued liabilities
335,276 
219,120 
Long-term debt, current portion
304,256 
29,288 
Total current liabilities
722,158 
322,063 
Long-term debt
986,780 
839,305 
Long-term legal contingencies
 
132,933 
Other long-term liabilities
167,904 
191,221 
Commitments and contingencies
   
   
Conversion option subject to cash settlement
 
282 
Stockholders' equity:
 
 
Preferred stock, $0.01 par value, 10,000 shares authorized; no shares issued and outstanding at December 28, 2014 and December 29, 2013
0 
0 
Common stock, $0.01 par value, 320,000 shares authorized; 181,332 shares issued and 143,629 outstanding at December 28, 2014; 175,205 shares issued and 127,723 outstanding at December 29, 2013
1,805 
1,753 
Additional paid-in capital
2,172,940 
2,562,705 
Accumulated other comprehensive (loss) income
(1,080)
1,234 
Retained earnings
561,206 
207,855 
Treasury stock, 37,703 shares and 47,482 shares at cost at December 28, 2014 and December 29, 2013, respectively
(1,272,073)
(1,240,345)
Total stockholders’ equity
1,462,798 
1,533,202 
Total liabilities and stockholders’ equity
$ 3,339,640 
$ 3,019,006 
Consolidated Balance Sheets (Parenthetical) (USD $)
In Thousands, except Per Share data, unless otherwise specified
Dec. 28, 2014
Dec. 29, 2013
Statement of Financial Position [Abstract]
 
 
Common stock, par value
$ 0.01 
$ 0.01 
Common stock, shares authorized
320,000 
320,000 
Common stock, shares issued
181,332 
175,205 
Common stock, shares outstanding
143,629 
127,723 
Preferred stock, par value
$ 0.01 
$ 0.01 
Preferred stock, shares authorized
10,000 
10,000 
Preferred stock, shares issued
0 
0 
Preferred stock, shares outstanding
0 
0 
Treasury stock, shares
37,703 
47,482 
Consolidated Statements of Income (USD $)
In Thousands, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 28, 2014
Dec. 29, 2013
Dec. 30, 2012
Revenue:
 
 
 
Product revenue
$ 1,619,511 
$ 1,264,656 
$ 1,055,826 
Service and other revenue
241,847 
156,522 
92,690 
Total revenue
1,861,358 
1,421,178 
1,148,516 
Cost of revenue:
 
 
 
Cost of product revenue
431,920 
407,877 
317,283 
Cost of service and other revenue
92,355 
67,811 
43,552 
Amortization of acquired intangible assets
39,373 
33,603 
14,153 
Total cost of revenue
563,648 
509,291 
374,988 
Gross profit
1,297,710 
911,887 
773,528 
Operating expense:
 
 
 
Research and development
388,055 
276,743 
231,025 
Selling, general and administrative
466,283 
381,040 
285,991 
Legal contingencies
(74,338)
115,369 
 
Headquarter relocation
5,638 
2,624 
26,328 
Acquisition related (gain) expense, net
(2,639)
(11,617)
2,774 
Unsolicited tender offer related expense
 
13,621 
23,136 
Restructuring
 
 
3,522 
Total operating expense
782,999 
777,780 
572,776 
Income from operations
514,711 
134,107 
200,752 
Other income (expense):
 
 
 
Interest income
3,901 
4,887 
16,208 
Interest expense
(41,728)
(39,690)
(37,779)
Cost-method investment related gain, net
4,427 
61,357 
45,911 
Other expense, net
(32,553)
(1,347)
(2,484)
Total other (expense) income, net
(65,953)
25,207 
21,856 
Income before income taxes
448,758 
159,314 
222,608 
Provision for income taxes
(95,407)
(34,006)
(71,354)
Net income
$ 353,351 
$ 125,308 
$ 151,254 
Net income per basic share
$ 2.61 
$ 1.00 
$ 1.23 
Net income per diluted share
$ 2.37 
$ 0.90 
$ 1.13 
Shares used in calculating basic net income per share
135,553 
125,076 
122,999 
Shares used in calculating diluted net income per share
148,977 
139,936 
133,693 
Consolidated Statements of Comprehensive Income (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 28, 2014
Dec. 29, 2013
Dec. 30, 2012
Statement of Comprehensive Income [Abstract]
 
 
 
Net income
$ 353,351 
$ 125,308 
$ 151,254 
Unrealized (loss) gain on available-for-sale securities, net of deferred tax
(2,314)
(889)
6 
Total comprehensive income
$ 351,037 
$ 124,419 
$ 151,260 
Consolidated Statements of Stockholders' Equity (USD $)
In Thousands, unless otherwise specified
Total
Common Stock [Member]
Additional Paid-in Capital [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Retained Earnings (Accumulated Deficit) [Member]
Treasury Stock [Member]
Balance at Jan. 01, 2012
$ 1,075,215 
$ 1,668 
$ 2,249,900 
$ 2,117 
$ (68,707)
$ (1,109,763)
Balance, shares at Jan. 01, 2012
 
166,707 
 
 
 
(44,665)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
Net income
151,254 
 
 
 
151,254 
 
Unrealized (loss) gain on available-for-sale securities, net of deferred tax
6 
 
 
6 
 
 
Issuance of common stock, net of repurchases, shares
 
3,464 
 
 
 
(1,875)
Issuance of common stock, net of repurchases, value
(28,165)
35 
55,106 
 
 
(83,306)
Reclassification of conversion option subject to cash settlement
2,565 
 
2,565 
 
 
 
Share-based compensation
94,385 
 
94,385 
 
 
 
Net incremental tax benefit related to share-based compensation
17,015 
 
17,015 
 
 
 
Equity based contingent compensation
6,306 
 
6,306 
 
 
 
Issuance of treasury stock, shares
 
 
 
 
 
312 
Issuance of treasury stock, value
 
 
(5,446)
 
 
5,446 
Balance at Dec. 30, 2012
1,318,581 
1,703 
2,419,831 
2,123 
82,547 
(1,187,623)
Balance, shares at Dec. 30, 2012
 
170,171 
 
 
 
(46,228)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
Net income
125,308 
 
 
 
125,308 
 
Unrealized (loss) gain on available-for-sale securities, net of deferred tax
(889)
 
 
(889)
 
 
Issuance of common stock, net of repurchases, shares
 
5,034 
 
 
 
(1,254)
Issuance of common stock, net of repurchases, value
45,543 
50 
98,215 
 
 
(52,722)
Reclassification of conversion option subject to cash settlement
2,338 
 
2,338 
 
 
 
Share-based compensation
105,771 
 
105,771 
 
 
 
Net incremental tax benefit related to share-based compensation
53,032 
 
53,032 
 
 
 
Equity based contingent compensation
8,278 
 
8,278 
 
 
 
Fair value of options assumed in acquisition
240 
 
240 
 
 
 
Warrant retirement
(125,000)
 
(125,000)
 
 
 
Balance at Dec. 29, 2013
1,533,202 
1,753 
2,562,705 
1,234 
207,855 
(1,240,345)
Balance, shares at Dec. 29, 2013
 
175,205 
 
 
 
(47,482)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
 
Net income
353,351 
 
 
 
 
 
Unrealized (loss) gain on available-for-sale securities, net of deferred tax
(2,314)
 
 
(2,314)
 
 
Issuance of common stock, net of repurchases, shares
 
6,127 
 
 
 
(2,696)
Issuance of common stock, net of repurchases, value
(150,965)
52 
96,204 
 
 
(247,221)
Reclassification of conversion option subject to cash settlement
282 
 
282 
 
 
 
Share-based compensation
153,189 
 
153,189 
 
 
 
Net incremental tax benefit related to share-based compensation
126,477 
 
126,477 
 
 
 
Equity based contingent compensation
2,621 
 
2,621 
 
 
 
Tax impact from the issuance, repurchase and conversion of convertible notes
(58,354)
 
(58,354)
 
 
 
Warrant exercises, shares
 
 
 
 
 
12,475 
Warrant exercises, value
0 
 
(215,493)
 
 
215,493 
Repurchase of convertible notes, net of issuances
(494,691)
 
(494,691)
 
 
 
Balance at Dec. 28, 2014
$ 1,462,798 
$ 1,805 
$ 2,172,940 
$ (1,080)
$ 561,206 
$ (1,272,073)
Balance, shares at Dec. 28, 2014
 
181,332 
 
 
 
(37,703)
Consolidated Statements of Cash Flows (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 28, 2014
Dec. 29, 2013
Dec. 30, 2012
Cash flows from operating activities:
 
 
 
Net income
$ 353,351 
$ 125,308 
$ 151,254 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation expense
61,905 
50,810 
48,249 
Amortization of intangible assets
50,669 
47,115 
17,070 
Share-based compensation expense
152,551 
105,826 
94,324 
Accretion of debt discount
38,069 
36,237 
35,004 
Loss on extinguishment of debt
31,360 
555 
 
Contingent compensation expense
2,621 
8,278 
6,306 
Incremental tax benefit related to share-based compensation
(126,479)
(56,678)
(20,783)
Deferred income taxes
99,846 
(36,663)
(21,698)
Change in fair value of contingent consideration
(5,356)
(18,784)
1,975 
(Gain) impairment related to discontinued product line
(2,000)
25,214 
21,438 
Change in estimated cease-use loss
5,651 
2,624 
22,367 
Cost-method investment related gain
(4,427)
(61,357)
(45,911)
Gain on litigation settlement
(109,363)
0 
 
Other
9,346 
4,533 
251 
Changes in operating assets and liabilities:
 
 
 
Accounts receivable
(50,381)
(15,928)
(34,441)
Inventory
(36,542)
6,217 
(23,707)
Prepaid expenses and other current assets
6,619 
1,783 
(3,062)
Other assets
(36,256)
(16,357)
(2,903)
Accounts payable
(2,106)
2,389 
15,112 
Accrued liabilities
83,902 
38,550 
24,388 
Accrued legal contingencies
(23,570)
132,933 
 
Other long-term liabilities
1,861 
3,816 
6,640 
Net cash provided by operating activities
501,271 
386,421 
291,873 
Cash flows from investing activities:
 
 
 
Purchases of available-for-sale securities
(791,252)
(364,001)
(925,478)
Sales of available-for-sale securities
391,655 
523,635 
498,371 
Maturities of available-for-sale securities
150,229 
289,197 
400,379 
Net cash paid for acquisitions
(3,285)
(523,501)
(83,156)
Net (purchases of) sales proceeds from strategic investments
(11,755)
95,580 
40,881 
Purchases of property and equipment
(105,996)
(79,215)
(68,781)
Cash paid for intangible assets
(36,220)
(11,344)
(12,228)
Net cash used in investing activities
(406,624)
(69,649)
(150,012)
Cash flows from financing activities:
 
 
 
Payments on financing obligations
(29,991)
(10,852)
 
Payments on acquisition related contingent consideration liability
 
(3,985)
(3,374)
Proceeds from issuance of convertible notes
1,132,378 
 
 
Repurchase of convertible notes
(1,244,721)
 
 
Incremental tax benefit related to share-based compensation
126,479 
56,678 
20,783 
Common stock repurchases
(237,183)
(50,020)
(82,522)
Taxes paid related to net share settlement of equity awards
(10,038)
 
 
Payments on retirement of warrants
 
(125,000)
 
Proceeds from issuance of common stock
96,328 
94,460 
54,358 
Net cash used in financing activities
(166,748)
(38,719)
(10,755)
Effect of exchange rate changes on cash and cash equivalents
(3,382)
(397)
(103)
Net (decrease) increase in cash and cash equivalents
(75,483)
277,656 
131,003 
Cash and cash equivalents at beginning of year
711,637 
433,981 
302,978 
Cash and cash equivalents at end of year
636,154 
711,637 
433,981 
Supplemental cash flow information:
 
 
 
Cash paid for income taxes
17,886 
50,086 
74,037 
Unsettled short-term investments purchase
 
 
$ 9,154 
Organization and Summary of Significant Accounting Policies
Organization and Summary of Significant Accounting Policies
Organization and Summary of Significant Accounting Policies

Organization and Business

Illumina, Inc. is a provider of sequencing- and array-based solutions, which serves customers in a board range of markets, enabling the adoption of genomic solutions in research and clinical settings. The Company’s customers include leading genomic research centers, academic institutions, government laboratories, hospitals, and reference laboratories, as well as pharmaceutical, biotechnology, agrigenomics, commercial molecular diagnostic, and consumer genomics companies.

Basis of Presentation

The consolidated financial statements of the Company have been prepared in conformity with U.S. generally accepted accounting principles and include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

Fiscal Year

The Company’s fiscal year is 52 or 53 weeks ending the Sunday closest to December 31, with quarters of 13 or 14 weeks ending the Sunday closest to March 31, June 30, September 30, and December 31. Each of the years ended December 28, 2014, December 29, 2013, and December 30, 2012 were 52 weeks.

Use of Estimates

The preparation of financial statements requires that management make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures of contingent assets and liabilities. Actual results could differ from those estimates.
Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers. The new standard is based on the principle that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 will be effective for the Company beginning in the first quarter of 2017 and allows for a full retrospective or a modified retrospective adoption approach. The Company is currently evaluating the impact of ASU 2014-09 on its consolidated financial statements.

Segment Information

Effective December 30, 2013, the Company reorganized and separated the roles of the Chief Executive Officer and the President, with core market and operational functions centralized and reporting to the President, for the primary purpose of achieving scalability in business operations to support the growth in the Company’s strategic markets. Corporate functions and the President report to the CEO. As a result, the Company operates under one operating segment and reports under one reportable segment.

Concentrations of Risk

The Company operates in markets that are highly competitive and rapidly changing. Significant technological changes, shifting customer needs, the emergence of competitive products or services with new capabilities, and other factors could negatively impact the Company’s operating results. A portion of the Company’s customers consist of university and research institutions that management believes are, to some degree, directly or indirectly supported by the United States Government. A significant change in current research funding, particularly with respect to the U.S. National Institutes of Health, could have an adverse impact on the Company’s future revenues and results of operations.

The Company is also subject to risks related to its financial instruments including its cash and cash equivalents, investments, and accounts receivable. Most of the Company’s cash and cash equivalents as of December 28, 2014 were deposited with U.S. financial institutions, either domestically or with their foreign branches. The Company’s investment policy restricts the amount of credit exposure to any one issuer to 5% of the portfolio or 5% of the total issue size outstanding at the time of purchase and to any one industry sector, as defined by Bloomberg classifications, to 30% of the portfolio at the time of purchase. There is no limit to the percentage of the portfolio that may be maintained in debt securities in U.S. government-sponsored entities, U.S. Treasury securities, and money market funds.

The Company’s products require customized products and components that currently are available from a limited number of sources. The Company sources certain key products and components included in its products from single vendors.

The Company performs a regular review of customer activity and associated credit risks and does not require collateral or enter into netting arrangements. Shipments to customers outside the United States comprised 49%, 50%, and 51% of the Company’s revenue for the years ended December 28, 2014, December 29, 2013, and December 30, 2012, respectively. Customers outside the United States represented 48% and 52% of the Company’s gross trade accounts receivable balance as of December 28, 2014 and December 29, 2013, respectively.

International sales entail a variety of risks, including currency exchange fluctuations, longer payment cycles, and greater difficulty in accounts receivable collection. The Company is also subject to general geopolitical risks, such as political, social and economic instability, and changes in diplomatic and trade relations. The risks of international sales are mitigated in part by the extent to which sales are geographically distributed. The Company has historically not experienced significant credit losses from investments and accounts receivable.

Fair Value Measurements

The Company determines the fair value of its assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The Company uses a fair value hierarchy with three levels of inputs, of which the first two are considered observable and the last unobservable, to measure fair value:

•
Level 1 — Quoted prices in active markets for identical assets or liabilities.
•
Level 2 — Inputs, other than Level 1, that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
•
Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The carrying amounts of financial instruments such as cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable, and accrued liabilities, excluding acquisition related contingent consideration liabilities, approximate the related fair values due to the short-term maturities of these instruments.

Functional Currency

The U.S. dollar is the functional currency of the Company’s international operations. The Company remeasures its foreign subsidiaries’ monetary assets and liabilities to the U.S. dollar and records the net gains or losses resulting from remeasurement in other expense, net in the consolidated statements of income.

Acquisitions

The Company measures all assets acquired and liabilities assumed, including contingent considerations and all contractual contingencies, at fair value as of the acquisition date. Contingent purchase considerations to be settled in cash are remeasured to estimated fair value at each reporting period with the change in fair value recorded in acquisition related (gain) expense, net, a component of operating expenses. In addition, the Company capitalizes in-process research and development (IPR&D) and either amortizes it over the life of the product upon commercialization, or impairs it if the project is abandoned. Post-acquisition adjustments in deferred tax asset valuation allowances and liabilities for uncertain tax positions are recorded in current period income tax expense.

Cash Equivalents and Short-Term Investments

Cash equivalents are comprised of short-term, highly liquid investments with maturities of 90 days or less at the date of purchase.

Short-term investments consist predominantly of debt securities in U.S. government-sponsored entities, corporate debt securities, and U.S. Treasury securities. Management classifies short-term investments as available-for-sale at the time of purchase and evaluates such classification as of each balance sheet date. All short-term investments are recorded at estimated fair value. Unrealized gains and losses for available-for-sale securities are included in accumulated other comprehensive income, a component of stockholders’ equity. The Company evaluates its investments to assess whether those with unrealized loss positions are other than temporarily impaired. Impairments are considered to be other than temporary if they are related to deterioration in credit risk or if it is likely that the Company will sell the securities before the recovery of their cost basis. Realized gains, losses, and declines in value judged to be other than temporary are determined based on the specific identification method and are reported in other (expense) income, net in the consolidated statements of income.

Accounts Receivable

Trade accounts receivable are recorded at the net invoice value and are not interest bearing. The Company considers receivables past due based on the contractual payment terms. The Company reserves specific receivables if collectibility is no longer reasonably assured. The Company also reserves a percentage of its trade receivable balance based on collection history and current economic trends that might impact the level of future credit losses. The Company re-evaluates such reserves on a regular basis and adjusts its reserves as needed. Once a receivable is deemed to be uncollectible, such balance is charged against the reserve.

Inventory

Inventory is stated at the lower of cost or market, on a first in, first out basis. Inventory includes raw materials and finished goods that may be used in the research and development process and such items are expensed as consumed or expired. Provisions for slow moving, excess, and obsolete inventories are estimated based on product life cycles, quality issues, historical experience, and usage forecasts.

Property and Equipment

Property and equipment are stated at cost, subject to review for impairment, and depreciated over the estimated useful lives of the assets, which generally range from three to seven years, using the straight-line method. Amortization of leasehold improvements is recorded over the shorter of the lease term or the estimated useful life of the related assets. Maintenance and repairs are charged to operations as incurred. When assets are sold, or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is included in operating expense.

In 2013, as a part of the Company’s ongoing effort to upgrade its current information systems, the Company started the implementation of new enterprise resource planning software and applications to manage parts of its business operations. Certain costs incurred in the development of such internal-use software and software applications, including external direct costs of materials and services and applicable compensation costs of employees devoted to specific software development, are capitalized as computer software costs. Costs incurred outside of the application development stage are expensed as incurred.

Leases

Leases are reviewed and classified as capital or operating at their inception. The Company records rent expense on a straight-line basis over the term of the lease, which includes the construction build-out period and lease extension periods, if appropriate. The difference between rent payments and straight-line rent expense is recorded as deferred rent in accrued liabilities and other long-term liabilities. Landlord allowances are amortized on a straight-line basis over the lease term as a reduction to rent expense. The Company capitalizes leasehold improvements and amortizes the value over the shorter of the lease term or expected useful lives.
  
Headquarter relocation expenses consisted of expenses such as accelerated depreciation expense, impairment of assets, additional rent expense during the transition period in 2012 when both the new and former headquarter facilities were occupied, moving expenses, cease-use losses, and accretion of interest expense on lease exit liability. The Company completed the relocation of its headquarters in 2012 to another facility in San Diego, California and recorded cease-use losses and the corresponding facility exit obligation upon vacating its former headquarters in 2011 and 2012, calculated as the present value of the remaining lease obligation offset by estimated sublease rental receipts during the remaining lease period, adjusted for deferred items and estimated lease incentives. The Company reassesses the facility exit obligation on a quarterly basis and the key assumptions used in the calculation include the amount and timing of estimated sublease rental receipts, and the risk-adjusted discount rate.

Goodwill, Intangible Assets and Other Long-Lived Assets

Goodwill, which has an indefinite useful life, represents the excess of cost over fair value of net assets acquired. The change in the carrying value of goodwill during the year ended December 28, 2014 was due to a current year acquisition and adjustments to the purchase price subsequent to the preliminary allocation of purchase price related to prior year acquisitions. Goodwill is reviewed for impairment at least annually during the second quarter, or more frequently if an event occurs indicating the potential for impairment. During its goodwill impairment review, the Company may assess qualitative factors to determine whether it is more likely than not that the fair value of its reporting unit is less than its carrying amount, including goodwill. The qualitative factors include, but are not limited to, macroeconomic conditions, industry and market considerations, and the overall financial performance of the Company. If, after assessing the totality of these qualitative factors, the Company determines that it is not more likely than not that the fair value of its reporting unit is less than its carrying amount, then no additional assessment is deemed necessary. Otherwise, the Company proceeds to perform the two-step test for goodwill impairment. The first step involves comparing the estimated fair value of the reporting unit with its carrying value, including goodwill. If the carrying amount of the reporting unit exceeds its fair value, the Company performs the second step of the goodwill impairment test to determine the amount of loss, which involves comparing the implied fair value of the goodwill to the carrying value of the goodwill. The Company may also elect to bypass the qualitative assessment in a period and elect to proceed to perform the first step of the goodwill impairment test. The Company performed its annual assessment for goodwill impairment in the second quarter of 2014, noting no impairment.

The Company’s identifiable intangible assets are typically comprised of acquired core technologies, licensed technologies, customer relationships, license agreements, and trade names. The cost of identifiable intangible assets with finite lives is generally amortized on a straight-line basis over the assets’ respective estimated useful lives.

The Company regularly performs reviews to determine if any event has occurred that may indicate its intangible assets with finite useful lives and other long-lived assets are potentially impaired. If indicators of impairment exist, the Company performs an impairment test to assess the recoverability of the affected assets by determining whether the carrying amount of such assets exceeds the undiscounted expected future cash flows. If the affected assets are not recoverable, the Company estimates the fair value of the assets and records an impairment loss if the carrying value of the assets exceeds the fair value. Factors that may indicate potential impairment include a significant decline in the Company’s stock price and market capitalization compared to its net book value, significant changes in the ability of a particular asset to generate positive cash flows the Company’s strategic business objectives, and the pattern of utilization of a particular asset.

During 2013, the Company decided to discontinue its Eco and NuPCR product lines to better align its product portfolio with its core strategy. As a result, the Company recorded a total impairment charge of $25.2 million in cost of product revenue, $22.9 million of which related to identifiable intangible assets.

Derivatives

The Company is exposed to foreign exchange rate risks in the normal course of business. The Company enters into foreign exchange contracts to manage foreign currency risks related to monetary assets and liabilities that are denominated in currencies other than the U.S. dollar. These foreign exchange contracts are carried at fair value in other assets or other liabilities and are not designated as hedging instruments. Changes in the value of the derivatives are recognized in other expense, net, along with the remeasurement gain or loss on the foreign currency denominated assets or liabilities.

As of December 28, 2014, the Company had foreign exchange forward contracts in place to hedge exposures in the euro, Japanese yen, and Australian dollar. As of December 28, 2014 and December 29, 2013, the total notional amount of outstanding forward contracts in place for foreign currency purchases was $61.0 million and $54.7 million, respectively. Non-designated foreign exchange forward contract related gain was $4.1 million and $3.5 million for the years ended December 28, 2014 and December 29, 2013, respectively, and immaterial for the year ended December 30, 2012.

Reserve for Product Warranties

The Company generally provides a one-year warranty on instruments. Additionally, the Company provides a warranty on consumables through the expiration date, which generally ranges from six to twelve months after the manufacture date. At the time revenue is recognized, the Company establishes an accrual for estimated warranty expenses based on historical experience as well as anticipated product performance. The Company periodically reviews its warranty reserve for adequacy and adjusts the warranty accrual, if necessary, based on actual experience and estimated costs to be incurred. Warranty expense is recorded as a component of cost of product revenue.

Revenue Recognition

The Company’s revenue is generated primarily from the sale of products and services. Product revenue primarily consists of sales of instruments and consumables used in genetic analysis. Service and other revenue primarily consists of revenue generated from genotyping and sequencing services and instrument service contracts.
 
The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the seller’s price to the buyer is fixed or determinable, and collectibility is reasonably assured. In instances where final acceptance of the product or system is required, revenue is deferred until all the acceptance criteria have been met. The Company occasionally offers discounts on newly introduced products to recent customers or existing products. These promotions sometimes involve the trade-in of existing products in exchange for a discount on new products. Where applicable, the Company defers a portion of revenue on the sales of existing products in recognition of the promotional discounts until the delivery of new products. All revenue is recorded net of discounts and sales taxes collected on behalf of governmental authorities.

 Revenue from product sales is recognized generally upon transfer of title to the customer, provided that no significant obligations remain and collection of the receivable is reasonably assured. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from genotyping and sequencing services is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer or agreed upon milestones are reached.
 
In order to assess whether the price is fixed or determinable, the Company evaluates whether an arrangement is cancellable or subject to future changes in price, deliverables, or other terms. If it is determined that the price is not fixed or determinable, the Company defers revenue recognition until the price becomes fixed or determinable. The Company assesses collectibility based on a number of factors, including past transaction history with, and the creditworthiness of, the customer. If the Company determines that collection of a payment is not reasonably assured, revenue recognition is deferred until receipt of payment.
 
The Company regularly enters into contracts where revenue is derived from multiple deliverables including products or services. These products or services are generally delivered within a short time frame, approximately three to six months, after the contract execution date. Revenue recognition for contracts with multiple deliverables is based on the individual units of accounting determined to exist in the contract. A delivered item is considered a separate unit of accounting when the delivered item has value to the customer on a stand-alone basis. Items are considered to have stand-alone value when they are sold separately by any vendor or when the customer could resell the item on a stand-alone basis.

For transactions with multiple deliverables, consideration is allocated at the inception of the contract to all deliverables based on their relative selling price. The relative selling price for each deliverable is determined using vendor specific objective evidence (VSOE) of selling price or third-party evidence of selling price if VSOE does not exist. If neither VSOE nor third-party evidence exists, the Company uses its best estimate of the selling price for the deliverable.
 
In order to establish VSOE of selling price, the Company must regularly sell the product or service on a standalone basis with a substantial majority priced within a relatively narrow range. VSOE of selling price is usually the midpoint of that range. If there are not a sufficient number of standalone sales and VSOE of selling price cannot be determined, then the Company considers whether third party evidence can be used to establish selling price. Due to the lack of similar products and services sold by other companies within the industry, the Company has rarely established selling price using third-party evidence. If neither VSOE nor third party evidence of selling price exists, the Company determines its best estimate of selling price using average selling prices over a rolling 12-month period coupled with an assessment of current market conditions. If the product or service has no history of sales or if the sales volume is not sufficient, the Company relies upon prices set by the Company’s pricing committee adjusted for applicable discounts. The Company recognizes revenue for delivered elements only when it determines there are no uncertainties regarding customer acceptance.
 
In certain markets, the Company sells products and provides services to customers through distributors that specialize in life science products. In most sales through distributors, the product is delivered directly to customers. In cases where the product is delivered to a distributor, revenue recognition is deferred until acceptance is received from the distributor, and/or the end-user, if required by the applicable sales contract. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. These transactions are accounted for in accordance with the Company’s revenue recognition policy described herein.

Share-Based Compensation

The Company incurs share-based compensation expense related to restricted stock, its Employee Stock purchase Plan (ESPP), and stock options.

Restricted stock units (RSU), restricted stock awards (RSA), and performance stock units (PSU) are all considered restricted stock. The fair value of restricted stock is determined by the closing market price of the Company’s common stock on the date of grant. The Company recognizes share-based compensation expense based on the fair value on a straight-line basis over the requisite service periods of the awards, taking into consideration estimated forfeitures. PSU represents a right to receive a certain number of shares of common stock based on the achievement of corporate performance goals and continued employment during the vesting period. At each reporting period, the Company reassesses the probability of the achievement of such corporate performance goals and any additional expenses resulting from an adjustment in the estimated shares to be released are treated as a cumulative catch-up in the period of adjustment.

The Company uses the Black-Scholes-Merton option-pricing model to estimate the fair value of stock purchases under ESPP and stock options granted. The model assumptions include expected volatility, term, dividends, and the risk-free interest rate. The Company determines the expected volatility by equally weighing the historical and implied volatility of the Company’s common stock. The historical volatility is generally commensurate with the estimated expected term of the Company’s stock awards, adjusted for the impact of unusual fluctuations and other relevant factors. The implied volatility is calculated from the implied market volatility of exchange-traded call options on the Company’s common stock. The expected term of an award is based on historical forfeiture experience, exercise activity, and on the terms and conditions of the stock awards. The expected dividend yield is determined to be 0% given that the Company has never declared or paid cash dividends on its common stock and does not anticipate paying such cash dividends. The risk-free interest rate is based upon U.S. Treasury securities with remaining terms similar to the expected term of the share-based awards.

Shipping and Handling Expenses

Shipping and handling expenses are included in cost of product revenue.

Research and Development

Research and development expenses include personnel expenses, contractor fees, license fees, facilities costs, and utilities. Expenditures relating to research and development are expensed in the period incurred.

Advertising Costs

The Company expenses advertising costs as incurred. Advertising costs were $16.4 million, $14.5 million, and $10.5 million for the years ended December 28, 2014, December 29, 2013, and December 30, 2012, respectively.

Income Taxes

The provision for income taxes is computed using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for the expected future tax benefit to be derived from tax loss and credit carryforwards. Deferred tax assets and liabilities are determined using the enacted tax rates in effect for the years in which those tax assets are expected to be realized. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the provision for income taxes in the period that includes the enactment date.

Deferred tax assets are regularly assessed to determine the likelihood they will be recovered from future taxable income. A valuation allowance is established when the Company believes it is more likely than not the future realization of all or some of a deferred tax asset will not be achieved. In evaluating the ability to recover deferred tax assets within the jurisdiction which they arise the Company considers all available positive and negative evidence. Factors reviewed include the cumulative pre-tax book income for the past three years, scheduled reversals of deferred tax liabilities, history of earnings and reliable forecasting, projections of pre-tax book income over the foreseeable future, and the impact of any feasible and prudent tax planning strategies.

The Company recognizes excess tax benefits associated with share-based compensation to stockholders’ equity only when realized. When assessing whether excess tax benefits relating to share-based compensation have been realized, the Company follows the with-and-without approach excluding any indirect effects of the excess tax deductions. Under this approach, excess tax benefits related to share-based compensation are not deemed to be realized until after the utilization of all other tax benefits available to the Company.

The Company recognizes the impact of a tax position in the financial statements only if that position is more likely than not of being sustained upon examination by taxing authorities, based on the technical merits of the position. Any interest and penalties related to uncertain tax positions will be reflected in income tax expense.

Net Income per Share

Basic net income per share is computed based on the weighted average number of common shares outstanding during the period. Diluted net income per share is computed based on the sum of the weighted average number of common shares and potentially dilutive common shares outstanding during the period.

Potentially dilutive common shares consist of shares issuable under convertible senior notes, equity awards, and warrants. Convertible senior notes have a dilutive impact when the average market price of the Company’s common stock exceeds the applicable conversion price of the respective notes. Potentially dilutive common shares from equity awards and warrants are determined using the average share price for each period under the treasury stock method. In addition, the following amounts are assumed to be used to repurchase shares: proceeds from exercise of equity awards and warrants; the average amount of unrecognized compensation expense for equity awards; and estimated tax benefits that will be recorded in additional paid-in capital when expenses related to equity awards become deductible. In loss periods, basic net loss per share and diluted net loss per share are identical because the otherwise dilutive potential common shares become anti-dilutive and are therefore excluded.

The following table presents the calculation of weighted average shares used to calculate basic and diluted net income per share (in thousands):
 
Years Ended
 
December 28,
2014
 
December 29,
2013
 
December 30,
2012
Weighted average shares outstanding
135,553

 
125,076

 
122,999

Effect of potentially dilutive common shares from:
 
 
 
 
 
Convertible senior notes
3,489

 
1,340

 
967

Equity awards
4,340

 
4,404

 
3,906

Warrants
5,595

 
9,116

 
5,821

Weighted average shares used in calculating diluted net income per share
148,977

 
139,936

 
133,693

Potentially dilutive shares excluded from calculation due to anti-dilutive effect
124

 
996

 
2,556



Accumulated Other Comprehensive Income

Comprehensive income is comprised of net income and other comprehensive income. Accumulated other comprehensive income on the consolidated balance sheets at December 28, 2014 and December 29, 2013 includes accumulated foreign currency translation adjustments and unrealized gains and losses on the Company’s available-for-sale securities.

The components of accumulated other comprehensive income are as follows (in thousands):
 
December 28,
2014
 
December 29,
2013
Foreign currency translation adjustments
$
1,289

 
$
1,289

Unrealized loss on available-for-sale securities, net of deferred tax
(2,369
)
 
(55
)
Total accumulated other comprehensive income
$
(1,080
)
 
$
1,234

Balance Sheet Account Details
Balance Sheet Account Details
Balance Sheet Account Details

Short-Term Investments

The following is a summary of short-term investments (in thousands):
 
December 28, 2014
 
December 29, 2013
 
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
 
Estimated
Fair Value
 
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
 
Estimated
Fair Value
Available-for-sale securities:
Debt securities in government-sponsored entities
$
51,308

 
$
10

 
$
(55
)
 
$
51,263

 
$
82,226

 
$
18

 
$
(101
)
 
$
82,143

Corporate debt securities
502,924

 
46

 
(2,882
)
 
500,088

 
342,034

 
312

 
(376
)
 
341,970

U.S. Treasury securities
151,255

 
5

 
(394
)
 
150,866

 
29,795

 
58

 
—

 
29,853

Total available-for-sale securities
$
705,487

 
$
61

 
$
(3,331
)
 
$
702,217

 
$
454,055

 
$
388

 
$
(477
)
 
$
453,966



As of December 28, 2014, the Company had 467 available-for-sale securities in a gross unrealized loss position, all of which had been in such position for less than twelve months. There were no impairments considered other-than-temporary as it is more likely than not the Company will hold the securities until maturity or the recovery of the cost basis.

The following table shows the estimated fair values and the gross unrealized losses of the Company’s available-for-sale securities that were in an unrealized loss position for less than twelve months as of December 28, 2014 and December 29, 2013, aggregated by investment category (in thousands):
 
December 28, 2014
 
December 29, 2013
 
Estimated
Fair Value
 
Gross
Unrealized
Losses
 
Estimated
Fair Value
 
Gross
Unrealized
Losses
Debt securities in government-sponsored entities
$
36,084

 
$
(55
)
 
$
73,362

 
$
(101
)
Corporate debt securities
428,078

 
(2,882
)
 
168,118

 
(373
)
U.S. Treasury securities
143,755

 
(394
)
 
—

 
—

Total
$
607,917

 
$
(3,331
)
 
$
241,480

 
$
(474
)


Realized gains and losses are determined based on the specific identification method and are reported in interest income.

Contractual maturities of available-for-sale debt securities as of December 28, 2014 are as follows (in thousands):
 
Estimated Fair Value
Due within one year
$
238,198

After one but within five years
464,019

Total
$
702,217


Cost-Method Investments

As of December 28, 2014 and December 29, 2013, the aggregate carrying amounts of the Company’s cost-method investments in non-publicly traded companies were $37.2 million and $22.1 million, respectively, included in other assets. The Company’s cost-method investments are assessed for impairment quarterly. The Company determines that it is not practicable to estimate the fair value of its cost-method investments on a regular basis and does not reassess the fair value of cost-method investments if there are no identified events or changes in circumstances that may have a significant adverse effect on the fair value of the investments.

During the year ended December 28, 2014, the Company recorded a gain of $4.4 million associated with additional proceeds received for a cost-method investment sold in a prior period. During the year ended December 29, 2013, the Company recorded cost-method investment related gains of $61.4 million, of which $55.2 million related to the sale of the Company’s minority interest in Oxford Nanopore Technologies Ltd.

No impairment losses were recorded during the years ended December 28, 2014 and December 29, 2013. During the year ended December 30, 2012, the Company determined that a cost-method investment was other-than-temporarily impaired and recorded an impairment loss of $2.7 million. This determination was based upon operational performance trends coupled with uncertainty regarding the entity’s ability to obtain additional funding in a required timeframe for the entity to continue operations.

Accounts Receivable

Accounts receivable, net consist of the following (in thousands):
 
December 28,
2014
 
December 29,
2013
Accounts receivable from product and service sales
$
292,847

 
$
241,360

Other receivables
2,070

 
1,266

Total accounts receivable, gross
294,917

 
242,626

Allowance for doubtful accounts
(5,459
)
 
(3,680
)
Total accounts receivable, net
$
289,458

 
$
238,946



Inventory

Inventory consists of the following (in thousands):
 
December 28,
2014
 
December 29,
2013
Raw materials
$
70,316

 
$
57,398

Work in process
94,102

 
70,016

Finished goods
26,726

 
26,685

Total inventory
$
191,144

 
$
154,099



Property and Equipment

Property and equipment, net consists of the following (in thousands):
 
December 28,
2014
 
December 29,
2013
Leasehold improvements
$
143,597

 
$
104,571

Machinery and equipment
192,715

 
175,340

Computer hardware and software
86,929

 
73,544

Furniture and fixtures
13,669

 
10,511

Building
7,670

 
7,670

Construction in progress
35,421

 
8,531

Total property and equipment, gross
480,001

 
380,167

Accumulated depreciation
(214,737
)
 
(177,501
)
Total property and equipment, net
$
265,264

 
$
202,666



Capital expenditures included accrued expenditures of $14.1 million for the year ended December 28, 2014, which was excluded from the consolidated statements of cash flows. Accrued capital expenditures were immaterial for the years ended December 29, 2013, and December 30, 2012. As of December 28, 2014, $16.5 million of computer software costs were capitalized associated with the Company’s implementation of a new enterprise resource planning software and applications, which are included primarily in construction in progress assets on the consolidated balance sheets. No computer software costs were capitalized as of December 29, 2013.

Goodwill

Changes to the Company’s goodwill balance during the year ended December 28, 2014 and December 29, 2013 are as follows (in thousands):
 
December 28, 2014
 
December 29, 2013
Balance at beginning of period
$
723,061

 
$
369,327

Current period acquisition
3,338

 
353,734

Purchase price allocation adjustments related to prior year acquisitions
(1,495
)
 
—

Balance at end of period
$
724,904

 
$
723,061



Accrued Liabilities

Accrued liabilities consist of the following (in thousands):
 
December 28,
2014
 
December 29,
2013
Accrued compensation expenses
$
112,606

 
$
82,705

Deferred revenue, current portion
75,294

 
50,834

Acquisition related contingent consideration liability, current portion
44,124

 
6,719

Accrued taxes payable
38,942

 
30,435

Customer deposits
20,274

 
13,569

Reserve for product warranties
15,616

 
10,407

Facility exit obligation, current portion
3,837

 
5,570

Other
24,583

 
18,881

Total accrued liabilities
$
335,276

 
$
219,120

Acquisitions
Acquisitions
Acquisitions

Acquisitions in 2013

On February 21, 2013, the Company acquired all of the outstanding capital stock of Verinata Health, Inc., a provider of non-invasive tests for the early identification of fetal chromosomal abnormalities. With this acquisition, the Company strengthened its reproductive health product portfolio by gaining access to Verinata’s verifi non-invasive prenatal test (NIPT) as well as what management believes to be the most comprehensive intellectual property portfolio in the NIPT industry.

The contractual price for the acquisition was $350.0 million, plus potential cash payments of up to $100.0 million based on the achievement of certain regulatory and revenue milestones. The aggregate purchase price was determined to be $396.3 million, including total cash payment of $339.3 million, $56.2 million in fair value of the contingent milestone payments, $0.2 million in fair value of converted stock options attributed to pre-combination services, and $0.5 million in loss realized on settlement of preexisting relationships. In connection with the transaction, the Company deposited into escrow $30.0 million of consideration otherwise payable to shareholders of Verinata. This amount was included in the aggregate consideration and was released to shareholders of Verinata in September of 2014. As of December 29, 2013, transaction costs of $3.4 million were expensed as incurred in acquisition related (gain) expense, net.
 
In conjunction with the acquisition, the Company assumed the Verinata Health, Inc. 2008 Stock Plan and converted, as of the acquisition date, the unvested stock options outstanding under the plan, all of which were in the money, into 0.4 million unvested stock options to purchase Illumina’s common stock, retaining the original vesting schedules. The fair value of all converted options was $18.9 million, $0.2 million of which was attributed to the pre-combination service period and was included in the calculation of purchase price. The remaining fair value is being recognized over the awards’ remaining vesting periods subsequent to the acquisition. The weighted-average acquisition-date fair value of the converted options was determined using the Black-Scholes option pricing model with the following assumptions: (i) market price of $48.36 per share, which was the closing price of Illumina’s common stock on the acquisition date; (ii) weighted average expected term of 2.3 years; (iii) weighted average risk-free interest rate of 0.32%; (iv) weighted average annualized volatility of 42%; and (v) no dividend yield. The weighted average acquisition-date fair value per share of the assumed stock options was $42.63.

An initial liability of $56.2 million was recorded for an estimate of the acquisition date fair value of the contingent consideration. Any change in the fair value of the contingent milestone consideration subsequent to the acquisition date was and will be recognized in the consolidated statement of income. The fair value of the regulatory milestone payments was measured by the probability-weighted discounted cash flows and the fair value of the revenue milestone payments was measured using a risk-neutral option pricing model, which captures the present value of the expected payment and the probability of reaching the revenue targets. Key assumptions used in the fair value assessments included discount rates ranging from 6% to 20%, volatility of 50%, risk-free rates of 0.26%, revenue projections, and the probability of achieving regulatory milestones. This fair value measurement of the contingent consideration is based on significant inputs not observed in the market and thus represents a Level 3 measurement. Level 3 instruments are valued based on unobservable inputs that are supported by little or no market activity and reflect the Company’s own assumptions in measuring fair value.

As of December 29, 2013, the allocation of the purchase price to the assets acquired and liabilities assumed on the acquisition date was as follows (in thousands):
 
Allocation of purchase price
Cash and cash equivalents
$
9,151

Accounts receivable
2,801

Inventory
1,110

Prepaid expenses and other current assets
979

Property and equipment
12,083

Other assets
978

Intangible assets
176,490

Goodwill
227,453

Accounts payable
(2,539
)
Accrued liabilities
(3,803
)
Lease financing obligation
(9,695
)
Deferred tax liability
(18,741
)
       Total purchase price
$
396,267



In conjunction with the acquisition, the Company assumed Verinata’s building lease, for which Verinata was considered the accounting owner of the leased building and as such, recorded the fair value of the building as an asset as of the acquisition date. The building is depreciated over a useful life of 30 years. The Company also recorded the related lease financing obligation as a liability assumed, representing the present value of all remaining building lease payments with an interest rate of 6.0%. The annual future minimum payments, including the balloon payment at the end of the lease for the value of the building to be transferred to the landlord, are $1.0 million for each of the years 2015 and 2016, and $8.4 million for 2017.

The following table summarizes the fair value of identifiable intangible assets acquired (amounts in thousands):
 
Weighted Average Useful Lives
(in years)
 
Fair Value
Developed technology
13
 
$
170,200

Customer relationships
5
 
4,690

Trade name
2
 
1,600

     Total intangible assets acquired, excluding goodwill
 
 
$
176,490



The fair value of the developed technology and trade name was estimated using an income approach. Under the income approach, an intangible asset’s fair value is equal to the present value of future economic benefits to be derived from ownership of the asset. The estimated fair value was developed by discounting future net cash flows to their present value at market-based rates of return. The fair value of the customer relationships was developed using a cost approach by estimating the time and personnel effort in constructing the customer base. The useful life of the intangible assets for amortization purposes was determined by considering the period of expected cash flows used to measure the fair value of the intangible assets adjusted as appropriate for the entity-specific factors including legal, regulatory, contractual, competitive, economic, or other factors that may limit the useful life of intangible assets.

The excess of the fair value of the total consideration over the estimated fair value of the net assets was recorded as goodwill, which was primarily attributable to the synergies expected from combining the technologies of Illumina with those of Verinata, including complementary products that will enhance the Company’s overall product portfolio, and the value of the workforce that became our employees following the closing of the acquisitions. The goodwill recognized is not deductible for income tax purposes.

During 2013, the Company also completed acquisitions of Advanced Liquid Logic Inc., a provider of liquid handling solutions, NextBio, a provider of clinical and genomic informatics tools, and another development-stage company. As a result of these transactions, the Company recorded developed technologies of $79.7 million with a weighted average useful life of eight years and goodwill of $124.8 million.

Pro Forma Information

The following unaudited pro forma information presents the consolidated results of operations of the Company as if the acquisitions completed during the year ended December 29, 2013 had occurred at the beginning of the applicable annual reporting period, with pro forma adjustments to give effect to intercompany transactions to be eliminated, amortization of intangible assets, share-based compensation, and transaction costs directly associated with the acquisitions (in thousands, except per share amounts):
 
Years Ended
 
December 29,
2013
 
December 30,
2012
Net revenues
$
1,433,935

 
$
1,161,241

Net income
$
113,869

 
$
92,645

Net income per share-basic
$
0.91

 
$
0.75

Net income per share-diluted
$
0.81

 
$
0.69



These unaudited pro forma consolidated financial results have been prepared for illustrative purposes only and do not purport to be indicative of the results of operations that actually would have resulted had the acquisition occurred on the first day of the earliest period presented, or of the future results of the consolidated entities. The unaudited pro forma consolidated financial information does not reflect any operating efficiencies and cost savings that may be realized from the integration of the acquisition.

Acquisition in 2012

On September 19, 2012, the Company announced the acquisition of BlueGnome Ltd. (BlueGnome), a provider of cytogenetics and in vitro fertilization screening products. Total consideration for the acquisition was $95.5 million, which included $88.0 million in initial cash payments and $7.5 million in fair value of contingent cash consideration of up to $20.0 million based on the achievement of certain revenue based milestones by December 28, 2014.

The Company estimated the fair value of contingent cash consideration using a probability weighted discounted cash flow approach, a Level 3 measurement, using a discount rate of 30%. The Company also agreed to pay up to $20.0 million to BlueGnome shareholders contingent upon the retention of certain key employees and certain other criteria. Such contingent payments are recognized as contingent compensation expense over the retention period through December 28, 2014.

As a result of this acquisition, the Company recorded developed technologies of $25.0 million, customer relationships of $16.8 million, and a trade name of $7.1 million with average useful lives of seven, five, and ten years, respectively. The Company recorded the excess consideration of approximately $47.5 million as goodwill.

Summary of Contingent Compensation Expenses

Contingent compensation expenses recorded as a result of acquisitions consist of the following (in thousands):
 
Years Ended
 
December 28,
2014
 
December 29,
2013
 
December 30,
2012
Contingent compensation expense, included in research and development expense
$
1,509

 
$
544

 
$
3,419

Contingent compensation expense, included in selling, general and administrative expense
2,756

 
13,066

 
5,732

     Total contingent compensation expense
$
4,265

 
$
13,610

 
$
9,151

Intangible Assets
Intangible Assets
Intangible Assets

The Company’s intangible assets, excluding goodwill, include acquired licensed and core technologies, customer relationships, license agreements, and trade name. Amortization for the intangible assets that have finite useful lives is generally recorded on a straight-line basis over their useful lives.
  
The following is a summary of the Company’s identifiable intangible assets (in thousands):
 
December 28, 2014
 
December 29, 2013
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Intangibles,
Net
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Intangibles,
Net
Licensed technologies
$
83,956

 
$
(39,423
)
 
$
44,533

 
$
48,361

 
$
(31,927
)
 
$
16,434

Core technologies
321,200

 
(77,493
)
 
243,707

 
321,700

 
(45,534
)
 
276,166

Customer relationships
26,461

 
(12,522
)
 
13,939

 
26,770

 
(7,376
)
 
19,394

License agreements
15,042

 
(4,592
)
 
10,450

 
18,917

 
(4,947
)
 
13,970

Trade name
4,700

 
(2,829
)
 
1,871

 
11,800

 
(6,591
)
 
5,209

Total intangible assets, net
$
451,359

 
$
(136,859
)
 
$
314,500

 
$
427,548

 
$
(96,375
)
 
$
331,173



As of December 28, 2014, the remaining weighted-average amortization period for identifiable intangible assets was 8.1 years.

Intangible assets acquired during the year ended December 28, 2014 are as follows (in thousands):
 
Weighted-Average
Useful Lives
(in years)
 
Gross
Carrying
Amount
Licensed technologies
4.7
 
$
35,595

Customer relationships
0.5
 
291

License agreements
7.2
 
125

Total intangible asset additions
 
 
$
36,011



The estimated annual amortization of intangible assets for the next five years and thereafter is shown in the following table (in thousands). Actual amortization expense to be reported in future periods could differ from these estimates as a result of acquisitions, divestitures, asset impairments, among other factors.
 
Estimated Annual Amortization
2015
$
52,994

2016
47,752

2017
43,276

2018
33,971

2019
30,685

Thereafter
105,822

Total
$
314,500

Fair Value Measurements
Fair Value Measurements
Fair Value Measurements

The following table presents the Company’s fair value hierarchy for assets and liabilities measured at fair value on a recurring basis as of December 28, 2014 and December 29, 2013 (in thousands):
 
December 28, 2014
 
December 29, 2013
 
Level 1
 
Level 2
 
Level 3
 
Total
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Money market funds (cash equivalent)
$
431,172

 
$
—

 
$
—

 
$
431,172

 
$
478,755

 
$
—

 
$
—

 
$
478,755

Debt securities in government-sponsored entities
—

 
51,263

 
—

 
51,263

 
—

 
82,143

 
—

 
82,143

Corporate debt securities
—

 
500,088

 
—

 
500,088

 
—

 
341,970

 
—

 
341,970

U.S. Treasury securities
150,866

 
—

 
—

 
150,866

 
29,853

 
—

 
—

 
29,853

Deferred compensation plan assets
—

 
23,486

 
—

 
23,486

 
—

 
17,805

 
—

 
17,805

Total assets measured at fair value
$
582,038

 
$
574,837

 
$
—

 
$
1,156,875

 
$
508,608

 
$
441,918

 
$
—

 
$
950,526

Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition related contingent consideration liabilities
$
—

 
$
—

 
$
44,124

 
$
44,124

 
$
—

 
$
—

 
$
49,480

 
$
49,480

Deferred compensation liability
—

 
20,310

 
—

 
20,310

 
—

 
14,957

 
—

 
14,957

Total liabilities measured at fair value
$
—

 
$
20,310

 
$
44,124

 
$
64,434

 
$
—

 
$
14,957

 
$
49,480

 
$
64,437



The Company holds available-for-sale securities that consist of highly liquid, investment grade debt securities. The Company considers information provided by the Company’s investment accounting and reporting service provider in the measurement of fair value of its debt securities. The investment service provider provides valuation information from an industry-recognized valuation service. Such valuations may be based on trade prices in active markets for identical assets or liabilities (Level 1 inputs) or valuation models using inputs that are observable either directly or indirectly (Level 2 inputs), such as quoted prices for similar assets or liabilities, yield curve, volatility factors, credit spreads, default rates, loss severity, current market and contractual prices for the underlying instruments or debt, broker and dealer quotes, as well as other relevant economic measures. The Company’s deferred compensation plan assets consist primarily of investments in life insurance contracts carried at cash surrender value, which reflects the net asset value of the underlying publicly traded mutual funds. The Company performs control procedures to corroborate the fair value of its holdings, including comparing valuations obtained from its investment service provider to valuations reported by the Company’s asset custodians, validation of pricing sources and models, and review of key model inputs if necessary.

The Company reassesses the fair value of contingent consideration to be settled in cash related to acquisitions on a quarterly basis using the income approach. This is a Level 3 measurement. Significant assumptions used in the measurement include probabilities of achieving the remaining milestones and the discount rates, which depend on the milestone risk profiles. The changes in fair value of the contingent considerations during the years ended December 28, 2014, December 29, 2013, and December 30, 2012 were due to changes in the estimated payments and a shorter discounting period.

Changes in estimated fair value of contingent consideration liabilities from January 1, 2012 through December 28, 2014 are as follows (in thousands):
 
Contingent
Consideration
Liability
(Level 3 
Measurement)
Balance as of January 1, 2012
$
6,638

Acquisition of BlueGnome
7,500

Change in estimated fair value, recorded in acquisition related (gain) expense, net
1,975

Cash payments
(3,594
)
Balance as of December 30, 2012
12,519

Additional liability recorded for current period acquisitions
60,184

Change in estimated fair value, recorded in acquisition related (gain) expense, net
(18,784
)
Cash payments
(4,439
)
Balance as of December 29, 2013
49,480

Change in estimated fair value, recorded in acquisition related (gain) expense, net
(5,356
)
Balance as of December 28, 2014
$
44,124

Convertible Senior Notes
Convertible Senior Notes
Convertible Senior Notes

As of December 28, 2014, the Company had outstanding $320.0 million in principal amount of 0.25% convertible senior notes due March 15, 2016, $632.5 million in principal amount of 0% convertible senior notes due June 15, 2019, and $517.5 million in principal amount of 0.5% convertible senior notes due June 15, 2021.

0% Convertible Senior Notes due 2019 and 0.5% Convertible Senior Notes due 2021

On June 11, 2014, the Company issued $632.5 million aggregate principal amount of 0% convertible senior notes due 2019 (2019 Notes) and $517.5 million aggregate principal amount of 0.5% convertible senior notes due 2021 (2021 Notes) in an offering conducted in accordance with Rule 144A under the Securities Act of 1933, as amended. The Notes were issued at 100% of par value. The net proceeds from the issuance, after deducting the offering expenses payable by the Company, was $1,132.4 million. The Company used the net proceeds plus cash on hand to repurchase a portion of the outstanding 2016 Notes in privately negotiated transactions concurrently with the issuance of the 2019 and 2021 Notes.

Both the 2019 and 2021 Notes will be convertible into cash, shares of common stock, or a combination of cash and shares of common stock, at the Company's election, based on an initial conversion rate, subject to adjustment, of 3.9318 shares per $1,000 principal amount of the notes (which represents an initial conversion price of approximately $254.34 per share), only in the following circumstances and to the following extent: (1) during the five business-day period after any 10 consecutive trading day period (the “measurement period”) in which the trading price per 2019 and 2021 Note for each day of such measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such day; (2) during any calendar quarter (and only during that quarter) after the calendar quarter ending September 30, 2014, if the last reported sale price of the Company’s common stock for 20 or more trading days in the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter exceeds 130% of the applicable conversion price in effect on the last trading day of the immediately preceding calendar quarter; (3) upon the occurrence of specified events described in the indenture for the 2019 and 2021 Notes; and (4) at any time on or after March 15, 2019 for the 2019 Notes, or March 15, 2021 for the 2021 Notes, through the second scheduled trading day immediately preceding the maturity date.

As noted in the indentures for the 2019 and 2021 Notes, it is the Company's intent and policy to settle conversions through combination settlement, which essentially involves repayment of an amount of cash equal to the “principal portion” and delivery of the “share amount” in excess of the conversion value over the principal portion in shares of common stock. In general, for each $1,000 in principal the “principal portion” of cash upon settlement is defined as the lesser of $1,000 and the conversion value during the 20-day observation period. The conversion value is the sum of the daily conversion value which is the product of the effective conversion rate divided by 20 days and the daily volume weighted average price (VWAP) of the Company's common stock. The “share amount” is the cumulative “daily share amount” during the observation period, which is calculated by dividing the daily VWAP into the difference between the daily conversion value (i.e., conversion rate x daily VWAP) and $1,000.

The 2019 Notes carry no coupon interest. The Company pays 0.5% interest per annum on the principal amount of the 2021 Notes, payable semiannually in arrears in cash on June 15 and December 15 of each year, beginning on December 15, 2014. The 2019 and 2021 Notes mature on June 15, 2019 and June 15, 2021, respectively. If a designated event, as defined in the indentures for the 2019 and 2021 Notes, such as acquisition, merger, or liquidation, occurs prior to the maturity date, subject to certain limitations, holders of the notes may require the Company to repurchase all or a portion of their notes for cash at a repurchase price equal to 100% of the principal amount of the notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the repurchase date.

The Company accounts separately for the liability and equity components of the 2019 and 2021 Notes in accordance with authoritative guidance for convertible debt instruments that may be settled in cash upon conversion. The guidance requires the carrying amount of the liability component to be estimated by measuring the fair value of a similar liability that does not have an associated conversion feature. Because the Company has no outstanding non-convertible public debt, the Company determined that market-traded senior, unsecured corporate bonds represent a similar liability to the convertible senior notes without the conversion option. Based on market data available for publicly traded, senior, unsecured corporate bonds issued by companies in the same industry as the Company, and with similar maturities to the 2019 and 2021 Notes, the Company estimated the implied interest rates of its 2019 and 2021 Notes to be 2.9% and 3.5%, respectively, assuming no conversion option. Assumptions used in the estimate represent what market participants would use in pricing the liability component, including market interest rates, credit standing, and yield curves, all of which are defined as Level 2 observable inputs. The estimated implied interest rates were applied to the 2019 and 2021 Notes, which resulted in a fair value of the liability component in aggregate of $971.5 million upon issuance, calculated as the present value of implied future payments based on the $1,150.0 million aggregate principal amount. The $161.2 million difference between the cash proceeds of $1,132.7 million and the estimated fair value of the liability component was recorded in additional paid-in capital as the 2019 and 2021 Notes are not considered redeemable.

As a policy election under applicable guidance related to the calculation of diluted net income per share, the Company elected the combination settlement method as its stated settlement policy and applied the treasury stock method in the calculation of the potential dilutive impact of the 2019 and 2021 Notes. Neither the 2019 nor the 2021 Notes were convertible as of December 28, 2014 and had no dilutive impact during the year ended December 28, 2014. If the 2019 and 2021 Notes were converted as of December 28, 2014, the if-converted value would not exceed the principal amount.

0.25% Convertible Senior Notes due 2016

In 2011, the Company issued $920.0 million aggregate principal amount of 0.25% convertible senior notes due 2016 (2016 Notes) in an offering conducted in accordance with Rule 144A under the Securities Act of 1933, as amended. The 2016 Notes were issued at 98.25% of par value. Debt issuance costs of approximately $0.4 million were primarily comprised of legal, accounting, and other professional fees, the majority of which were recorded in other noncurrent assets and are being amortized to interest expense over the five-year term of the 2016 Notes.

The 2016 Notes are convertible into cash, shares of common stock, or a combination of cash and shares of common stock, at the Company’s election, based on an initial conversion rate, subject to adjustment, of 11.9687 shares per $1,000 principal amount of the 2016 Notes (which represents an initial conversion price of approximately $83.55 per share), only in the following circumstances and to the following extent: (1) during the five business-day period after any 10 consecutive trading day period (the “measurement period”) in which the trading price per 2016 Note for each day of such measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such day; (2) during any calendar quarter (and only during that quarter) after the calendar quarter ending March 31, 2011, if the last reported sale price of the Company’s common stock for 20 or more trading days in the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter exceeds 130% of the applicable conversion price in effect on the last trading day of the immediately preceding calendar quarter; (3) upon the occurrence of specified events described in the indenture for the 2016 Notes; and (4) at any time on or after December 15, 2015 through the second scheduled trading day immediately preceding the maturity date. Based upon meeting the stock trading price conversion requirement during the three months ended March 30, 2014, the 2016 Notes became convertible on April 1, 2014 and continue to be convertible through March 31, 2015. As such, the remaining 2016 Notes outstanding were classified as current liabilities as of December 28, 2014.

As noted in the indenture for the 2016 Notes, it is the Company’s intent and policy to settle conversions through combination settlement, which essentially involves repayment of an amount of cash equal to the “principal portion” and delivery of the “share amount” in excess of the conversion value over the principal portion in shares of common stock. In general, for each $1,000 in principal, the “principal portion” of cash upon settlement is defined as the lesser of $1,000, and the conversion value during the 20-day observation period as described in the indenture for the 2016 Notes. The conversion value is the sum of the daily conversion value which is the product of the effective conversion rate divided by 20 days and the daily volume weighted average price (“VWAP”) of the Company’s common stock. The “share amount” is the cumulative “daily share amount” during the observation period, which is calculated by dividing the daily VWAP into the difference between the daily conversion value (i.e., conversion rate x daily VWAP) and $1,000. The Company pays 0.25% interest per annum on the principal amount of the 2016 Notes semiannually in arrears in cash on March 15 and September 15 of each year. The 2016 Notes mature on March 15, 2016. If a designated event, as defined in the indenture for the 2016 Notes, such as an acquisition, merger, or liquidation, occurs prior to the maturity date, subject to certain limitations, holders of the 2016 Notes may require the Company to repurchase all or a portion of their 2016 Notes for cash at a repurchase price equal to 100% of the principal amount of the 2016 Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the repurchase date.

The Company accounts separately for the liability and equity components of the 2016 Notes in accordance with authoritative guidance for convertible debt instruments that may be settled in cash upon conversion. The guidance requires the carrying amount of the liability component to be estimated by measuring the fair value of a similar liability that does not have an associated conversion feature. Because the Company has no outstanding non-convertible public debt, the Company determined that senior, unsecured corporate bonds traded on the market represent a similar liability to the convertible senior notes without the conversion option. Based on market data available for publicly traded, senior, unsecured corporate bonds issued by companies in the same industry and with similar maturity, the Company estimated the implied interest rate of its 2016 Notes to be 4.5%, assuming no conversion option. Assumptions used in the estimate represent what market participants would use in pricing the liability component, including market interest rates, credit standing, and yield curves, all of which are defined as Level 2 observable inputs. The estimated implied interest rate was applied to the 2016 Notes, which resulted in a fair value of the liability component of $748.5 million upon issuance, calculated as the present value of implied future payments based on the $920.0 million aggregate principal amount. The $155.4 million difference between the cash proceeds of $903.9 million and the estimated fair value of the liability component was recorded in additional paid-in capital as the 2016 Notes were not considered redeemable.

In conjunction with the issuance of the 2019 and 2021 Notes, the Company used the net proceeds from the issuance plus cash on hand to repurchase $600.0 million in principal amount of the outstanding 2016 Notes in privately negotiated transactions. The aggregate cash used for the repurchase was $1,244.7 million. The repurchase is accounted for as an extinguishment of debt. Extinguishment accounting requires the purchase price to be allocated to the liability and equity components of the repurchased notes based on the fair value of the liability component, and the difference between the fair value and the carrying value of the liability component to be recognized as loss on extinguishment of debt. An interest rate of 1.2% upon settlement, which was estimated using Level 2 inputs, was applied to measure the fair value of the liability component of the extinguished debt. This calculation resulted in $588.8 million allocated to the debt component and $655.9 million allocated to the equity component. The $31.4 million difference between the $588.8 million fair value of debt component and the carrying value of the repurchased 2016 Notes was recorded as a loss on extinguishment of debt within other expense, net, during the three and six months ended June 29, 2014. The $655.9 million of the repurchase price allocated to the equity component was recorded as a reduction of additional paid-in capital.

As a policy election under applicable guidance related to the calculation of diluted net income per share, the Company elected the combination settlement method as its stated settlement policy and applied the treasury stock method in the calculation of dilutive impact of the 2016 Notes. During the years ended December 29, 2013 and December 30, 2012, the 2016 Notes were not convertible. However, as the market price of the Company’s common stock exceeded the conversion price during the last months of 2013, the calculation of dilutive potential common shares outstanding for the year ended December 29, 2013 reflects the dilutive impact from the 2016 Notes. The 2016 Notes had no dilutive impact for the year ended December 30, 2012. If the 2016 Notes were converted as of December 28, 2014, the if-converted value would exceed the principal amount by $393.3 million.

0.625% Convertible Senior Notes due 2014

In 2007, the Company issued $400.0 million principal amount of 0.625% convertible senior notes due 2014 (2014 Notes). The Company pays 0.625% interest per annum on the principal amount of the 2014 Notes semi-annually in arrears in cash on February 15 and August 15 of each year. The 2014 Notes matured on February 15, 2014. The effective interest rate of the liability component was estimated to be 8.3%.

The Company entered into hedge transactions concurrently with the issuance of the 2014 Notes under which the Company was entitled to purchase up to approximately 18.3 million shares of the Company’s common stock at a strike price of approximately $21.83 per share, subject to adjustment. The convertible note hedge transactions had the effect of reducing dilution to the Company’s stockholders upon conversion of the 2014 Notes. Also concurrently with the issuance of the 2014 Notes, the Company sold to the hedge counterparties warrants exercisable, on a cashless basis, for up to approximately 18.3 million shares of the Company’s common stock at a strike price of $31.435 per share, subject to adjustment. The proceeds from these warrants partially offset the cost to the Company of the convertible note hedge transactions.

The 2014 Notes were convertible into cash and shares of the Company’s common stock in various prior periods and became convertible again from April 1, 2012 through, and including, February 12, 2014, by which date all notes were converted. In all cases of conversions of the 2014 Notes, the principal amount converted was repaid with cash and the excess of the conversion value over the principal amount was paid in shares of common stock. The equity dilution resulting from the issuance of common stock related to the conversion of the 2014 Notes was offset by repurchase of the same amount of shares under the convertible note hedge transactions, which were automatically exercised in accordance with their terms at the time of each conversion. Accordingly, the hedge transactions terminated concomitant with the conversions of the 2014 Notes.

As a result of the conversions during the year ended December 28, 2014, the Company recorded losses on extinguishment of debt calculated as the difference between the estimated fair value of the debt and the carrying value of the notes as of the settlement dates. To measure the fair value of the converted notes as of the settlement dates, the applicable interest rates were estimated using Level 2 observable inputs and applied to the converted notes using the same methodology as in the issuance date valuation.

The following table summarizes information about the conversion of the 2014 Notes during the year ended December 28, 2014 (in thousands):
 
2014 Notes
Cash paid for principal of notes converted
$
29,570

Conversion value over principal amount paid in shares of common stock
$
196,095

Number of shares of common stock issued upon conversion
1,151



The following table summarizes information about the equity and liability components of all convertible senior notes outstanding as of the period reported (dollars in thousands). The fair values of the respective notes outstanding were measured based on quoted market prices.
 
December 28,
2014
 
December 29, 2013
Principal amount of convertible notes outstanding
$
1,470,027

 
$
949,570

Unamortized discount of liability component
(178,991
)
 
(80,977
)
       Net carrying amount of liability component
1,291,036

 
868,593

Less: current portion
(304,256
)
 
(29,288
)
       Long-term debt
$
986,780

 
$
839,305

Conversion option subject to cash settlement
—

 
$
282

Carrying value of equity component, net of issuance costs
$
215,283

 
$
274,304

Fair value of outstanding notes
$
2,021,750

 
$
1,428,743

Weighted average remaining amortization period of discount on the liability component
5.2 years

 
2.2 years

Commitments
Commitments
Commitments

Leases

The Company leases office and manufacturing facilities under various noncancellable lease agreements. Facility leases generally provide for periodic rent increases, and many contain escalation clauses and renewal options. Certain leases require the Company to pay property taxes and routine maintenance. The Company is headquartered in San Diego, California and leases facilities in San Diego and the San Francisco Bay Area in California; Madison, Wisconsin; Morrisville, North Carolina; Australia; Brazil; China; France; Japan; Singapore; the Netherlands; and the United Kingdom.

On December 30, 2014, the Company entered into a lease agreement, under the terms of which the Company will lease certain office buildings to be constructed at 200-800 Lincoln Centre Drive, Foster City, California, consisting of approximately 360,000 rentable square feet. In addition, the Company has the right to further expand the premises and lease an additional office building that may be built at this facility (the "Expansion Building"). The lease is for a period of 16 years (the "Initial Term") with a target commencement date of July 1, 2017. The Company has three five-year options to extend the lease. The aggregate rent during the Initial Term of the lease is expected to be approximately $204.0 million, but not including the Expansion Building.  The future minimum payments under this lease is not included in the table below. In addition to rent, the lease requires the Company to pay certain taxes, insurance, and operating costs relating to the leased buildings.

During 2013, the Company entered into an agreement to sublease sections of its former headquarters. The sublease has an initial term of approximately ten years. In conjunction with the sublease, the Company issued a letter of credit in the amount of $8.0 million, which will decrease ratably to zero over the term of the sublease. As of December 28, 2014, the letter of credit carried a balance of $7.2 million.

Annual future minimum payments under operating leases as of December 28, 2014 were as follows (in thousands):
 
Operating
Leases
 
Sublease
Income
 
Net Operating
Leases
2015
$
35,210

 
$
(2,900
)
 
$
32,310

2016
38,892

 
(2,924
)
 
35,968

2017
37,064

 
(2,708
)
 
34,356

2018
37,747

 
(2,789
)
 
34,958

2019
39,656

 
(2,873
)
 
36,783

Thereafter
415,052

 
(11,837
)
 
403,215

Total minimum lease payments
$
603,621

 
$
(26,031
)
 
$
577,590



Rent expense was $33.2 million, $28.1 million, and $21.4 million for the years ended December 28, 2014, December 29, 2013, and December 30, 2012, respectively.

The Company recorded facility exit obligations upon vacating its former headquarters in 2011. Changes in the facility exit obligation from January 1, 2012 through December 28, 2014 are as follows (in thousands):
 
Facility Exit Obligation
Balance as of January 1, 2012:
$
25,049

Adjustment to facility exit obligation
24,878

Accretion of interest expense
2,129

Cash payments
(6,704
)
Balance as of December 30, 2012
45,352

Adjustment to facility exit obligation
(114
)
Accretion of interest expense
2,738

Cash payments
(9,758
)
Balance as of December 29, 2013
38,218

Adjustment to facility exit obligation
2,555

Accretion of interest expense
2,638

Cash payments
(5,711
)
Balance as of December 28, 2014
$
37,700



Licensing Agreements

In the normal course of its business, the Company enters, from time to time, into licensing agreements under which the Company commits to certain minimum royalty payments, some of which are subject to adjustment. Such licensing agreements may be terminated prior to the expiration of underlying intellectual property under certain circumstances. Annual future minimum royalty payments under the Company’s licensing agreements as of December 28, 2014 are as follows (in thousands):
 
Minimum Payments
2015
$
8,650

2016
12,470

2017
13,500

2018
18,475

2019
23,480

Thereafter
23,550

Total minimum royalty payments
$
100,125



Warranties

Changes in the Company’s reserve for product warranties from January 1, 2012 through December 28, 2014 are as follows (in thousands):
 
Warranty Reserve
Balance as of January 1, 2012
$
11,966

Additions charged to cost of revenue
17,279

Repairs and replacements
(19,109
)
Balance as of December 30, 2012
10,136

Additions charged to cost of revenue
15,674

Repairs and replacements
(15,403
)
Balance as of December 29, 2013
10,407

Additions charged to cost of revenue
24,150

Repairs and replacements
(18,941
)
Balance as of December 28, 2014
$
15,616

Share-based Compensation Expense
Share-based Compensation Expense
Share-based Compensation Expense

Share-based compensation expense for all stock awards consists of the following (in thousands):
 
Years Ended
 
December 28,
2014
 
December 29,
2013
 
December 30,
2012
Cost of product revenue
$
9,451

 
$
6,223

 
$
7,575

Cost of service and other revenue
1,204

 
777

 
461

Research and development
50,880

 
37,439

 
30,879

Selling, general and administrative
91,016

 
61,387

 
55,409

Share-based compensation expense before taxes
152,551

 
105,826

 
94,324

Related income tax benefits
(44,194
)
 
(32,819
)
 
(30,759
)
Share-based compensation expense, net of taxes
$
108,357

 
$
73,007

 
$
63,565



The assumptions used for the specified reporting periods and the resulting estimates of weighted-average grant date fair value per share of options granted and for stock purchased under the ESPP are as follows:
 
Years Ended
 
December 28,
2014
 
December 29,
2013
 
December 30,
2012
Stock options granted:
 
 
 
 
 
Risk-free interest rate
—
 
0.14 - 1.86%

 
0.56 - 0.93%

Expected volatility
—
 
30 - 44%

 
41 - 48%

Expected term
—
 
0.8 - 9.4 years

 
4.0 - 6.6 years

Expected dividends
—
 
—
 
—
Weighted-average grant-date fair value per share
—
 
$
40.66

 
$
15.47

 
 
 
 
 
 
Stock purchased under the ESPP:
 
 
 
 
 
Risk-free interest rate
0.05 - 0.13%

 
0.08 - 0.15%

 
0.09 - 0.17%

Expected volatility
38% - 41%

 
31 - 32%

 
33 - 64%

Expected term
0.5 - 1.0 year

 
0.5 - 1.0 year

 
0.5 - 1.0 year

Expected dividends
—
 
—
 
—
Weighted-average grant-date fair value per share
$
44.64

 
$
19.30

 
$
16.45



As of December 28, 2014, approximately $280.6 million of total unrecognized compensation cost related to stock options, restricted stock, and ESPP shares issued to date is expected to be recognized over a weighted-average period of approximately 2.1 years.
Stockholders' Equity
Stockholders' Equity
Stockholders’ Equity

The Company’s 2005 Stock and Incentive Plan (the 2005 Stock Plan), 2005 Solexa Equity Incentive Plan (the 2005 Solexa Equity Plan), the Verinata Health, Inc. 2008 Stock Plan (the 2008 Stock Plan), and the New Hire Stock and Incentive Plan allow for the issuance of stock options, restricted stock units and awards, and performance stock units. During the year ended December 29, 2013, the stockholders ratified an amendment to increase the maximum number of shares of common stock authorized for issuance under the 2005 Stock Plan by 5.0 million shares. As of December 28, 2014, approximately 5.3 million shares remained available for future grants under the 2005 Stock Plan, the 2005 Solexa Equity Plan, and the 2008 Verinata Health Stock Plan. There is no set number of shares reserved for issuance under the New Hire Stock and Incentive Plan.

Stock Options

Stock options granted at the time of hire primarily vest over a four or five-year period, with 25% or 20% of options vesting on the first anniversary of the grant date and the remaining options vesting monthly over the remaining vesting period. Stock options granted subsequent to hiring primarily vest monthly over a four or five-year period. Each grant of options has a maximum term of ten years, measured from the applicable grant date, subject to earlier termination if the optionee’s service ceases. Vesting in all cases is subject to the individual’s continued service through the vesting date. The Company satisfies option exercises through the issuance of new shares.

The Company’s stock option activity under all stock option plans from January 1, 2012 through December 28, 2014 is as follows:
 
Options
(in thousands)
 
Weighted-
Average
Exercise Price
Outstanding at January 1, 2012
10,378

 
$
29.69

Granted
251

 
$
40.79

Exercised
(2,071
)
 
$
20.34

Cancelled
(207
)
 
$
39.18

Outstanding at December 30, 2012
8,351

 
$
32.10

Granted
512

 
$
14.74

Exercised
(3,006
)
 
$
27.70

Cancelled
(133
)
 
$
41.80

Outstanding at December 29, 2013
5,724

 
$
32.64

Exercised
(2,478
)
 
$
29.93

Cancelled
(35
)
 
$
31.73

Outstanding at December 28, 2014
3,211

 
$
34.74



At December 28, 2014, outstanding options to purchase 2.9 million shares were exercisable with a weighted-average per share exercise price of $35.94. The weighted-average remaining life of options outstanding and exercisable is 4.3 years and 4.1 years, respectively, as of December 28, 2014.

The aggregate intrinsic value of options outstanding and options exercisable as of December 28, 2014 was $492.8 million and $444.2 million, respectively. Aggregate intrinsic value represents the product of the number of options outstanding multiplied by the difference between the Company’s closing stock price per share on the last trading day of the fiscal period, which was $188.20 as of December 26, 2014, and the exercise price. Total intrinsic value of options exercised was $330.5 million, $141.7 million, and $60.6 million for the years ended December 28, 2014, December 29, 2013, and December 30, 2012, respectively. Total fair value of options vested was $17.2 million, $24.0 million, and $31.9 million for the years ended December 28, 2014, December 29, 2013, and December 30, 2012, respectively.

Restricted Stock

The Company issues restricted stock units (RSU), restricted stock awards (RSA), and performance stock units (PSU). The Company grants RSU and PSU pursuant to its 2005 Stock and Incentive Plan and 2008 Stock Plan. RSU are share awards that, upon vesting, will deliver to the holder shares of the Company’s common stock. For grants to new hires prior to July 2011 and for grants to existing employees, RSU generally vest 15% on the first anniversary of the grant date, 20% on the second anniversary of the grant date, 30% on the third anniversary of the grant date, and 35% on the fourth anniversary of the grant date. For grants to new hires subsequent to July 2011, RSU generally vest over a four-year period with equal vesting on anniversaries of the grant date. The Company satisfies RSU vesting through the issuance of new shares. The Company issues PSU for which the number of shares issuable at the end of a three-year performance period can reach up to 150% of the shares approved in the award based on the Company’s performance relative to specified earnings per share targets.

The Company also issues RSA that are released based on service related vesting conditions. RSA may be issued from the Company’s treasury stock or granted pursuant to the Company’s 2005 Stock and Incentive Plan.
  
A summary of the Company’s restricted stock activity and related information from January 1, 2012 through December 28, 2014 is as follows (in thousands, except per share amounts):
 
Restricted
Stock Awards
(RSA)
 
Restricted
Stock Units
(RSU)
 
Performance
Stock Units
(PSU)
 
Weighted-Average
Grant-Date Fair Value per Share
 
 
 
 
RSA
 
RSU
 
PSU
Outstanding at January 1, 2012
230

 
3,476

 
—

 
$
65.95

 
$
41.87

 
—

Awarded
312

 
1,640

 
599

 
$
47.91

 
$
48.52

 
$
49.66

Vested
(77
)
 
(1,062
)
 
—

 
$
65.95

 
$
38.48

 
—

Cancelled
—

 
(394
)
 
(12
)
 
—

 
$
45.05

 
$
50.54

Outstanding at December 30, 2012
465

 
3,660

 
587

 
$
53.84

 
$
45.49

 
$
49.64

Awarded
—

 
1,532

 
584

 
—

 
$
77.53

 
$
59.16

Vested
(217
)
 
(1,308
)
 
—

 
$
54.27

 
$
42.97

 
—

Cancelled
—

 
(256
)
 
(70
)
 
—

 
$
49.24

 
$
50.42

Outstanding at December 29, 2013
248

 
3,628

 
1,101

 
$
53.46

 
$
59.66

 
$
54.64

Awarded
—

 
780

 
968

 
—

 
$
172.53

 
$
104.52

Vested
(140
)
 
(1,383
)
 
(753
)
 
$
47.90

 
$
55.44

 
$
49.52

Cancelled
—

 
(184
)
 
(59
)
 
—

 
$
65.09

 
$
52.87

Outstanding at December 28, 2014
108

 
2,841

 
1,257

 
$
56.62

 
$
92.35

 
$
96.21



Pre-tax intrinsic values and total fair value of vested restricted stock are as follows (in thousands):
 
Years Ended
 
December 28,
2014
 
December 29,
2013
 
December 30,
2012
Pre-tax intrinsic value of outstanding restricted stock:
 
 
 
 
 
RSA
$
20,321

 
$
27,384

 
$
25,437

RSU
$
534,708

 
$
400,421

 
$
200,383

PSU
$
236,606

 
$
121,555

 
$
32,149

 
 
 
 
 
 
Fair value of restricted stock vested:
 
 
 
 
 
RSA
$
6,712

 
$
11,750

 
$
5,039

RSU
$
76,646

 
$
56,212

 
$
40,870

PSU
$
37,313

 
—

 
—



Employee Stock Purchase Plan

A total of 15.5 million shares of the Company’s common stock have been reserved for issuance under its 2000 Employee Stock Purchase Plan, or ESPP. The ESPP permits eligible employees to purchase common stock at a discount, but only through payroll deductions, during defined offering periods. The price at which stock is purchased under the ESPP is equal to 85% of the fair market value of the common stock on the first or last day of the offering period, whichever is lower. The initial offering period commenced in July 2000.

The ESPP provides for annual increases of shares available for issuance by the lesser of 3% of the number of outstanding shares of the Company’s common stock on the last day of the immediately preceding fiscal year, 3.0 million shares, or such lesser amount as determined by the Company’s board of directors. Approximately 0.3 million, 0.4 million, and 0.3 million shares were issued under the ESPP during the years ended December 28, 2014, December 29, 2013, and December 30, 2012, respectively. As of December 28, 2014 and December 29, 2013, there were approximately 14.7 million and 15.0 million shares available for issuance under the ESPP, respectively.

Warrants

In connection with the offering of the Company’s 2014 Notes, the Company sold warrants to purchase 18.3 million shares of common stock to counterparties to the convertible note hedge transactions. The warrants have an exercise price of $31.435 per share, and the proceeds from the sale of such warrants were used by the Company to partially offset the cost of the transactions. In July 2013, the Company settled with a hedging counterparty outstanding warrants to purchase approximately 3.0 million shares of the Company’s common stock for $125.0 million in cash. The remaining warrants were exercised in full during the year ended December 28, 2014.

Share Repurchases

During the years ended December 28, 2014, December 29, 2013, and December 30, 2012, the Company repurchased approximately 1.5 million shares for $237.2 million, 0.9 million shares for $50.0 million, and 1.9 million shares for $82.5 million, respectively.

In April 2012, the Company’s Board of Directors authorized share repurchases for up to $250.0 million via a combination of Rule 10b5-1 and discretionary share repurchase programs. In addition, on January 30, 2014, the Company’s Board of Directors authorized up to $250.0 million to repurchase shares of the Company’s common stock on a discretionary basis. Authorizations to repurchase up to an additional $130.4 million of its common stock remained as of December 28, 2014.
 
Stockholder Rights Plan

In connection with the unsolicited tender offer by Roche (refer to note “15. Unsolicited Tender Offer”), on January 25, 2012, the Company’s Board of Directors declared a dividend of one preferred share purchase right (Right) for each outstanding share of the Company’s common stock. Each Right entitled the registered holder to purchase from the Company one one-thousandth of a share of the Company’s Series A Junior Participating Preferred Stock, par value $0.01 per share (Preferred Shares), at a price of $275.00 per one thousandth of a Preferred Share, subject to adjustment. The Rights were not exercisable until such time that the Board of Directors determined to eliminate its deferral of the date on which separate Rights certificates are issued and the Rights traded separately from the Company’s common stock (Distribution Date). If a person or group (triggering party) acquired 15% or more of the Company’s outstanding common stock, each Right would have entitled holders other than the triggering party to purchase, at the exercise price of the Right, a number of shares of common stock having a market value of two times the exercise price of the Right. If the Company was acquired in a merger or other business combination transaction after a person acquires 15% or more of the Company’s common stock, each Right would have entitled holders other than the triggering party to purchase, at the Right’s then-current exercise price, a number of common shares of the acquiring company that at the time of such transaction have a market value of two times the exercise price of the Right. The Board of Directors would have been entitled to redeem the Rights at a price of $0.001 per Right at any time before the Distribution Date. The Board of Directors would have been entitled to exchange the Rights at an exchange ratio per Right of one share of common stock after any person acquires beneficial ownership of 15% or more of the Company’s outstanding common stock, and prior to the acquisition of 50% or more of the Company’s outstanding common stock. In 2013, the expiration date was amended to March 27, 2013, from January 26, 2017, and the Rights expired accordingly.
Legal Proceedings
Legal Proceedings
Legal Proceedings

The Company is involved in various lawsuits and claims arising in the ordinary course of business, including actions with respect to intellectual property, employment, and contractual matters. In connection with these matters, the Company assesses, on a regular basis, the probability and range of possible loss based on the developments in these matters. A liability is recorded in the financial statements if it is believed to be probable that a loss has been incurred and the amount of the loss can be reasonably estimated. Because litigation is inherently unpredictable and unfavorable results could occur, assessing contingencies is highly subjective and requires judgments about future events. The Company regularly reviews outstanding legal matters to determine the adequacy of the liabilities accrued and related disclosures. The amount of ultimate loss may differ from these estimates. Each matter presents its own unique circumstances, and prior litigation does not necessarily provide a reliable basis on which to predict the outcome, or range of outcomes, in any individual proceeding. Because of the uncertainties related to the occurrence, amount, and range of loss on any pending litigation or claim, the Company is currently unable to predict their ultimate outcome, and, with respect to any pending litigation or claim where no liability has been accrued, to make a meaningful estimate of the reasonably possible loss or range of loss that could result from an unfavorable outcome. In the event that opposing litigants in outstanding litigations or claims ultimately succeed at trial and any subsequent appeals on their claims, any potential loss or charges in excess of any established accruals, individually or in the aggregate, could have a material adverse effect on the Company’s business, financial condition, results of operations, and/or cash flows in the period in which the unfavorable outcome occurs or becomes probable, and potentially in future periods.

Syntrix

On November 24, 2010, Syntrix Biosystems, Inc. (“Syntrix”) filed suit against the Company in the United States District Court for the Western District of Washington at Tacoma (Case No. C10-5870-BHS) alleging that the Company willfully infringed U.S. Patent No. 6,951,682 by selling its BeadChip array products, and that the Company misappropriated Syntrix’s trade secrets. On January 30, 2013, the Court granted the Company’s motion for summary judgment on Syntrix’s trade secret claims, and dismissed those claims from the case. On March 14, 2013, a jury reached a verdict in favor of Syntrix, finding that Illumina’s BeadChip kits infringe the Syntrix patent. During trial, the Court dismissed Syntrix’s claim that the alleged infringement was willful. On July 1, 2013, the Court entered a Final Amended Judgment for $115.1 million, in accordance with the jury verdict, including supplemental damages and prejudgment interest. In addition, the Court awarded Syntrix an ongoing royalty of 8% for accused sales from March 15, 2013 until the patent expires on September 16, 2019. On December 3, 2013, the Company filed a Notice of Appeal to the Court of Appeals for the Federal Circuit challenging the Final Amended Judgment. On December 16, 2013, Syntrix cross appealed the Court’s dismissal of its trade secret claims and denial of its willfulness claim. For the year ended December 29, 2013, the Company recorded total charges of $132.9 million related to this matter, $114.6 million of which was recorded within operating expenses, with the remainder recorded to cost of sales.

On November 14, 2014, the Company entered into a Settlement and License Agreement with Syntrix and its sole shareholders, John A. Zebala and Amy Zebala, that settled all claims in the litigation. Pursuant to the terms of the Settlement and License Agreement, the Company paid Syntrix a one-time payment of $70.0 million in exchange for a release of past damages claimed and a fully paid-up exclusive license to U.S. Patent No. 6,951,682.  None of the parties made any admission of liability in entering into the Settlement and License Agreement. On November 19, 2014, the Court dismissed the litigation with prejudice and vacated the judgment against the Company. The Company allocated the $70.0 million payment on relative fair value basis, resulting in $29.5 million capitalized as an intangible asset for the value of the exclusive license, which is amortized over a period of 4.8 years on a straight-line basis, and the remaining $40.5 million to the release of past damages claimed. The fair value of license and past damages was estimated using a discounted cash flow model, and is considered to be a Level 3 measurement.

As of September 28, 2014, the Company had accrued $148.8 million for damages and interest awarded to Syntrix. The settlement of the litigation resulted in a gain of $109.4 million, calculated as the difference between the accrual released and the amount of payment allocated to the release of past damages claimed. $27.3 million of the total gain was recorded as reversal of cost of sales, reflecting a true-up of historical royalty expenses to the effective royalty rate. The remaining gain of $82.1 million was recorded as a legal contingency gain in operating expenses. In conjunction with the settlement, a $33.5 million deposit with the Court, which was reported in prepaid expenses, was released.

Sequenom

On December 2, 2014, the Company and its subsidiary Verinata Health, Inc. entered into a series of agreements with Sequenom, Inc. (“Sequenom”), its subsidiary Sequenom Center for Molecular Medicine LLC (“Sequenom LLC”), and Chinese University of Hong Kong (“CUHK”), and an agreement with the Trustees of Leland Stanford University (“Stanford”), that, together, (1) settled a patent litigation pending in the United States District Court for the Northern District of California (the “District Court”) between Verinata and Stanford, on the one hand, and Sequenom, Sequenom LLC, and Isis Innovation Limited (“Isis”), on the other hand, (2) requested remand of certain claims and counterclaims of Sequenom, Isis, Verinata, and Stanford from the appeal pending in the United States Court of Appeals for the Federal Circuit of a second patent litigation pending in District Court in order to seek to vacate an order related to those claims and dismiss them, and (3) settled an inter partes review related to a United States Patent No. 8,195,415, assigned to Stanford and licensed to Verinata.

As part of the settlement, the Company and Sequenom have entered into a Pooled Patents Agreement and related sublicense agreements whereby (1) Sequenom granted Illumina a worldwide license to patents directed to Non-Invasive Prenatal Testing (“NIPT”) for Laboratory Developed Testing (“LDT”) and In-Vitro Diagnostic (“IVD”) products, which license is exclusive in the LDT field, except with respect to certain patents formerly owned by Isis, in which case it is non-exclusive, and (2) Illumina (and Verinata in some cases) granted a worldwide non-exclusive license to Sequenom under Illumina-owned and in-licensed NIPT-related patents for Sequenom to continue its business related to NIPT LDT (the patents owned or in-licensed by either the Company or Sequenom that fall under the Pooled Patents Agreement are the “Pooled Patents”). The Company also assumed, by novation, amended exclusive patent licenses from CUHK to Sequenom and entered into several new exclusive in-license agreements with CUHK related to CUHK patents directed to NIPT, and granted to Sequenom non-exclusive sublicenses under the Company’s license agreements with CUHK, Stanford, and General Hospital Corporation for Sequenom to practice NIPT LDT. The Company and Sequenom also extended, amended, and restated their current supply agreement under which Sequenom purchases from the Company equipment and supplies for NIPT LDT and other clinical fields, and entered into a separate agreement whereby Sequenom transferred to the Company certain clinical samples and data useful in the development of NIPT IVD.

As consideration for the foregoing settlement arrangements, the Company agreed to pay Sequenom an aggregate of $50.0 million, as well as to pay royalties to Sequenom for sales of NIPT IVD products. The Company and Sequenom also agreed to share revenues received for exploitation of the Pooled Patents in NIPT LDT. None of the parties made any admission of liability in entering into these arrangements. The parties filed certain stipulated motions with the Federal Circuit and District Court to vacate and dismiss the associated claims and counterclaims with prejudice, which motions have been granted by the respective courts.

The Company considered whether the elements received represented identifiable benefits that were sufficiently separable from the products it sells to Sequenom, and considered whether the value of these benefits could be reasonably estimated. The Company identified the legal settlement, clinical samples, the IVD and LDT patent rights as elements. The Company used a discounted cash flow analysis to estimate the value of the patent rights, replacement cost to value the samples, and an assumed royalty rate on historical sales for the legal settlement. These fair value estimates are considered Level 3 measurements. The Company determined that the aggregate fair value of the benefits received exceeded the consideration paid and allocated the $50.0 million payment to the various elements on a relative fair value basis. This resulted in $48.8 million allocated to the samples and patent rights transferred to Illumina, which were expensed in research and development expenses due to lack of alternative future use.  The remaining $1.2 million was recorded as a legal contingency charge in operating expenses.
Income Taxes
Income Tax Disclosure [Text Block]
Income Taxes

The income before income taxes summarized by region is as follows (in thousands):
 
Years Ended
 
December 28,
2014
 
December 29,
2013
 
December 30,
2012
United States
$
176,974

 
$
(53,703
)
 
$
102,296

Foreign
271,784

 
213,017

 
120,312

Total income before income taxes
$
448,758

 
$
159,314

 
$
222,608



The provision for income taxes consists of the following (in thousands):
 
Years Ended
 
December 28,
2014
 
December 29,
2013
 
December 30,
2012
Current:
 

 
 

 
 

Federal
$
60,984

 
$
78,419

 
$
57,285

State
12,381

 
8,854

 
10,121

Foreign
41,815

 
39,416

 
31,504

Total current provision
115,180

 
126,689

 
98,910

Deferred:
 

 
 

 
 

Federal
(3,191
)
 
(69,102
)
 
(7,724
)
State
(4,974
)
 
(15,222
)
 
(7,708
)
Foreign
(11,608
)
 
(8,359
)
 
(12,124
)
Total deferred benefit
(19,773
)
 
(92,683
)
 
(27,556
)
Total tax provision
$
95,407

 
$
34,006

 
$
71,354



The provision for income taxes reconciles to the amount computed by applying the federal statutory rate to income before taxes as follows (in thousands):
 
Years Ended
 
December 28,
2014
 
December 29,
2013
 
December 30,
2012
Tax at federal statutory rate
$
157,065

 
$
55,760

 
$
77,913

State, net of federal benefit
5,023

 
647

 
4,056

Research and other credits
(16,144
)
 
(10,977
)
 
(2,613
)
Change in valuation allowance
(4,212
)
 
10,544

 
(37
)
Change in fair value of contingent consideration
(1,321
)
 
(3,859
)
 
—

Impact of foreign operations
(42,215
)
 
(18,006
)
 
(11,470
)
Other
(2,789
)
 
(103
)
 
3,505

Total tax provision
$
95,407

 
$
34,006

 
$
71,354



The impact of foreign operations primarily represents the difference between the actual provision for income taxes for our legal entities that operate primarily in jurisdictions that have statutory tax rates lower than the U.S. federal statutory tax rate of 35%. The most significant tax benefits from foreign operations were from the Company’s earnings in Singapore and the United Kingdom, which had statutory tax rates of 17% and 21.5%, respectively, in the year ended December 28, 2014. The impact of foreign operations also includes the U.S. foreign tax credit impact of non-U.S. earnings and uncertain tax positions related to foreign items.

Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands):
 
December 28,
2014
 
December 29,
2013
Deferred tax assets:
 

 
 

Net operating losses
$
47,738

 
$
66,969

Tax credits
32,192

 
36,277

Other accruals and reserves
41,676

 
86,716

Stock compensation
54,570

 
36,728

Deferred rent
25,975

 
16,823

Inventory adjustments
12,003

 
9,034

Other amortization
28,203

 
9,571

Other
24,045

 
18,244

Total gross deferred tax assets
266,402

 
280,362

Valuation allowance on deferred tax assets
(15,191
)
 
(19,132
)
Total deferred tax assets
251,211

 
261,230

Deferred tax liabilities:
 

 
 

Purchased intangible amortization
(85,612
)
 
(98,671
)
Convertible debt
(61,383
)
 
(27,821
)
Property and equipment
(16,521
)
 
(13,311
)
Other
(1,670
)
 
(6,349
)
Total deferred tax liabilities
(165,186
)
 
(146,152
)
Net deferred tax assets
$
86,025

 
$
115,078



A valuation allowance is established when it is more likely than not the future realization of all or some of the deferred tax assets will not be achieved. The evaluation of the need for a valuation allowance is performed on a jurisdiction-by-jurisdiction basis, and includes a review of all available positive and negative evidence. Based on the available evidence as of December 28, 2014, the Company was not able to conclude it is more likely than not certain U.S. deferred tax assets will be realized. Therefore, the Company recorded a valuation allowance of $15.2 million against certain U.S. deferred tax assets. During the year ended December 28, 2014, the valuation allowance decreased by $3.9 million, primarily due to a $10.4 million decrease in the provision for income taxes related to foreign tax credits utilized in the U.S., offset by a $6.0 million increase in the provision for income taxes related to state research and development credits generated in the current year.

As of December 28, 2014, the Company had net operating loss carryforwards for federal and state tax purposes of $163.6 million and $295.0 million, respectively, which will begin to expire in 2020 and 2015, respectively, unless utilized prior. The Company also had federal and state tax credit carryforwards of $15.3 million and $63.7 million, respectively, which will begin to expire in 2024 and 2019, respectively, unless utilized prior.

Pursuant to Section 382 and 383 of the Internal Revenue Code, utilization of the Company’s net operating losses and credits may be subject to annual limitations in the event of any significant future changes in its ownership structure. These annual limitations may result in the expiration of net operating losses and credits prior to utilization. The deferred tax assets as of December 28, 2014 are net of any previous limitations due to Section 382 and 383.

The Company recognizes excess tax benefits associated with share-based compensation to stockholders’ equity only when realized. When assessing whether excess tax benefits relating to share-based compensation have been realized, the Company follows the with-and-without approach excluding any indirect effects of the excess tax deductions. Under this approach, excess tax benefits related to share-based compensation are not deemed to be realized until after the utilization of all other tax benefits available to the Company. During the year ended December 28, 2014, the Company realized $126.5 million of such excess tax benefits, and accordingly recorded a corresponding credit to additional paid-in capital. As of December 28, 2014, the Company had $36.8 million of unrealized excess tax benefits associated with share-based compensation. These tax benefits will be accounted for as a credit to additional paid-in capital, if and when realized, rather than a reduction of the provision for income taxes.

The Company’s manufacturing operations in Singapore operate under various tax holidays and incentives that begin to expire in 2018. For the year ended December 28, 2014, these tax holidays and incentives resulted in a $15.6 million decrease to the provision for income taxes and an increase in net income per diluted share of $0.10.

It is the Company’s intention to indefinitely reinvest all current and future foreign earnings in order to ensure sufficient working capital to support and expand existing operations outside the United States. Accordingly, residual U.S. income taxes have not been provided on $395.6 million of undistributed earnings of foreign subsidiaries as of December 28, 2014. In the event the Company was required to repatriate funds from outside of the United States, such repatriation would be subject to local laws, customs, and tax consequences.

The following table summarizes the gross amount of the Company’s uncertain tax positions (in thousands):
 
December 28,
2014
 
December 29,
2013
 
December 30,
2012
Balance at beginning of year
$
49,046

 
$
37,585

 
$
28,396

Increases related to prior year tax positions
426

 
4,794

 
2,573

Decreases related to prior year tax positions
(804
)
 
(223
)
 
(69
)
Increases related to current year tax positions
8,756

 
7,503

 
6,685

Decreases related to lapse of statute of limitations
(5,336
)
 
(613
)
 
—

Balance at end of year
$
52,088

 
$
49,046

 
$
37,585



Included in the balance of uncertain tax positions as of December 28, 2014, and December 29, 2013, were $42.6 million and $40.1 million, respectively, of net unrecognized tax benefits that, if recognized, would reduce the Company’s effective income tax rate in future periods.

Any interest and penalties related to uncertain tax positions are reflected in the provision for income taxes. The Company recognized expense of $0.7 million, $1.0 million, and $0.8 million, related to potential interest and penalties on uncertain tax positions during the years ended December 28, 2014, December 29, 2013, and December 30, 2012, respectively. The Company recorded a liability for potential interest and penalties of $4.4 million and $3.5 million as of December 28, 2014 and December 29, 2013, respectively.

The Company is currently under examination by the IRS for tax year 2011. The IRS has not yet proposed any adjustments to the filed return. Tax years 1997 to 2014 remain subject to future examination by the major tax jurisdictions in which the Company is subject to tax. Given the uncertainty of potential adjustments from the current examination as well as the impact of the current examination on the potential expiration of the statute of limitations, it is reasonably possible that the balance of unrecognized tax benefits could change significantly over the next 12 months. However, at this time, an estimate of the range of reasonably possible adjustments to the balance of unrecognized tax benefits cannot be determined given the number of matters being examined and the number of years that are potentially subject to examination.
Employee Benefit Plans
Employee Benefit Plans
Employee Benefit Plans

Retirement Plan

The Company has a 401(k) savings plan covering substantially all of its employees in the United States. Company contributions to the plan are discretionary. During the years ended December 28, 2014, December 29, 2013, and December 30, 2012, the Company made matching contributions of $9.5 million, $7.0 million, and $5.5 million, respectively.

Deferred Compensation Plan

The Company adopted the Illumina, Inc. Deferred Compensation Plan (the Plan) that became effective January 1, 2008. The Company’s senior level employees can contribute up to 80% of their base salary and 100% of their variable cash compensation. Members of the board of directors can contribute up to 100% of their director fees and equity awards. The Company has agreed to credit the participants’ contributions with earnings that reflect the performance of certain independent investment funds. On a discretionary basis, the Company may also make employer contributions to participant accounts in any amount determined by the Company. The vesting schedules of employer contributions are at the sole discretion of the Compensation Committee. However, all employer contributions shall become 100% vested upon the occurrence of the participant’s disability, death or retirement or a change in control of the Company. The benefits under this plan are unsecured. Participants are generally eligible to receive payment of their vested benefit at the end of their elected deferral period or after termination of their employment with the Company for any reason or at a later date to comply with the restrictions of Section 409A. As of December 28, 2014, no employer contributions were made to the Plan.

In January 2008, the Company also established a rabbi trust for the benefit of the participants under the Plan. In accordance with authoritative guidance related to consolidation of variable interest entities and accounting for deferred compensation arrangements where amounts earned are held in a rabbi trust and invested, the Company has included the assets of the rabbi trust in its consolidated balance sheet since the trust’s inception. As of December 28, 2014 and December 29, 2013, the assets of the trust were $23.5 million and $17.8 million, respectively, and liabilities of the Company were $20.3 million and $15.0 million, respectively. The assets and liabilities are classified as other assets and accrued liabilities, respectively, on the Company’s consolidated balance sheets. Changes in the values of the assets held by the rabbi trust are recorded in other (expense) income, net in the consolidated statements of income, and changes in the values of the deferred compensation liabilities are recorded in cost of sales or operating expenses.
Segment Information, Geographic Data, and Significant Customers
Segment Information, Geographic Data, and Significant Customers
Segment Information, Geographic Data, and Significant Customers

The Company had revenue in the following regions for the years ended December 28, 2014, December 29, 2013, and December 30, 2012 (in thousands):
 
Years Ended
 
December 28,
2014
 
December 29,
2013
 
December 30,
2012
United States
$
950,703

 
$
714,662

 
$
568,443

Europe
466,536

 
354,682

 
291,404

Asia-Pacific
342,702

 
276,442

 
232,498

Other markets
101,417

 
75,392

 
56,171

Total
$
1,861,358

 
$
1,421,178

 
$
1,148,516



Revenues are attributable to geographic areas based on the region of destination.

The majority of our product sales consist of consumables and instruments. For the years ended December 28, 2014, December 29, 2013, and December 30, 2012, consumable sales represented 56%, 62%, and 64%, respectively, of total revenues and instrument sales comprised 30%, 26%, and 27%, respectively, of total revenues. The Company’s customers include leading genomic research centers, academic institutions, government laboratories, hospitals, and reference laboratories, as well as pharmaceutical, biotechnology, agrigenomics, commercial molecular diagnostic, and consumer genomics companies. The Company had no customers that provided more than 10% of total revenue in the years ended December 28, 2014, December 29, 2013, and December 30, 2012.
  
Net long-lived assets exclude goodwill and other intangible assets since they are not allocated on a geographic basis. The Company had net long-lived assets consisting of property and equipment in the following regions as of December 28, 2014 and December 29, 2013 (in thousands):
 
December 28,
2014
 
December 29,
2013
United States
$
204,717

 
$
150,470

United Kingdom
31,965

 
24,122

Singapore
22,326

 
21,311

Other countries
6,256

 
6,763

Total
$
265,264

 
$
202,666

Quarterly Financial Information (unaudited)
Quarterly Financial Information (unaudited)
Quarterly Financial Information (unaudited)

The following financial information reflects all normal recurring adjustments, which are, in the opinion of management, necessary for a fair statement of the results and cash flows of interim periods. All quarters for fiscal years 2014 and 2013 ended December 28, 2014 and December 29, 2013 were 13 weeks. Summarized quarterly data for fiscal years 2014 and 2013 are as follows (in thousands, except per share amounts):
 
First Quarter
 
Second Quarter
 
Third Quarter
 
Fourth Quarter
2014
 

 
 

 
 

 
 

Total revenue
$
420,781

 
$
447,568

 
$
480,630

 
$
512,379

Gross profit
$
278,292

 
$
300,540

 
$
333,941

 
$
384,937

Net income
$
59,977

 
$
46,605

 
$
93,489

 
$
153,280

Net income per share, basic
$
0.47

 
$
0.36

 
$
0.66

 
$
1.08

Net income per share, diluted
$
0.40

 
$
0.31

 
$
0.63

 
$
1.03

2013
 
 
 
 
 
 
 
Total revenue
$
330,958

 
$
346,094

 
$
356,800

 
$
387,326

Gross profit
$
219,292

 
$
223,409

 
$
209,940

 
$
259,246

Net (loss) income
$
(22,587
)
 
$
35,877

 
$
31,357

 
$
80,661

Net (loss) income per share, basic
$
(0.18
)
 
$
0.29

 
$
0.25

 
$
0.64

Net (loss) income per share, diluted
$
(0.18
)
 
$
0.26

 
$
0.22

 
$
0.56

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
Valuation and Qualifying Accounts and Reserves
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
 
Balance at
Beginning of
Period
 
Additions Charged
to Expenses/(Reductions from)
Revenue(1)
 
Deductions(2)
 
Balance at
End of
Period
 
(In thousands)
Year ended December 28, 2014
 
 
 
 
 
 
 
Allowance for doubtful accounts
$
3,680

 
1,870

 
(91
)
 
$
5,459

Year ended December 29, 2013
 

 
 

 
 

 
 

Allowance for doubtful accounts
$
4,280

 
(422
)
 
(178
)
 
$
3,680

Year ended December 30, 2012
 

 
 

 
 

 
 

Allowance for doubtful accounts
$
3,997

 
2,191

 
(1,908
)
 
$
4,280

_______________________________________
(1)
Additions to and reductions from allowance for doubtful accounts are recorded to selling, general and administrative expense.
(2)
Deductions for allowance for doubtful accounts are for accounts receivable written off.
Organization and Summary of Significant Accounting Policies (Policies)
Basis of Presentation 
Basis of Presentation

The consolidated financial statements of the Company have been prepared in conformity with U.S. generally accepted accounting principles and include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.
Fiscal Year 
Fiscal Year

The Company’s fiscal year is 52 or 53 weeks ending the Sunday closest to December 31, with quarters of 13 or 14 weeks ending the Sunday closest to March 31, June 30, September 30, and December 31. Each of the years ended December 28, 2014, December 29, 2013, and December 30, 2012 were 52 weeks.

Use of Estimates 
Use of Estimates

The preparation of financial statements requires that management make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures of contingent assets and liabilities. Actual results could differ from those estimates.
Recent Accounting Pronouncements 
Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers. The new standard is based on the principle that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 will be effective for the Company beginning in the first quarter of 2017 and allows for a full retrospective or a modified retrospective adoption approach. The Company is currently evaluating the impact of ASU 2014-09 on its consolidated financial statements.
Segment Information 
Segment Information

Effective December 30, 2013, the Company reorganized and separated the roles of the Chief Executive Officer and the President, with core market and operational functions centralized and reporting to the President, for the primary purpose of achieving scalability in business operations to support the growth in the Company’s strategic markets. Corporate functions and the President report to the CEO. As a result, the Company operates under one operating segment and reports under one reportable segment.

Fair Value Measurements 
Fair Value Measurements

The Company determines the fair value of its assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The Company uses a fair value hierarchy with three levels of inputs, of which the first two are considered observable and the last unobservable, to measure fair value:

•
Level 1 — Quoted prices in active markets for identical assets or liabilities.
•
Level 2 — Inputs, other than Level 1, that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
•
Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The carrying amounts of financial instruments such as cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable, and accrued liabilities, excluding acquisition related contingent consideration liabilities, approximate the related fair values due to the short-term maturities of these instruments.

Functional Currency 
Functional Currency

The U.S. dollar is the functional currency of the Company’s international operations. The Company remeasures its foreign subsidiaries’ monetary assets and liabilities to the U.S. dollar and records the net gains or losses resulting from remeasurement in other expense, net in the consolidated statements of income.

Acquisitions 
Acquisitions

The Company measures all assets acquired and liabilities assumed, including contingent considerations and all contractual contingencies, at fair value as of the acquisition date. Contingent purchase considerations to be settled in cash are remeasured to estimated fair value at each reporting period with the change in fair value recorded in acquisition related (gain) expense, net, a component of operating expenses. In addition, the Company capitalizes in-process research and development (IPR&D) and either amortizes it over the life of the product upon commercialization, or impairs it if the project is abandoned. Post-acquisition adjustments in deferred tax asset valuation allowances and liabilities for uncertain tax positions are recorded in current period income tax expense.

Cash Equivalents and Short-Term Investments 
Cash Equivalents and Short-Term Investments

Cash equivalents are comprised of short-term, highly liquid investments with maturities of 90 days or less at the date of purchase.

Short-term investments consist predominantly of debt securities in U.S. government-sponsored entities, corporate debt securities, and U.S. Treasury securities. Management classifies short-term investments as available-for-sale at the time of purchase and evaluates such classification as of each balance sheet date. All short-term investments are recorded at estimated fair value. Unrealized gains and losses for available-for-sale securities are included in accumulated other comprehensive income, a component of stockholders’ equity. The Company evaluates its investments to assess whether those with unrealized loss positions are other than temporarily impaired. Impairments are considered to be other than temporary if they are related to deterioration in credit risk or if it is likely that the Company will sell the securities before the recovery of their cost basis. Realized gains, losses, and declines in value judged to be other than temporary are determined based on the specific identification method and are reported in other (expense) income, net in the consolidated statements of income.

Accounts Receivable 
Accounts Receivable

Trade accounts receivable are recorded at the net invoice value and are not interest bearing. The Company considers receivables past due based on the contractual payment terms. The Company reserves specific receivables if collectibility is no longer reasonably assured. The Company also reserves a percentage of its trade receivable balance based on collection history and current economic trends that might impact the level of future credit losses. The Company re-evaluates such reserves on a regular basis and adjusts its reserves as needed. Once a receivable is deemed to be uncollectible, such balance is charged against the reserve.

Inventory 
Inventory

Inventory is stated at the lower of cost or market, on a first in, first out basis. Inventory includes raw materials and finished goods that may be used in the research and development process and such items are expensed as consumed or expired. Provisions for slow moving, excess, and obsolete inventories are estimated based on product life cycles, quality issues, historical experience, and usage forecasts.
Property and Equipment 
Property and Equipment

Property and equipment are stated at cost, subject to review for impairment, and depreciated over the estimated useful lives of the assets, which generally range from three to seven years, using the straight-line method. Amortization of leasehold improvements is recorded over the shorter of the lease term or the estimated useful life of the related assets. Maintenance and repairs are charged to operations as incurred. When assets are sold, or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is included in operating expense.

In 2013, as a part of the Company’s ongoing effort to upgrade its current information systems, the Company started the implementation of new enterprise resource planning software and applications to manage parts of its business operations. Certain costs incurred in the development of such internal-use software and software applications, including external direct costs of materials and services and applicable compensation costs of employees devoted to specific software development, are capitalized as computer software costs. Costs incurred outside of the application development stage are expensed as incurred.

Leases 
Leases

Leases are reviewed and classified as capital or operating at their inception. The Company records rent expense on a straight-line basis over the term of the lease, which includes the construction build-out period and lease extension periods, if appropriate. The difference between rent payments and straight-line rent expense is recorded as deferred rent in accrued liabilities and other long-term liabilities. Landlord allowances are amortized on a straight-line basis over the lease term as a reduction to rent expense. The Company capitalizes leasehold improvements and amortizes the value over the shorter of the lease term or expected useful lives.
  
Headquarter relocation expenses consisted of expenses such as accelerated depreciation expense, impairment of assets, additional rent expense during the transition period in 2012 when both the new and former headquarter facilities were occupied, moving expenses, cease-use losses, and accretion of interest expense on lease exit liability. The Company completed the relocation of its headquarters in 2012 to another facility in San Diego, California and recorded cease-use losses and the corresponding facility exit obligation upon vacating its former headquarters in 2011 and 2012, calculated as the present value of the remaining lease obligation offset by estimated sublease rental receipts during the remaining lease period, adjusted for deferred items and estimated lease incentives. The Company reassesses the facility exit obligation on a quarterly basis and the key assumptions used in the calculation include the amount and timing of estimated sublease rental receipts, and the risk-adjusted discount rate.

Goodwill, Intangible Assets and Other Long-Lived Assets 
Goodwill, Intangible Assets and Other Long-Lived Assets

Goodwill, which has an indefinite useful life, represents the excess of cost over fair value of net assets acquired. The change in the carrying value of goodwill during the year ended December 28, 2014 was due to a current year acquisition and adjustments to the purchase price subsequent to the preliminary allocation of purchase price related to prior year acquisitions. Goodwill is reviewed for impairment at least annually during the second quarter, or more frequently if an event occurs indicating the potential for impairment. During its goodwill impairment review, the Company may assess qualitative factors to determine whether it is more likely than not that the fair value of its reporting unit is less than its carrying amount, including goodwill. The qualitative factors include, but are not limited to, macroeconomic conditions, industry and market considerations, and the overall financial performance of the Company. If, after assessing the totality of these qualitative factors, the Company determines that it is not more likely than not that the fair value of its reporting unit is less than its carrying amount, then no additional assessment is deemed necessary. Otherwise, the Company proceeds to perform the two-step test for goodwill impairment. The first step involves comparing the estimated fair value of the reporting unit with its carrying value, including goodwill. If the carrying amount of the reporting unit exceeds its fair value, the Company performs the second step of the goodwill impairment test to determine the amount of loss, which involves comparing the implied fair value of the goodwill to the carrying value of the goodwill. The Company may also elect to bypass the qualitative assessment in a period and elect to proceed to perform the first step of the goodwill impairment test. The Company performed its annual assessment for goodwill impairment in the second quarter of 2014, noting no impairment.

The Company’s identifiable intangible assets are typically comprised of acquired core technologies, licensed technologies, customer relationships, license agreements, and trade names. The cost of identifiable intangible assets with finite lives is generally amortized on a straight-line basis over the assets’ respective estimated useful lives.

The Company regularly performs reviews to determine if any event has occurred that may indicate its intangible assets with finite useful lives and other long-lived assets are potentially impaired. If indicators of impairment exist, the Company performs an impairment test to assess the recoverability of the affected assets by determining whether the carrying amount of such assets exceeds the undiscounted expected future cash flows. If the affected assets are not recoverable, the Company estimates the fair value of the assets and records an impairment loss if the carrying value of the assets exceeds the fair value. Factors that may indicate potential impairment include a significant decline in the Company’s stock price and market capitalization compared to its net book value, significant changes in the ability of a particular asset to generate positive cash flows the Company’s strategic business objectives, and the pattern of utilization of a particular asset.

During 2013, the Company decided to discontinue its Eco and NuPCR product lines to better align its product portfolio with its core strategy. As a result, the Company recorded a total impairment charge of $25.2 million in cost of product revenue, $22.9 million of which related to identifiable intangible assets.
Derivatives 
Derivatives

The Company is exposed to foreign exchange rate risks in the normal course of business. The Company enters into foreign exchange contracts to manage foreign currency risks related to monetary assets and liabilities that are denominated in currencies other than the U.S. dollar. These foreign exchange contracts are carried at fair value in other assets or other liabilities and are not designated as hedging instruments. Changes in the value of the derivatives are recognized in other expense, net, along with the remeasurement gain or loss on the foreign currency denominated assets or liabilities.

As of December 28, 2014, the Company had foreign exchange forward contracts in place to hedge exposures in the euro, Japanese yen, and Australian dollar. As of December 28, 2014 and December 29, 2013, the total notional amount of outstanding forward contracts in place for foreign currency purchases was $61.0 million and $54.7 million, respectively. Non-designated foreign exchange forward contract related gain was $4.1 million and $3.5 million for the years ended December 28, 2014 and December 29, 2013, respectively, and immaterial for the year ended December 30, 2012.

Reserve for Product Warranties 
Reserve for Product Warranties

The Company generally provides a one-year warranty on instruments. Additionally, the Company provides a warranty on consumables through the expiration date, which generally ranges from six to twelve months after the manufacture date. At the time revenue is recognized, the Company establishes an accrual for estimated warranty expenses based on historical experience as well as anticipated product performance. The Company periodically reviews its warranty reserve for adequacy and adjusts the warranty accrual, if necessary, based on actual experience and estimated costs to be incurred. Warranty expense is recorded as a component of cost of product revenue.
Revenue Recognition 
Revenue Recognition

The Company’s revenue is generated primarily from the sale of products and services. Product revenue primarily consists of sales of instruments and consumables used in genetic analysis. Service and other revenue primarily consists of revenue generated from genotyping and sequencing services and instrument service contracts.
 
The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the seller’s price to the buyer is fixed or determinable, and collectibility is reasonably assured. In instances where final acceptance of the product or system is required, revenue is deferred until all the acceptance criteria have been met. The Company occasionally offers discounts on newly introduced products to recent customers or existing products. These promotions sometimes involve the trade-in of existing products in exchange for a discount on new products. Where applicable, the Company defers a portion of revenue on the sales of existing products in recognition of the promotional discounts until the delivery of new products. All revenue is recorded net of discounts and sales taxes collected on behalf of governmental authorities.

 Revenue from product sales is recognized generally upon transfer of title to the customer, provided that no significant obligations remain and collection of the receivable is reasonably assured. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from genotyping and sequencing services is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer or agreed upon milestones are reached.
 
In order to assess whether the price is fixed or determinable, the Company evaluates whether an arrangement is cancellable or subject to future changes in price, deliverables, or other terms. If it is determined that the price is not fixed or determinable, the Company defers revenue recognition until the price becomes fixed or determinable. The Company assesses collectibility based on a number of factors, including past transaction history with, and the creditworthiness of, the customer. If the Company determines that collection of a payment is not reasonably assured, revenue recognition is deferred until receipt of payment.
 
The Company regularly enters into contracts where revenue is derived from multiple deliverables including products or services. These products or services are generally delivered within a short time frame, approximately three to six months, after the contract execution date. Revenue recognition for contracts with multiple deliverables is based on the individual units of accounting determined to exist in the contract. A delivered item is considered a separate unit of accounting when the delivered item has value to the customer on a stand-alone basis. Items are considered to have stand-alone value when they are sold separately by any vendor or when the customer could resell the item on a stand-alone basis.

For transactions with multiple deliverables, consideration is allocated at the inception of the contract to all deliverables based on their relative selling price. The relative selling price for each deliverable is determined using vendor specific objective evidence (VSOE) of selling price or third-party evidence of selling price if VSOE does not exist. If neither VSOE nor third-party evidence exists, the Company uses its best estimate of the selling price for the deliverable.
 
In order to establish VSOE of selling price, the Company must regularly sell the product or service on a standalone basis with a substantial majority priced within a relatively narrow range. VSOE of selling price is usually the midpoint of that range. If there are not a sufficient number of standalone sales and VSOE of selling price cannot be determined, then the Company considers whether third party evidence can be used to establish selling price. Due to the lack of similar products and services sold by other companies within the industry, the Company has rarely established selling price using third-party evidence. If neither VSOE nor third party evidence of selling price exists, the Company determines its best estimate of selling price using average selling prices over a rolling 12-month period coupled with an assessment of current market conditions. If the product or service has no history of sales or if the sales volume is not sufficient, the Company relies upon prices set by the Company’s pricing committee adjusted for applicable discounts. The Company recognizes revenue for delivered elements only when it determines there are no uncertainties regarding customer acceptance.
 
In certain markets, the Company sells products and provides services to customers through distributors that specialize in life science products. In most sales through distributors, the product is delivered directly to customers. In cases where the product is delivered to a distributor, revenue recognition is deferred until acceptance is received from the distributor, and/or the end-user, if required by the applicable sales contract. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. These transactions are accounted for in accordance with the Company’s revenue recognition policy described herein.
Share-Based Compensation 
Share-Based Compensation

The Company incurs share-based compensation expense related to restricted stock, its Employee Stock purchase Plan (ESPP), and stock options.

Restricted stock units (RSU), restricted stock awards (RSA), and performance stock units (PSU) are all considered restricted stock. The fair value of restricted stock is determined by the closing market price of the Company’s common stock on the date of grant. The Company recognizes share-based compensation expense based on the fair value on a straight-line basis over the requisite service periods of the awards, taking into consideration estimated forfeitures. PSU represents a right to receive a certain number of shares of common stock based on the achievement of corporate performance goals and continued employment during the vesting period. At each reporting period, the Company reassesses the probability of the achievement of such corporate performance goals and any additional expenses resulting from an adjustment in the estimated shares to be released are treated as a cumulative catch-up in the period of adjustment.

The Company uses the Black-Scholes-Merton option-pricing model to estimate the fair value of stock purchases under ESPP and stock options granted. The model assumptions include expected volatility, term, dividends, and the risk-free interest rate. The Company determines the expected volatility by equally weighing the historical and implied volatility of the Company’s common stock. The historical volatility is generally commensurate with the estimated expected term of the Company’s stock awards, adjusted for the impact of unusual fluctuations and other relevant factors. The implied volatility is calculated from the implied market volatility of exchange-traded call options on the Company’s common stock. The expected term of an award is based on historical forfeiture experience, exercise activity, and on the terms and conditions of the stock awards. The expected dividend yield is determined to be 0% given that the Company has never declared or paid cash dividends on its common stock and does not anticipate paying such cash dividends. The risk-free interest rate is based upon U.S. Treasury securities with remaining terms similar to the expected term of the share-based awards.
Shipping and Handling Expenses 
Shipping and Handling Expenses

Shipping and handling expenses are included in cost of product revenue.
Research and Development 
Research and Development

Research and development expenses include personnel expenses, contractor fees, license fees, facilities costs, and utilities. Expenditures relating to research and development are expensed in the period incurred.
Advertising Costs 
Advertising Costs

The Company expenses advertising costs as incurred. Advertising costs were $16.4 million, $14.5 million, and $10.5 million for the years ended December 28, 2014, December 29, 2013, and December 30, 2012, respectively.
Income Taxes 
Income Taxes

The provision for income taxes is computed using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for the expected future tax benefit to be derived from tax loss and credit carryforwards. Deferred tax assets and liabilities are determined using the enacted tax rates in effect for the years in which those tax assets are expected to be realized. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the provision for income taxes in the period that includes the enactment date.

Deferred tax assets are regularly assessed to determine the likelihood they will be recovered from future taxable income. A valuation allowance is established when the Company believes it is more likely than not the future realization of all or some of a deferred tax asset will not be achieved. In evaluating the ability to recover deferred tax assets within the jurisdiction which they arise the Company considers all available positive and negative evidence. Factors reviewed include the cumulative pre-tax book income for the past three years, scheduled reversals of deferred tax liabilities, history of earnings and reliable forecasting, projections of pre-tax book income over the foreseeable future, and the impact of any feasible and prudent tax planning strategies.

The Company recognizes excess tax benefits associated with share-based compensation to stockholders’ equity only when realized. When assessing whether excess tax benefits relating to share-based compensation have been realized, the Company follows the with-and-without approach excluding any indirect effects of the excess tax deductions. Under this approach, excess tax benefits related to share-based compensation are not deemed to be realized until after the utilization of all other tax benefits available to the Company.

The Company recognizes the impact of a tax position in the financial statements only if that position is more likely than not of being sustained upon examination by taxing authorities, based on the technical merits of the position. Any interest and penalties related to uncertain tax positions will be reflected in income tax expense.

Net Income per Share 
Net Income per Share

Basic net income per share is computed based on the weighted average number of common shares outstanding during the period. Diluted net income per share is computed based on the sum of the weighted average number of common shares and potentially dilutive common shares outstanding during the period.

Potentially dilutive common shares consist of shares issuable under convertible senior notes, equity awards, and warrants. Convertible senior notes have a dilutive impact when the average market price of the Company’s common stock exceeds the applicable conversion price of the respective notes. Potentially dilutive common shares from equity awards and warrants are determined using the average share price for each period under the treasury stock method. In addition, the following amounts are assumed to be used to repurchase shares: proceeds from exercise of equity awards and warrants; the average amount of unrecognized compensation expense for equity awards; and estimated tax benefits that will be recorded in additional paid-in capital when expenses related to equity awards become deductible. In loss periods, basic net loss per share and diluted net loss per share are identical because the otherwise dilutive potential common shares become anti-dilutive and are therefore excluded.

Accumulated Other Comprehensive Income 

Accumulated Other Comprehensive Income

Comprehensive income is comprised of net income and other comprehensive income. Accumulated other comprehensive income on the consolidated balance sheets at December 28, 2014 and December 29, 2013 includes accumulated foreign currency translation adjustments and unrealized gains and losses on the Company’s available-for-sale securities.

Organization and Summary of Significant Accounting Policies (Tables)
Weighted-average shares used to calculate basic and diluted net income per share 
The following table presents the calculation of weighted average shares used to calculate basic and diluted net income per share (in thousands):
 
Years Ended
 
December 28,
2014
 
December 29,
2013
 
December 30,
2012
Weighted average shares outstanding
135,553

 
125,076

 
122,999

Effect of potentially dilutive common shares from:
 
 
 
 
 
Convertible senior notes
3,489

 
1,340

 
967

Equity awards
4,340

 
4,404

 
3,906

Warrants
5,595

 
9,116

 
5,821

Weighted average shares used in calculating diluted net income per share
148,977

 
139,936

 
133,693

Potentially dilutive shares excluded from calculation due to anti-dilutive effect
124

 
996

 
2,556

Accumulated other comprehensive income 
The components of accumulated other comprehensive income are as follows (in thousands):
 
December 28,
2014
 
December 29,
2013
Foreign currency translation adjustments
$
1,289

 
$
1,289

Unrealized loss on available-for-sale securities, net of deferred tax
(2,369
)
 
(55
)
Total accumulated other comprehensive income
$
(1,080
)
 
$
1,234

Balance Sheet Account Details (Tables)
Short-term Investments 
The following is a summary of short-term investments (in thousands):
 
December 28, 2014
 
December 29, 2013
 
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
 
Estimated
Fair Value
 
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
 
Estimated
Fair Value
Available-for-sale securities:
Debt securities in government-sponsored entities
$
51,308

 
$
10

 
$
(55
)
 
$
51,263

 
$
82,226

 
$
18

 
$
(101
)
 
$
82,143

Corporate debt securities
502,924

 
46

 
(2,882
)
 
500,088

 
342,034

 
312

 
(376
)
 
341,970

U.S. Treasury securities
151,255

 
5

 
(394
)
 
150,866

 
29,795

 
58

 
—

 
29,853

Total available-for-sale securities
$
705,487

 
$
61

 
$
(3,331
)
 
$
702,217

 
$
454,055

 
$
388

 
$
(477
)
 
$
453,966

Available-for-sale securities in unrealized loss positions 
The following table shows the estimated fair values and the gross unrealized losses of the Company’s available-for-sale securities that were in an unrealized loss position for less than twelve months as of December 28, 2014 and December 29, 2013, aggregated by investment category (in thousands):
 
December 28, 2014
 
December 29, 2013
 
Estimated
Fair Value
 
Gross
Unrealized
Losses
 
Estimated
Fair Value
 
Gross
Unrealized
Losses
Debt securities in government-sponsored entities
$
36,084

 
$
(55
)
 
$
73,362

 
$
(101
)
Corporate debt securities
428,078

 
(2,882
)
 
168,118

 
(373
)
U.S. Treasury securities
143,755

 
(394
)
 
—

 
—

Total
$
607,917

 
$
(3,331
)
 
$
241,480

 
$
(474
)
Contractual maturities of available-for-sale securities 
Contractual maturities of available-for-sale debt securities as of December 28, 2014 are as follows (in thousands):
 
Estimated Fair Value
Due within one year
$
238,198

After one but within five years
464,019

Total
$
702,217


Accounts receivable 
Accounts receivable, net consist of the following (in thousands):
 
December 28,
2014
 
December 29,
2013
Accounts receivable from product and service sales
$
292,847

 
$
241,360

Other receivables
2,070

 
1,266

Total accounts receivable, gross
294,917

 
242,626

Allowance for doubtful accounts
(5,459
)
 
(3,680
)
Total accounts receivable, net
$
289,458

 
$
238,946

Inventory 
Inventory consists of the following (in thousands):
 
December 28,
2014
 
December 29,
2013
Raw materials
$
70,316

 
$
57,398

Work in process
94,102

 
70,016

Finished goods
26,726

 
26,685

Total inventory
$
191,144

 
$
154,099

Property and equipment 
Property and equipment, net consists of the following (in thousands):
 
December 28,
2014
 
December 29,
2013
Leasehold improvements
$
143,597

 
$
104,571

Machinery and equipment
192,715

 
175,340

Computer hardware and software
86,929

 
73,544

Furniture and fixtures
13,669

 
10,511

Building
7,670

 
7,670

Construction in progress
35,421

 
8,531

Total property and equipment, gross
480,001

 
380,167

Accumulated depreciation
(214,737
)
 
(177,501
)
Total property and equipment, net
$
265,264

 
$
202,666

Goodwill 
Changes to the Company’s goodwill balance during the year ended December 28, 2014 and December 29, 2013 are as follows (in thousands):
 
December 28, 2014
 
December 29, 2013
Balance at beginning of period
$
723,061

 
$
369,327

Current period acquisition
3,338

 
353,734

Purchase price allocation adjustments related to prior year acquisitions
(1,495
)
 
—

Balance at end of period
$
724,904

 
$
723,061

Accrued liabilities 
Accrued liabilities consist of the following (in thousands):
 
December 28,
2014
 
December 29,
2013
Accrued compensation expenses
$
112,606

 
$
82,705

Deferred revenue, current portion
75,294

 
50,834

Acquisition related contingent consideration liability, current portion
44,124

 
6,719

Accrued taxes payable
38,942

 
30,435

Customer deposits
20,274

 
13,569

Reserve for product warranties
15,616

 
10,407

Facility exit obligation, current portion
3,837

 
5,570

Other
24,583

 
18,881

Total accrued liabilities
$
335,276

 
$
219,120

Acquisitions (Tables)
Allocation of the purchase price to the assets acquired and liabilities assumed 
As of December 29, 2013, the allocation of the purchase price to the assets acquired and liabilities assumed on the acquisition date was as follows (in thousands):
 
Allocation of purchase price
Cash and cash equivalents
$
9,151

Accounts receivable
2,801

Inventory
1,110

Prepaid expenses and other current assets
979

Property and equipment
12,083

Other assets
978

Intangible assets
176,490

Goodwill
227,453

Accounts payable
(2,539
)
Accrued liabilities
(3,803
)
Lease financing obligation
(9,695
)
Deferred tax liability
(18,741
)
       Total purchase price
$
396,267

Fair value of identifiable intangible assets acquired 
The following table summarizes the fair value of identifiable intangible assets acquired (amounts in thousands):
 
Weighted Average Useful Lives
(in years)
 
Fair Value
Developed technology
13
 
$
170,200

Customer relationships
5
 
4,690

Trade name
2
 
1,600

     Total intangible assets acquired, excluding goodwill
 
 
$
176,490

Pro forma information 
The following unaudited pro forma information presents the consolidated results of operations of the Company as if the acquisitions completed during the year ended December 29, 2013 had occurred at the beginning of the applicable annual reporting period, with pro forma adjustments to give effect to intercompany transactions to be eliminated, amortization of intangible assets, share-based compensation, and transaction costs directly associated with the acquisitions (in thousands, except per share amounts):
 
Years Ended
 
December 29,
2013
 
December 30,
2012
Net revenues
$
1,433,935

 
$
1,161,241

Net income
$
113,869

 
$
92,645

Net income per share-basic
$
0.91

 
$
0.75

Net income per share-diluted
$
0.81

 
$
0.69

Contingent compensation expense 
Contingent compensation expenses recorded as a result of acquisitions consist of the following (in thousands):
 
Years Ended
 
December 28,
2014
 
December 29,
2013
 
December 30,
2012
Contingent compensation expense, included in research and development expense
$
1,509

 
$
544

 
$
3,419

Contingent compensation expense, included in selling, general and administrative expense
2,756

 
13,066

 
5,732

     Total contingent compensation expense
$
4,265

 
$
13,610

 
$
9,151

Intangible Assets (Tables)
Identifiable intangible assets 
The following is a summary of the Company’s identifiable intangible assets (in thousands):
 
December 28, 2014
 
December 29, 2013
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Intangibles,
Net
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Intangibles,
Net
Licensed technologies
$
83,956

 
$
(39,423
)
 
$
44,533

 
$
48,361

 
$
(31,927
)
 
$
16,434

Core technologies
321,200

 
(77,493
)
 
243,707

 
321,700

 
(45,534
)
 
276,166

Customer relationships
26,461

 
(12,522
)
 
13,939

 
26,770

 
(7,376
)
 
19,394

License agreements
15,042

 
(4,592
)
 
10,450

 
18,917

 
(4,947
)
 
13,970

Trade name
4,700

 
(2,829
)
 
1,871

 
11,800

 
(6,591
)
 
5,209

Total intangible assets, net
$
451,359

 
$
(136,859
)
 
$
314,500

 
$
427,548

 
$
(96,375
)
 
$
331,173

Acquired intangible assets 

Intangible assets acquired during the year ended December 28, 2014 are as follows (in thousands):
 
Weighted-Average
Useful Lives
(in years)
 
Gross
Carrying
Amount
Licensed technologies
4.7
 
$
35,595

Customer relationships
0.5
 
291

License agreements
7.2
 
125

Total intangible asset additions
 
 
$
36,011

Estimated annual amortization of intangible assets 
The estimated annual amortization of intangible assets for the next five years and thereafter is shown in the following table (in thousands). Actual amortization expense to be reported in future periods could differ from these estimates as a result of acquisitions, divestitures, asset impairments, among other factors.
 
Estimated Annual Amortization
2015
$
52,994

2016
47,752

2017
43,276

2018
33,971

2019
30,685

Thereafter
105,822

Total
$
314,500

Fair Value Measurements (Tables)
Fair value measurements 
The following table presents the Company’s fair value hierarchy for assets and liabilities measured at fair value on a recurring basis as of December 28, 2014 and December 29, 2013 (in thousands):
 
December 28, 2014
 
December 29, 2013
 
Level 1
 
Level 2
 
Level 3
 
Total
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Money market funds (cash equivalent)
$
431,172

 
$
—

 
$
—

 
$
431,172

 
$
478,755

 
$
—

 
$
—

 
$
478,755

Debt securities in government-sponsored entities
—

 
51,263

 
—

 
51,263

 
—

 
82,143

 
—

 
82,143

Corporate debt securities
—

 
500,088

 
—

 
500,088

 
—

 
341,970

 
—

 
341,970

U.S. Treasury securities
150,866

 
—

 
—

 
150,866

 
29,853

 
—

 
—

 
29,853

Deferred compensation plan assets
—

 
23,486

 
—

 
23,486

 
—

 
17,805

 
—

 
17,805

Total assets measured at fair value
$
582,038

 
$
574,837

 
$
—

 
$
1,156,875

 
$
508,608

 
$
441,918

 
$
—

 
$
950,526

Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition related contingent consideration liabilities
$
—

 
$
—

 
$
44,124

 
$
44,124

 
$
—

 
$
—

 
$
49,480

 
$
49,480

Deferred compensation liability
—

 
20,310

 
—

 
20,310

 
—

 
14,957

 
—

 
14,957

Total liabilities measured at fair value
$
—

 
$
20,310

 
$
44,124

 
$
64,434

 
$
—

 
$
14,957

 
$
49,480

 
$
64,437

Changes in estimated fair value of contingent consideration liabilities 
Changes in estimated fair value of contingent consideration liabilities from January 1, 2012 through December 28, 2014 are as follows (in thousands):
 
Contingent
Consideration
Liability
(Level 3 
Measurement)
Balance as of January 1, 2012
$
6,638

Acquisition of BlueGnome
7,500

Change in estimated fair value, recorded in acquisition related (gain) expense, net
1,975

Cash payments
(3,594
)
Balance as of December 30, 2012
12,519

Additional liability recorded for current period acquisitions
60,184

Change in estimated fair value, recorded in acquisition related (gain) expense, net
(18,784
)
Cash payments
(4,439
)
Balance as of December 29, 2013
49,480

Change in estimated fair value, recorded in acquisition related (gain) expense, net
(5,356
)
Balance as of December 28, 2014
$
44,124

Convertible Senior Notes (Tables)
Schedule of Extinguishment of Debt 
The following table summarizes information about the conversion of the 2014 Notes during the year ended December 28, 2014 (in thousands):
 
2014 Notes
Cash paid for principal of notes converted
$
29,570

Conversion value over principal amount paid in shares of common stock
$
196,095

Number of shares of common stock issued upon conversion
1,151

Summarized information about equity and liability components of convertible senior notes 
The following table summarizes information about the equity and liability components of all convertible senior notes outstanding as of the period reported (dollars in thousands). The fair values of the respective notes outstanding were measured based on quoted market prices.
 
December 28,
2014
 
December 29, 2013
Principal amount of convertible notes outstanding
$
1,470,027

 
$
949,570

Unamortized discount of liability component
(178,991
)
 
(80,977
)
       Net carrying amount of liability component
1,291,036

 
868,593

Less: current portion
(304,256
)
 
(29,288
)
       Long-term debt
$
986,780

 
$
839,305

Conversion option subject to cash settlement
—

 
$
282

Carrying value of equity component, net of issuance costs
$
215,283

 
$
274,304

Fair value of outstanding notes
$
2,021,750

 
$
1,428,743

Weighted average remaining amortization period of discount on the liability component
5.2 years

 
2.2 years

Commitments (Tables)
Future minimum payments under operating leases 
Annual future minimum payments under operating leases as of December 28, 2014 were as follows (in thousands):
 
Operating
Leases
 
Sublease
Income
 
Net Operating
Leases
2015
$
35,210

 
$
(2,900
)
 
$
32,310

2016
38,892

 
(2,924
)
 
35,968

2017
37,064

 
(2,708
)
 
34,356

2018
37,747

 
(2,789
)
 
34,958

2019
39,656

 
(2,873
)
 
36,783

Thereafter
415,052

 
(11,837
)
 
403,215

Total minimum lease payments
$
603,621

 
$
(26,031
)
 
$
577,590

Facility exit obligations 
Changes in the facility exit obligation from January 1, 2012 through December 28, 2014 are as follows (in thousands):
 
Facility Exit Obligation
Balance as of January 1, 2012:
$
25,049

Adjustment to facility exit obligation
24,878

Accretion of interest expense
2,129

Cash payments
(6,704
)
Balance as of December 30, 2012
45,352

Adjustment to facility exit obligation
(114
)
Accretion of interest expense
2,738

Cash payments
(9,758
)
Balance as of December 29, 2013
38,218

Adjustment to facility exit obligation
2,555

Accretion of interest expense
2,638

Cash payments
(5,711
)
Balance as of December 28, 2014
$
37,700

Annual future minimum royalty payments 
Annual future minimum royalty payments under the Company’s licensing agreements as of December 28, 2014 are as follows (in thousands):
 
Minimum Payments
2015
$
8,650

2016
12,470

2017
13,500

2018
18,475

2019
23,480

Thereafter
23,550

Total minimum royalty payments
$
100,125

Reserve for product warranties 
Changes in the Company’s reserve for product warranties from January 1, 2012 through December 28, 2014 are as follows (in thousands):
 
Warranty Reserve
Balance as of January 1, 2012
$
11,966

Additions charged to cost of revenue
17,279

Repairs and replacements
(19,109
)
Balance as of December 30, 2012
10,136

Additions charged to cost of revenue
15,674

Repairs and replacements
(15,403
)
Balance as of December 29, 2013
10,407

Additions charged to cost of revenue
24,150

Repairs and replacements
(18,941
)
Balance as of December 28, 2014
$
15,616

Share-based Compensation Expense (Tables)
Share-based compensation expense for all stock awards 
Share-based compensation expense for all stock awards consists of the following (in thousands):
 
Years Ended
 
December 28,
2014
 
December 29,
2013
 
December 30,
2012
Cost of product revenue
$
9,451

 
$
6,223

 
$
7,575

Cost of service and other revenue
1,204

 
777

 
461

Research and development
50,880

 
37,439

 
30,879

Selling, general and administrative
91,016

 
61,387

 
55,409

Share-based compensation expense before taxes
152,551

 
105,826

 
94,324

Related income tax benefits
(44,194
)
 
(32,819
)
 
(30,759
)
Share-based compensation expense, net of taxes
$
108,357

 
$
73,007

 
$
63,565

Assumptions used to estimate the fair value per share of options granted and employee stock purchase rights granted 
The assumptions used for the specified reporting periods and the resulting estimates of weighted-average grant date fair value per share of options granted and for stock purchased under the ESPP are as follows:
 
Years Ended
 
December 28,
2014
 
December 29,
2013
 
December 30,
2012
Stock options granted:
 
 
 
 
 
Risk-free interest rate
—
 
0.14 - 1.86%

 
0.56 - 0.93%

Expected volatility
—
 
30 - 44%

 
41 - 48%

Expected term
—
 
0.8 - 9.4 years

 
4.0 - 6.6 years

Expected dividends
—
 
—
 
—
Weighted-average grant-date fair value per share
—
 
$
40.66

 
$
15.47

 
 
 
 
 
 
Stock purchased under the ESPP:
 
 
 
 
 
Risk-free interest rate
0.05 - 0.13%

 
0.08 - 0.15%

 
0.09 - 0.17%

Expected volatility
38% - 41%

 
31 - 32%

 
33 - 64%

Expected term
0.5 - 1.0 year

 
0.5 - 1.0 year

 
0.5 - 1.0 year

Expected dividends
—
 
—
 
—
Weighted-average grant-date fair value per share
$
44.64

 
$
19.30

 
$
16.45

Stockholders' Equity (Tables)
Stock option activity under all stock option plans 
The Company’s stock option activity under all stock option plans from January 1, 2012 through December 28, 2014 is as follows:
 
Options
(in thousands)
 
Weighted-
Average
Exercise Price
Outstanding at January 1, 2012
10,378

 
$
29.69

Granted
251

 
$
40.79

Exercised
(2,071
)
 
$
20.34

Cancelled
(207
)
 
$
39.18

Outstanding at December 30, 2012
8,351

 
$
32.10

Granted
512

 
$
14.74

Exercised
(3,006
)
 
$
27.70

Cancelled
(133
)
 
$
41.80

Outstanding at December 29, 2013
5,724

 
$
32.64

Exercised
(2,478
)
 
$
29.93

Cancelled
(35
)
 
$
31.73

Outstanding at December 28, 2014
3,211

 
$
34.74

Restricted stock activity 
A summary of the Company’s restricted stock activity and related information from January 1, 2012 through December 28, 2014 is as follows (in thousands, except per share amounts):
 
Restricted
Stock Awards
(RSA)
 
Restricted
Stock Units
(RSU)
 
Performance
Stock Units
(PSU)
 
Weighted-Average
Grant-Date Fair Value per Share
 
 
 
 
RSA
 
RSU
 
PSU
Outstanding at January 1, 2012
230

 
3,476

 
—

 
$
65.95

 
$
41.87

 
—

Awarded
312

 
1,640

 
599

 
$
47.91

 
$
48.52

 
$
49.66

Vested
(77
)
 
(1,062
)
 
—

 
$
65.95

 
$
38.48

 
—

Cancelled
—

 
(394
)
 
(12
)
 
—

 
$
45.05

 
$
50.54

Outstanding at December 30, 2012
465

 
3,660

 
587

 
$
53.84

 
$
45.49

 
$
49.64

Awarded
—

 
1,532

 
584

 
—

 
$
77.53

 
$
59.16

Vested
(217
)
 
(1,308
)
 
—

 
$
54.27

 
$
42.97

 
—

Cancelled
—

 
(256
)
 
(70
)
 
—

 
$
49.24

 
$
50.42

Outstanding at December 29, 2013
248

 
3,628

 
1,101

 
$
53.46

 
$
59.66

 
$
54.64

Awarded
—

 
780

 
968

 
—

 
$
172.53

 
$
104.52

Vested
(140
)
 
(1,383
)
 
(753
)
 
$
47.90

 
$
55.44

 
$
49.52

Cancelled
—

 
(184
)
 
(59
)
 
—

 
$
65.09

 
$
52.87

Outstanding at December 28, 2014
108

 
2,841

 
1,257

 
$
56.62

 
$
92.35

 
$
96.21

Pre-tax intrinsic values of all outstanding restricted stock and total fair values of vested restricted stock 
Pre-tax intrinsic values and total fair value of vested restricted stock are as follows (in thousands):
 
Years Ended
 
December 28,
2014
 
December 29,
2013
 
December 30,
2012
Pre-tax intrinsic value of outstanding restricted stock:
 
 
 
 
 
RSA
$
20,321

 
$
27,384

 
$
25,437

RSU
$
534,708

 
$
400,421

 
$
200,383

PSU
$
236,606

 
$
121,555

 
$
32,149

 
 
 
 
 
 
Fair value of restricted stock vested:
 
 
 
 
 
RSA
$
6,712

 
$
11,750

 
$
5,039

RSU
$
76,646

 
$
56,212

 
$
40,870

PSU
$
37,313

 
—

 
—

Income Taxes (Tables)
Income before income taxes summarized by region 
The income before income taxes summarized by region is as follows (in thousands):
 
Years Ended
 
December 28,
2014
 
December 29,
2013
 
December 30,
2012
United States
$
176,974

 
$
(53,703
)
 
$
102,296

Foreign
271,784

 
213,017

 
120,312

Total income before income taxes
$
448,758

 
$
159,314

 
$
222,608

Provision for income taxes 
The provision for income taxes consists of the following (in thousands):
 
Years Ended
 
December 28,
2014
 
December 29,
2013
 
December 30,
2012
Current:
 

 
 

 
 

Federal
$
60,984

 
$
78,419

 
$
57,285

State
12,381

 
8,854

 
10,121

Foreign
41,815

 
39,416

 
31,504

Total current provision
115,180

 
126,689

 
98,910

Deferred:
 

 
 

 
 

Federal
(3,191
)
 
(69,102
)
 
(7,724
)
State
(4,974
)
 
(15,222
)
 
(7,708
)
Foreign
(11,608
)
 
(8,359
)
 
(12,124
)
Total deferred benefit
(19,773
)
 
(92,683
)
 
(27,556
)
Total tax provision
$
95,407

 
$
34,006

 
$
71,354

Provision for income taxes reconciles to the amount computed by applying the federal statutory rate to income before taxes 
The provision for income taxes reconciles to the amount computed by applying the federal statutory rate to income before taxes as follows (in thousands):
 
Years Ended
 
December 28,
2014
 
December 29,
2013
 
December 30,
2012
Tax at federal statutory rate
$
157,065

 
$
55,760

 
$
77,913

State, net of federal benefit
5,023

 
647

 
4,056

Research and other credits
(16,144
)
 
(10,977
)
 
(2,613
)
Change in valuation allowance
(4,212
)
 
10,544

 
(37
)
Change in fair value of contingent consideration
(1,321
)
 
(3,859
)
 
—

Impact of foreign operations
(42,215
)
 
(18,006
)
 
(11,470
)
Other
(2,789
)
 
(103
)
 
3,505

Total tax provision
$
95,407

 
$
34,006

 
$
71,354

Significant components of deferred tax assets and liabilities 
Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands):
 
December 28,
2014
 
December 29,
2013
Deferred tax assets:
 

 
 

Net operating losses
$
47,738

 
$
66,969

Tax credits
32,192

 
36,277

Other accruals and reserves
41,676

 
86,716

Stock compensation
54,570

 
36,728

Deferred rent
25,975

 
16,823

Inventory adjustments
12,003

 
9,034

Other amortization
28,203

 
9,571

Other
24,045

 
18,244

Total gross deferred tax assets
266,402

 
280,362

Valuation allowance on deferred tax assets
(15,191
)
 
(19,132
)
Total deferred tax assets
251,211

 
261,230

Deferred tax liabilities:
 

 
 

Purchased intangible amortization
(85,612
)
 
(98,671
)
Convertible debt
(61,383
)
 
(27,821
)
Property and equipment
(16,521
)
 
(13,311
)
Other
(1,670
)
 
(6,349
)
Total deferred tax liabilities
(165,186
)
 
(146,152
)
Net deferred tax assets
$
86,025

 
$
115,078

Summary of the gross amount of uncertain tax positions 
The following table summarizes the gross amount of the Company’s uncertain tax positions (in thousands):
 
December 28,
2014
 
December 29,
2013
 
December 30,
2012
Balance at beginning of year
$
49,046

 
$
37,585

 
$
28,396

Increases related to prior year tax positions
426

 
4,794

 
2,573

Decreases related to prior year tax positions
(804
)
 
(223
)
 
(69
)
Increases related to current year tax positions
8,756

 
7,503

 
6,685

Decreases related to lapse of statute of limitations
(5,336
)
 
(613
)
 
—

Balance at end of year
$
52,088

 
$
49,046

 
$
37,585

Segment Information, Geographic Data, and Significant Customers (Tables)
Revenue by region 
The Company had revenue in the following regions for the years ended December 28, 2014, December 29, 2013, and December 30, 2012 (in thousands):
 
Years Ended
 
December 28,
2014
 
December 29,
2013
 
December 30,
2012
United States
$
950,703

 
$
714,662

 
$
568,443

Europe
466,536

 
354,682

 
291,404

Asia-Pacific
342,702

 
276,442

 
232,498

Other markets
101,417

 
75,392

 
56,171

Total
$
1,861,358

 
$
1,421,178

 
$
1,148,516

Net long-lived assets consisting of property and equipment by region 
The Company had net long-lived assets consisting of property and equipment in the following regions as of December 28, 2014 and December 29, 2013 (in thousands):
 
December 28,
2014
 
December 29,
2013
United States
$
204,717

 
$
150,470

United Kingdom
31,965

 
24,122

Singapore
22,326

 
21,311

Other countries
6,256

 
6,763

Total
$
265,264

 
$
202,666

Quarterly Financial Information (unaudited) (Tables)
Schedule of Quarterly Financial Information [Table Text Block]
Summarized quarterly data for fiscal years 2014 and 2013 are as follows (in thousands, except per share amounts):
 
First Quarter
 
Second Quarter
 
Third Quarter
 
Fourth Quarter
2014
 

 
 

 
 

 
 

Total revenue
$
420,781

 
$
447,568

 
$
480,630

 
$
512,379

Gross profit
$
278,292

 
$
300,540

 
$
333,941

 
$
384,937

Net income
$
59,977

 
$
46,605

 
$
93,489

 
$
153,280

Net income per share, basic
$
0.47

 
$
0.36

 
$
0.66

 
$
1.08

Net income per share, diluted
$
0.40

 
$
0.31

 
$
0.63

 
$
1.03

2013
 
 
 
 
 
 
 
Total revenue
$
330,958

 
$
346,094

 
$
356,800

 
$
387,326

Gross profit
$
219,292

 
$
223,409

 
$
209,940

 
$
259,246

Net (loss) income
$
(22,587
)
 
$
35,877

 
$
31,357

 
$
80,661

Net (loss) income per share, basic
$
(0.18
)
 
$
0.29

 
$
0.25

 
$
0.64

Net (loss) income per share, diluted
$
(0.18
)
 
$
0.26

 
$
0.22

 
$
0.56



Organization and Summary of Significant Accounting Policies (Details)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 28, 2014
Dec. 29, 2013
Dec. 30, 2012
Weighted average shares used to calculate basic and diluted net income per share [Line Items]
 
 
 
Weighted average shares outstanding
135,553 
125,076 
122,999 
Convertible senior notes
3,489 
1,340 
967 
Equity awards
4,340 
4,404 
3,906 
Warrants
5,595 
9,116 
5,821 
Weighted average shares used in calculating diluted net income per share
148,977 
139,936 
133,693 
Potentially dilutive shares excluded from calculation due to anti-dilutive effect
124 
996 
2,556 
Organization and Summary of Significant Accounting Policies (Details 1) (USD $)
In Thousands, unless otherwise specified
Dec. 28, 2014
Dec. 29, 2013
Accounting Policies [Abstract]
 
 
Foreign currency translation adjustments
$ 1,289 
$ 1,289 
Unrealized loss on available-for-sale securities, net of deferred tax
(2,369)
(55)
Total accumulated other comprehensive income
$ (1,080)
$ 1,234 
Organization and Summary of Significant Accounting Policies (Details Textual) (USD $)
12 Months Ended
Dec. 28, 2014
segments
Dec. 29, 2013
Dec. 30, 2012
Operating Cycle
P52W 
P52W 
P52W 
Number of operating segments
1 
 
 
Number of reportable segments
1 
 
 
Impairments
$ (2,000,000)
$ 25,214,000 
$ 21,438,000 
Notional amount of outstanding forward contracts
61,000,000 
54,700,000 
 
Gain (Loss) on Foreign Currency Derivative Instruments Not Designated as Hedging Instruments
4,100,000 
3,500,000 
 
Instrument warranty period
1 year 
 
 
Period of time average selling prices are observed to establish best estimate of selling price
12 months 
 
 
Expected dividend yield
0.00% 
 
 
Advertising expense
16,400,000 
14,500,000 
10,500,000 
Minimum [Member]
 
 
 
Useful life
3 years 
 
 
Warranty on consumable sales through the expiration date
6 months 
 
 
Product or service delivery period
3 months 
 
 
Maximum [Member]
 
 
 
Useful life
7 years 
 
 
Warranty on consumable sales through the expiration date
12 months 
 
 
Product or service delivery period
6 months 
 
 
Cost of Sales [Member]
 
 
 
Impairments
 
25,214,000 
 
Intangible asset impairments
 
$ 22,900,000 
 
Organization and Summary of Significant Accounting Policies (Details Textual 2)
12 Months Ended
Dec. 28, 2014
Dec. 29, 2013
Dec. 30, 2012
Concentration Risk [Line Items]
 
 
 
Maximum investment portfolio credit exposure per issuer at time of purchase
5.00% 
 
 
Maximum investment portfolio credit exposure per total issue size outstanding at time of purchase
5.00% 
 
 
Maximum investment portfolio credit exposure per industry sector at time of purchase
30.00% 
 
 
Sales Revenue, Segment [Member] |
Countries outside the United States
 
 
 
Concentration Risk [Line Items]
 
 
 
Concentration Risk, Percentage
49.00% 
50.00% 
51.00% 
Accounts Receivable [Member] |
Countries outside the United States
 
 
 
Concentration Risk [Line Items]
 
 
 
Concentration Risk, Percentage
48.00% 
52.00% 
 
Balance Sheet Account Details (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 28, 2014
Dec. 29, 2013
Available-for-sale securities:
 
 
Available for sale securities, Amortized Cost
$ 705,487 
$ 454,055 
Total Estimated Fair Value
702,217 
453,966 
Debt securities in government sponsored entities [Member]
 
 
Available-for-sale securities:
 
 
Available for sale securities, Amortized Cost
51,308 
82,226 
Total Estimated Fair Value
51,263 
82,143 
Corporate debt securities [Member]
 
 
Available-for-sale securities:
 
 
Available for sale securities, Amortized Cost
502,924 
342,034 
Total Estimated Fair Value
500,088 
341,970 
U.S. Treasury securities [Member]
 
 
Available-for-sale securities:
 
 
Available for sale securities, Amortized Cost
151,255 
29,795 
Total Estimated Fair Value
$ 150,866 
$ 29,853 
Balance Sheet Account Details (Details 1) (USD $)
In Thousands, unless otherwise specified
Dec. 28, 2014
Dec. 29, 2013
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale Securities, Amortized Cost
$ 705,487 
$ 454,055 
Available-for-sale Securities, Gross Unrealized Gains
61 
388 
Available-for-sale Securities, Gross Unrealized Losses
(3,331)
(477)
Total Estimated Fair Value
702,217 
453,966 
Available-for-sale securities gross unrealized loss position
 
 
Estimated Fair Value
607,917 
241,480 
Available-for-sale Securities, Gross Unrealized Losses
(3,331)
(474)
Debt securities in government sponsored entities [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale Securities, Amortized Cost
51,308 
82,226 
Available-for-sale Securities, Gross Unrealized Gains
10 
18 
Available-for-sale Securities, Gross Unrealized Losses
(55)
(101)
Total Estimated Fair Value
51,263 
82,143 
Available-for-sale securities gross unrealized loss position
 
 
Estimated Fair Value
36,084 
73,362 
Available-for-sale Securities, Gross Unrealized Losses
(55)
(101)
Corporate debt securities [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale Securities, Amortized Cost
502,924 
342,034 
Available-for-sale Securities, Gross Unrealized Gains
46 
312 
Available-for-sale Securities, Gross Unrealized Losses
(2,882)
(376)
Total Estimated Fair Value
500,088 
341,970 
Available-for-sale securities gross unrealized loss position
 
 
Estimated Fair Value
428,078 
168,118 
Available-for-sale Securities, Gross Unrealized Losses
(2,882)
(373)
US Treasury Securities [Member]
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-for-sale Securities, Amortized Cost
151,255 
29,795 
Available-for-sale Securities, Gross Unrealized Gains
5 
58 
Available-for-sale Securities, Gross Unrealized Losses
(394)
 
Total Estimated Fair Value
150,866 
29,853 
Available-for-sale securities gross unrealized loss position
 
 
Estimated Fair Value
143,755 
 
Available-for-sale Securities, Gross Unrealized Losses
$ (394)
 
Balance Sheet Account Details (Details 2) (USD $)
In Thousands, unless otherwise specified
Dec. 28, 2014
Dec. 29, 2013
Balance Sheet Account Details [Abstract]
 
 
Due within one year
$ 238,198 
 
After one but within five years
464,019 
 
Total
$ 702,217 
$ 453,966 
Balance Sheet Account Details (Details 3) (USD $)
In Thousands, unless otherwise specified
Dec. 28, 2014
Dec. 29, 2013
Accounts Receivable [Line Items]
 
 
Accounts receivable, gross
$ 294,917 
$ 242,626 
Allowance for doubtful accounts
(5,459)
(3,680)
Total accounts receivable, net
289,458 
238,946 
Accounts receivable from product and service sales [Member]
 
 
Accounts Receivable [Line Items]
 
 
Accounts receivable, gross
292,847 
241,360 
Other receivables [Member]
 
 
Accounts Receivable [Line Items]
 
 
Accounts receivable, gross
$ 2,070 
$ 1,266 
Balance Sheet Account Details (Details 4) (USD $)
In Thousands, unless otherwise specified
Dec. 28, 2014
Dec. 29, 2013
Inventory [Abstract]
 
 
Raw materials
$ 70,316 
$ 57,398 
Work in process
94,102 
70,016 
Finished goods
26,726 
26,685 
Total inventory
$ 191,144 
$ 154,099 
Balance Sheet Account Details (Details 5) (USD $)
In Thousands, unless otherwise specified
Dec. 28, 2014
Dec. 29, 2013
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
$ 480,001 
$ 380,167 
Accumulated depreciation
(214,737)
(177,501)
Total property and equipment, net
265,264 
202,666 
Leasehold improvements [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
143,597 
104,571 
Machinery and equipment [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
192,715 
175,340 
Computer hardware and software [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
86,929 
73,544 
Furniture and fixtures [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
13,669 
10,511 
Building [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
7,670 
7,670 
Construction in progress [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
$ 35,421 
$ 8,531 
Balance Sheet Account Details Balance Sheet Account Details (Details 6) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 28, 2014
Dec. 29, 2013
Goodwill Rollforward]
 
 
Balance at beginning of period
$ 723,061 
$ 369,327 
Current period acquisition
3,338 
353,734 
Purchase price allocation adjustments related to prior year acquisitions
(1,495)
 
Balance at end of period
$ 724,904 
$ 723,061 
Balance Sheet Account Details (Details 7) (USD $)
In Thousands, unless otherwise specified
Dec. 28, 2014
Dec. 29, 2013
Dec. 30, 2012
Jan. 1, 2012
Accrued Liabilities, Current [Abstract]
 
 
 
 
Accrued compensation expenses
$ 112,606 
$ 82,705 
 
 
Deferred revenue, current portion
75,294 
50,834 
 
 
Acquisition related contingent consideration liability, current portion
44,124 
6,719 
 
 
Accrued taxes payable
38,942 
30,435 
 
 
Customer deposits
20,274 
13,569 
 
 
Reserve for product warranties
15,616 
10,407 
10,136 
11,966 
Facility exit obligation, current portion
3,837 
5,570 
 
 
Other
24,583 
18,881 
 
 
Total accrued liabilities
$ 335,276 
$ 219,120 
 
 
Balance Sheet Account Details (Details Textual) (USD $)
12 Months Ended
Dec. 28, 2014
securities
Dec. 29, 2013
Dec. 30, 2012
Balance Sheet Account Details [Line Items]
 
 
 
Number of available-for-sale securities in a gross unrealized loss position
467 
 
 
Cost-method investments in non-publicly traded companies
$ 37,200,000 
$ 22,100,000 
 
Cost method investment related (gain) loss
(4,427,000)
(61,357,000)
(45,911,000)
Accrued expenditures included in capital expenditures
14,100,000 
 
 
Capitalized computer software costs
16,500,000 
 
 
Oxford Nanopore Technologies [Member]
 
 
 
Balance Sheet Account Details [Line Items]
 
 
 
Cost method investment related (gain) loss
 
(55,200,000)
 
Other Cost Method Investment [Member]
 
 
 
Balance Sheet Account Details [Line Items]
 
 
 
Cost method investment related (gain) loss
 
 
$ 2,700,000 
Acquisitions (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 28, 2014
Dec. 29, 2013
Dec. 30, 2012
Business Acquisition [Line Items]
 
 
 
Goodwill
$ 724,904 
$ 723,061 
$ 369,327 
Verinata [Member]
 
 
 
Business Acquisition [Line Items]
 
 
 
Cash and cash equivalents
 
9,151 
 
Accounts receivable
 
2,801 
 
Inventory
 
1,110 
 
Prepaid expenses and other current assets
 
979 
 
Property and equipment
 
12,083 
 
Other assets
 
978 
 
Intangible assets
 
176,490 
 
Goodwill
 
227,453 
 
Accounts payable
 
(2,539)
 
Accrued liabilities
 
(3,803)
 
Lease financing obligation
 
(9,695)
 
Deferred tax liability
 
(18,741)
 
Total purchase price
 
$ 396,267 
 
Acquisitions (Details 1) (USD $)
In Thousands, unless otherwise specified
12 Months Ended 0 Months Ended
Dec. 28, 2014
Dec. 28, 2014
Customer relationships [Member]
Feb. 21, 2013
Verinata [Member]
Feb. 21, 2013
Verinata [Member]
Developed technology [Member]
Feb. 21, 2013
Verinata [Member]
Customer relationships [Member]
Feb. 21, 2013
Verinata [Member]
Trade name [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
 
 
 
 
 
 
Weighted average useful lives of intangible assets acquired in period (in years)
 
6 months 
 
13 years 
5 years 
2 years 
Fair Value
$ 36,011 
$ 291 
$ 176,490 
$ 170,200 
$ 4,690 
$ 1,600 
Acquisitions (Details 2) (USD $)
In Thousands, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 29, 2013
Dec. 30, 2012
Business Combinations [Abstract]
 
 
Net revenues
$ 1,433,935 
$ 1,161,241 
Net income
$ 113,869 
$ 92,645 
Net income per share-basic (in dollars per share)
$ 0.91 
$ 0.75 
Net income per share-diluted (in dollars per share)
$ 0.81 
$ 0.69 
Acquisitions (Details 3) (Contingent compensation expense [Member], USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 28, 2014
Dec. 29, 2013
Dec. 30, 2012
Business Combination, Separately Recognized Transactions [Line Items]
 
 
 
Contingent compensation expense
$ 4,265 
$ 13,610 
$ 9,151 
Research and development expense [Member]
 
 
 
Business Combination, Separately Recognized Transactions [Line Items]
 
 
 
Contingent compensation expense
1,509 
544 
3,419 
Selling, general and administrative expense [Member]
 
 
 
Business Combination, Separately Recognized Transactions [Line Items]
 
 
 
Contingent compensation expense
$ 2,756 
$ 13,066 
$ 5,732 
Acquisitions (Details Textual) (USD $)
Share data in Thousands, except Per Share data, unless otherwise specified
12 Months Ended 12 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended 12 Months Ended 12 Months Ended 0 Months Ended
Dec. 28, 2014
Dec. 29, 2013
Dec. 30, 2012
Dec. 26, 2014
Dec. 28, 2014
Customer relationships [Member]
Dec. 28, 2014
Minimum [Member]
Dec. 28, 2014
Maximum [Member]
Feb. 21, 2013
Verinata [Member]
Dec. 29, 2013
Verinata [Member]
Feb. 21, 2013
Verinata [Member]
Developed technologies [Member]
Feb. 21, 2013
Verinata [Member]
Customer relationships [Member]
Feb. 21, 2013
Verinata [Member]
Trade name [Member]
Feb. 21, 2013
Verinata [Member]
Building [Member]
Dec. 28, 2014
Verinata [Member]
Building [Member]
Feb. 21, 2013
Verinata [Member]
Minimum [Member]
Feb. 21, 2013
Verinata [Member]
Maximum [Member]
Feb. 21, 2013
Verinata [Member]
Preexisting relationship [Member]
Dec. 29, 2013
Verinata [Member]
Transaction costs [Member]
Acquisition related expense (gain), net [Member]
Dec. 29, 2013
Series of individually immaterial business acquisitions [Member]
Dec. 29, 2013
Series of individually immaterial business acquisitions [Member]
Developed technologies [Member]
Sep. 19, 2012
BlueGnome [Member]
Sep. 19, 2012
BlueGnome [Member]
Developed technologies [Member]
Sep. 19, 2012
BlueGnome [Member]
Customer relationships [Member]
Sep. 19, 2012
BlueGnome [Member]
Trade name [Member]
Sep. 19, 2012
BlueGnome [Member]
Contingent compensation expense [Member]
Maximum [Member]
Business Acquisition [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business acquisition contract price
 
 
 
 
 
 
 
$ 350,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Contingent consideration payments, maximum
 
 
 
 
 
 
 
100,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
20,000,000 
 
 
 
 
Business acquisition total consideration
 
 
 
 
 
 
 
396,300,000 
 
 
 
 
 
 
 
 
 
 
 
 
95,500,000 
 
 
 
 
Business acquisition net cash consideration
 
 
 
 
 
 
 
339,300,000 
 
 
 
 
 
 
 
 
 
 
 
 
88,000,000 
 
 
 
 
Fair value of contingent consideration to be settled in cash
 
 
 
 
 
 
 
56,200,000 
 
 
 
 
 
 
 
 
 
 
 
 
7,500,000 
 
 
 
 
Fair value of converted stock options
 
 
 
 
 
 
 
200,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Separately recognized transaction
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(500,000)
3,400,000 
 
 
 
 
 
 
20,000,000 
Amount deposited in escrow
 
 
 
 
 
 
 
30,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of unvested stock options to purchase Illumina stock
 
512 
251 
 
 
 
 
400 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of converted options
 
 
 
 
 
 
 
18,900,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share price (in dollars per share)
 
 
 
$ 188.20 
 
 
 
$ 48.36 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expected life
 
 
 
 
 
 
 
2 years 4 months 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average risk free interest rate
 
 
 
 
 
 
 
0.32% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average annualized volatility
 
 
 
 
 
 
 
42.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expected dividend yield
0.00% 
 
 
 
 
 
 
0.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average grant date fair value (in dollars per share)
 
 
 
 
 
 
 
$ 42.63 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Discount rate for assessment of the acquisition date fair value
 
 
 
 
 
 
 
 
 
 
 
 
6.00% 
 
6.00% 
20.00% 
 
 
 
 
30.00% 
 
 
 
 
Expected volatility rate
 
 
 
 
 
 
 
50.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Risk free interest rate
 
 
 
 
 
 
 
0.26% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Useful life
 
 
 
 
 
3 years 
7 years 
 
 
 
 
 
30 years 
 
 
 
 
 
 
 
 
 
 
 
 
Future annual minimum payments due in 2015 and 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
1,000,000 
 
 
 
 
 
 
 
 
 
 
 
Future minimum payments due in 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
8,400,000 
 
 
 
 
 
 
 
 
 
 
 
Consideration to identified intangible assets
 
 
 
 
 
 
 
 
176,490,000 
 
 
 
 
 
 
 
 
 
 
79,700,000 
 
25,000,000 
16,800,000 
7,100,000 
 
Weighted average useful life of identified intangible assets
 
 
 
 
6 months 
 
 
 
 
13 years 
5 years 
2 years 
 
 
 
 
 
 
 
8 years 
 
7 years 
5 years 
10 years 
 
Goodwill
$ 724,904,000 
$ 723,061,000 
$ 369,327,000 
 
 
 
 
 
$ 227,453,000 
 
 
 
 
 
 
 
 
 
$ 124,800,000 
 
$ 47,500,000 
 
 
 
 
Intangible Assets (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 28, 2014
Dec. 29, 2013
Intangible asset, gross carrying amount
$ 451,359 
$ 427,548 
Accumulated amortization
(136,859)
(96,375)
Intangible assets, net
314,500 
331,173 
Licensed technologies [Member]
 
 
Intangible asset, gross carrying amount
83,956 
48,361 
Accumulated amortization
(39,423)
(31,927)
Intangible assets, net
44,533 
16,434 
Core technologies [Member]
 
 
Intangible asset, gross carrying amount
321,200 
321,700 
Accumulated amortization
(77,493)
(45,534)
Intangible assets, net
243,707 
276,166 
Customer relationships [Member]
 
 
Intangible asset, gross carrying amount
26,461 
26,770 
Accumulated amortization
(12,522)
(7,376)
Intangible assets, net
13,939 
19,394 
License agreements [Member]
 
 
Intangible asset, gross carrying amount
15,042 
18,917 
Accumulated amortization
(4,592)
(4,947)
Intangible assets, net
10,450 
13,970 
Trade name [Member]
 
 
Intangible asset, gross carrying amount
4,700 
11,800 
Accumulated amortization
(2,829)
(6,591)
Intangible assets, net
$ 1,871 
$ 5,209 
intangibles Assets (Details 1) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 28, 2014
Acquired Finite-Lived Intangible Assets [Line Items]
 
Finite-lived Intangible Assets Acquired, gross amount
$ 36,011 
Licensed technologies [Member]
 
Acquired Finite-Lived Intangible Assets [Line Items]
 
Finite-lived Intangible Assets Acquired, gross amount
35,595 
Weighted average useful lives of intangible assets acquired in period (in years)
4 years 8 months 
Customer Relationships [Member]
 
Acquired Finite-Lived Intangible Assets [Line Items]
 
Finite-lived Intangible Assets Acquired, gross amount
291 
Weighted average useful lives of intangible assets acquired in period (in years)
6 months 
License agreements [Member]
 
Acquired Finite-Lived Intangible Assets [Line Items]
 
Finite-lived Intangible Assets Acquired, gross amount
$ 125 
Weighted average useful lives of intangible assets acquired in period (in years)
7 years 2 months 
Intangibles Asses (Details 2) (USD $)
In Thousands, unless otherwise specified
Dec. 28, 2014
Intangibles Assets, Net (Excluding Goodwill) [Abstract]
 
2015
$ 52,994 
2016
47,752 
2017
43,276 
2018
33,971 
2019
30,685 
Thereafter
105,822 
Total
$ 314,500 
Intangible Assets (Details Textual)
12 Months Ended
Dec. 28, 2014
Intangible Assets, Net (Excluding Goodwill) [Abstract]
 
Finite-Lived Intangible Asset, Useful Life
8 years 1 month 
Fair Value Measurements (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 28, 2014
Dec. 29, 2013
Dec. 30, 2012
Change in estimated fair value of the contingent consideration liability
 
 
 
Change in estimated fair value, recorded in acquisition related (gain) expense, net
$ (5,356)
$ (18,784)
$ 1,975 
Level 3 [Member]
 
 
 
Liability:
 
 
 
Acquisition related contingent consideration liabilities
44,124 
49,480 
12,519 
Change in estimated fair value of the contingent consideration liability
 
 
 
Balance as of beginning of period
49,480 
12,519 
6,638 
Additional liability recorded for acquisitions
 
60,184 
 
Change in estimated fair value, recorded in acquisition related (gain) expense, net
(5,356)
(18,784)
1,975 
Cash payments
 
(4,439)
(3,594)
Balance as of end of period
44,124 
49,480 
12,519 
Level 3 [Member] |
BlueGnome [Member]
 
 
 
Change in estimated fair value of the contingent consideration liability
 
 
 
Additional liability recorded for acquisitions
 
 
7,500 
Fair Value, Measurements, Recurring [Member]
 
 
 
Assets:
 
 
 
Money market funds (cash equivalent)
431,172 
478,755 
 
Deferred compensation plan assets
23,486 
17,805 
 
Total assets measured at fair value
1,156,875 
950,526 
 
Liability:
 
 
 
Acquisition related contingent consideration liabilities
44,124 
49,480 
 
Deferred compensation liability
20,310 
14,957 
 
Total liabilities measured at fair value
64,434 
64,437 
 
Change in estimated fair value of the contingent consideration liability
 
 
 
Balance as of end of period
44,124 
49,480 
 
Fair Value, Measurements, Recurring [Member] |
Debt securities in government sponsored entities [Member]
 
 
 
Assets:
 
 
 
Investments, fair value disclosure
51,263 
82,143 
 
Fair Value, Measurements, Recurring [Member] |
Corporate debt securities [Member]
 
 
 
Assets:
 
 
 
Investments, fair value disclosure
500,088 
341,970 
 
Fair Value, Measurements, Recurring [Member] |
U.S. Treasury securities [Member]
 
 
 
Assets:
 
 
 
Investments, fair value disclosure
150,866 
29,853 
 
Fair Value, Measurements, Recurring [Member] |
Level 1 [Member]
 
 
 
Assets:
 
 
 
Money market funds (cash equivalent)
431,172 
478,755 
 
Total assets measured at fair value
582,038 
508,608 
 
Fair Value, Measurements, Recurring [Member] |
Level 1 [Member] |
U.S. Treasury securities [Member]
 
 
 
Assets:
 
 
 
Investments, fair value disclosure
150,866 
29,853 
 
Fair Value, Measurements, Recurring [Member] |
Level 2 [Member]
 
 
 
Assets:
 
 
 
Deferred compensation plan assets
23,486 
17,805 
 
Total assets measured at fair value
574,837 
441,918 
 
Liability:
 
 
 
Deferred compensation liability
20,310 
14,957 
 
Total liabilities measured at fair value
20,310 
14,957 
 
Fair Value, Measurements, Recurring [Member] |
Level 2 [Member] |
Debt securities in government sponsored entities [Member]
 
 
 
Assets:
 
 
 
Investments, fair value disclosure
51,263 
82,143 
 
Fair Value, Measurements, Recurring [Member] |
Level 2 [Member] |
Corporate debt securities [Member]
 
 
 
Assets:
 
 
 
Investments, fair value disclosure
500,088 
341,970 
 
Fair Value, Measurements, Recurring [Member] |
Level 3 [Member]
 
 
 
Liability:
 
 
 
Acquisition related contingent consideration liabilities
44,124 
49,480 
 
Total liabilities measured at fair value
44,124 
49,480 
 
Change in estimated fair value of the contingent consideration liability
 
 
 
Balance as of end of period
$ 44,124 
$ 49,480 
 
Convertible Senior Notes (Details 1) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 28, 2014
Dec. 29, 2013
Summarized information about equity and liability components of convertible senior notes
 
 
Principal amount of convertible notes outstanding
$ 1,470,027 
$ 949,570 
Unamortized discount of liability component
(178,991)
(80,977)
Net carrying amount of liability component
1,291,036 
868,593 
Less: current portion
(304,256)
(29,288)
Long-term debt
986,780 
839,305 
Conversion option subject to cash settlement
 
282 
Carrying value of equity component, net of debt issuance cost
215,283 
274,304 
Fair value of outstanding notes
$ 2,021,750 
$ 1,428,743 
Weighted average remaining amortization period of discount on the liability component
5 years 2 months 
2 years 2 months 
Convertible Senior Notes (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 28, 2014
Extinguishment of Debt [Line Items]
 
Cash paid for principal of notes converted
$ 1,244,721 
2014 Notes [Member]
 
Extinguishment of Debt [Line Items]
 
Cash paid for principal of notes converted
29,570 
Conversion value over principal amount paid in shares of common stock
$ 196,095 
Number of shares of common stock issued upon conversion
1,151 
Convertible Senior Notes (Details Textual) (USD $)
Share data in Millions, except Per Share data, unless otherwise specified
12 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended 12 Months Ended
Dec. 28, 2014
Dec. 29, 2013
Dec. 30, 2007
Jun. 11, 2014
2019 and 2021 Notes [Member]
Jun. 11, 2014
2019 Notes [Member]
Dec. 28, 2014
2019 Notes [Member]
Jun. 11, 2014
2021 Notes [Member]
Dec. 28, 2014
2021 Notes [Member]
Jun. 11, 2014
2016 Notes [Member]
Dec. 28, 2014
2016 Notes [Member]
Jan. 1, 2012
2016 Notes [Member]
Dec. 28, 2014
2014 Notes [Member]
Dec. 30, 2007
2014 Notes [Member]
Dec. 30, 2007
2014 Notes [Member]
Warrant [Member]
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Issuance of convertible senior notes
 
 
 
$ 1,150,000,000 
 
$ 632,500,000 
 
$ 517,500,000 
 
$ 320,000,000 
$ 920,000,000 
 
$ 400,000,000 
 
Interest rate on convertible senior notes
 
 
 
 
0.00% 
 
0.50% 
 
 
 
0.25% 
 
0.625% 
 
Debt Instrument, Maturity Date
 
 
 
 
Jun. 15, 2019 
 
Jun. 15, 2021 
 
 
 
Mar. 15, 2016 
 
Feb. 15, 2014 
 
Debt issuance price as a percentage of principal
 
 
 
100.00% 
 
 
 
 
 
 
98.25% 
 
 
 
Proceeds from Debt, Net of Issuance Costs
1,132,378,000 
 
 
1,132,400,000 
 
 
 
 
 
 
 
 
 
 
Conversion rate per 1,000 principal amount of notes
 
 
 
3.9318 
 
 
 
 
 
 
11.9687 
 
 
 
Principal amount used in calculating incremental share settlement amount
 
 
 
1,000 
 
 
 
 
 
 
1,000 
 
 
 
Conversion Price
 
 
 
$ 254.34 
 
 
 
 
 
 
$ 83.55 
 
 
 
Circumstances of converting notes at referred conversion ratio
 
 
 
(1) during the five business-day period after any 10 consecutive trading day period (the “measurement period”) in which the trading price per 2019 and 2021 Note for each day of such measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such day; (2) during any calendar quarter (and only during that quarter) after the calendar quarter ending September 30, 2014, if the last reported sale price of the Company’s common stock for 20 or more trading days in the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter exceeds 130% of the applicable conversion price in effect on the last trading day of the immediately preceding calendar quarter; (3) upon the occurrence of specified events described in the indenture for the 2019 and 2021 Notes; and (4) at any time on or after March 15, 2019 for the 2019 Notes, or March 15, 2021 for the 2021 Notes, through the second scheduled trading day immediately preceding the maturity date 
 
 
 
 
 
 
(1) during the five business-day period after any 10 consecutive trading day period (the “measurement period”) in which the trading price per 2016 Note for each day of such measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such day; (2) during any calendar quarter (and only during that quarter) after the calendar quarter ending March 31, 2011, if the last reported sale price of the Company’s common stock for 20 or more trading days in the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter exceeds 130% of the applicable conversion price in effect on the last trading day of the immediately preceding calendar quarter; (3) upon the occurrence of specified events described in the indenture for the 2016 Notes; and (4) at any time on or after December 15, 2015 through the second scheduled trading day immediately preceding the maturity date.  
 
 
 
Number of consecutive trading days in the measurement period
 
 
 
10 days 
 
 
 
 
 
 
10 days 
 
 
 
Conversion triggering common stock trading price as a percentage of price last reported in Measurement period converted at conversion rate
 
 
 
less than 98% 
 
 
 
 
 
 
less than 98% 
 
 
 
Number of business days notes are convertible after measurement period
 
 
 
20 days 
 
 
 
 
 
 
20 days 
 
 
 
Number of consecutive trading days on which trading price is examined for triggering of conversion
 
 
 
30 days 
 
 
 
 
 
 
30 days 
 
 
 
Conversion triggering common stock price as a percentage of applicable conversion price in effect on the last trading day of the immediately preceding calendar quarter
 
 
 
exceeds 130% 
 
 
 
 
 
 
exceeds 130% 
 
 
 
Observation period for the observation value
 
 
 
20 days 
 
 
 
 
 
 
20 days 
 
 
 
Repurchase Price as a Percentage of Principal Amount upon designated events
 
 
 
100.00% 
 
 
 
 
 
 
100.00% 
 
 
 
Effective interest rate used to measure fair value of convertible senior note
 
 
 
 
2.90% 
 
3.50% 
 
 
 
4.50% 
 
8.30% 
 
Debt, Long-term and Short-term, Combined Amount
1,291,036,000 
868,593,000 
 
971,500,000 
 
 
 
 
 
 
748,500,000 
 
 
 
Carrying value of equity component, net of debt issuance cost
215,283,000 
274,304,000 
 
161,200,000 
 
 
 
 
 
 
155,400,000 
 
 
 
Proceeds from Issuance of Debt
 
 
 
1,132,700,000 
 
 
 
 
 
 
903,900,000 
 
 
 
Debt Issuance Costs
 
 
 
 
 
 
 
 
 
 
400,000 
 
 
 
Amortization period for debt issuance costs
 
 
 
 
 
 
 
 
 
 
5 years 
 
 
 
Convertible senior note conversion start period
 
 
 
 
 
 
 
 
 
Apr. 01, 2014 
 
Apr. 01, 2012 
 
 
Convertible senior note conversion end period
 
 
 
 
 
 
 
 
 
Mar. 31, 2015 
 
Feb. 12, 2014 
 
 
Debt Instrument, Repurchased Face Amount
 
 
 
 
 
 
 
 
600,000,000 
 
 
 
 
 
Cash paid for principal of notes converted
1,244,721,000 
 
 
 
 
 
 
 
 
1,244,700,000 
 
29,570,000 
 
 
Effective interest rate used to measure fair value of converted notes upon conversion
 
 
 
 
 
 
 
 
1.20% 
 
 
 
 
 
Debt Instrument, Repurchase Amount, Debt Component
 
 
 
 
 
 
 
 
588,800,000 
 
 
 
 
 
Debt Instrument, Repurchase Amount, Equity Component
 
 
 
 
 
 
 
 
655,900,000 
 
 
 
 
 
Loss on extinguishment of debt
(31,360,000)
(555,000)
 
 
 
 
 
 
31,400,000 
 
 
 
 
 
If-converted value in excess of principal
 
 
 
 
 
 
 
 
 
$ 393,300,000 
 
 
 
 
Maximum Shares Entitles to Purchase Shares Under Hedge Transaction Upon Issuance of Convertible Senior Notes
 
 
 
 
 
 
 
 
 
 
 
 
18.3 
 
Strike price under hedge transaction upon issuance of the convertible senior notes
 
 
 
 
 
 
 
 
 
 
 
 
$ 21.83 
 
Class of Warrant or Right, Outstanding
 
 
 
 
 
 
 
 
 
 
 
 
 
18.3 
Exercise price of warrants held by hedging counter parties (in dollars per share)
 
 
$ 31.435 
 
 
 
 
 
 
 
 
 
 
$ 31.435 
Commitments (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 28, 2014
Commitments and Contingencies Disclosure [Abstract]
 
Operating lease, current - 2015
$ 35,210 
Operating lease, due in two years - 2016
38,892 
Operating lease, due in three years - 2017
37,064 
Operating lease, due in four years - 2018
37,747 
Operating lease, due in five years - 2019
39,656 
Operating lease, due after five years - Thereafter
415,052 
Operating lease, total future minimum payments due
603,621 
Sublease, current - 2015
(2,900)
Sublease, receivable in two years - 2016
(2,924)
Sublease, receivable in three years - 2017
(2,708)
Sublease, receivable in four years - 2018
(2,789)
Sublease, receivable in five years - 2019
(2,873)
Sublease, receivable after five years - Thereafter
(11,837)
Sublease, total future minimum receivable
(26,031)
Operating leases, net - current - 2015
32,310 
Operating lease, net, due in two years - 2016
35,968 
Operating lease, net, due in three years - 2017
34,356 
Operating lease, net, due in four years - 2018
34,958 
Operating lease, net, due in five years - 2019
36,783 
Operating lease, net, due after five years - Thereafter
403,215 
Operating lease, total net future minimum payments due
$ 577,590 
Commitments (Details 1) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 28, 2014
Dec. 29, 2013
Dec. 30, 2012
Commitments and Contingencies Disclosure [Abstract]
 
 
 
Headquarters facility exit obligation balance, beginning of period
$ 38,218 
$ 45,352 
$ 25,049 
Adjustment to facility exit obligation
2,555 
(114)
24,878 
Accretion of interest expense
2,638 
2,738 
2,129 
Cash payments
(5,711)
(9,758)
(6,704)
Headquarters facility exit obligation balance, end of period
$ 37,700 
$ 38,218 
$ 45,352 
Commitments (Details 2) (USD $)
In Thousands, unless otherwise specified
Dec. 28, 2014
Commitments and Contingencies Disclosure [Abstract]
 
Royalties, Future Minimum Payments, Due in 2015
$ 8,650 
Royalties, Future Minimum Payments, Due in 2016
12,470 
Royalties, Future Minimum Payments, Due in 2017
13,500 
Royalties, Future Minimum Payments, Due in 2018
18,475 
Royalties, Future Minimum Payments, Due in 2019
23,480 
Royalties, Future Minimum Payments, Due Thereafter
23,550 
Total minimum royalty payments
$ 100,125 
Commitments (Details 3) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 28, 2014
Dec. 29, 2013
Dec. 30, 2012
Reserve for product warranties
 
 
 
Balance as of beginning of period
$ 10,407 
$ 10,136 
$ 11,966 
Additions charged to cost of revenue
24,150 
15,674 
17,279 
Repairs and replacements
(18,941)
(15,403)
(19,109)
Balance as of end of period
$ 15,616 
$ 10,407 
$ 10,136 
Commitments (Details Textual) (USD $)
12 Months Ended 0 Months Ended
Dec. 28, 2014
Dec. 29, 2013
Dec. 30, 2012
Dec. 31, 2014
Subsequent Event [Member]
Dec. 30, 2014
Subsequent Event [Member]
sqft
Subsequent Event [Line Items]
 
 
 
 
 
Lease square footage
 
 
 
 
360,000 
Initial Term
 
 
 
16 years 
 
Lease Commencement Date
 
 
 
Jul. 01, 2017 
 
Number of lease renewal options
 
 
 
 
3 
Lease renewal option term
 
 
 
5 years 
 
Operating Leases, Future Minimum Payments Due
$ 603,621,000 
 
 
 
$ 204,000,000 
Sublease initial term
10 years 
 
 
 
 
Line of Credit Issuance Amount
8,000,000 
 
 
 
 
Letters of credit amount at end of lease term
0 
 
 
 
 
Line of Credit Outstanding Balance
7,200,000 
 
 
 
 
Rent expense
$ 33,200,000 
$ 28,100,000 
$ 21,400,000 
 
 
Share-based Compensation Expense (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 28, 2014
Dec. 29, 2013
Dec. 30, 2012
Share-based Compensation
 
 
 
Share-based compensation expense before taxes
$ 152,551 
$ 105,826 
$ 94,324 
Related income tax benefits
(44,194)
(32,819)
(30,759)
Share-based compensation expense, net of taxes
108,357 
73,007 
63,565 
Cost of product revenue [Member]
 
 
 
Share-based Compensation
 
 
 
Share-based compensation expense before taxes
9,451 
6,223 
7,575 
Cost of service and other revenue [Member]
 
 
 
Share-based Compensation
 
 
 
Share-based compensation expense before taxes
1,204 
777 
461 
Research and development expense [Member]
 
 
 
Share-based Compensation
 
 
 
Share-based compensation expense before taxes
50,880 
37,439 
30,879 
Selling, general and administrative [Member]
 
 
 
Share-based Compensation
 
 
 
Share-based compensation expense before taxes
$ 91,016 
$ 61,387 
$ 55,409 
Share-based Compensation Expense (Details 1)
12 Months Ended
Dec. 28, 2014
Dec. 29, 2013
Dec. 30, 2012
Assumptions used to estimate the fair value per share of options granted and employee stock purchase rights granted
 
 
 
Expected dividend yield
0.00% 
 
 
Stock Options [Member]
 
 
 
Assumptions used to estimate the fair value per share of options granted and employee stock purchase rights granted
 
 
 
Risk-free interest rate, minimum
 
0.14% 
0.56% 
Risk-free interest rate, maximum
 
1.86% 
0.93% 
Expected volatility, minimum
 
30.00% 
41.00% 
Expected volatility, maximum
 
44.00% 
48.00% 
Expected dividend yield
 
0.00% 
0.00% 
Weighted-average grant-date fair value per share, options
 
$ 40.66 
$ 15.47 
Stock Options [Member] |
Maximum [Member]
 
 
 
Assumptions used to estimate the fair value per share of options granted and employee stock purchase rights granted
 
 
 
Expected term
   
9 years 5 months 
6 years 7 months 
Stock Options [Member] |
Minimum [Member]
 
 
 
Assumptions used to estimate the fair value per share of options granted and employee stock purchase rights granted
 
 
 
Expected term
   
0 years 9 months 
4 years 
Employee Stock Purchase Rights [Member]
 
 
 
Assumptions used to estimate the fair value per share of options granted and employee stock purchase rights granted
 
 
 
Risk-free interest rate, minimum
0.05% 
0.08% 
0.09% 
Risk-free interest rate, maximum
0.13% 
0.15% 
0.17% 
Expected volatility, minimum
38.00% 
31.00% 
33.00% 
Expected volatility, maximum
41.00% 
32.00% 
64.00% 
Expected dividend yield
0.00% 
0.00% 
0.00% 
Weighted-average grant-date fair value per share, ESPP
$ 44.64 
$ 19.30 
$ 16.45 
Employee Stock Purchase Rights [Member] |
Maximum [Member]
 
 
 
Assumptions used to estimate the fair value per share of options granted and employee stock purchase rights granted
 
 
 
Expected term
1 year 
1 year 
1 year 
Employee Stock Purchase Rights [Member] |
Minimum [Member]
 
 
 
Assumptions used to estimate the fair value per share of options granted and employee stock purchase rights granted
 
 
 
Expected term
6 months 
6 months 
6 months 
Share-based Compensation Expense (Details Textual) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 28, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
 
Unrecognized compensation cost related to stock options, restricted stock units and ESPP shares issued to date
$ 280.6 
Weighted-average period of unrecognized compensation cost related to stock options, restricted stock, and ESPP shares issued to date
2 years 1 month 
Stockholders' Equity (Details) (USD $)
12 Months Ended
Dec. 28, 2014
Dec. 29, 2013
Dec. 30, 2012
Equity [Abstract]
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number
2,900,000 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price
$ 35.94 
 
 
Options
 
 
 
Options, Outstanding at Period Start
5,724,000 
8,351,000 
10,378,000 
Options, Granted
 
512,000 
251,000 
Options, Exercised
(2,478,000)
(3,006,000)
(2,071,000)
Options, Cancelled
(35,000)
(133,000)
(207,000)
Options, Outstanding at Period End
3,211,000 
5,724,000 
8,351,000 
Weighted-Average Exercise Price
 
 
 
Weighted-Average Exercise Price, Outstanding at Period Start (in dollars per share)
$ 32.64 
$ 32.10 
$ 29.69 
Weighted Average Exercise Price, Granted (in dollars per share)
 
$ 14.74 
$ 40.79 
Weighted Average Exercise Price, Exercised (in dollars per share)
$ 29.93 
$ 27.70 
$ 20.34 
Weighted Average Exercise Price, Cancelled (in dollars per share)
$ 31.73 
$ 41.80 
$ 39.18 
Weighted-Average Exercise Price, Outstanding at Period End (in dollars per share)
$ 34.74 
$ 32.64 
$ 32.10 
Stockholders' Equity (Details 1) (USD $)
In Thousands, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 28, 2014
Dec. 29, 2013
Dec. 30, 2012
Restricted Stock Awards [Member]
 
 
 
Restricted stock
 
 
 
Restricted Stock, Outstanding at Period Start
248 
465 
230 
Restricted Stock, Awarded
 
 
312 
Restricted Stock, Vested
(140)
(217)
(77)
Restricted Stock, Outstanding at Period End
108 
248 
465 
Weighted Average Grant-Date Fair Value per Share
 
 
 
Weighted Average Grant Date Fair Value per Share, Outstanding at Period Start (in dollars per share)
$ 53.46 
$ 53.84 
$ 65.95 
Weighted Average Grant Date Fair Value per Share, Awarded (in dollars per share)
 
 
$ 47.91 
Weighted Average Grant Date Fair Value per Share, Vested (in dollars per share)
$ 47.90 
$ 54.27 
$ 65.95 
Weighted Average Grant Date Fair Value per Share, Outstanding at Period End (in dollars per share)
$ 56.62 
$ 53.46 
$ 53.84 
Restricted Stock Units [Member]
 
 
 
Restricted stock
 
 
 
Restricted Stock, Outstanding at Period Start
3,628 
3,660 
3,476 
Restricted Stock, Awarded
780 
1,532 
1,640 
Restricted Stock, Vested
(1,383)
(1,308)
(1,062)
Restricted Stock, Cancelled
(184)
(256)
(394)
Restricted Stock, Outstanding at Period End
2,841 
3,628 
3,660 
Weighted Average Grant-Date Fair Value per Share
 
 
 
Weighted Average Grant Date Fair Value per Share, Outstanding at Period Start (in dollars per share)
$ 59.66 
$ 45.49 
$ 41.87 
Weighted Average Grant Date Fair Value per Share, Awarded (in dollars per share)
$ 172.53 
$ 77.53 
$ 48.52 
Weighted Average Grant Date Fair Value per Share, Vested (in dollars per share)
$ 55.44 
$ 42.97 
$ 38.48 
Weighted Average Grant Date Fair Value per Share, Cancelled (in dollars per share)
$ 65.09 
$ 49.24 
$ 45.05 
Weighted Average Grant Date Fair Value per Share, Outstanding at Period End (in dollars per share)
$ 92.35 
$ 59.66 
$ 45.49 
Performance Stock Units [Member]
 
 
 
Restricted stock
 
 
 
Restricted Stock, Outstanding at Period Start
1,101 
587 
 
Restricted Stock, Awarded
968 
584 
599 
Restricted Stock, Vested
(753)
 
 
Restricted Stock, Cancelled
(59)
(70)
(12)
Restricted Stock, Outstanding at Period End
1,257 
1,101 
587 
Weighted Average Grant-Date Fair Value per Share
 
 
 
Weighted Average Grant Date Fair Value per Share, Outstanding at Period Start (in dollars per share)
$ 54.64 
$ 49.64 
 
Weighted Average Grant Date Fair Value per Share, Awarded (in dollars per share)
$ 104.52 
$ 59.16 
$ 49.66 
Weighted Average Grant Date Fair Value per Share, Vested (in dollars per share)
$ 49.52 
 
 
Weighted Average Grant Date Fair Value per Share, Cancelled (in dollars per share)
$ 52.87 
$ 50.42 
$ 50.54 
Weighted Average Grant Date Fair Value per Share, Outstanding at Period End (in dollars per share)
$ 96.21 
$ 54.64 
$ 49.64 
Stockholders' Equity (Details 2) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 28, 2014
Dec. 29, 2013
Dec. 30, 2012
Restricted Stock Awards [Member]
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Pre-tax intrinsic value of outstanding restricted and performance stock
$ 20,321 
$ 27,384 
$ 25,437 
Fair value of restricted and performance stock vested
6,712 
11,750 
5,039 
Restricted Stock Units [Member]
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Pre-tax intrinsic value of outstanding restricted and performance stock
534,708 
400,421 
200,383 
Fair value of restricted and performance stock vested
76,646 
56,212 
40,870 
Performance Shares Units [Member]
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Pre-tax intrinsic value of outstanding restricted and performance stock
236,606 
121,555 
32,149 
Fair value of restricted and performance stock vested
$ 37,313 
 
 
Stockholders' Equity (Details Textual) (USD $)
1 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended
Jul. 28, 2013
Dec. 28, 2014
Dec. 29, 2013
Dec. 30, 2012
Dec. 26, 2014
Dec. 30, 2007
Dec. 28, 2014
April 18, 2012 Discretionary Plan [Member]
Dec. 29, 2013
April 18, 2012 Discretionary Plan [Member]
Apr. 29, 2012
April 18, 2012 Discretionary Plan [Member]
Jan. 30, 2014
January 30, 2014 Stock Repurchase Program [Member]
Dec. 28, 2014
Stock Options [Member]
Minimum [Member]
Dec. 28, 2014
Stock Options [Member]
Maximum [Member]
Dec. 28, 2014
Restricted Stock Units [Member]
Dec. 28, 2014
Performance Stock Units [Member]
Dec. 28, 2014
Performance Stock Units [Member]
Maximum [Member]
Dec. 29, 2013
2005 Stock Plan [Member]
Dec. 28, 2014
2005 Illumina, 2005 Solexa, and 2008 Verinata Stock Plans [Member]
Dec. 28, 2014
Employee Stock Purchase Plan [Member]
Dec. 29, 2013
Employee Stock Purchase Plan [Member]
Dec. 30, 2012
Employee Stock Purchase Plan [Member]
Jan. 25, 2012
Stockholder Rights Plan [Member]
Jan. 25, 2012
Stockholder Rights Plan [Member]
Minimum [Member]
Jan. 25, 2012
Stockholder Rights Plan [Member]
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Increase in the maximum number of shares of common stock authorized for issuance (in shares)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5,000,000 
 
 
 
 
 
 
 
Shares available for issuance
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5,300,000 
14,700,000 
15,000,000 
 
 
 
 
Vesting period
 
 
 
 
 
 
 
 
 
 
4 years 
5 years 
4 years 
 
 
 
 
 
 
 
 
 
 
Percentage of options vesting on the first anniversary of the grant date
 
 
 
 
 
 
 
 
 
 
20.00% 
25.00% 
 
 
 
 
 
 
 
 
 
 
 
Maximum term of each grant of options
 
 
 
 
 
 
 
 
 
 
 
10 years 
 
 
 
 
 
 
 
 
 
 
 
Stock options exercisable (in shares)
 
2,900,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock options exercisable outstanding weighted average exercise price per share (in dollars per share)
 
$ 35.94 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average remaining life in years of options outstanding
 
4 years 3 months 20 days 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average remaining life in years of options exercisable
 
4 years 1 month 17 days 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Aggregate intrinsic value of options outstanding
 
$ 492,800,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Aggregate intrinsic value of options exercisable
 
444,200,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share price (in dollars per share)
 
 
 
 
$ 188.20 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total intrinsic value of options exercised
 
330,500,000 
141,700,000 
60,600,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total fair value of options vested
 
17,200,000 
24,000,000 
31,900,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Vesting percentage, 1st anniversary
 
 
 
 
 
 
 
 
 
 
 
 
15.00% 
 
 
 
 
 
 
 
 
 
 
Vesting percentage, 2nd anniversary
 
 
 
 
 
 
 
 
 
 
 
 
20.00% 
 
 
 
 
 
 
 
 
 
 
Vesting percentage, 3rd anniversary
 
 
 
 
 
 
 
 
 
 
 
 
30.00% 
 
 
 
 
 
 
 
 
 
 
Vesting percentage, 4th anniversary
 
 
 
 
 
 
 
 
 
 
 
 
35.00% 
 
 
 
 
 
 
 
 
 
 
Performance stock award performance period
 
 
 
 
 
 
 
 
 
 
 
 
 
3 years 
 
 
 
 
 
 
 
 
 
Percentage of shares approved issuable at end of performance period
 
 
 
 
 
 
 
 
 
 
 
 
 
 
150.00% 
 
 
 
 
 
 
 
 
ESPP Number of shares authorized
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
15,500,000 
 
 
 
 
 
Specified percentage of the fair market value of the common stock on the first or last day of the offering period whichever is lower at which stock is purchased
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
85.00% 
 
 
 
 
 
Annual percent increases of shares available for issuance
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.00% 
 
 
 
 
 
ESPP Annual increases of shares available for issuance
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3,000,000 
 
 
 
 
 
Total shares issued under the ESPP
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
300,000 
400,000 
300,000 
 
 
 
Exercise price of warrants held by hedging counter parties (in dollars per share)
 
 
 
 
 
$ 31.435 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 0.001 
 
 
Number of common shares callable by warrants settled in period
3,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of common shares called by warrants
 
 
 
 
 
18,300,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Payments on retirement of warrants
125,000,000 
 
(125,000,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Repurchase of common shares (in shares)
 
 
 
1,900,000 
 
 
1,500,000 
900,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock repurchases (in dollars)
 
237,183,000 
50,020,000 
82,522,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock repurchase program authorized amount
 
 
 
 
 
 
 
 
250,000,000 
250,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dollar amount remaining in authorized stock repurchase program
 
$ 130,400,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock, par value (in dollars per share)
 
$ 0.01 
$ 0.01 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 0.01 
 
 
Dividend price per share of Series A Junior Participating Preferred Stock (in dollars per Right)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
275.00 
 
 
Dividend portion of a share of Series A Junior Participating Preferred Stock
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
0.001 
 
 
Minimum percent ownership of outstanding common stock required to exercise rights
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
15.00% 
 
 
Price per right Board of Directors are entitled to redeem rights (in dollars per Right)
 
 
 
 
 
$ 31.435 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 0.001 
 
 
Number of shares per Right
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1 
 
 
Percent ownership of outstanding common stock required prior to exchange by board of directors
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
15.00% 
50.00% 
Legal Proceedings Legal Proceedings (Details Textual) (USD $)
0 Months Ended 12 Months Ended 12 Months Ended
Jul. 2, 2013
Dec. 28, 2014
Dec. 29, 2013
Dec. 28, 2014
Syntrix [Member]
Dec. 29, 2013
Syntrix [Member]
Sep. 28, 2014
Syntrix [Member]
Dec. 28, 2014
Sequenom [Member]
Dec. 28, 2014
Cost of Sales [Member]
Syntrix [Member]
Dec. 28, 2014
Operating Expense [Member]
Syntrix [Member]
Dec. 29, 2013
Operating Expense [Member]
Syntrix [Member]
Dec. 28, 2014
Operating Expense [Member]
Sequenom [Member]
Dec. 28, 2014
Research and development expense [Member]
Sequenom [Member]
Dec. 28, 2014
Finite-Lived Intangible Assets [Member]
Syntrix [Member]
Dec. 28, 2014
Release of past damages [Member]
Syntrix [Member]
Loss Contingencies [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Final Amended Judgment amount
$ 115,100,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Final Amended Judgment royalty rate
8.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
Legal contingencies
 
(74,338,000)
115,369,000 
(109,400,000)
132,900,000 
 
 
(27,300,000)
(82,100,000)
114,600,000 
1,200,000 
 
 
 
Settlement payment
 
 
 
70,000,000 
 
 
 
 
 
 
 
 
29,500,000 
40,500,000 
Upfront payment for Sequenom contract
 
 
 
 
 
 
50,000,000 
 
 
 
 
48,800,000 
 
 
Loss Contingency Accrual
 
 
 
 
 
148,800,000 
 
 
 
 
 
 
 
 
Remaining amortization of settlement payment allocated to intangible assets
 
 
 
4 years 9 months 20 days 
 
 
 
 
 
 
 
 
 
 
Release of ongoing royalty amount deposited with the Court
 
 
 
$ 33,500,000 
 
 
 
 
 
 
 
 
 
 
Income Taxes (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 28, 2014
Dec. 29, 2013
Dec. 30, 2012
Income Tax Disclosure [Abstract]
 
 
 
United States
$ 176,974 
$ (53,703)
$ 102,296 
Foreign
271,784 
213,017 
120,312 
Income before income taxes
$ 448,758 
$ 159,314 
$ 222,608 
Income Taxes (Details 1) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 28, 2014
Dec. 29, 2013
Dec. 30, 2012
Current:
 
 
 
Federal
$ 60,984 
$ 78,419 
$ 57,285 
State
12,381 
8,854 
10,121 
Foreign
41,815 
39,416 
31,504 
Total current provision
115,180 
126,689 
98,910 
Deferred:
 
 
 
Federal
(3,191)
(69,102)
(7,724)
State
(4,974)
(15,222)
(7,708)
Foreign
(11,608)
(8,359)
(12,124)
Total deferred benefit
(19,773)
(92,683)
(27,556)
Total tax provision
$ 95,407 
$ 34,006 
$ 71,354 
Income Taxes (Details 2) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 28, 2014
Dec. 29, 2013
Dec. 30, 2012
Income Tax Disclosure [Abstract]
 
 
 
Tax at federal statutory rate
$ 157,065 
$ 55,760 
$ 77,913 
State, net of federal benefit
5,023 
647 
4,056 
Research and other credits
(16,144)
(10,977)
(2,613)
Change in valuation allowance
(4,212)
10,544 
(37)
Change in fair value of contingent consideration
(1,321)
(3,859)
 
Impact of foreign operations
(42,215)
(18,006)
(11,470)
Other
(2,789)
(103)
3,505 
Total tax provision
$ 95,407 
$ 34,006 
$ 71,354 
Income Taxes (Details 3) (USD $)
In Thousands, unless otherwise specified
Dec. 28, 2014
Dec. 29, 2013
Deferred tax assets:
 
 
Net operating losses
$ 47,738 
$ 66,969 
Tax credits
32,192 
36,277 
Other accruals and reserves
41,676 
86,716 
Stock compensation
54,570 
36,728 
Deferred rent
25,975 
16,823 
Inventory adjustments
12,003 
9,034 
Other amortization
28,203 
9,571 
Other
24,045 
18,244 
Total gross deferred tax assets
266,402 
280,362 
Valuation allowance on deferred tax assets
(15,191)
(19,132)
Total deferred tax assets
251,211 
261,230 
Deferred tax liabilities:
 
 
Purchased intangible amortization
(85,612)
(98,671)
Convertible debt
(61,383)
(27,821)
Property and equipment
(16,521)
(13,311)
Other
(1,670)
(6,349)
Total deferred tax liabilities
(165,186)
(146,152)
Net deferred tax assets
$ 86,025 
$ 115,078 
Income Taxes (Details 4) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 28, 2014
Dec. 29, 2013
Dec. 30, 2012
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
 
 
 
Balance at beginning of year
$ 49,046 
$ 37,585 
$ 28,396 
Increases related to prior year tax positions
426 
4,794 
2,573 
Decreases related to prior year tax positions
(804)
(223)
(69)
Increases related to current year tax positions
8,756 
7,503 
6,685 
Decreases related to lapse of statute of limitations
(5,336)
(613)
 
Balance at end of year
$ 52,088 
$ 49,046 
$ 37,585 
Income Taxes (Details Textual) (USD $)
12 Months Ended
Dec. 28, 2014
Dec. 29, 2013
Dec. 30, 2012
Income Taxes [Line Items]
 
 
 
U.S. federal statutory tax rate
35.00% 
 
 
Valuation allowance
$ 15,191,000 
$ 19,132,000 
 
Change in valuation allowance
(3,900,000)
 
 
Excess tax benefits realized
126,477,000 
53,032,000 
17,015,000 
Unrealized excess tax benefits associated with share-based compensation
36,800,000 
 
 
Decrease to the provision for income taxes
15,600,000 
 
 
Increase to net income per diluted share
$ 0.10 
 
 
Undistributed earnings of foreign subsidiaries
395,600,000 
 
 
Uncertain tax positions that would reduce annual effective tax rate, if recognized
42,600,000 
40,100,000 
 
Potential interest penalties on uncertain tax positions
700,000 
1,000,000 
800,000 
Liability recorded for potential interest and penalties
4,400,000 
3,500,000 
 
Federal [Domain]
 
 
 
Income Taxes [Line Items]
 
 
 
Net operating loss carryforwards
163,600,000 
 
 
Federal and state tax credit carryforwards
15,300,000 
 
 
State [Member]
 
 
 
Income Taxes [Line Items]
 
 
 
Net operating loss carryforwards
295,000,000 
 
 
Federal and state tax credit carryforwards
63,700,000 
 
 
Foreign Tax Authority [Member]
 
 
 
Income Taxes [Line Items]
 
 
 
Change in valuation allowance
(10,400,000)
 
 
Research Tax Credit Carryforward [Member]
 
 
 
Income Taxes [Line Items]
 
 
 
Change in valuation allowance
$ 6,000,000 
 
 
Singapore [Member]
 
 
 
Income Taxes [Line Items]
 
 
 
Foreign statutory tax rates
17.00% 
 
 
United Kingdom [Member]
 
 
 
Income Taxes [Line Items]
 
 
 
Foreign statutory tax rates
21.50% 
 
 
Employee Benefit Plans (Details Textual) (USD $)
12 Months Ended
Dec. 28, 2014
Dec. 29, 2013
Dec. 30, 2012
Matching contributions
$ 9,500,000 
$ 7,000,000 
$ 5,500,000 
Percent of base salary available for contribution to the deferred compensation plan
80.00% 
 
 
Percent of all other forms of compensation available for contribution to the deferred compensation plan
100.00% 
 
 
Fair Value, Measurements, Recurring [Member]
 
 
 
Assets of the Deferred Compensation Plan rabbi trust
23,486,000 
17,805,000 
 
Liabilities of the Deferred Compensation Plan rabbi trust
20,310,000 
14,957,000 
 
Fair Value, Measurements, Recurring [Member] |
Level 2 [Member]
 
 
 
Assets of the Deferred Compensation Plan rabbi trust
23,486,000 
17,805,000 
 
Liabilities of the Deferred Compensation Plan rabbi trust
$ 20,310,000 
$ 14,957,000 
 
Segment Information, Geographic Data, and Significant Customers (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 28, 2014
Sep. 28, 2014
Jun. 29, 2014
Mar. 30, 2014
Dec. 29, 2013
Sep. 29, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 28, 2014
Dec. 29, 2013
Dec. 30, 2012
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Revenue
$ 512,379 
$ 480,630 
$ 447,568 
$ 420,781 
$ 387,326 
$ 356,800 
$ 346,094 
$ 330,958 
$ 1,861,358 
$ 1,421,178 
$ 1,148,516 
United States [Member]
 
 
 
 
 
 
 
 
 
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
950,703 
714,662 
568,443 
Europe [Member]
 
 
 
 
 
 
 
 
 
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
466,536 
354,682 
291,404 
Asia-Pacific [Member]
 
 
 
 
 
 
 
 
 
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
342,702 
276,442 
232,498 
Other markets [Member]
 
 
 
 
 
 
 
 
 
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
$ 101,417 
$ 75,392 
$ 56,171 
Segment Information, Geographic Data, and Significant Customers (Details 1) (USD $)
In Thousands, unless otherwise specified
Dec. 28, 2014
Dec. 29, 2013
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
Long-Lived Assets
$ 265,264 
$ 202,666 
United States [Member]
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
Long-Lived Assets
204,717 
150,470 
United Kingdom [Member]
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
Long-Lived Assets
31,965 
24,122 
Singapore [Member]
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
Long-Lived Assets
22,326 
21,311 
Other countries [Member]
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
Long-Lived Assets
$ 6,256 
$ 6,763 
Segment Information, Geographic Data, and Significant Customers (Details Textual)
12 Months Ended
Dec. 28, 2014
Dec. 29, 2013
Dec. 30, 2012
Products and Services, Consumables [Member]
 
 
 
Revenue from External Customer [Line Items]
 
 
 
Percent of sales
56.00% 
62.00% 
64.00% 
Products and Services, Instruments [Member]
 
 
 
Revenue from External Customer [Line Items]
 
 
 
Percent of sales
30.00% 
26.00% 
27.00% 
Quarterly Financial Information (unaudited) (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 28, 2014
Sep. 28, 2014
Jun. 29, 2014
Mar. 30, 2014
Dec. 29, 2013
Sep. 29, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 28, 2014
Dec. 29, 2013
Dec. 30, 2012
Quarterly Financial Information Disclosure [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Fiscal year quarterly operating cycle
P13W 
P13W 
P13W 
P13W 
P13W 
P13W 
P13W 
P13W 
 
 
 
Total revenue
$ 512,379 
$ 480,630 
$ 447,568 
$ 420,781 
$ 387,326 
$ 356,800 
$ 346,094 
$ 330,958 
$ 1,861,358 
$ 1,421,178 
$ 1,148,516 
Gross profit
384,937 
333,941 
300,540 
278,292 
259,246 
209,940 
223,409 
219,292 
1,297,710 
911,887 
773,528 
Net income (loss)
$ 153,280 
$ 93,489 
$ 46,605 
$ 59,977 
$ 80,661 
$ 31,357 
$ 35,877 
$ (22,587)
$ 353,351 
$ 125,308 
$ 151,254 
Net income (loss) per share, basic
$ 1.08 
$ 0.66 
$ 0.36 
$ 0.47 
$ 0.64 
$ 0.25 
$ 0.29 
$ (0.18)
$ 2.61 
$ 1.00 
$ 1.23 
Net income (loss) per share, diluted
$ 1.03 
$ 0.63 
$ 0.31 
$ 0.40 
$ 0.56 
$ 0.22 
$ 0.26 
$ (0.18)
$ 2.37 
$ 0.90 
$ 1.13 
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES (Details) (Allowance for doubtful accounts [Member], USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 28, 2014
Dec. 29, 2013
Dec. 30, 2012
Allowance for doubtful accounts [Member]
 
 
 
Valuation and Qualifying Accounts Disclosure [Line Items]
 
 
 
Balance at Beginning of Period
$ 3,680 
$ 4,280 
$ 3,997 
Additions Charged to Expenses/(Reductions from) Revenue(1)
1,870 1
(422)1
2,191 1
Deductions
(91)2
(178)2
(1,908)2
Balance at End of Period
$ 5,459 
$ 3,680 
$ 4,280