--- ticker: ILMN company: ILMN filing_type: 10-K year_current: 2026 year_prior: 2025 risks_added: 19 risks_removed: 30 risks_modified: 88 risks_unchanged: 83 source: SEC EDGAR url: https://riskdiff.com/ilmn/2026-vs-2025/ markdown_url: https://riskdiff.com/ilmn/2026-vs-2025/index.md generated: 2026-06-01 --- # ILMN: 10-K Risk Factor Changes 2026 vs 2025 > Source: U.S. Securities and Exchange Commission (EDGAR) > Generated: 2026-06-01 > All data extracted directly from official filings. No hallucinated content. ## Summary | Status | Count | |--------|-------| | New risks added | 19 | | Risks removed | 30 | | Risks modified | 88 | | Unchanged | 83 | --- ## New in Current Filing: Changes in tariffs, trade restrictions, and customs or export/import regulations have impacted, and we expect will continue to impact, our business by increasing costs and administrative burdens, disrupting cross-border flows, and affecting customer demand. We operate a diversified, global supply chain. Recent tariff measures and related policy actions have already resulted in higher input costs and longer lead times, and we expect continued volatility in tariff rates, sector-specific duties, and licensing or other trade requirements in the U.S. and key international markets (including China) that may further raise costs, constrain pricing, reduce demand, or cause inventory imbalances. While we pursue mitigation efforts, these actions may not be successful, timely, or economically feasible, and our ability to pass cost increases to customers may be limited, any of which could adversely affect our business, cash flows, financial condition, and results of operations. --- ## New in Current Filing: Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. 50 50 50 Valuation of Excess and Obsolete InventoryDescription of the MatterThe Company's inventories totaled $564 million as of December 28, 2025. As explained in Note 1 and Note 7 to the consolidated financial statements, the Company assesses the valuation of inventory each reporting period. Obsolete inventory or inventory in excess of management's estimated usage requirement is written down to its estimated net realizable value if those balances are determined to be less than cost.Auditing management's estimates for excess and obsolete inventory involved subjective auditor judgment because the estimates rely on a number of factors that are affected by market and economic conditions. In particular, the excess and obsolete inventory calculations are subject to potential significant changes in assumptions about future demand, market conditions, and the release of new products that may supersede old ones.How We Addressed the Matter in Our AuditWe obtained an understanding, evaluated and tested the design and operating effectiveness of internal controls over the Company's excess and obsolete inventory valuation process, including management's assessment of the assumptions stated above and manual input and analysis of certain data underlying the excess and obsolete inventory valuation. Our audit procedures included, among others, evaluating the significant assumptions stated above and the accuracy and completeness of the underlying manual inputs provided by supply chain and operations management personnel used to value excess and obsolete inventory. We compared the balance of on-hand inventories to usage forecasts and historical usage and evaluated whether adjustments to forecasted usage were required for specific product considerations, such as new product introductions, technological changes or alternative uses. We also assessed the historical accuracy of management's estimates and performed sensitivity analyses over the significant assumptions to evaluate the changes in the excess and obsolete inventory estimates that would result from changes in the underlying assumptions. The Company's inventories totaled $564 million as of December 28, 2025. As explained in Note 1 and Note 7 to the consolidated financial statements, the Company assesses the valuation of inventory each reporting period. Obsolete inventory or inventory in excess of management's estimated usage requirement is written down to its estimated net realizable value if those balances are determined to be less than cost. Auditing management's estimates for excess and obsolete inventory involved subjective auditor judgment because the estimates rely on a number of factors that are affected by market and economic conditions. In particular, the excess and obsolete inventory calculations are subject to potential significant changes in assumptions about future demand, market conditions, and the release of new products that may supersede old ones. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated and tested the design and operating effectiveness of internal controls over the Company's excess and obsolete inventory valuation process, including management's assessment of the assumptions stated above and manual input and analysis of certain data underlying the excess and obsolete inventory valuation. Our audit procedures included, among others, evaluating the significant assumptions stated above and the accuracy and completeness of the underlying manual inputs provided by supply chain and operations management personnel used to value excess and obsolete inventory. We compared the balance of on-hand inventories to usage forecasts and historical usage and evaluated whether adjustments to forecasted usage were required for specific product considerations, such as new product introductions, technological changes or alternative uses. We also assessed the historical accuracy of management's estimates and performed sensitivity analyses over the significant assumptions to evaluate the changes in the excess and obsolete inventory estimates that would result from changes in the underlying assumptions. /s/ Ernst & Young LLP We have served as the Company's auditor since 2000. San Diego, California February 11, 2026 51 51 51 --- ## New in Current Filing: Accounting Pronouncements Adopted in 2025 In December 2023, the FASB issued ASU 2023-09, Income Taxes - Improvements to Income Tax Disclosures. The new standard includes enhanced income tax disclosures, specifically related to the rate reconciliation and income taxes paid for annual periods. The standard was effective for us beginning in fiscal year 2025. We adopted the standard on its effective date in fiscal year 2025 and applied the amendments retrospectively, as permitted, to all prior periods presented in the consolidated financial statements. See note 10. Income Taxes for additional details. --- ## New in Current Filing: Government Incentives From time to time, we may qualify for or receive government incentives, under defined programs, from various governments, primarily to support our manufacturing and research and development activities. The incentives, which vary in size, have terms of up to five years and are subject to compliance with specified conditions. If conditions are not satisfied, the incentives are subject to reduction, recapture or termination. The government incentives are subject to confidentiality provisions, where applicable. Government incentives are recognized when there is reasonable assurance the conditions of the incentive will be met and the subsidies will be received. We record incentives related to the purchase or construction of assets as deferred income and recognize as a reduction to the related depreciation expense over the estimated useful life of the asset. We record incentives related to operating activities as a reduction of expense over the period necessary to match to the expenditure for which the incentive is intended to compensate. The effect of a change in estimate is recognized in the period in which it is concluded that it is no longer reasonably assured that (i) all of the incentive conditions will be met or (ii) a portion of the subsidies will be received. We recorded benefits (reductions of expense) for operating-related incentives of $13 million and $4 million in research and development and selling, general and administrative expense, respectively, in 2025. Grant receivables totaled $21 million, as of December 28, 2025, of which the short-term portion of $8 million was recorded within prepaid expenses and other current assets and the remaining long-term portion was recorded in other assets. Amounts recognized in our consolidated financial statements in 2025 related to asset-based incentives and cash subsidies received were immaterial. Amounts recognized in 2024 and 2023 for government incentives were immaterial. --- ## New in Current Filing: Contingent Consideration Liabilities We reassess the fair value of contingent consideration related to acquisitions on a quarterly basis, with changes in the fair value subsequent to the acquisition date, recognized in selling, general and administrative expense. 69 69 69 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents --- ## New in Current Filing: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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, we rely upon prices set by management, adjusted for applicable discounts. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment and payment is typically due within 30 days from invoice. In instances where right of payment or transfer of title is contingent upon the customer's acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from genotyping and sequencing services, including cancer detection testing services related to the GRAIL business, is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, or payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expense when incurred as the amortization period for such costs, if capitalized, would have been one year or less. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers by us. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. --- ## New in Current Filing: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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, we rely upon prices set by management, adjusted for applicable discounts. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment and payment is typically due within 30 days from invoice. In instances where right of payment or transfer of title is contingent upon the customer's acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from genotyping and sequencing services, including cancer detection testing services related to the GRAIL business, is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, or payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expense when incurred as the amortization period for such costs, if capitalized, would have been one year or less. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers by us. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. --- ## New in Current Filing: 4.750% Term Notes due 2030 (2030 Term Notes) On November 25, 2025, we issued $500 million aggregate principal amount of 2030 Term Notes. After deducting discounts and issuance costs, we received net proceeds of $495 million. The 2030 Notes, which mature on December 12, 2030, accrue interest at a rate of 4.750% per annum, payable semi-annually on June 12 and December 12 of each year, beginning on June 12, 2026. We may redeem for cash all or any portion of the 2030 Term Notes, at our option, at any time prior to maturity at make-whole premium redemption prices as defined in the form of the notes. --- ## New in Current Filing: Purchase Obligations In the normal course of business, we enter into agreements to purchase goods or services that are not cancelable without penalty, primarily for licensing and supply arrangements. For agreements with variable terms, we do not estimate any obligation beyond minimum quantities or pricing as of the reporting date. Licensing agreements under which we commit to minimum royalty payments, some of which are subject to adjustment, may be terminated prior to expiration of underlying intellectual property under certain circumstances. Total minimum payments for noncancelable purchase obligations as of December 28, 2025 were $184 million, more than half of which are due during 2026. --- ## New in Current Filing: 3.82% - 4.94% 4.35% - 5.54% 0.78% - 5.54% 41% - 48% 41% - 49% 41% - 51% --- ## New in Current Filing: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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, we rely upon prices set by management, adjusted for applicable discounts. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment and payment is typically due within 30 days from invoice. In instances where right of payment or transfer of title is contingent upon the customer's acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from genotyping and sequencing services, including cancer detection testing services related to the GRAIL business, is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, or payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expense when incurred as the amortization period for such costs, if capitalized, would have been one year or less. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers by us. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. --- ## New in Current Filing: Employee Separation Costs Amount recorded in accrued liabilities as of December 31, 2023 Expense recorded Amount recorded in accrued liabilities as of December 29, 2024 Expense recorded Expense recorded Amount recorded in accrued liabilities as of December 28, 2025 --- ## New in Current Filing: Indemnification Liability In connection with the acquisition of GRAIL, we assumed a performance-based award for which vesting was based on GRAIL's future revenues and had an aggregate potential value of up to $78 million. Prior to the Spin-Off of GRAIL in 2024, it was not probable that the performance conditions associated with the award would be achieved and, therefore, no share-based compensation expense was recognized in the consolidated statements of operations. In connection with the Spin-Off, this award was assumed by GRAIL. For a period of 2.5 years following the Spin-Off, we are obligated to indemnify GRAIL for cash payments that become earned and payable related to this award. The indemnification is accounted for in accordance with ASC 460. As of both December 28, 2025 and December 29, 2024, we recognized a non-contingent liability of $1 million related to this indemnification. --- ## New in Current Filing: 8. GRAIL SPIN-OFF On June 24, 2024, we completed the Spin-Off of GRAIL into a separate, independent publicly traded company through the distribution of 26,547,021 shares of GRAIL common stock to Illumina stockholders on a pro rata basis. The GRAIL common stock distributed in the Spin-Off consisted of approximately 85.5% of the outstanding common stock of GRAIL as of the Record Date. The Spin-Off was structured as a tax-free spin-off and Illumina stockholders received one share of GRAIL common stock for every six shares of Illumina common stock held on the Record Date. We retained approximately 14.5% of the shares of GRAIL common stock immediately following the Spin-Off. The disposition of GRAIL did not meet the criteria to be reported as a discontinued operation and accordingly, GRAIL's assets, liabilities, results of operations and cash flows have not been reclassified. As part of the Spin-Off, we contributed to GRAIL an amount, in cash, to cover 2.5 years of GRAIL's operations (the Disposal Funding), which was determined to be $974 million, less the cash and cash equivalents held by GRAIL. 82 82 82 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents --- ## New in Current Filing: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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, we rely upon prices set by management, adjusted for applicable discounts. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment and payment is typically due within 30 days from invoice. In instances where right of payment or transfer of title is contingent upon the customer's acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from genotyping and sequencing services, including cancer detection testing services related to the GRAIL business, is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, or payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expense when incurred as the amortization period for such costs, if capitalized, would have been one year or less. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers by us. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. --- ## New in Current Filing: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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, we rely upon prices set by management, adjusted for applicable discounts. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment and payment is typically due within 30 days from invoice. In instances where right of payment or transfer of title is contingent upon the customer's acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from genotyping and sequencing services, including cancer detection testing services related to the GRAIL business, is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, or payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expense when incurred as the amortization period for such costs, if capitalized, would have been one year or less. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers by us. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. --- ## New in Current Filing: State and local income taxes, net of federal income tax effect (1) _____________ (1)State taxes in California, Massachusetts, Illinois and Maryland made up the majority (greater than 50%) of the tax effect in this category for 2025. California and Massachusetts made up the majority (greater than 50%) of the tax effect in this category for 2024 and 2023. 88 88 88 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents --- ## New in Current Filing: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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, we rely upon prices set by management, adjusted for applicable discounts. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment and payment is typically due within 30 days from invoice. In instances where right of payment or transfer of title is contingent upon the customer's acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from genotyping and sequencing services, including cancer detection testing services related to the GRAIL business, is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, or payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expense when incurred as the amortization period for such costs, if capitalized, would have been one year or less. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers by us. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. --- ## New in Current Filing: 13. SUBSEQUENT EVENTS On January 30, 2026, we acquired SomaLogic and other specified assets from Standard BioTools for a $350 million upfront cash payment, subject to customary adjustments. The Stock Purchase Agreement, which we entered into on June 22, 2025, further provides for, in connection with the revenues generated from certain products and services, (i) royalty streams and (ii) up to $75 million in potential milestone payments to Standard BioTools. We also acquired an intellectual property portfolio on January 30, 2026 for a $50 million upfront cash payment. 93 93 93 Table of Contents Table of Contents --- ## No Match in Current: The Spin-Off could adversely affect the market value of the CVRs. *This section from the 2025 filing does not have a high-confidence textual match in 2026. It may have been removed, merged, or substantially reworded.* The business of GRAIL may be adversely affected by the Spin-Off, which could adversely affect the market value of the CVRs. Risks Relating to Litigation --- ## No Match in Current: In April 2024, the FDA issued the Final Rule relating to Laboratory Development Tests (LDTs). Newly developed LDT products may be subject to regulatory clearance or approval, and could result in adverse impacts to our business, financial condition, or results of operations. *This section from the 2025 filing does not have a high-confidence textual match in 2026. It may have been removed, merged, or substantially reworded.* Certain of our in vitro diagnostic products, or IVDs, are currently available through laboratories that are certified under the Clinical Laboratory Improvements Amendments (CLIA) of 1988. These IVD products are commonly called "laboratory developed tests," or LDTs. For a number of years, the FDA has exercised its regulatory enforcement discretion to not regulate LDTs as medical devices if created and used within a single laboratory. On April 29, 2024, the FDA released final regulations under 21 CFR Part 809 under the Federal Food, Drug, and Cosmetic Act (FD&C Act) amending the regulations to make explicit that LDTs offered as IVDs are devices under the FD&C Act including when the manufacturer of the IVD is a laboratory (the LDT Rule). The LDT Rule also provides that the FDA intends to exercise enforcement discretion with regard to premarket review and most quality system requirements for certain categories of IVDs, including currently marketed IVDs offered as LDTs that were first marketed prior to April 29, 2024. The FDA has included additional enforcement discretion policies within the rule for LDTs approved by the New York State's Clinical Laboratory Evaluation Program (NYS CLEP). The majority of revenue from products currently offered by our laboratories do not fall within the scope of the LDT Rule. With one exception, the LDTs currently offered as IVDs by our laboratories that fall within the purview of the LDT Rule are approved by NYS CLEP and were first marketed prior to the release of the LDT Rule. We cannot predict the specifics of how the FDA intends to implement the Final Rule and uncertainties remain as to whether and how newly developed LDT products that are now require regulatory clearance or approval may impact our business, financial condition, or results of operations. Risks Relating to Information Technology Security and Continuity --- ## No Match in Current: Critical Audit Matters *This section from the 2025 filing does not have a high-confidence textual match in 2026. It may have been removed, merged, or substantially reworded.* The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. GRAIL Contingent ConsiderationDescription of the MatterIn connection with the August 18, 2021 acquisition of GRAIL, the Company recognized a contingent consideration liability at the estimated fair value on the acquisition date. The Company uses a Monte Carlo simulation model to determine the fair value of the contingent consideration liability each reporting period. As disclosed in Note 4 of the consolidated financial statements, the fair value of the contingent consideration liability as of December 29, 2024 is $71 million. The Company recognized a $315 million gain in the current year as a result of the change in the fair value of the contingent consideration liability.Auditing the valuation of the contingent consideration liability was complex and required significant auditor judgment due to the estimation uncertainty in evaluating the reasonableness of a significant assumption, which is the revenue risk premium. A significant emphasis is placed on the appropriateness of the estimate considerations used by management to determine the fair value of the GRAIL contingent consideration due to the sensitivity of the fair value to changes in the revenue risk premium. The revenue risk premium is forward-looking and could be affected by future economic and market conditions. --- ## No Match in Current: GRAIL Contingent Consideration *This section from the 2025 filing does not have a high-confidence textual match in 2026. It may have been removed, merged, or substantially reworded.* In connection with the August 18, 2021 acquisition of GRAIL, the Company recognized a contingent consideration liability at the estimated fair value on the acquisition date. The Company uses a Monte Carlo simulation model to determine the fair value of the contingent consideration liability each reporting period. As disclosed in Note 4 of the consolidated financial statements, the fair value of the contingent consideration liability as of December 29, 2024 is $71 million. The Company recognized a $315 million gain in the current year as a result of the change in the fair value of the contingent consideration liability. Auditing the valuation of the contingent consideration liability was complex and required significant auditor judgment due to the estimation uncertainty in evaluating the reasonableness of a significant assumption, which is the revenue risk premium. A significant emphasis is placed on the appropriateness of the estimate considerations used by management to determine the fair value of the GRAIL contingent consideration due to the sensitivity of the fair value to changes in the revenue risk premium. The revenue risk premium is forward-looking and could be affected by future economic and market conditions. 48 48 48 How We Addressed the Matter in Our AuditWe obtained an understanding, evaluated the design, and tested the operating effectiveness of internal controls over the Company's process for determining the fair value of the contingent consideration liability related to GRAIL. This included controls over management's development of the above-described assumption used in the valuation model applied. In testing the valuation of the contingent consideration liability, we performed audit procedures that included, among others, evaluating the Company's use of the Monte Carlo simulation model and testing the significant assumption used in the model, as described above. We evaluated the completeness and accuracy of underlying data used in supporting the assumption and estimate. In addition, we involved valuation specialists to assist in evaluating the Company's use of the Monte Carlo simulation model and selection of the revenue risk premium. Our valuation specialists evaluated the revenue risk premium by comparing it against a range that was independently developed using publicly available market data for comparable entities. Impairment assessment of GRAIL in-process research and development (IPR&D)Description of the MatterThe Company tests indefinite-lived intangible assets for impairment annually, as of May, or more frequently if events or circumstances indicate it is more likely than not that the fair value of an asset is less than its carrying amount. The Company identified a triggering event that occurred in the three months ended June 30, 2024 that required an interim impairment test. GRAIL IPR&D was tested for impairment by comparing its fair value to its carrying value. As disclosed in Note 5 of the consolidated financial statements, as a result of the interim impairment assessment, the Company recorded an impairment loss of $420 million related to GRAIL IPR&D. The carrying value of IPR&D following the impairment assessment was $140 million. The Company divested GRAIL on June 24, 2024. Auditing the Company's IPR&D impairment assessment was complex and required significant auditor judgment due to the significant estimation uncertainty in determining the fair value of GRAIL IPR&D. Management used an income approach to estimate the fair value of GRAIL IPR&D. A significant emphasis is placed on the appropriateness of the estimate considerations used by management to determine the fair value of GRAIL IPR&D due to the sensitivity of the fair value to the underlying assumptions. The significant assumptions include forecasted revenues for GRAIL IPR&D and the discount rate used to discount future cash flows. These significant assumptions related to the fair value of GRAIL IPR&D are forward-looking and could be affected by future economic and market conditions.How We Addressed the Matter in Our AuditWe obtained an understanding, evaluated the design, and tested the operating effectiveness of internal controls over the Company's process for determining the fair value of GRAIL IPR&D. This included controls over management's development of the above-described assumptions used in the valuation model applied.In testing the valuation of GRAIL IPR&D, we performed audit procedures that included, among others, evaluating the Company's use of the income approach and testing the significant assumptions used in the model, as described above. We evaluated the completeness and accuracy of underlying data used in supporting the assumptions and estimates. We evaluated the reasonableness of projected revenue growth used within the valuation against industry trends, market trends, and other market information. In addition, we involved valuation specialists to assist in evaluating the Company's use of the income approach and selection of the discount rate. Our valuation specialists evaluated the discount rate by comparing it against a discount rate range that was independently developed using publicly available market data for comparable entities. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of internal controls over the Company's process for determining the fair value of the contingent consideration liability related to GRAIL. This included controls over management's development of the above-described assumption used in the valuation model applied. In testing the valuation of the contingent consideration liability, we performed audit procedures that included, among others, evaluating the Company's use of the Monte Carlo simulation model and testing the significant assumption used in the model, as described above. We evaluated the completeness and accuracy of underlying data used in supporting the assumption and estimate. In addition, we involved valuation specialists to assist in evaluating the Company's use of the Monte Carlo simulation model and selection of the revenue risk premium. Our valuation specialists evaluated the revenue risk premium by comparing it against a range that was independently developed using publicly available market data for comparable entities. --- ## No Match in Current: Impairment assessment of GRAIL in-process research and development (IPR&D) *This section from the 2025 filing does not have a high-confidence textual match in 2026. It may have been removed, merged, or substantially reworded.* Description of the Matter The Company tests indefinite-lived intangible assets for impairment annually, as of May, or more frequently if events or circumstances indicate it is more likely than not that the fair value of an asset is less than its carrying amount. The Company identified a triggering event that occurred in the three months ended June 30, 2024 that required an interim impairment test. GRAIL IPR&D was tested for impairment by comparing its fair value to its carrying value. As disclosed in Note 5 of the consolidated financial statements, as a result of the interim impairment assessment, the Company recorded an impairment loss of $420 million related to GRAIL IPR&D. The carrying value of IPR&D following the impairment assessment was $140 million. The Company divested GRAIL on June 24, 2024. Auditing the Company's IPR&D impairment assessment was complex and required significant auditor judgment due to the significant estimation uncertainty in determining the fair value of GRAIL IPR&D. Management used an income approach to estimate the fair value of GRAIL IPR&D. A significant emphasis is placed on the appropriateness of the estimate considerations used by management to determine the fair value of GRAIL IPR&D due to the sensitivity of the fair value to the underlying assumptions. The significant assumptions include forecasted revenues for GRAIL IPR&D and the discount rate used to discount future cash flows. These significant assumptions related to the fair value of GRAIL IPR&D are forward-looking and could be affected by future economic and market conditions. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of internal controls over the Company's process for determining the fair value of GRAIL IPR&D. This included controls over management's development of the above-described assumptions used in the valuation model applied. In testing the valuation of GRAIL IPR&D, we performed audit procedures that included, among others, evaluating the Company's use of the income approach and testing the significant assumptions used in the model, as described above. We evaluated the completeness and accuracy of underlying data used in supporting the assumptions and estimates. We evaluated the reasonableness of projected revenue growth used within the valuation against industry trends, market trends, and other market information. In addition, we involved valuation specialists to assist in evaluating the Company's use of the income approach and selection of the discount rate. Our valuation specialists evaluated the discount rate by comparing it against a discount rate range that was independently developed using publicly available market data for comparable entities. /s/ Ernst & Young LLP We have served as the Company's auditor since 2000. San Diego, California February 12, 2025 49 49 49 --- ## No Match in Current: (Accumulated *This section from the 2025 filing does not have a high-confidence textual match in 2026. It may have been removed, merged, or substantially reworded.* Deficit) Cumulative-effect adjustment from adoption of ASU 2020-06, net of deferred tax --- ## No Match in Current: Accounting Pronouncements Adopted in 2022 *This section from the 2025 filing does not have a high-confidence textual match in 2026. It may have been removed, merged, or substantially reworded.* In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40). The new standard reduces the number of accounting models for convertible debt instruments, amends the accounting for certain contracts in an entity's own equity, and modifies how certain convertible instruments and contracts that may be settled in cash or shares impact the calculation of diluted earnings per share. Specifically, the guidance removes certain accounting models that separate the embedded conversion features from the host contract for convertible instruments and requires the use of the if-converted method to calculate diluted earnings per share. We adopted the standard on its effective date in the first quarter of 2022 using a modified retrospective approach by recognizing a cumulative-effect adjustment to retained earnings on January 3, 2022. As a result of the adoption of ASU 2020-06, we increased retained earnings and decreased additional paid-in capital by $61 million and $93 million, respectively. --- ## No Match in Current: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) *This section from the 2025 filing does not have a high-confidence textual match in 2026. It may have been removed, merged, or substantially reworded.* We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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, we rely upon prices set by management, adjusted for applicable discounts. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment and payment is typically due within 30 days from invoice. In instances where right of payment or transfer of title is contingent upon the customer's acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from genotyping and sequencing services, including cancer detection testing services related to the GRAIL business, is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, or payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expense when incurred as the amortization period for such costs, if capitalized, would have been one year or less. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers by us. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. --- ## No Match in Current: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) *This section from the 2025 filing does not have a high-confidence textual match in 2026. It may have been removed, merged, or substantially reworded.* We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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, we rely upon prices set by management, adjusted for applicable discounts. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment and payment is typically due within 30 days from invoice. In instances where right of payment or transfer of title is contingent upon the customer's acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from genotyping and sequencing services, including cancer detection testing services related to the GRAIL business, is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, or payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expense when incurred as the amortization period for such costs, if capitalized, would have been one year or less. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers by us. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. --- ## No Match in Current: 5. GOODWILL, INTANGIBLE ASSETS, AND ACQUISITIONSGoodwill *This section from the 2025 filing does not have a high-confidence textual match in 2026. It may have been removed, merged, or substantially reworded.* Goodwill In millionsBalance as of January 1, 2023(1)$3,239 Impairment(712)Acquisition18 Balance as of December 31, 20232,545 Impairment(1,466)Acquisition34 Balance as of December 29, 2024$1,113 Balance as of January 1, 2023(1) _____________ (1) The balance as of January 1, 2023 includes accumulated impairment of $3,914 million related to our GRAIL reporting unit. --- ## No Match in Current: 2024 Impairment of Goodwill *This section from the 2025 filing does not have a high-confidence textual match in 2026. It may have been removed, merged, or substantially reworded.* Goodwill is reviewed for impairment annually, during the second quarter of our fiscal year, or more frequently if an event occurs indicating the potential for impairment. In May 2024, we performed our annual goodwill impairment test for our two reporting units: Core Illumina and GRAIL. We performed a quantitative test for both reporting units. GRAIL's carrying value exceeded its fair value, estimated as $580 million, and we recorded a goodwill impairment of $1,466 million in Q2 2024. There was no impairment for Core Illumina, as its fair value exceeded its carrying value. 70 70 70 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents --- ## No Match in Current: 2023 Impairment of Goodwill *This section from the 2025 filing does not have a high-confidence textual match in 2026. It may have been removed, merged, or substantially reworded.* In Q3 2023, we concluded that the sustained decrease in the Company's stock price and overall market capitalization during the quarter was a triggering event indicating the fair values of our reporting units might be less than their carrying amounts and that an interim impairment test was required. Based on our analysis, we concluded GRAIL's carrying value exceeded its fair value and recorded a goodwill impairment of $712 million, primarily due to the decrease in the Company's consolidated market capitalization and a higher discount rate selected for the fair value calculation of GRAIL. There was no impairment for Core Illumina, as its fair value exceeded its carrying value. 71 71 71 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents --- ## No Match in Current: 2022 Impairment of Goodwill *This section from the 2025 filing does not have a high-confidence textual match in 2026. It may have been removed, merged, or substantially reworded.* On July 13, 2022, the EU General Court ruled that the European Commission had jurisdiction under the EU Merger Regulation to review our acquisition of GRAIL. Additionally, on September 6, 2022, the European Commission issued its decision prohibiting the acquisition. See note 9. Legal Proceedings. These decisions, along with a continued and significant decrease in the Company's stock price and market capitalization, required us to perform an interim impairment test in Q3 2022. Based on our analysis, we concluded GRAIL's carrying value exceeded its fair value and recorded a goodwill impairment of $3,914 million, primarily due to the negative impact of capital market conditions and a higher discount rate selected for the fair value calculation of GRAIL. There was no impairment for Core Illumina. We performed our interim goodwill impairment test using a combination of both an income and a market approach to determine the fair value of each reporting unit. The income approach utilized the estimated discounted cash flows for each reporting unit, while the market approach utilized comparable company information. Estimates and assumptions used in the income approach included projected cash flows for both GRAIL and Core Illumina and a discount rate for each reporting unit. Discount rates were determined using a weighted average cost of capital for risk factors specific to each reporting unit and other market and industry data. For GRAIL, the discount rate selected was 22.0%. In order to further validate the reasonableness of the fair values concluded for our reporting units, a reconciliation to market capitalization was performed by estimating a reasonable implied control premium and other market factors. In conjunction with our interim goodwill impairment test, we also evaluated GRAIL's IPR&D intangible asset for potential impairment. We performed our impairment test by comparing the carrying value of the IPR&D intangible asset to its estimated fair value, which was determined by the income approach, using a discounted cash flow model. Estimates and assumptions used in the income approach included projected cash flows and a discount rate. Based on our analysis, the carrying value of the IPR&D intangible asset did not exceed its estimated fair value and no impairment was recorded. We also performed a recoverability test for the definite-lived intangible assets assigned to GRAIL, which included developed technology and trade name, and to Core Illumina and noted no impairment. 72 72 72 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents --- ## No Match in Current: 0% Convertible Senior Notes due 2023 (2023 Convertible Notes) *This section from the 2025 filing does not have a high-confidence textual match in 2026. It may have been removed, merged, or substantially reworded.* In August 2018, we issued $750 million aggregate principal amount of 2023 Convertible Notes. The notes were convertible into cash, shares of common stock or a combination of cash and shares of common stock, at our election, based on conversion rates as defined in the indenture. The 2023 Convertible Notes matured on August 15, 2023, at which time the principal was repaid in cash. We did not issue any shares of common stock. The 2023 Convertible Notes were initially accounted for in accordance with authoritative guidance for convertible debt instruments that may be settled in cash upon conversion. The guidance required the carrying amount of the liability component to be estimated by estimating the fair value of a similar liability that does not have an associated conversion feature. Because at issuance we had no outstanding non-convertible public debt, we determined that market-traded senior, unsecured corporate bonds represented a similar liability without a conversion option. Based on market data available for publicly traded, senior, unsecured corporate bonds issued by companies in our industry, and with similar maturities to the 2023 Convertible Notes, we estimated an implied interest rate of 3.7%, assuming no conversion option. The estimated implied interest rate was applied to the 2023 Convertible Notes, which resulted in a fair value of the liability component in aggregate of $624 million upon issuance, calculated as the present value of implied future payments based on the $750 million aggregate principal amount. The $126 million difference ($93 million, net of tax) between the aggregate principal amount of $750 million and the estimated fair value of the liability component was recorded in additional paid-in capital as the 2023 Convertible Notes were not considered redeemable. As of January 3, 2022, we adopted ASU 2020-06, which removed the requirement to separate the embedded conversion feature from the notes and requires the notes to be accounted for as a single liability measured at amortized cost. Accordingly, we reclassified the unamortized debt discount from additional paid-in capital to convertible senior notes in the consolidated balance sheets on January 3, 2022. This resulted in an increase to retained earnings and a decrease to additional paid-in capital of $61 million and $93 million, respectively. Interest expense recognized on our 2023 Convertible Notes was immaterial in both 2023 and 2022. --- ## No Match in Current: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) *This section from the 2025 filing does not have a high-confidence textual match in 2026. It may have been removed, merged, or substantially reworded.* We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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, we rely upon prices set by management, adjusted for applicable discounts. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment and payment is typically due within 30 days from invoice. In instances where right of payment or transfer of title is contingent upon the customer's acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from genotyping and sequencing services, including cancer detection testing services related to the GRAIL business, is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, or payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expense when incurred as the amortization period for such costs, if capitalized, would have been one year or less. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers by us. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. --- ## No Match in Current: Liability-Classified RSU *This section from the 2025 filing does not have a high-confidence textual match in 2026. It may have been removed, merged, or substantially reworded.* In Q1 2023, we granted RSU that were to be settled in cash if stockholder approval to increase our share reserve under the amended and restated 2015 Stock Plan was not obtained. In Q2 2023, the Company's stockholders approved an amended and restated version of the 2015 Stock Plan and increased the maximum number of shares authorized for issuance. Upon such approval, all RSU previously accounted for as liability-classified awards, approximately 557,000 RSU, were reclassified to stockholders equity and accounted for prospectively as equity awards. There were no RSU liability-classified awards outstanding as of December 29, 2024 or December 31, 2023. 78 78 78 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents --- ## No Match in Current: Other Liability-Classified Awards *This section from the 2025 filing does not have a high-confidence textual match in 2026. It may have been removed, merged, or substantially reworded.* Prior to the GRAIL Spin-Off, we granted cash-based equity incentive awards to GRAIL employees, which were accounted for as liability-classified awards. In connection with the Spin-Off, these awards were assumed by GRAIL. For purposes of valuation and performance measurement of the awards, GRAIL's stand-alone value calculation, as estimated by GRAIL based on its analysis and on input from independent valuation advisors and analyses, was used. The awards generally had terms of four years and vested in four equal installments on each anniversary of the grant date, subject to continued employment through the vesting period. four 79 79 79 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents --- ## No Match in Current: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) *This section from the 2025 filing does not have a high-confidence textual match in 2026. It may have been removed, merged, or substantially reworded.* We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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, we rely upon prices set by management, adjusted for applicable discounts. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment and payment is typically due within 30 days from invoice. In instances where right of payment or transfer of title is contingent upon the customer's acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from genotyping and sequencing services, including cancer detection testing services related to the GRAIL business, is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, or payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expense when incurred as the amortization period for such costs, if capitalized, would have been one year or less. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers by us. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. --- ## No Match in Current: 4.35% - 5.54% *This section from the 2025 filing does not have a high-confidence textual match in 2026. It may have been removed, merged, or substantially reworded.* 0.78% - 5.54% 0.06% - 2.98% 41% - 49% 41% - 51% 37% - 51% --- ## No Match in Current: Acquisition of GRAIL *This section from the 2025 filing does not have a high-confidence textual match in 2026. It may have been removed, merged, or substantially reworded.* As of September 6, 2024, all previously disclosed regulatory proceedings in the United States and European Union related to our acquisition of GRAIL have been resolved (as further described below). On April 19, 2021, the European Commission sought and subsequently accepted a request for a referral of the GRAIL acquisition for European Union merger review, submitted by a Member State of the European Union (France), and joined by several other EEA Member States (Belgium, Greece, Iceland, the Netherlands and Norway), under Article 22(1) of Council Regulation (EC) No 139/2004 (the EU Merger Regulation). The European Commission had never solicited referrals to take jurisdiction over an acquisition of a U.S. company that had no revenue in Europe. On April 28, 2021, we filed an action in the General Court of the European Union (the EU General Court) asking for annulment of the European Commission's assertion of jurisdiction to review the acquisition under Article 22 of the EU Merger Regulation, as the acquisition does not meet the jurisdictional criteria under the EU Merger Regulation or under the national merger control laws of any Member State of the European Union. On July 13, 2022, the EU General Court reached a decision in favor of the European Commission, holding that the European Commission has jurisdiction under the EU Merger Regulation to review the acquisition. On September 22, 2022, we filed an appeal in the Court of Justice of the European Union (the EU Court of Justice) asking for annulment of the EU General Court's judgment. On October 12, 2023, the European Commission adopted a decision requiring Illumina to unwind its acquisition of GRAIL (the EC Divestment Decision). On December 17, 2023, we announced that we would divest GRAIL. On June 24, 2024, we completed the separation (the Spin-Off) of GRAIL into a separate, independent publicly traded company through the distribution of approximately 85.5% of the outstanding GRAIL common stock to Illumina stockholders on a pro rata basis. 84 84 84 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents --- ## No Match in Current: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) *This section from the 2025 filing does not have a high-confidence textual match in 2026. It may have been removed, merged, or substantially reworded.* We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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, we rely upon prices set by management, adjusted for applicable discounts. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment and payment is typically due within 30 days from invoice. In instances where right of payment or transfer of title is contingent upon the customer's acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from genotyping and sequencing services, including cancer detection testing services related to the GRAIL business, is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, or payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expense when incurred as the amortization period for such costs, if capitalized, would have been one year or less. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers by us. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. --- ## No Match in Current: SEC Inquiry Letter *This section from the 2025 filing does not have a high-confidence textual match in 2026. It may have been removed, merged, or substantially reworded.* In July 2023, we were informed that the staff of the SEC was conducting an investigation relating to Illumina and was requesting documents and communications primarily related to Illumina's acquisition of GRAIL and certain statements and disclosures concerning GRAIL, its products and its acquisition, and related to the conduct and compensation of certain members of Illumina and GRAIL management, among other things. Illumina is cooperating with the SEC in this investigation. --- ## No Match in Current: Shareholder Derivative Complaints *This section from the 2025 filing does not have a high-confidence textual match in 2026. It may have been removed, merged, or substantially reworded.* On October 17, 2023, a stockholder derivative and class action complaint captioned Icahn Partners LP, et al. v. deSouza, et al., purportedly brought on behalf of Illumina and public holders of Illumina's common stock, was filed in the Delaware Court of Chancery against certain current and former directors (including our former Chief Executive Officer). We are named as a nominal defendant in the complaint. The lawsuit alleges the named directors breached their fiduciary duties by knowingly causing Illumina to unlawfully close the GRAIL acquisition, concealing material facts related to the GRAIL acquisition and making inadequate disclosures. Before the filing of the complaint, the purported stockholders did not make a demand that our Board of Directors pursue the claims asserted therein. The complaint seeks damages, costs and expenses, including attorney fees, the certification and consolidation of a putative class, the issuance of amended disclosures, the removal of conflicted directors and declaratory and other equitable relief. On November 1, 2023, the defendants filed a motion to dismiss the complaint, which has not yet been briefed. On the same day, Illumina-joined by the director defendants-moved to strike portions of the complaint that contain improperly included confidential and privileged information. On January 16, 2024, the Court granted the motion to strike. On December 5, 2023, the plaintiffs moved to expedite the proceedings with respect to their direct claims. The director defendants opposed that motion and Illumina joined their opposition. On January 19, 2024, the Court denied plaintiffs' motion to expedite. On January 23, 2024, the plaintiffs filed a motion for reargument of the Court's January 16 opinion, which the Court denied on February 19, 2024. On February 29, 2024, the plaintiffs filed an application to the trial court to certify the orders granting the motion to strike and denying the motion for reargument for interlocutory appeal. The Court refused the application on March 20, 2024. On March 14, 2024, the plaintiffs filed an application for interlocutory appeal with the Supreme Court of Delaware, which the Court denied on April 11, 2024. 85 85 85 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents --- ## No Match in Current: DOJ Civil Investigative Demand *This section from the 2025 filing does not have a high-confidence textual match in 2026. It may have been removed, merged, or substantially reworded.* On January 18, 2024, we received a civil investigative demand (CID) from the U.S. Department of Justice, requiring production of certain documents and information in the course of a False Claims Act investigation to determine whether there is or has been a violation of 31 U.S.C. § 3729. The False Claims Act investigation concerns allegations that the Company caused the submission of false claims to Medicare and other federal government programs because it misrepresented its compliance with cybersecurity requirements to the Food and Drug Administration and other federal agencies that purchase its devices. The Company is cooperating with the government. --- ## No Match in Current: Books and Records Action *This section from the 2025 filing does not have a high-confidence textual match in 2026. It may have been removed, merged, or substantially reworded.* On February 14, 2024, a stockholder filed a complaint in the Delaware Court of Chancery captioned Pavers and Road Builders Benefit Funds v. Illumina, Inc. seeking to inspect certain books and records related to the GRAIL transaction, including certain materials and minutes from meetings of our Board of Directors, which have been withheld because the Company contends they are non-responsive to the request or subject to the attorney-client privilege. Illumina previously provided documents to the stockholder in response to a demand made by letter under Delaware law, but the stockholder seeks additional and unredacted materials through this action. On March 11, 2024, Illumina filed an answer to the complaint, denying that the stockholder was entitled to inspection. We deny that the stockholder is entitled to review the documents and intend to vigorously defend the litigation. The trial took place on June 7, 2024. On July 16, 2024, the Court issued a decision requiring the Company to produce certain additional documents to plaintiff. On July 26, 2024, the stockholder filed a motion seeking in camera review of certain documents that the Company maintains are not subject to the Court's July 16, 2024 order to produce documents. The Court granted the motion on August 19, 2024, and the Company filed the documents for in camera review on August 29, 2024. On October 7, 2024, the Court ruled that the Company need not produce the documents subject to the motion for in camera review because they are privileged under the attorney opinion work product doctrine. On December 11, 2024, the Court entered its final order and judgment. On December 23, 2024, the plaintiff in this action filed a derivative complaint, described above. --- ## No Match in Current: BGI Genomics Co. Ltd. and its Affiliates *This section from the 2025 filing does not have a high-confidence textual match in 2026. It may have been removed, merged, or substantially reworded.* As previously disclosed, we were engaged in litigation in various U.S. jurisdictions with BGI Genomics Co. Ltd (BGI) and certain of its affiliates, including Complete Genomics, Inc. (CGI) since June of 2019. On July 14, 2022, we entered into a Settlement and License Agreement with BGI and CGI (the Agreement). Pursuant to the terms of the Agreement, we agreed to pay CGI a one time payment of $325 million. We allocated the $325 million payment on a relative fair value basis, resulting in $180 million capitalized as an intangible asset in 2022 for the value of the license, which is amortized over a period of 6.5 years on a straight-line basis, $150 million allocated to the release of past damages claimed, and a $5 million gain for damages awarded to us. The fair value of the license was estimated using a discounted cash flow model, which included assumptions for projected revenues covered by the license, an estimated royalty rate and a discount rate. The fair value of the past damages claimed was estimated based on applicable historical revenues and an estimated royalty rate. These inputs represent a Level 3 measurement because they are supported by little or no market activity and reflect our own assumptions in measuring fair value. --- ## No Match in Current: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) *This section from the 2025 filing does not have a high-confidence textual match in 2026. It may have been removed, merged, or substantially reworded.* We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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, we rely upon prices set by management, adjusted for applicable discounts. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment and payment is typically due within 30 days from invoice. In instances where right of payment or transfer of title is contingent upon the customer's acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from genotyping and sequencing services, including cancer detection testing services related to the GRAIL business, is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, or payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expense when incurred as the amortization period for such costs, if capitalized, would have been one year or less. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers by us. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. --- ## No Match in Current: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) *This section from the 2025 filing does not have a high-confidence textual match in 2026. It may have been removed, merged, or substantially reworded.* We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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, we rely upon prices set by management, adjusted for applicable discounts. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment and payment is typically due within 30 days from invoice. In instances where right of payment or transfer of title is contingent upon the customer's acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from genotyping and sequencing services, including cancer detection testing services related to the GRAIL business, is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, or payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expense when incurred as the amortization period for such costs, if capitalized, would have been one year or less. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers by us. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. --- ## No Match in Current: Supplemental Information *This section from the 2025 filing does not have a high-confidence textual match in 2026. It may have been removed, merged, or substantially reworded.* No Annual Report to stockholders or proxy materials has been furnished to stockholders as of the date of this report. The Annual Report to stockholders and proxy material will be furnished to our stockholders after the filing of this Annual Report on Form 10-K and we will furnish such material to the SEC at that time. 104 104 104 Table of Contents Table of Contents FORM 10-K CROSS-REFERENCE INDEX PagePART IItem 1Business5Item 1ARisk Factors14Item 1BUnresolved Staff CommentsNoneItem 1CCybersecurity11Item 2Properties11Item 3Legal Proceedings28Item 4Mine Safety DisclosuresNot Applicable PART IIItem 5Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities28;30Item 7Management's Discussion and Analysis of Financial Condition and Results of Operations31Item 7AQuantitative and Qualitative Disclosures About Market Risk45Item 8Financial Statements and Supplementary Data47Item 9Changes in and Disagreements with Accountants on Accounting and Financial DisclosureNoneItem 9AControls and Procedures95Item 9BOther Information97Item 9CDisclosure Regarding Foreign Jurisdictions that Prevent InspectionsNot Applicable PART IIIItem 10Directors, Executive Officers and Corporate Governance98Item 11Executive Compensation98Item 12Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters98Item 13Certain Relationships and Related Transactions, and Director Independence99Item 14Principal Accountant Fees and Services99 PART IVItem 15Exhibits, Financial Statement Schedules99Signatures106 Item 1 Business 5 Item 1A Risk Factors 14 Item 1C Cybersecurity 11 Item 2 Properties 11 Item 3 Legal Proceedings 28 Item 5 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 28;30 Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations 31 Item 7A Quantitative and Qualitative Disclosures About Market Risk 45 Item 8 Financial Statements and Supplementary Data 47 Item 9A Controls and Procedures 95 Item 9B Other Information 97 Item 10 Directors, Executive Officers and Corporate Governance 98 Item 11 Executive Compensation 98 Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 98 Item 13 Certain Relationships and Related Transactions, and Director Independence 99 Item 14 Principal Accountant Fees and Services 99 Item 15 Exhibits, Financial Statement Schedules 99 Signatures 106 105 105 105 Table of Contents Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized, on February 12, 2025. ILLUMINA, INC. By: /s/ JACOB THAYSENJacob ThaysenChief Executive Officer ILLUMINA, INC. By: 106 106 106 Table of Contents Table of Contents February 12, 2025 --- ## No Match in Current: POWER OF ATTORNEY *This section from the 2025 filing does not have a high-confidence textual match in 2026. It may have been removed, merged, or substantially reworded.* KNOW ALL PERSONS BY THESE PRESENT, that each person whose signature appears below constitutes and appoints Jacob Thaysen and Ankur Dhingra, and each or any one of them, his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their, his, or her substitutes or substitute, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. /s/ JACOB THAYSENChief Executive Officer, Director(Principal Executive Officer)February 12, 2025Jacob Thaysen/s/ ANKUR DHINGRAChief Financial Officer(Principal Financial Officer)February 12, 2025Ankur Dhingra/s/ SCOTT ERICKSENVice President and Chief Accounting Officer (Principal Accounting Officer)February 12, 2025Scott Ericksen/s/ STEPHEN P. MACMILLANIndependent Chair of the Board of Directors February 12, 2025Stephen P. MacMillan/s/ FRANCES ARNOLDDirectorFebruary 12, 2025Frances Arnold, Ph.D./s/ CAROLINE DORSADirectorFebruary 12, 2025Caroline Dorsa/s/ ROBERT S. EPSTEINDirectorFebruary 12, 2025Robert S. Epstein, M.D./s/ SCOTT GOTTLIEBDirectorFebruary 12, 2025Scott Gottlieb, M.D./s/ GARY S. GUTHARTDirectorFebruary 12, 2025Gary S. Guthart, Ph.D./s/ PHILIP SCHILLERDirectorFebruary 12, 2025Philip Schiller/s/ SUSAN SIEGELDirectorFebruary 12, 2025Susan Siegel/s/ ANNA RICHODirectorFebruary 12, 2025Anna Richo/s/ SCOTT B. ULLEMDirectorFebruary 12, 2025Scott B. Ullem --- ## Modified: 5. DEBT AND OTHER COMMITMENTSSummary of Term Debt Obligations **Key changes:** - Reworded sentence: "Summary of Term Debt Obligations In millionsDecember 28,2025December 29,2024Principal amount of 2025 Term Notes outstanding - 500 Principal amount of 2026 Term Notes outstanding500 500 Principal amount of 2027 Term Notes outstanding500 500 Principal amount of 2030 Term Notes outstanding500 - Principal amount of 2031 Term Notes outstanding500 500 Unamortized discounts and debt issuance costs(11)(11)Net carrying amount of term debt1,989 1,989 Less: current portion499 499 Term debt, non-current$1,490 $1,490 Fair value of term debt outstanding (Level 2)$1,977 $1,940 Principal amount of 2025 Term Notes outstanding Principal amount of 2030 Term Notes outstanding Net carrying amount of term debt Term debt, non-current Fair value of term debt outstanding (Level 2) Interest expense recognized on our outstanding debt obligations, which included amortization of debt discounts and debt issuance costs, was $99 million in 2025 and 2024, respectively, and $74 million in 2023." **Prior (2025):** Summary of Term Debt Obligations In millionsDecember 29,2024December 31,2023Principal amount of 2025 Term Notes outstanding$500 $500 Principal amount of 2026 Term Notes outstanding500 - Principal amount of 2027 Term Notes outstanding500 500 Principal amount of 2031 Term Notes outstanding500 500 Unamortized discounts and debt issuance costs(11)(11)Net carrying amount of term debt1,989 1,489 Less: current portion499 - Term debt, non-current$1,490 $1,489 Fair value of term debt outstanding (Level 2)$1,940 $1,440 Net carrying amount of term debt Term debt, non-current Fair value of term debt outstanding (Level 2) Interest expense recognized on our term notes and delayed draw term loan, which included amortization of debt discounts and issuance costs, was $99 million, $74 million, and $21 million in 2024, 2023 and 2022, respectively. **Current (2026):** Summary of Term Debt Obligations In millionsDecember 28,2025December 29,2024Principal amount of 2025 Term Notes outstanding - 500 Principal amount of 2026 Term Notes outstanding500 500 Principal amount of 2027 Term Notes outstanding500 500 Principal amount of 2030 Term Notes outstanding500 - Principal amount of 2031 Term Notes outstanding500 500 Unamortized discounts and debt issuance costs(11)(11)Net carrying amount of term debt1,989 1,989 Less: current portion499 499 Term debt, non-current$1,490 $1,490 Fair value of term debt outstanding (Level 2)$1,977 $1,940 Principal amount of 2025 Term Notes outstanding Principal amount of 2030 Term Notes outstanding Net carrying amount of term debt Term debt, non-current Fair value of term debt outstanding (Level 2) Interest expense recognized on our outstanding debt obligations, which included amortization of debt discounts and debt issuance costs, was $99 million in 2025 and 2024, respectively, and $74 million in 2023. --- ## Modified: Our products, if used for the diagnosis of disease, could be subject to government regulation, and the regulatory approval and maintenance process for such products may be expensive, time-consuming, and uncertain both in timing and in outcome. Since our strategy includes an emphasis on increasing our participation in clinical markets, we will be increasingly exposed to these risks. **Key changes:** - Reworded sentence: "Such regulatory approval processes or clearances may be expensive, time-consuming, and uncertain, and our failure to obtain or comply with such approvals and clearances could have an adverse effect on our business, financial condition, or operating results." - Reworded sentence: "25 25 25 In addition, we market certain products "For Research Use Only." **Prior (2025):** Our products are not subject to FDA clearance or approval if they are not intended to be used for the diagnosis, treatment or prevention of disease. However, as we implement our strategy to increase our participation in clinical markets by expanding our product line to encompass products that are intended to be used for the diagnosis of disease, such as our FDA-regulated MiSeqDx and NextSeq550Dx, certain of our products will become subject to regulation by the FDA, or comparable international agencies, including requirements for regulatory clearance or approval of such products before they can be marketed. Such regulatory approval processes or clearances may be expensive, time-consuming, and uncertain, and our failure to obtain or comply with such approvals and clearances 23 23 23 could have an adverse effect on our business, financial condition, or operating results. Our failure to obtain such clearance or approval in a timely manner, or our competitors' success in obtaining clearance or approval before we do for products that are competitive with our planned offerings, may result in material adverse business consequences because the investment and time required to seek and obtain clearance or approval for clinical products are substantial. In addition, changes to the current regulatory framework, including the imposition of additional or new regulations, could arise at any time during the development or marketing of our products, which may negatively affect our ability to obtain or maintain FDA or comparable regulatory approval of our products, if required. Diagnostic products are regulated as medical devices by the FDA and comparable international agencies and may require either clearance from the FDA following the 510(k) pre-market notification process or pre-market approval from the FDA, in each case prior to marketing. Obtaining the requisite regulatory approvals can be expensive and may involve considerable delay. If we fail to obtain, or experience significant delays in obtaining, regulatory approvals for diagnostic products that we develop, we may not be able to launch or successfully commercialize such products in a timely manner, or at all. In addition, if our products labeled as "For Research Use Only. Not for use in diagnostic procedures," or RUO, are used, or could be used, for the diagnosis of disease, the regulatory requirements related to marketing, selling, and supporting such products could change or be uncertain, even if such use by our customers is without our consent. If the FDA or other regulatory authorities assert that any of our RUO products are subject to regulatory clearance or approval, our business, financial condition, or results of operations could be adversely affected. **Current (2026):** Our products are not subject to FDA clearance or approval if they are not intended to be used for the diagnosis, treatment or prevention of disease. However, as we implement our strategy to increase our participation in clinical markets by expanding our product line to encompass products that are intended to be used for the diagnosis of disease, such as our FDA-regulated MiSeqDx and NextSeq550Dx, certain of our products will become subject to regulation by the FDA, or comparable international agencies, including requirements for regulatory clearance or approval of such products before they can be marketed. Such regulatory approval processes or clearances may be expensive, time-consuming, and uncertain, and our failure to obtain or comply with such approvals and clearances could have an adverse effect on our business, financial condition, or operating results. Our failure to obtain such clearance or approval in a timely manner, or our competitors' success in obtaining clearance or approval before we do for products that are competitive with our planned offerings, may result in material adverse business consequences because the investment and time required to seek and obtain clearance or approval for clinical products are substantial. In addition, changes to the current regulatory framework, including the imposition of additional or new regulations, could arise at any time during the development or marketing of our products, which may negatively affect our ability to obtain or maintain FDA or comparable regulatory approval of our products, if required. Diagnostic products are regulated as medical devices by the FDA and comparable international agencies and may require either clearance from the FDA following the 510(k) pre-market notification process or pre-market approval from the FDA, in each case prior to marketing. Obtaining the requisite regulatory approvals can be expensive and may involve considerable delay. If we fail to obtain, or experience significant delays in obtaining, regulatory approvals for diagnostic products that we develop, we may not be able to launch or successfully commercialize such products in a timely manner, or at all. 25 25 25 In addition, we market certain products "For Research Use Only. Not for use in diagnostic procedures," or RUO. Although some decentralized clinical laboratories may independently choose to incorporate RUO components into laboratory‑developed tests (LDTs) under applicable frameworks, our RUO labeling and policies prohibit promoting clinical use. Nevertheless, regulators could interpret our interactions with such labs - including sales practices, training, technical support, collateral, or performance data sharing - as evidence of diagnostic intended use or off‑label promotion, exposing us to inspections, warning letters, civil or criminal penalties, injunctions, product seizures, mandatory recalls, or requirements to obtain clearances/approvals or to re‑label products. Outside the U.S., under the EU IVDR, a lab that uses RUO products for patient testing can be deemed the manufacturer of the test, which increases scrutiny of our role and could result in parallel regulatory or reputational risk. Even with robust compliance training and operating procedures, government investigations (including qui tam actions), customer audits, loss of key customers, and delays in product availability could arise, which could have material adverse effects on our business, financial condition, results of operations, and reputation. Risks Relating to Information Technology Security and Continuity --- ## Modified: Advertising Costs **Key changes:** - Reworded sentence: "Advertising costs are expensed as incurred and were $37 million in 2025 and 2024 and $36 million in 2023." **Prior (2025):** Advertising costs are expensed as incurred and were $37 million, $36 million, and $53 million in 2024, 2023, and 2022, respectively. **Current (2026):** Advertising costs are expensed as incurred and were $37 million in 2025 and 2024 and $36 million in 2023. --- ## Modified: Opinion on the Financial Statements **Key changes:** - Reworded sentence: "(the Company) as of December 28, 2025 and December 29, 2024, the related consolidated statements of operations, comprehensive income (loss), stockholders' equity and cash flows for each of the three years in the period ended December 28, 2025, and the related notes (collectively referred to as the "consolidated financial statements")." - Reworded sentence: "We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 28, 2025, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 11, 2026 expressed an unqualified opinion thereon." **Prior (2025):** We have audited the accompanying consolidated balance sheets of Illumina, Inc. (the Company) as of December 29, 2024 and December 31, 2023, the related consolidated statements of operations, comprehensive loss, stockholders' equity and cash flows for each of the three years in the period ended December 29, 2024, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 29, 2024 and December 31, 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 29, 2024, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 29, 2024, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 12, 2025 expressed an unqualified opinion thereon. **Current (2026):** We have audited the accompanying consolidated balance sheets of Illumina, Inc. (the Company) as of December 28, 2025 and December 29, 2024, the related consolidated statements of operations, comprehensive income (loss), stockholders' equity and cash flows for each of the three years in the period ended December 28, 2025, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 28, 2025 and December 29, 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 28, 2025, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 28, 2025, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 11, 2026 expressed an unqualified opinion thereon. --- ## Modified: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) **Key changes:** - Reworded sentence: "Changes in the reserve for product warranties were as follows: In millionsBalance as of January 1, 2023$18 Additions charged to cost of product revenue42 Repairs and replacements(39)Balance as of December 31, 202321 Additions charged to cost of product revenue42 Repairs and replacements(45)Balance as of December 29, 202418 Additions charged to cost of product revenue28 Repairs and replacements(29)Balance as of December 28, 2025$17" **Prior (2025):** We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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, we rely upon prices set by management, adjusted for applicable discounts. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment and payment is typically due within 30 days from invoice. In instances where right of payment or transfer of title is contingent upon the customer's acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from genotyping and sequencing services, including cancer detection testing services related to the GRAIL business, is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, or payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expense when incurred as the amortization period for such costs, if capitalized, would have been one year or less. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers by us. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. **Current (2026):** We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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, we rely upon prices set by management, adjusted for applicable discounts. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment and payment is typically due within 30 days from invoice. In instances where right of payment or transfer of title is contingent upon the customer's acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from genotyping and sequencing services, including cancer detection testing services related to the GRAIL business, is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, or payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expense when incurred as the amortization period for such costs, if capitalized, would have been one year or less. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers by us. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. --- ## Modified: Nasdaq Biotechnology Index, and S&P 500 Index **Key changes:** - Reworded sentence: "Holders As of February 6, 2026, we had 443 record holders of our common stock." **Prior (2025):** Holders As of February 7, 2025, we had 497 record holders of our common stock. Dividends We have never paid cash dividends and have no present intention to pay cash dividends in the foreseeable future. 29 29 29 **Current (2026):** Holders As of February 6, 2026, we had 443 record holders of our common stock. Dividends We have never paid cash dividends and have no present intention to pay cash dividends in the foreseeable future. 31 31 31 --- ## Modified: Securities Class Actions **Key changes:** - Added sentence: "On September 26, 2025, the Court granted the defendants' motion to dismiss for failure to state a claim, but granted plaintiffs leave to file an amended complaint by October 27, 2025." - Added sentence: "On October 27, 2025, the Plaintiffs filed a Third Amended Complaint." - Added sentence: "On December 11, 2025, the Company filed a motion to dismiss the Third Amended Complaint." - Added sentence: "On February 4, 2026, the Plaintiffs filed their opposition to the motion to dismiss." - Added sentence: "The Company's reply is due March 6, 2026." **Prior (2025):** Federal Securities Class Actions. On November 11, 2023, the first of three securities class action complaints was filed against Illumina and certain of its current and former executive officers in the United States District Court for the Southern District of California. The first-filed case is captioned Kangas v. Illumina, Inc. et al., the second-filed case is captioned Roy v. Illumina, Inc. et al., and the third-filed case is captioned Louisiana Sheriffs' Pension & Relief Fund v. Illumina, Inc. et al. (collectively, the Actions). The complaints generally allege, among other things, that defendants made materially false and misleading statements and omitted material facts relating to Illumina's acquisition of GRAIL. The complaints seek unspecified damages, interest, fees, and costs. On January 9, 2024, four movants filed motions to consolidate the Actions and to appoint a lead plaintiff (Lead Plaintiff Motions). On April 11, 2024, the Court issued an order consolidating the Actions into a single action (captioned in re Illumina, Inc. Securities Litigation No. 23-cv-2082-LL-MMP), and appointed Universal-Investment-Gesellschaft mbH, UI BVK Kapitalverwaltungsgesellschaft mbH, and ACATIS Investment Kapitalverwaltungsgesellschaft mbH as lead plaintiffs (the Lead Plaintiffs). On June 21, 2024, the Lead Plaintiffs filed their consolidated amended complaint. The complaint alleges that Illumina and GRAIL and certain of their current and former directors and officers violated Sections 10(b) and 20(a) of the Securities Exchange Act and SEC Rule 10b-5 in connection with Illumina's acquisition of GRAIL. On September 13, 2024, the Lead Plaintiffs filed a second amended consolidated complaint. On November 12, 2024, the Company and other defendants filed a motion to dismiss the second amended consolidated complaint. On December 20, 2024, the Lead Plaintiffs filed their opposition to the motion to dismiss. The defendants' final reply brief was filed on February 3, 2025. No hearing date has been set. State Securities Class Actions. On February 2, 2024, the first of two additional securities class actions was filed against Illumina, certain of its officers and directors, and several other individuals and entities in the Superior Court of the State of California, County of San Mateo, captioned Loren Scott Mar v. Illumina, et al. and Scott Zerzanek v. Illumina, Inc. et al. Both complaints generally allege, among other things, that defendants made materially false and misleading statements and omitted material facts in the November 2020 and February 2021 registration statements and prospectus relating to Illumina's acquisition of GRAIL. The complaints seek unspecified damages, interest, fees, and costs. On March 29, 2024, the parties to the actions filed a Joint Stipulation to Consolidate the actions and to appoint co-lead counsel for plaintiffs, which the Court granted on April 5, 2024. On August 12, 2024, the Plaintiffs filed their consolidated complaint. On September 6, 2024, Illumina and the other named defendants filed a motion to stay the litigation. On October 4, 2024, the plaintiffs opposed the motion to stay. At a hearing held on December 6, 2024, the Court declined to stay the litigation. The defendants' demurrer is due February 28, 2025. Plaintiffs' oppositions to the demurrer are due April 30, 2025, and defendants' final reply briefs are due May 30, 2025. A hearing is set for June 20, 2025. In light of the fact that the lawsuits are in an early stage, we cannot predict the ultimate outcome of the suits. We deny the allegations in the complaints and intend to vigorously defend the litigation. 87 87 87 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents **Current (2026):** Federal Securities Class Actions. On November 11, 2023, the first of three securities class action complaints was filed against Illumina and certain of its current and former executive officers in the United States District Court for the Southern District of California. The first-filed case is captioned Kangas v. Illumina, Inc. et al., the second-filed case is captioned Roy v. Illumina, Inc. et al., and the third-filed case is captioned Louisiana Sheriffs' Pension & Relief Fund v. Illumina, Inc. et al. (collectively, the Actions). The complaints generally allege, among other things, that defendants made materially false and misleading statements and omitted material facts relating to Illumina's acquisition of GRAIL. The complaints seek unspecified damages, interest, fees, and costs. On January 9, 2024, four movants filed motions to consolidate the Actions and to appoint a lead plaintiff (Lead Plaintiff Motions). On April 11, 2024, the Court issued an order consolidating the Actions into a single action (captioned in re Illumina, Inc. Securities Litigation No. 23-cv-2082-LL-MMP), and appointed Universal-Investment-Gesellschaft mbH, UI BVK Kapitalverwaltungsgesellschaft mbH, and ACATIS Investment Kapitalverwaltungsgesellschaft mbH as lead plaintiffs (the Lead Plaintiffs). On June 21, 2024, the Lead Plaintiffs filed their consolidated amended complaint. The complaint alleges that Illumina and GRAIL and certain of their current and former directors and officers violated Sections 10(b) and 20(a) of the Securities Exchange Act and SEC Rule 10b-5 in connection with Illumina's acquisition of GRAIL. On September 13, 2024, the Lead Plaintiffs filed a second amended consolidated complaint. On November 12, 2024, the Company and other defendants filed a motion to dismiss the second amended consolidated complaint. On December 20, 2024, the Lead Plaintiffs filed their opposition to the motion to dismiss. The defendants' final reply brief was filed on February 3, 2025. On September 26, 2025, the Court granted the defendants' motion to dismiss for failure to state a claim, but granted plaintiffs leave to file an amended complaint by October 27, 2025. On October 27, 2025, the Plaintiffs filed a Third Amended Complaint. On December 11, 2025, the Company filed a motion to dismiss the Third Amended Complaint. On February 4, 2026, the Plaintiffs filed their opposition to the motion to dismiss. The Company's reply is due March 6, 2026. No hearing date has been set. State Securities Class Actions. On February 2, 2024, the first of two additional securities class actions was filed against Illumina, certain of its officers and directors, and several other individuals and entities in the Superior Court of the State of California, County of San Mateo, captioned Loren Scott Mar v. Illumina, et al. and Scott Zerzanek v. Illumina, Inc. et al. Both complaints generally allege, among other things, that defendants made materially false and misleading statements and omitted material facts in the November 2020 and February 2021 registration statements and prospectus relating to Illumina's acquisition of GRAIL. The complaints seek unspecified damages, interest, fees, and costs. On March 29, 2024, the parties to the actions filed a Joint Stipulation to Consolidate the actions and to appoint co-lead counsel for plaintiffs, which the Court granted on April 5, 2024. On August 12, 2024, the Plaintiffs filed their consolidated complaint. On February 28, 2025, the defendants filed demurrers seeking dismissal of the litigation. On April 30, 2025, Plaintiffs filed their oppositions to the demurrers, and defendants filed their reply briefs on May 30, 2025. On September 3, 2025, the Court overruled Illumina's demurrer. On September 16, 2025, Illumina filed its answer to the consolidated complaint denying the allegations. On October 28, 2025, the Company filed a writ with the California Court of Appeals seeking interlocutory appellate review of the court's order overruling Illumina's demurrer. On October 31, 2025, the Court of Appeals denied the writ. In light of the fact that the lawsuits are in an early stage, we cannot predict the ultimate outcome of the suits. We deny the allegations in the complaints and intend to vigorously defend the litigation. --- ## Modified: Restructuring **Key changes:** - Reworded sentence: "In 2023, we implemented a cost reduction initiative that included workforce reductions, consolidation of certain facilities, and other actions to reduce expenses as part of a plan to realign operating expenses while maintaining focus on our innovation roadmap and sustainable long-term growth." - Reworded sentence: "(2)For 2025, $26 million was recorded in SG&A expense, $16 million in R&D expense, and remainder in cost of revenue." - Reworded sentence: "81 81 81 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents" **Prior (2025):** We measure and accrue liabilities associated with employee separation costs, which primarily consist of severance pay and other separation costs such as outplacement services and benefits, at fair value as of the date the plan is approved and when such costs are reasonably estimable. The fair value measurement of restructuring related liabilities requires certain assumptions and estimates to be made, such as the retention period of certain employees. It is our policy to use the best estimates based on facts and circumstances available at the time of measurement, review the assumptions and estimates periodically, and adjust the liabilities when necessary. **Current (2026):** We measure and accrue liabilities associated with employee separation costs, which primarily consist of severance pay and other separation costs such as outplacement services and benefits, at fair value as of the date the plan is approved and when such costs are reasonably estimable. The fair value measurement of restructuring related liabilities requires certain assumptions and estimates to be made, such as the retention period of certain employees. It is our policy to use the best estimates based on facts and circumstances available at the time of measurement, review the assumptions and estimates periodically, and adjust the liabilities when necessary. 66 66 66 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents --- ## Modified: Following the Spin-Off, we remain the obligor on the contingent value rights (the CVRs) we issued in connection with the GRAIL Acquisition, and the Spin-Off could adversely affect the market value of the CVRs. **Key changes:** - Added sentence: "Risks Relating to Litigation" **Prior (2025):** Following the Spin-Off, we remain the obligor on the CVRs and, accordingly, continue to be required to record in our financial statements the estimated future liabilities associated with the CVRs. Since we no longer own GRAIL, it may be more difficult for us to estimate these future liabilities. We also may have difficulty complying with our obligations with respect to the CVRs if we are unable to obtain timely and accurate information from GRAIL. **Current (2026):** Following the Spin-Off, we remain the obligor on the CVRs and, accordingly, continue to be required to record in our financial statements the estimated future liabilities associated with the CVRs. Since we no longer own GRAIL, it may be more difficult for us to estimate these future liabilities. We also may have difficulty complying with our obligations with respect to the CVRs if we are unable to obtain timely and accurate information from GRAIL. Risks Relating to Litigation --- ## Modified: Cash Flow Summary **Key changes:** - Reworded sentence: "In millions202520242023Net cash provided by operating activities$1,079 $837 $478 Net cash used in investing activities(55)(178)(231)Net cash used in financing activities(744)(570)(1,210)Effect of exchange rate changes on cash and cash equivalents11 (10) - Net increase (decrease) in cash and cash equivalents$291 $79 $(963) 41 41 41 Operating Activities Net cash provided by operating activities in 2025 consisted of net income of $850 million, plus net adjustments of $382 million, less net changes in operating assets and liabilities of $153 million." - Reworded sentence: "Investing Activities Net cash used in investing activities totaled $55 million in 2025." - Reworded sentence: "Financing Activities Net cash used in financing activities totaled $744 million in 2025." **Prior (2025):** In millions202420232022Net cash provided by operating activities$837 $478 $392 Net cash used in investing activities(178)(231)(591)Net cash (used in) provided by financing activities(570)(1,210)1,000 Effect of exchange rate changes on cash and cash equivalents(10) - (22)Net increase (decrease) in cash and cash equivalents$79 $(963)$779 39 39 39 Operating Activities Net cash provided by operating activities in 2024 consisted of a net loss of $1,223 million, plus net adjustments of $2,543 million, less net changes in operating assets and liabilities of $483 million. The primary adjustments to net loss included goodwill and intangible impairment of $1,889 million, share-based compensation expense of $370 million, depreciation and amortization expense of $354 million, net loss on strategic investments of $312 million, and property and equipment and right-of-use asset impairment of $46 million, offset by change in fair value of contingent consideration liabilities of $315 million and deferred income taxes of $112 million. Cash flow impact from changes in net operating assets and liabilities were primarily driven by decreases in accrued liabilities and inventory, offset by increases in accounts receivable, operating lease right-of-use assets and liabilities, net, and other long-term liabilities. Net cash provided by operating activities in 2023 consisted of net adjustments of $1,729 million, less a net loss of $1,161 million and net changes in operating assets and liabilities of $90 million. The primary adjustments to net loss included goodwill and intangible impairment of $827 million, depreciation and amortization expense of $432 million, share-based compensation of $380 million, property and equipment and right-of-use asset impairment of $100 million, and net loss on strategic investments of $40 million, offset by deferred income taxes of $33 million and change in fair value of contingent consideration liabilities of $24 million. Cash flow impact from changes in net operating assets and liabilities were primarily driven by increases in accounts receivable and inventory and a decrease in accounts payable. Investing Activities Net cash used in investing activities totaled $178 million in 2024. We invested $128 million in capital expenditures, net of proceeds received from sales, primarily associated with investments in facilities, paid $81 million for an acquisition, net of cash acquired, and other intangible assets, and purchased strategic investments, net of distributions, of $52 million. This was offset by the receipt of $83 million related to the settlement of our Helix contingent value right. Net cash used in investing activities totaled $231 million in 2023. We invested $195 million in capital expenditures, primarily associated with our investment in facilities, paid $30 million for an acquisition, net of cash acquired, and other intangible assets, and used $6 million for net purchases of strategic investments. Financing Activities Net cash used in financing activities totaled $570 million in 2024. We deconsolidated cash and cash equivalents of $968 million, as a result of the GRAIL Spin-Off, repaid our delayed draw term loan of $750 million, used $116 million to repurchase our common stock, and used $32 million to pay taxes related to net share settlement of equity awards. This was offset by net borrowings on the Delayed Draw Credit Facility of $744 million, net proceeds received from the issuance of our 2026 Term Notes of $497 million, and proceeds received from the sale of shares under our employee stock purchase plan of $56 million. Net cash used in financing activities totaled $1,210 million in 2023. We repaid our 2023 Term Notes, with an aggregate principal amount of $500 million, repaid our 2023 Convertible Notes, with an aggregate principal amount of $750 million, and used $40 million to pay taxes related to net share settlement of equity awards. This was offset by $67 million received in proceeds from the sale of shares under our employee stock purchase plan and the issuance of common stock through the exercise of stock options. **Current (2026):** In millions202520242023Net cash provided by operating activities$1,079 $837 $478 Net cash used in investing activities(55)(178)(231)Net cash used in financing activities(744)(570)(1,210)Effect of exchange rate changes on cash and cash equivalents11 (10) - Net increase (decrease) in cash and cash equivalents$291 $79 $(963) 41 41 41 Operating Activities Net cash provided by operating activities in 2025 consisted of net income of $850 million, plus net adjustments of $382 million, less net changes in operating assets and liabilities of $153 million. The primary adjustments to net income included share-based compensation of $275 million, depreciation and amortization of $270 million, deferred income taxes of $119 million, intangible impairment of $23 million, and non-cash charitable contribution of $19 million, offset by net gains on investments of $328 million and change in fair value of contingent consideration of $18 million. Cash flow impact from changes in operating assets and liabilities were primarily driven by increases in accounts receivable, operating lease assets and liabilities, net, other long-term liabilities, other assets, and inventory. Net cash provided by operating activities in 2024 consisted of a net loss of $1,223 million, plus net adjustments of $2,543 million, less net changes in operating assets and liabilities of $483 million. The primary adjustments to net loss included goodwill and intangible impairment of $1,889 million, share-based compensation expense of $370 million, depreciation and amortization expense of $354 million, net loss on strategic investments of $312 million, and property and equipment and right-of-use asset impairment of $46 million, offset by change in fair value of contingent consideration liabilities of $315 million and deferred income taxes of $112 million. Cash flow impact from changes in net operating assets and liabilities were primarily driven by decreases in accrued liabilities and inventory, offset by increases in accounts receivable, operating lease right-of-use assets and liabilities, net, and other long-term liabilities. Investing Activities Net cash used in investing activities totaled $55 million in 2025. We primarily invested $148 million in capital expenditures, primarily for investments in facilities, offset by net sales of strategic investments of $103 million. Net cash used in investing activities totaled $178 million in 2024. We invested $128 million in capital expenditures, net of proceeds received from sales, primarily associated with investments in facilities, paid $81 million for an acquisition, net of cash acquired, and other intangible assets, and purchased strategic investments, net of distributions, of $52 million. This was offset by the receipt of $83 million related to the settlement of our Helix contingent value right. Financing Activities Net cash used in financing activities totaled $744 million in 2025. We used $742 million to repurchase our common stock, $500 million to repay our 2025 Term Notes that matured, and $40 million to pay taxes related to net share settlement of equity awards. This was offset by net proceeds received from the issuance of our 2030 Term Notes of $495 million and proceeds from the sale of shares under our employee stock purchase plan of $44 million. Net cash used in financing activities totaled $570 million in 2024. We deconsolidated cash of $968 million for the GRAIL Spin-Off, repaid our delayed draw term loan of $750 million, used $116 million to repurchase our common stock, and used $32 million to pay taxes related to net share settlement of equity awards, offset by net borrowings on the Delayed Draw Credit Facility of $744 million, net proceeds received from issuance of our 2026 Term Notes of $497 million, and proceeds received from the sale of shares under our employee stock purchase plan of $56 million. --- ## Modified: Earnings (Loss) per Share **Key changes:** - Reworded sentence: "Basic earnings (loss) per share is computed based on the weighted average number of common shares outstanding during the period." - Reworded sentence: "Potentially dilutive common shares from equity awards are determined using the average share price for each period under the treasury stock method and proceeds from exercise of equity awards and the average amount of unrecognized compensation expense for equity awards are assumed to be used to repurchase shares." **Prior (2025):** Basic loss per share is computed based on the weighted average number of common shares outstanding during the period. Diluted loss 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. In loss periods, basic and diluted loss per share are identical since the effect of potentially dilutive common shares is antidilutive and therefore excluded. Potentially dilutive common shares from equity awards are determined using the average share price for each period under the treasury stock method. In addition, proceeds from exercise of equity awards and the average amount of unrecognized compensation expense for equity awards are assumed to be used to repurchase shares. Potentially dilutive common shares issuable upon conversion of convertible senior notes are determined using the if-converted method. 58 58 58 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents **Current (2026):** Basic earnings (loss) per share is computed based on the weighted average number of common shares outstanding during the period. Diluted earnings (loss) 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. In loss periods, basic and diluted loss per share are identical since the effect of potentially dilutive common shares is antidilutive and therefore excluded. Potentially dilutive common shares from equity awards are determined using the average share price for each period under the treasury stock method and proceeds from exercise of equity awards and the average amount of unrecognized compensation expense for equity awards are assumed to be used to repurchase shares. Potentially dilutive common shares issuable upon conversion of convertible notes are determined using the if-converted method. 60 60 60 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents --- ## Modified: 5.800% Term Notes due 2025 (2025 Term Notes) and 5.750% Term Notes due 2027 (2027 Term Notes) **Key changes:** - Reworded sentence: "The 2025 Term Notes matured and were repaid in cash on December 12, 2025." **Prior (2025):** In December 2022, we issued $500 million aggregate principal amount of 2025 Term Notes and $500 million aggregate principal amount of 2027 Term Notes. After deducting discounts and issuance costs, we received net proceeds of $991 million. The 2025 Notes, which mature on December 12, 2025, and the 2027 Notes, which mature on December 13, 2027, accrue interest at a rate of 5.800% and 5.750% per annum, respectively, payable semi-annually. Interest for the 2025 Notes is payable on June 12 and December 12 of each year and interest for the 2027 Notes is payable on June 13 and December 13 of each year, beginning in June 2023. We may redeem for cash all or any portion of the 2025 or 2027 Term Notes, at our option, at any time prior to maturity. Prior to November 12, 2025 for the 2025 Notes and prior to November 13, 2027 for the 2027 Notes, the notes are redeemable at make-whole premium redemption prices as defined in the applicable forms of note. After November 12, 2025 and November 13, 2027, respectively, the notes are redeemable at a redemption price equal to 100% of the principal to be redeemed, plus accrued and unpaid interest up to, but excluding, the redemption date. **Current (2026):** In December 2022, we issued $500 million aggregate principal amount of 2025 Term Notes and $500 million aggregate principal amount of 2027 Term Notes. The 2025 Term Notes matured and were repaid in cash on December 12, 2025. The 2027 Term Notes, which mature on December 13, 2027, accrue interest at a rate of 5.750% per annum, payable semi-annually on June 13 and December 13 of each year, beginning in June 2023. We may redeem for cash all or any portion of the 2027 Term Notes, at our option, at any time prior to maturity. Prior to November 13, 2027, the notes are redeemable at make-whole premium redemption prices as defined in the form of the notes. After November 13, 2027, the notes are redeemable at a redemption price equal to 100% of the principal to be redeemed, plus accrued and unpaid interest up to, but excluding, the redemption date. 74 74 74 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents --- ## Modified: RECENT ACCOUNTING PRONOUNCEMENTS **Prior (2025):** For a summary of recent accounting pronouncements applicable to our consolidated financial statements refer to note 1. Organization and Significant Accounting Policies within the Consolidated Financial Statements section of this report, which is incorporated herein by reference. 46 46 46 **Current (2026):** For a summary of recent accounting pronouncements applicable to our consolidated financial statements refer to note 1. Organization and Significant Accounting Policies within the Consolidated Financial Statements section of this report, which is incorporated herein by reference. 48 48 48 --- ## Modified: Disruption of critical information technology systems could have an adverse effect on our operations, business, customer relations, and financial condition. **Key changes:** - Reworded sentence: "IT systems may be vulnerable to damage or disruption from a variety of sources, including telecommunications or network failures, power loss, natural disasters, human acts, terrorist attacks, computer viruses, computer denial-of-service attacks, ransomware attacks, unauthorized access to customer or employee data or company trade secrets, and other attempts to harm or exploit our information systems." - Reworded sentence: "As we continuously adjust our procedures and business practices and add additional functionality to our enterprise software, including generative artificial intelligence tools, problems could arise that we have not foreseen, including interruptions in service, loss of data, inaccurate data, or reduced functionality." - Added sentence: "26 26 26 In addition, from time to time, we undertake significant changes to our enterprise applications, including enterprise resource planning and adjacent systems." - Added sentence: "If these projects are delayed, exceed cost estimates, or do not perform as intended, we could experience operational disruptions (for example, in order processing, manufacturing, fulfillment, or financial reporting) and incremental costs, any of which could adversely affect our business, results of operations, or financial condition." **Prior (2025):** Our success depends, in part, on the continued and uninterrupted performance of our IT systems, which are used extensively in virtually all aspects of our business. IT systems may be vulnerable to damage from a variety of sources, including telecommunications or network failures, power loss, natural disasters, human acts, terrorist attacks, computer viruses, computer denial-of-service attacks, ransomware attacks, unauthorized access to customer or employee data or company trade secrets, and other attempts to harm our systems. Certain of our systems are not redundant, and our disaster recovery planning is not sufficient for every eventuality. Further, the development of artificial intelligence is creating unforeseen, more sophisticated attacks. Despite any precautions we may take, such problems could result in, among other consequences, disruption of our operations, which could harm our reputation and financial results. As we continuously adjust our workflow and business practices and add additional functionality to our enterprise software, problems could arise that we have not foreseen, including interruptions in service, loss of data, inaccurate data, or reduced functionality. Such problems could adversely impact our ability to run our business in a timely manner. Risk Relating to Public Health Crises **Current (2026):** Our success depends, in part, on the continued and uninterrupted performance of our IT systems, which are used extensively in virtually all aspects of our business. IT systems may be vulnerable to damage or disruption from a variety of sources, including telecommunications or network failures, power loss, natural disasters, human acts, terrorist attacks, computer viruses, computer denial-of-service attacks, ransomware attacks, unauthorized access to customer or employee data or company trade secrets, and other attempts to harm or exploit our information systems. Certain of our systems are not redundant, and our disaster recovery planning does not address every eventuality. Further, the development of artificial intelligence is creating unforeseen, more sophisticated attacks. Despite any precautions we may take, such problems could result in, among other consequences, disruption of our operations, which could harm our reputation and financial results. As we continuously adjust our procedures and business practices and add additional functionality to our enterprise software, including generative artificial intelligence tools, problems could arise that we have not foreseen, including interruptions in service, loss of data, inaccurate data, or reduced functionality. Such problems could adversely impact our ability to run our business in a timely manner. 26 26 26 In addition, from time to time, we undertake significant changes to our enterprise applications, including enterprise resource planning and adjacent systems. If these projects are delayed, exceed cost estimates, or do not perform as intended, we could experience operational disruptions (for example, in order processing, manufacturing, fulfillment, or financial reporting) and incremental costs, any of which could adversely affect our business, results of operations, or financial condition. Risk Relating to Public Health Crises --- ## Modified: Sales of Unregistered Securities **Key changes:** - Reworded sentence: "There were no sales of unregistered securities in 2025." **Prior (2025):** There were no sales of unregistered securities in 2024. 30 30 30 **Current (2026):** There were no sales of unregistered securities in 2025. 32 32 32 --- ## Modified: Performance Stock Options (1) **Key changes:** - Reworded sentence: "Cancelled Outstanding at December 29, 2024 and December 28, 2025 _____________ (1)In connection with the GRAIL acquisition, we issued replacement performance stock options to GRAIL employees in 2021." - Reworded sentence: "In connection with the GRAIL Spin-Off, all outstanding performance stock options were assumed by GRAIL in 2024." **Prior (2025):** _____________ (1)In connection with the GRAIL acquisition, we issued replacement performance stock options to GRAIL employees in 2021. The number of units reflected awards that had been granted and for which it was assumed to be probable that the underlying performance goals would be achieved. In connection with the GRAIL Spin-Off, all outstanding performance stock options were assumed by GRAIL. (1) The total intrinsic value of stock options exercised was immaterial in both 2023 and 2022. None exercised in 2024. **Current (2026):** Cancelled Outstanding at December 29, 2024 and December 28, 2025 _____________ (1)In connection with the GRAIL acquisition, we issued replacement performance stock options to GRAIL employees in 2021. The number of units reflected awards that had been granted and for which it was assumed to be probable that the underlying performance goals would be achieved. In connection with the GRAIL Spin-Off, all outstanding performance stock options were assumed by GRAIL in 2024. (1) --- ## Modified: If we do not successfully manage the development, manufacturing, and launch of new products or services, including product updates and transitions, our financial results could be adversely affected. **Key changes:** - Reworded sentence: "As we announce future products or integrate new products into our portfolio, such as new instruments or instrument platforms, we face numerous risks relating to product transitions and the evolution of our product portfolio." - Added sentence: "We may encounter significant challenges in scaling up or adapting our manufacturing and supply chain processes to support new products, which could result in delays, increased costs, or disruptions to product availability." - Added sentence: "In addition, from time to time, we develop and implement product updates, including significant hardware or software updates to in-service products, such as our NovaSeq X sequencing platform." - Added sentence: "Such product updates may materially impact how such products operate." - Added sentence: "Therefore, if we are unable to implement such updates on a cost-effective and timely basis, or if such updates are not successful technologically or operationally for our customers, our business and reputation could be adversely affected, and our financial results could suffer." **Prior (2025):** We face risks associated with launching new products and pre-announcing products and services when the products or services have not been fully developed or tested. In addition, we may experience difficulty in managing or forecasting customer reactions, purchasing decisions, transition requirements, or programs with respect to newly-launched products (or products in development), which could adversely affect sales of our existing products. If our products and services are not able to deliver the performance or results expected by our target markets or are not delivered on a timely basis, our reputation and credibility may suffer. If we encounter development challenges or discover errors in our products late in our development cycle, we may delay the product launch date. The expenses or losses associated with unsuccessful product development or launch activities, or a lack of market acceptance of our new products, could adversely affect our business, financial condition, or results of operations. 15 15 15 As we announce future products or integrate new products into our portfolio, such as new instruments or instrument platforms, we face numerous risks relating to product transitions and the evolution of our product portfolio. We may be unable to accurately forecast new product demand and the impact of new products on the demand for current or established products. We may experience challenges relating to managing excess and obsolete inventories, managing new or higher product cost structures, and managing different sales and support requirements. Announcements of currently planned or other new products may cause customers to defer or stop purchasing our current or established products until new products become available. In addition, customers may defer or stop purchasing our current or established products as they assess the features and technological characteristics of new products, as compared to our current or established products, before making a financial commitment. **Current (2026):** We face risks associated with launching new products and pre-announcing products and services when the products or services have not been fully developed or tested. In addition, we may experience difficulty in managing or forecasting customer reactions, purchasing decisions, transition requirements, or programs with respect to newly-launched products (or products in development), which could adversely affect sales of our existing products. If our products and services are not able to deliver the performance or results expected by our target markets or are not delivered on a timely basis, our reputation and credibility may suffer. If we encounter development challenges or discover errors in our products late in our development cycle, we may delay the product launch date. The expenses or losses associated with unsuccessful product development or launch activities, or a lack of market acceptance of our new products, could adversely affect our business, financial condition, or results of operations. As we announce future products or integrate new products into our portfolio, such as new instruments or instrument platforms, we face numerous risks relating to product transitions and the evolution of our product portfolio. We may be unable to accurately forecast new product demand and the impact of new products on the demand for current or established products. We may experience challenges relating to managing excess and obsolete inventories, managing new or higher product cost structures, and managing different sales and support requirements. Announcements of currently planned or other new products may cause customers to defer or stop purchasing our current or established products until new products become available. We may encounter significant challenges in scaling up or adapting our manufacturing and supply chain processes to support new products, which could result in delays, increased costs, or disruptions to product availability. In addition, customers may defer or stop purchasing our current or established products as they assess the features and technological characteristics of new products, as compared to our current or established products, before making a financial commitment. In addition, from time to time, we develop and implement product updates, including significant hardware or software updates to in-service products, such as our NovaSeq X sequencing platform. Such product updates may materially impact how such products operate. Therefore, if we are unable to implement such updates on a cost-effective and timely basis, or if such updates are not successful technologically or operationally for our customers, our business and reputation could be adversely affected, and our financial results could suffer. --- ## Modified: CONTROLS AND PROCEDURES **Key changes:** - Reworded sentence: "In the third quarter of 2025, we began implementation efforts related to an upgrade of our global enterprise resource planning (ERP) system." - Reworded sentence: "Based on such evaluation, our CEO and CFO have concluded that as of December 28, 2025, our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (SEC), and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure." **Prior (2025):** We design our internal controls to provide reasonable assurance that (1) our transactions are properly authorized; (2) our assets are safeguarded against unauthorized or improper use; and (3) our transactions are properly recorded and reported in conformity with U.S. generally accepted accounting principles. We also maintain internal controls and procedures to ensure that we comply with applicable laws and our established financial policies. During the fourth quarter of 2024, we continued to monitor and evaluate the design and operating effectiveness of key controls. There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that materially affected or are reasonably likely to materially affect internal control over financial reporting. Our management, under the supervision and with the participation of our chief executive officer (CEO) and chief financial officer (CFO), has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act)), as of the end of the period covered by this Annual Report on Form 10-K. Based on such evaluation, our CEO and CFO have concluded that as of December 29, 2024, our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (SEC), and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure. **Current (2026):** We design our internal controls to provide reasonable assurance that (1) our transactions are properly authorized; (2) our assets are safeguarded against unauthorized or improper use; and (3) our transactions are properly recorded and reported in conformity with U.S. generally accepted accounting principles. We also maintain internal controls and procedures to ensure that we comply with applicable laws and our established financial policies. In the third quarter of 2025, we began implementation efforts related to an upgrade of our global enterprise resource planning (ERP) system. The upgraded ERP system is expected to enhance the flow of financial information, facilitate data analysis, and accelerate information reporting. The upgraded ERP system is expected to become operational in the first half of 2027. As part of this implementation effort, we may make changes to our processes and procedures which, in turn, could materially affect our internal controls over financial reporting. We will monitor, evaluate, and report the impact of such changes, if any, on our internal controls over financial reporting in the periods in which they occur. During the fourth quarter of 2025, we continued to monitor and evaluate the design and operating effectiveness of key controls. There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that materially affected or are reasonably likely to materially affect internal control over financial reporting. Our management, under the supervision and with the participation of our chief executive officer (CEO) and chief financial officer (CFO), has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act)), as of the end of the period covered by this Annual Report on Form 10-K. Based on such evaluation, our CEO and CFO have concluded that as of December 28, 2025, our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (SEC), and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure. --- ## Modified: About Illumina **Key changes:** - Reworded sentence: "33 33 33 On June 24, 2024, we completed the Spin-Off of GRAIL into a new public company through the distribution of approximately 85.5% of the outstanding shares of common stock of GRAIL to Illumina stockholders on a pro rata basis." - Reworded sentence: "We have one reportable segment, Core Illumina, as of December 28, 2025." - Added sentence: "On June 22, 2025, we entered into a Stock Purchase Agreement (the Purchase Agreement) with Standard BioTools to acquire SomaLogic and other specified assets for $350 million in cash, subject to customary adjustments." - Added sentence: "The Purchase Agreement further provides for, in connection with the revenues generated from certain products and services, (i) royalty streams and (ii) up to $75 million in potential milestone payments to Standard BioTools." - Added sentence: "We believe the acquisition will enhance our presence in the expanding proteomics market and advance our multiomics strategy." **Prior (2025):** Our focus on innovation has established us as a global leader in DNA sequencing and array-based technologies, serving customers in the research, clinical and applied markets. Our products are used for applications in the life sciences, oncology, reproductive health, agriculture and other emerging segments. Our customers include leading genomic research centers, academic institutions, government laboratories, and hospitals, as well as pharmaceutical, biotechnology, commercial molecular diagnostic laboratories, and consumer genomics companies. Our comprehensive line of products addresses the scale of experimentation and breadth of functional analysis to advance disease research, drug development, and the development of molecular tests. This portfolio of leading-edge sequencing and array-based solutions addresses a range of genomic complexity and throughput, enabling researchers and clinical practitioners to select the best solution for their scientific challenge. 31 31 31 On June 24, 2024, we completed the Spin-Off of GRAIL into a separate, independent publicly traded company through the distribution of approximately 85.5% of the outstanding shares of common stock of GRAIL to Illumina stockholders on a pro rata basis. We retained approximately 14.5% of the shares of GRAIL common stock immediately following the Spin-Off. The disposition of GRAIL did not meet the criteria to be reported as a discontinued operation and accordingly, GRAIL's assets, liabilities, results of operations and cash flows have not been reclassified. In connection with the Spin-Off, Illumina's stockholders received one share of GRAIL common stock for every six shares of Illumina common stock held on the Record Date. Refer to note 2. GRAIL Spin-Off for further details. We have one reportable segment, Core Illumina, as of December 29, 2024. Prior to the Spin-Off of GRAIL on June 24, 2024, our reportable segments included both Core Illumina and GRAIL. See note 12. Segment and Geographic Information within the Consolidated Financial Statements section of this report for details on our reportable segments. Our financial results have been, and will continue to be, impacted by several significant trends, which are described below. While these trends are important to understanding and evaluating our financial results, this discussion should be read in conjunction with our consolidated financial statements and the notes thereto within the Consolidated Financial Statements section of this report, and the other transactions, events, and trends discussed in Risk Factors within the Business & Market Information section of this report. **Current (2026):** Our focus on innovation has established us as a global leader in DNA sequencing and array-based technologies, serving customers in the research, clinical and applied markets. Our products are used for applications in the life sciences, oncology, reproductive health, agriculture and other emerging segments. Our customers include leading genomic research centers, academic institutions, government laboratories, and hospitals, as well as pharmaceutical, biotechnology, commercial molecular diagnostic laboratories, and consumer genomics companies. Our comprehensive line of products addresses the scale of experimentation and breadth of functional analysis to advance disease research, drug development, and the development of molecular tests. This portfolio of leading-edge sequencing and array-based solutions addresses a range of genomic complexity and throughput, enabling researchers and clinical practitioners to select the best solution for their scientific challenge. 33 33 33 On June 24, 2024, we completed the Spin-Off of GRAIL into a new public company through the distribution of approximately 85.5% of the outstanding shares of common stock of GRAIL to Illumina stockholders on a pro rata basis. We retained approximately 14.5% of the shares of GRAIL common stock immediately following the Spin-Off. The disposition of GRAIL did not meet the criteria to be reported as a discontinued operation and accordingly, GRAIL's assets, liabilities, results of operations and cash flows have not been reclassified. In connection with the Spin-Off, Illumina's stockholders received one share of GRAIL common stock for every six shares of Illumina common stock held on the Record Date. Refer to note 8. GRAIL Spin-Off for further details. We have one reportable segment, Core Illumina, as of December 28, 2025. Prior to the Spin-Off of GRAIL on June 24, 2024, our reportable segments included both Core Illumina and GRAIL. See note 12. Segment and Geographic Information within the Consolidated Financial Statements section of this report for details on our reportable segments. On June 22, 2025, we entered into a Stock Purchase Agreement (the Purchase Agreement) with Standard BioTools to acquire SomaLogic and other specified assets for $350 million in cash, subject to customary adjustments. The Purchase Agreement further provides for, in connection with the revenues generated from certain products and services, (i) royalty streams and (ii) up to $75 million in potential milestone payments to Standard BioTools. We believe the acquisition will enhance our presence in the expanding proteomics market and advance our multiomics strategy. The transaction was completed on January 30, 2026. See note 13. Subsequent Events for further details. Our financial results have been, and will continue to be, impacted by several significant trends, which are described below. While these trends are important to understanding and evaluating our financial results, this discussion should be read in conjunction with our consolidated financial statements and the notes thereto within the Consolidated Financial Statements section of this report, and the other transactions, events, and trends discussed in Risk Factors within the Business & Market Information section of this report. --- ## Modified: Income Taxes **Key changes:** - Reworded sentence: "The impact of a tax position is recognized in the consolidated 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." **Prior (2025):** Our provision for income taxes, deferred tax assets and liabilities, and reserves for unrecognized tax benefits reflect our best assessment of estimated future taxes to be paid. Judgments and estimates based on interpretations of existing tax laws or regulations in the United States and the numerous foreign jurisdictions where we are subject to income tax are required in determining our provision for income taxes. Changes in tax laws, regulations, or statutory tax rates (including the implementation of global minimum tax rates in certain jurisdictions), and estimates of our future taxable income could impact the deferred tax assets and liabilities provided for in the consolidated financial statements and would require an adjustment to the provision for income taxes. Deferred tax assets are regularly assessed to determine the likelihood they will be recovered from future taxable income. A valuation allowance is established when we believe it is more likely than not the future realization of all or some of a deferred tax asset will not be achieved. In evaluating our ability to recover deferred tax assets within the jurisdiction which they arise, we consider 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, our history of earnings and reliability of our forecasts, projections of pre-tax book income over the foreseeable future, and the impact of any feasible and prudent tax planning strategies. We recognize the impact of a tax position in our consolidated 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. Tax authorities regularly examine our returns in the jurisdictions in which we do business and we regularly assess the tax risk of our return filing positions. Due to the complexity of some of the uncertainties, the ultimate resolution may result in payments that are materially different from our current estimate of the tax liability. These differences, as well as any interest and penalties, will be reflected in the provision for income taxes in the period in which they are determined. 44 44 44 **Current (2026):** Our provision for income taxes, deferred tax assets and liabilities, and reserves for unrecognized tax benefits reflect our best assessment of estimated future taxes to be paid. Judgments and estimates based on interpretations of existing tax laws or regulations in the United States and the numerous foreign jurisdictions where we are subject to income tax are required in determining our provision for income taxes. Changes in tax laws, regulations, or statutory tax rates (including the implementation of global minimum tax rates in certain jurisdictions), and estimates of our future taxable income could impact the deferred tax assets and liabilities provided for in the consolidated financial statements and would require an adjustment to the provision for income taxes. Deferred tax assets are regularly assessed to determine the likelihood they will be recovered from future taxable income. A valuation allowance is established when we believe it is more likely than not the future realization of all or some of a deferred tax asset will not be achieved. In evaluating our ability to recover deferred tax assets within the jurisdiction which they arise, we consider 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, our history of earnings and reliability of our forecasts, projections of pre-tax book income over the foreseeable future, and the impact of any feasible and prudent tax planning strategies. We recognize the impact of a tax position in our consolidated 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. Tax authorities regularly examine our returns in the jurisdictions in which we do business and we regularly assess the tax risk of our return filing positions. Due to the complexity of some of the uncertainties, the ultimate resolution may result in payments that are materially different from our current estimate of the tax liability. These differences, as well as any interest and penalties, will be reflected in the provision for income taxes in the period in which they are determined. 46 46 46 --- ## Modified: Contract Assets and Liabilities **Key changes:** - Reworded sentence: "Contract assets, which consist of revenue recognized and performance obligations satisfied or partially satisfied in advance of customer billing, as of December 28, 2025 and December 29, 2024, were $21 million and $16 million, respectively, all of which were short-term and recorded in prepaid expenses and other current assets." **Prior (2025):** Contract assets, which consist of revenue recognized and performance obligations satisfied or partially satisfied in advance of customer billing, as of December 29, 2024 and December 31, 2023, were $16 million and $18 million, respectively, all of which were short-term and recorded in prepaid expenses and other current assets. Contract liabilities, which consist of deferred revenue and customer deposits, as of December 29, 2024 and December 31, 2023, were $327 million and $329 million, respectively, of which the short-term portions of $260 million and $252 million, respectively, were recorded in accrued liabilities and the remaining long-term portions were recorded in other long-term liabilities. Revenue recorded in 2024 included $245 million of previously deferred revenue that was included in contract liabilities as of December 31, 2023. **Current (2026):** Contract assets, which consist of revenue recognized and performance obligations satisfied or partially satisfied in advance of customer billing, as of December 28, 2025 and December 29, 2024, were $21 million and $16 million, respectively, all of which were short-term and recorded in prepaid expenses and other current assets. Contract liabilities, which consist of deferred revenue and customer deposits, as of December 28, 2025 and December 29, 2024, were $346 million and $327 million, respectively, of which the short-term portions of $270 million and $260 million, respectively, were recorded in accrued liabilities and the remaining long-term portions were recorded in other long-term liabilities. Revenue recorded in 2025 included $244 million of previously deferred revenue that was included in contract liabilities as of December 29, 2024. --- ## Modified: 2.550% Term Notes due 2031 (2031 Term Notes) **Key changes:** - Reworded sentence: "In March 2021, we issued $500 million aggregate principal amount of 2031 Term Notes." - Removed sentence: "74 74 74 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents" **Prior (2025):** In March 2021, we issued $500 million aggregate principal amount of 2023 Term Notes and $500 million aggregate principal amount of 2031 Term Notes. After deducting discounts and issuance costs, we received net proceeds of $992 million. The 2023 Notes matured and were repaid in cash on March 23, 2023. The 2031 Notes, which mature on March 23, 2031, accrue interest at a rate of 2.550% per annum, payable semi-annually on March 23 and September 23 of each year. We may redeem for cash all or any portion of the 2031 Term Notes, at our option, at any time prior to maturity. Prior to December 23, 2030, the notes are redeemable at make-whole premium redemption prices as defined in the form of the notes. After December 23, 2030, the notes are redeemable at a redemption price equal to 100% of the principal to be redeemed, plus accrued and unpaid interest up to, but excluding, the redemption date. 74 74 74 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents **Current (2026):** In March 2021, we issued $500 million aggregate principal amount of 2031 Term Notes. The notes, which mature on March 23, 2031, accrue interest at a rate of 2.550% per annum, payable semi-annually on March 23 and September 23 of each year. We may redeem for cash all or any portion of the 2031 Term Notes, at our option, at any time prior to maturity. Prior to December 23, 2030, the notes are redeemable at make-whole premium redemption prices as defined in the form of the notes. After December 23, 2030, the notes are redeemable at a redemption price equal to 100% of the principal to be redeemed, plus accrued and unpaid interest up to, but excluding, the redemption date. --- ## Modified: ADOPTIONS, MODIFICATIONS OR TERMINATIONS OF TRADING PLANS **Key changes:** - Reworded sentence: "During the quarterly period ended December 28, 2025, the following directors and officers adopted, modified or terminated 10b5-1 plans: •On November 11, 2025, Everett Cunningham, our Chief Commercial Officer, entered in a new arrangement intended to satisfy the affirmative defense conditions of Rule 10b5-1(c)." **Prior (2025):** During the quarterly period ended December 29, 2024, the following directors and officers adopted, modified or terminated 10b5-1 plans: •On November 6, 2024, Frances Arnold, a member of our Board of Directors, entered in a new arrangement intended to satisfy the affirmative defense conditions of Rule 10b5-1(c). The arrangement terminates on February 27, 2026 and provides for the sale of up to 120 shares. On November 6, 2024, Frances Arnold, a member of our Board of Directors, entered in a new arrangement intended to satisfy the affirmative defense conditions of Rule 10b5-1(c). The arrangement terminates on February 27, 2026 and provides for the sale of up to 120 shares. •On November 7, 2024, Jakob Wedel, our Chief Strategy and Corporate Development Officer, entered in a new arrangement intended to satisfy the affirmative defense conditions of Rule 10b5-1(c). The arrangement terminates on May 29, 2026 and provides for the sale of up to 3,182 shares. On November 7, 2024, Jakob Wedel, our Chief Strategy and Corporate Development Officer, entered in a new arrangement intended to satisfy the affirmative defense conditions of Rule 10b5-1(c). The arrangement terminates on May 29, 2026 and provides for the sale of up to 3,182 shares. •On November 8, 2024, Scott Davies, our Interim General Counsel, entered in a new arrangement intended to satisfy the affirmative defense conditions of Rule 10b5-1(c). The arrangement terminates on December 16, 2025 and provides for the sale of up to 3,301 shares. On November 8, 2024, Scott Davies, our Interim General Counsel, entered in a new arrangement intended to satisfy the affirmative defense conditions of Rule 10b5-1(c). The arrangement terminates on December 16, 2025 and provides for the sale of up to 3,301 shares. •On November 13, 2024, Patricia Leckman, our Chief People Officer, entered in a new arrangement intended to satisfy the affirmative defense conditions of Rule 10b5-1(c). The arrangement terminates on November 14, 2025 and provides for the sale of up to 1,615 shares. On November 13, 2024, Patricia Leckman, our Chief People Officer, entered in a new arrangement intended to satisfy the affirmative defense conditions of Rule 10b5-1(c). The arrangement terminates on November 14, 2025 and provides for the sale of up to 1,615 shares. Other than as disclosed above, during the quarterly period ended December 29, 2024, none of the Company's directors or officers adopted, modified or terminated any "Rule 10b5-1 trading arrangement" or any "non-Rule 10b5-1 trading arrangement," in each case as such term is defined in Item 408 of Regulation S-K. 97 97 97 Table of Contents Table of Contents **Current (2026):** During the quarterly period ended December 28, 2025, the following directors and officers adopted, modified or terminated 10b5-1 plans: •On November 11, 2025, Everett Cunningham, our Chief Commercial Officer, entered in a new arrangement intended to satisfy the affirmative defense conditions of Rule 10b5-1(c). On February 9, 2026, Mr. Cunningham terminated this new arrangement in connection with his departure from the Company on January 16, 2026. The arrangement provided for the sale of up to 8,118 shares and would have terminated by its terms on November 11, 2026. •On November 12, 2025, Patricia Leckman, our Chief People Officer, entered in a new arrangement intended to satisfy the affirmative defense conditions of Rule 10b5-1(c). The arrangement terminates on November 12, 2026 and provides for the sale of up to 2,370 shares. On November 12, 2025, Patricia Leckman, our Chief People Officer, entered in a new arrangement intended to satisfy the affirmative defense conditions of Rule 10b5-1(c). The arrangement terminates on November 12, 2026 and provides for the sale of up to 2,370 shares. •On November 21, 2025, Scott Davies, our Chief Legal Officer, entered in a new arrangement intended to satisfy the affirmative defense conditions of Rule 10b5-1(c). The arrangement terminates on December 28, 2026 and provides for the sale of up to 4,251 shares. On November 21, 2025, Scott Davies, our Chief Legal Officer, entered in a new arrangement intended to satisfy the affirmative defense conditions of Rule 10b5-1(c). The arrangement terminates on December 28, 2026 and provides for the sale of up to 4,251 shares. Other than as disclosed above, during the quarterly period ended December 28, 2025, none of the Company's directors or officers adopted, modified or terminated any "Rule 10b5-1 trading arrangement" or any "non-Rule 10b5-1 trading arrangement," in each case as such term is defined in Item 408 of Regulation S-K. 96 96 96 Table of Contents Table of Contents --- ## Modified: Fiscal Year **Key changes:** - Reworded sentence: "References to 2025, 2024, and 2023 refer to fiscal years ended December 28, 2025, December 29, 2024, and December 31, 2023, respectively, which were all 52 weeks." **Prior (2025):** Our fiscal year is the 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. References to 2024, 2023, and 2022 refer to fiscal years ended December 29, 2024, December 31, 2023, and January 1, 2023, respectively, which were all 52 weeks. 55 55 55 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents **Current (2026):** Our fiscal year is the 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. References to 2025, 2024, and 2023 refer to fiscal years ended December 28, 2025, December 29, 2024, and December 31, 2023, respectively, which were all 52 weeks. 57 57 57 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents --- ## Modified: Revenue Recognition **Key changes:** - Reworded sentence: "Service and other revenue consists of revenue generated from genotyping and sequencing services, instrument service contracts, development and licensing agreements, and, prior to the Spin-Off of GRAIL in 2024, cancer detection testing services related to the GRAIL business." **Prior (2025):** Our revenue is generated from the sale of products and services. Product revenue consists of sales of instruments and consumables used in genetic analysis. Service and other revenue consists of revenue generated from genotyping and sequencing services, instrument service contracts, development and licensing agreements, and, prior to the Spin-Off of GRAIL on June 24, 2024, cancer detection testing services related to the GRAIL business. We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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, we rely upon prices set by management, adjusted for applicable discounts. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment and payment is typically due within 30 days from invoice. In instances where right of payment or transfer of title is contingent upon customer acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from genotyping and sequencing services, including cancer detection testing services related to the GRAIL business prior to the Spin-Off, is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, or payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expense when incurred as the amortization period for such costs, if capitalized, would have been one year or less. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers by us. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. **Current (2026):** Our revenue is generated from the sale of products and services. Product revenue consists of sales of instruments and consumables used in genetic analysis. Service and other revenue consists of revenue generated from genotyping and sequencing services, instrument service contracts, development and licensing agreements, and, prior to the Spin-Off of GRAIL in 2024, cancer detection testing services related to the GRAIL business. We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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, we rely upon prices set by management, adjusted for applicable discounts. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment and payment is typically due within 30 days from invoice. In instances where right of payment or transfer of title is contingent upon customer acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from genotyping and sequencing services, including cancer detection testing services related to the GRAIL business prior to the Spin-Off, is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, or payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expense when incurred as the amortization period for such costs, if capitalized, would have been one year or less. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers by us. The terms of sales transactions through distributors are generally consistent with the terms of direct sales to customers. --- ## Modified: Stock Units **Key changes:** - Reworded sentence: "(PSU) (1) Unvested adjustment for GRAIL Spin-Off (1)For OM and EPS PSU, the number of units reflect the estimated number of shares to be issued at the end of the performance period." - Reworded sentence: "Pre-tax intrinsic value and fair value of vested restricted stock was as follows: In millions202520242023Pre-tax intrinsic value of outstanding restricted stock:RSU$504 $525 $306 PSU$116 $95 $ - Fair value of restricted stock vested:RSU$146 $116 $122 PSU$7 $ - $ - 77 77 77 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents" **Prior (2025):** (PSU) (1) Unvested adjustment for GRAIL Spin-Off (1)For EPS and OM PSU, the number of units reflect the estimated number of shares to be issued at the end of the performance period. For rTSR PSU, the number of units reflect the estimated number of shares to be issued based on performance as of the current reporting period. Awarded units are presented net of performance adjustments. (1) Pre-tax intrinsic value and fair value of vested restricted stock was as follows: In millions202420232022Pre-tax intrinsic value of outstanding restricted stock:RSU$525 $306 $326 PSU$95 $ - $15 Fair value of restricted stock vested:RSU$116 $122 $162 PSU$ - $ - $49 **Current (2026):** (PSU) (1) Unvested adjustment for GRAIL Spin-Off (1)For OM and EPS PSU, the number of units reflect the estimated number of shares to be issued at the end of the performance period. For rTSR PSU, the number of units reflect the estimated number of shares to be issued based on performance as of the current reporting period. Awarded units are presented net of performance adjustments. Pre-tax intrinsic value and fair value of vested restricted stock was as follows: In millions202520242023Pre-tax intrinsic value of outstanding restricted stock:RSU$504 $525 $306 PSU$116 $95 $ - Fair value of restricted stock vested:RSU$146 $116 $122 PSU$7 $ - $ - 77 77 77 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents --- ## Modified: Share Repurchases **Key changes:** - Reworded sentence: "In August 2024, our Board of Directors authorized a share repurchase program, which canceled and superseded all prior and available repurchase authorizations, to repurchase up to $1.5 billion of our outstanding common stock." - Reworded sentence: "Authorizations to repurchase up to $643 million of our outstanding common stock remained available as of December 28, 2025." **Prior (2025):** In August 2024, our Board of Directors authorized a new share repurchase program, which cancels and supersedes all prior and available repurchase authorizations, to repurchase up to $1.5 billion of our outstanding common stock. The repurchases may be completed through open market purchases, pursuant to Rule 10b5-1 or Rule 10b-18, or through an accelerated share repurchase program. Authorizations to repurchase up to $1.4 billion of our outstanding common stock remained available as of December 29, 2024. We did not repurchase any shares during 2023 or 2022. Share repurchase activity during 2024 was as follows: In millions, except shares in thousandsNumber of shares repurchased904 Total cost of shares repurchased(1)$116 _____________ In millions, except shares in thousands Number of shares repurchased Total cost of shares repurchased(1) (1)Total cost of shares repurchased includes the 1% excise tax imposed as part of the Inflation Reduction Act of 2022, which is calculated based on share repurchases, net of certain share issuances. Subsequent to December 29, 2024 and through February 11, 2025, we repurchased an additional 1.0 million shares of our common stock for $126 million. **Current (2026):** In August 2024, our Board of Directors authorized a share repurchase program, which canceled and superseded all prior and available repurchase authorizations, to repurchase up to $1.5 billion of our outstanding common stock. The repurchases may be completed through open market purchases, pursuant to Rule 10b5-1 or Rule 10b-18, or through an accelerated share repurchase program. Authorizations to repurchase up to $643 million of our outstanding common stock remained available as of December 28, 2025. We did not repurchase any shares during 2023. Share repurchase activity was as follows: In millions, except shares in thousands20252024Number of shares repurchased7,790 904 Total cost of shares repurchased (1)$748 $116 _____________ In millions, except shares in thousands Number of shares repurchased Total cost of shares repurchased (1) (1)Total cost of shares repurchased includes the 1% excise tax imposed as part of the Inflation Reduction Act of 2022, which is calculated based on share repurchases, net of certain share issuances, and was immaterial for all periods presented. 79 79 79 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents --- ## Modified: Financial Statement Schedules **Key changes:** - Reworded sentence: "98 98 98 Table of Contents Table of Contents" **Prior (2025):** All financial schedules have been omitted as the required information is not applicable, not material, or because the information required is included in the consolidated financial statements and notes thereto included in the Consolidated Financial Statements section of this report. 99 99 99 Table of Contents Table of Contents **Current (2026):** All financial schedules have been omitted as the required information is not applicable, not material, or because the information required is included in the consolidated financial statements and notes thereto included in the Consolidated Financial Statements section of this report. 98 98 98 Table of Contents Table of Contents --- ## Modified: Provision for Income Taxes **Key changes:** - Reworded sentence: "2025-2024Dollars in millions20252024Change% ChangeIncome (loss) before income taxes$1,086$(1,179)$2,265 (192)%Provision for income taxes23644192 436 Net income (loss)$850$(1,223)$2,073 (170)%Effective tax rate21.7%(3.8)% 2025-2024 In 2025, the variance from the U.S." - Removed sentence: "In 2023, the variance from the U.S." - Removed sentence: "federal statutory tax rate of 21% was primarily because of the $149 million income tax expense impact from the impairment of goodwill, which is nondeductible for tax purposes, the $86 million income tax expense impact of capitalizing research and development expense for tax purposes, and the $61 million income tax expense impact of GRAIL pre-acquisition net operating losses on GILTI and the utilization of the U.S." - Removed sentence: "The income tax expense in 2023 was also favorably impacted by the mix of earnings in jurisdictions with lower statutory tax rates than the U.S." - Removed sentence: "federal statutory tax rate, such as in Singapore." **Prior (2025):** 2024-2023Dollars in millions20242023Change% ChangeLoss before income taxes$(1,179)$(1,117)$(62)6 %Provision for income taxes4444 - - Net loss$(1,223)$(1,161)$(62)5 %Effective tax rate(3.8)%(3.9)% In 2024, the variance from the U.S. federal statutory tax rate of 21% was primarily because of the $308 million income tax expense impact from the impairment of goodwill, which is nondeductible for tax purposes, $90 million income tax expense impact of GRAIL pre-acquisition net operating losses on GILTI, the utilization of U.S. foreign tax credits, and the Pillar Two global minimum top-up tax, and the $52 million income tax expense impact of capitalizing research and development expenses for tax purposes. The income tax rate in 2024 was favorably impacted by the $99 million income tax expense impact of the reversal of the European Commission fine related to the GRAIL acquisition, which is excluded from taxable income, and by the mix of earnings in jurisdictions with lower statutory tax rates than the U.S. federal statutory tax rate, such as in Singapore. In 2023, the variance from the U.S. federal statutory tax rate of 21% was primarily because of the $149 million income tax expense impact from the impairment of goodwill, which is nondeductible for tax purposes, the $86 million income tax expense impact of capitalizing research and development expense for tax purposes, and the $61 million income tax expense impact of GRAIL pre-acquisition net operating losses on GILTI and the utilization of the U.S. foreign tax credits. The income tax expense in 2023 was also favorably impacted by the mix of earnings in jurisdictions with lower statutory tax rates than the U.S. federal statutory tax rate, such as in Singapore. Our future effective tax rate may vary from the U.S. federal statutory tax rate due to the mix of earnings in tax jurisdictions with different statutory tax rates and the other factors discussed in the risk factor "We are subject to risks related to taxation in multiple jurisdictions" in Risk Factors within the Business & Market Information section of this report, including future tax legislation that changes existing tax policies, laws, regulations, or rates. 37 37 37 **Current (2026):** 2025-2024Dollars in millions20252024Change% ChangeIncome (loss) before income taxes$1,086$(1,179)$2,265 (192)%Provision for income taxes23644192 436 Net income (loss)$850$(1,223)$2,073 (170)%Effective tax rate21.7%(3.8)% 2025-2024 In 2025, the variance from the U.S. federal statutory tax rate of 21% was primarily due to the release of a valuation allowance of $74 million against certain deferred tax assets in Singapore. This was partially offset by the implications of the U.S. tax legislation that was signed on July 4, 2025, which included changes to no longer require capitalization of U.S. based research and development expenses. While the changes from the recent U.S. tax legislation were favorable, based on available evidence, the increased U.S. tax deductions resulted in a determination that it is more likely than not the future realization of deferred tax assets associated with certain U.S. foreign tax credits may not be achieved. Therefore, a valuation allowance of $62 million was recorded against the deferred tax assets associated with certain U.S. foreign tax credits. The income tax rate in 2025 was favorably impacted by the mix of earnings in jurisdictions with lower statutory tax rates than the U.S. federal statutory tax rate, such as Singapore. In 2024, the variance from the U.S. federal statutory tax rate of 21% was primarily due to the $308 million income tax expense impact from the impairment of goodwill, which is nondeductible for tax purposes, $90 million income tax expense impact of GRAIL pre-acquisition net operating losses on GILTI, the utilization of U.S. foreign tax credits, and the Pillar Two global minimum top-up tax, and the $52 million income tax expense impact of capitalizing research and development expenses for tax purposes. The income tax rate in 2024 was favorably impacted by the $99 million income tax expense impact of the reversal of the European Commission fine related to the GRAIL acquisition, which is excluded from taxable income, and by the mix of earnings in jurisdictions with lower statutory tax rates than the U.S. federal statutory tax rate, such as in Singapore. Our future effective tax rate may vary from the U.S. federal statutory tax rate due to the mix of earnings in tax jurisdictions with different statutory tax rates and the other factors discussed in the risk factor "We are subject to risks related to taxation in multiple jurisdictions" in Risk Factors within the Business & Market Information section of this report, including future tax legislation that changes existing tax policies, laws, regulations, or rates. 39 39 39 --- ## Modified: (In millions) **Key changes:** - Reworded sentence: "AccumulatedRetainedAdditionalOtherEarningsTotal Common StockPaid-InComprehensive(AccumulatedTreasury StockStockholders' SharesAmountCapitalIncome (Loss)Deficit)SharesAmountEquityBalance as of January 1, 2023198 $2 $9,207 $3 $1,142 (40)$(3,755)$6,599 Net loss - - - - (1,161) - - (1,161)Unrealized loss on cash flow hedges, net of deferred tax - - - (4) - - - (4)Issuance of common stock, net of repurchases1 - 64 - - - (37)27 Share-based compensation - - 275 - - - - 275 Reclassification of liability-classified awards - - 9 - - - - 9 Balance as of December 31, 2023199 2 9,555 (1)(19)(40)(3,792)5,745 Net loss - - - - (1,223) - - (1,223)Unrealized gain on cash flow hedges, net of deferred tax - - - 23 - - - 23 Issuance of common stock, net of repurchases1 - 51 - - (1)(142)(91)Share-based compensation - - 318 - - - - 318 Spin-Off of GRAIL (see Note 8) - - (2,399) - - - - (2,399)Balance as of December 29, 2024200 2 7,525 22 (1,242)(41)(3,934)2,373 Net income - - - - 850 - - 850 Unrealized loss on cash flow hedges, net of deferred tax - - - (32) - - - (32)Issuance of common stock, net of repurchases1 - 22 - - (7)(765)(743)Share-based compensation - - 275 - - - - 275 Balance as of December 28, 2025201 $2 $7,822 $(10)$(392)(48)$(4,699)$2,723" **Prior (2025):** Years Ended December 29,2024December 31,2023January 1,2023Net loss$(1,223)$(1,161)$(4,404)Unrealized gain (loss) on cash flow hedges, net of deferred tax23 (4)(14)Total comprehensive loss$(1,200)$(1,165)$(4,418) See accompanying notes to consolidated financial statements. 52 52 52 **Current (2026):** Years Ended December 28,2025December 29,2024December 31,2023Net income (loss)$850 $(1,223)$(1,161)Unrealized (loss) gain on cash flow hedges, net of deferred tax(32)23 (4)Total comprehensive income (loss)$818 $(1,200)$(1,165) See accompanying notes to consolidated financial statements. 54 54 54 --- ## Modified: Deferred Compensation Plan **Key changes:** - Reworded sentence: "We established a rabbi trust for the benefit of the participants under the Plan and have included the assets of the trust in other assets in the consolidated balance sheets." **Prior (2025):** The Illumina, Inc. Deferred Compensation Plan (the Plan) allows senior level employees to contribute up to 60% of their base salary and 100% of their variable cash compensation, and members of the board of directors to contribute up to 100% of their director fees and equity awards. Under the Plan, we credit the participants' contributions with earnings that reflect the performance of certain independent investment funds. On a discretionary basis, we may also make employer contributions to participant accounts in any amount determined by us. 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 Illumina. 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 for any reason or at a later date to comply with the restrictions of Section 409A. 91 91 91 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents **Current (2026):** The Illumina, Inc. Deferred Compensation Plan (the Plan) allows senior level employees to contribute up to 60% of their base salary and 100% of their variable cash compensation, and members of the board of directors to contribute up to 100% of their director fees and equity awards. Under the Plan, we credit the participants' contributions with earnings that reflect the performance of certain independent investment funds. On a discretionary basis, we may also make employer contributions to participant accounts in any amount determined by us. 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 Illumina. 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 for any reason or at a later date to comply with the restrictions of Section 409A. We established a rabbi trust for the benefit of the participants under the Plan and have included the assets of the trust in other assets in the consolidated balance sheets. As of December 28, 2025 and December 29, 2024, the assets of the trust were $79 million and $70 million, respectively, and our liabilities, included in accrued liabilities, were $72 million and $65 million, respectively. Changes in the value of the assets held by the trust are recorded in other income (expense), net, and changes in the value of the deferred compensation liabilities are recorded in operating expense. --- ## Modified: Use of Estimates **Key changes:** - Reworded sentence: "The preparation of the consolidated financial statements requires that management make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and disclosures of contingent assets and liabilities." **Prior (2025):** The preparation of the consolidated 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. Though macroeconomic factors such as inflation, exchange rate fluctuations and concerns about an economic downturn present additional uncertainty, we continue to use the best information available to inform our critical accounting estimates. Actual results could differ from those estimates. **Current (2026):** The preparation of the consolidated financial statements requires that management make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and disclosures of contingent assets and liabilities. Although imposed tariffs, reductions in the U.S. government's funding of the NIH, our inclusion on the unreliable entities list by regulatory authorities in China, as well as macroeconomic factors such as inflation, exchange rate fluctuations, and concerns about an economic downturn present additional uncertainty, we continue to use the best information available to inform our critical accounting estimates. Actual results could differ from those estimates. --- ## Modified: 2024 Impairment of Goodwill **Key changes:** - Reworded sentence: "In May 2024, we performed our annual goodwill impairment test for our two reporting units: Core Illumina and GRAIL." - Reworded sentence: "72 72 72 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents" **Prior (2025):** We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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, we rely upon prices set by management, adjusted for applicable discounts. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment and payment is typically due within 30 days from invoice. In instances where right of payment or transfer of title is contingent upon the customer's acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from genotyping and sequencing services, including cancer detection testing services related to the GRAIL business, is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, or payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expense when incurred as the amortization period for such costs, if capitalized, would have been one year or less. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers by us. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. **Current (2026):** In May 2024, we performed our annual goodwill impairment test for our two reporting units: Core Illumina and GRAIL. Prior to the Spin-Off of GRAIL in June 2024, our reporting units included Core Illumina and GRAIL. We performed a quantitative test for both reporting units. GRAIL's carrying value exceeded its fair value, estimated as $580 million, and we recorded a goodwill impairment of $1,466 million. There was no impairment noted for Core Illumina. impairment To determine the fair value of GRAIL as of May 2024, we utilized enterprise value estimates of GRAIL, as estimated by investment bankers for purposes of determining pricing for the Spin-Off. Estimates and assumptions used to derive the investment bankers' enterprise value estimates included estimated revenues for a two year period based on assumed growth rates and implied revenue multiples for comparable companies. These estimates and assumptions represent a Level 3 measurement as they are supported by little or no market activity and reflect our own assumptions in measuring fair value. An increase in estimated enterprise values for GRAIL of 100% would still have resulted in a full impairment of goodwill. In prior periods, we used a combination of both an income (discounted cash flow) and market approach to determine the fair value of GRAIL. The income approach utilized estimated cash flows for GRAIL based on a long-range plan, for a 15 year period, which contemplated FDA approval. Based on this approach, in Q3 2023, we estimated the fair value of GRAIL to be $3.6 billion and using this same approach in Q4 2023 suggested no further decrement in fair value. Initial analyst coverage of GRAIL from December 2023 into the spring of 2024 suggested that GRAIL could be valued between $3 billion and $4 billion. By May 2024, prior to the consummation of the GRAIL Spin-Off, additional information about GRAIL had become available in GRAIL's amended Form 10 filings and a publicly available management presentation, which included updated disclosure about GRAIL's business and anticipated near term financial trends. Prior to the consummation of the GRAIL Spin-Off, the amount of GRAIL's Disposal Funding, $974 million, was also disclosed. Analyst and banker valuation estimates then began to estimate fair values between $400 million and $770 million, consistent with the impairment recorded in Q2 2024. To determine the fair value of Core Illumina, we used a combination of both an income and market approach consistent with prior periods. The income approach utilized estimated discounted cash flows for the reporting unit, while the market approach utilized comparable company information. Estimates and assumptions used in the income approach included projected cash flows and a discount rate and represent a Level 3 measurement because they are supported by little or no market activity and reflect our own assumptions in measuring fair value. 72 72 72 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents --- ## Modified: The markets we serve are dynamic - we face intense and increasing competition, which could render our products obsolete, result in significant price reductions, or substantially limit the volume of products that we sell, and increasing customer concentration makes us more dependent on key customers. **Key changes:** - Reworded sentence: "In some cases, we compete for the resources our customers allocate for purchasing a wide range of sequencing and non-sequencing products, some of which are complementary or adjacent to our own but not directly competitive; in other cases, our products face direct competition as customers choose among sequencing and non-sequencing products that are designed to address the same use case or answer the same biological question." - Reworded sentence: "We are facing and anticipate that we will continue to face increased competition as existing companies develop new or improved products and as new companies enter the market with new technologies." - Reworded sentence: "If our competitors are able to develop and commercialize products superior to or less expensive than ours or are able to obtain regulatory clearances before we do, our business could be adversely impacted." - Added sentence: "A portion of our revenue is increasingly derived from a small number of large, centralized laboratory customers." - Added sentence: "If these customers continue to represent a growing share of our total sales, the loss of, or reduction in purchases by, any one of these key customers could materially and adversely affect our business, financial condition, and results of operations." **Prior (2025):** We compete with third parties that design, manufacture, and market products and services for analysis of genetic variation and biological function and other applications using a wide range of technologies. We have faced, and expect to continue to face, increased pricing pressure from competitors who offer sequencing products and we have experienced lengthened sales cycles with many customers due to competition. In some cases, we compete for the resources our customers allocate for purchasing a wide range of sequencing and non-sequencing products, some of which are complementary or adjacent to our own but not directly competitive; in other cases, our products face direct 14 14 14 competition as customers choose among sequencing and non-sequencing products that are designed to address the same use case or answer the same biological question. For example, complementary third-party sequencing technologies address use cases to which our products are not as well suited. If we are unable to develop or acquire new technologies that address these complementary sequencing applications, our rate of growth and our ability to grow the overall market for sequencing could be adversely affected. We anticipate that we will continue to face increased competition as existing companies develop new or improved products and as new companies enter the market with new technologies. One or more of our competitors may render one or more of our technologies obsolete or uneconomical. Some of our competitors have greater financial and personnel resources, broader product lines, more focused product lines, a more established customer base, more experience and broader reach in clinical markets, and more experience in research and development than we do. Furthermore, life sciences, clinical genomics, and pharmaceutical companies, which are our potential customers and strategic partners, could also develop competing products. We believe that customers in our markets display a significant amount of loyalty to their initial supplier of a particular product; therefore, it may be difficult to generate sales to potential customers who have purchased products from competitors. To the extent we are unable to be the first to develop or supply new products, our competitive position may suffer. The market for clinical and diagnostic products, in particular, is currently limited and highly competitive, with several large companies having significant market share, intellectual property portfolios, and regulatory expertise. For example, the market for noninvasive prenatal testing is rapidly developing, and if our competitors are able to develop and commercialize products superior to or less expensive than ours or are able to obtain regulatory clearances before we do, our business could be adversely impacted. Established clinical and diagnostic companies also have an installed base of instruments in several markets, including clinical and reference laboratories, which could deter acceptance of our products. In addition, some of these companies have formed alliances with genomics companies that provide them access to genetic information that may be incorporated into their diagnostic tests, potentially creating a competitive advantage for them. **Current (2026):** We compete with third parties that design, manufacture, and market products and services for analysis of genetic variation and biological function and other applications using a wide range of technologies. We have faced, and expect to continue to face, increased pricing pressure from competitors who offer sequencing products and we have experienced lengthened sales cycles with many customers due to competition. In some cases, we compete for the resources our customers allocate for purchasing a wide range of sequencing and non-sequencing products, some of which are complementary or adjacent to our own but not directly competitive; in other cases, our products face direct competition as customers choose among sequencing and non-sequencing products that are designed to address the same use case or answer the same biological question. For example, complementary third-party sequencing technologies address use cases to which our products are not as well suited. If we are unable to develop or acquire new technologies that address these complementary sequencing applications, our rate of growth and our ability to grow the overall market for sequencing could be adversely affected. We are facing and anticipate that we will continue to face increased competition as existing companies develop new or improved products and as new companies enter the market with new technologies. One or more of our competitors may render one or more of our technologies obsolete or uneconomical, which would materially and adversely impact our business prospects and financial condition. Some of our competitors have greater financial and personnel resources, broader product lines, more focused product lines, a more established customer base, more experience and broader reach in clinical markets, and more experience in research and development than we do. Furthermore, life sciences, clinical genomics, and pharmaceutical companies, which are our potential customers and strategic partners, could also develop competing products. We believe that customers in our markets display a significant amount of loyalty to their initial supplier of a particular product; therefore, it may be difficult to generate sales to potential customers who have purchased products from competitors. To the extent we are unable to be the first to develop or supply new products, our competitive position may suffer. The market for clinical and diagnostic products, in particular, is currently limited and highly competitive, with several large companies having significant market share, intellectual property portfolios, and regulatory expertise. If our competitors are able to develop and commercialize products superior to or less expensive than ours or are able to obtain regulatory clearances before we do, our business could be adversely impacted. Established clinical and diagnostic companies also have an installed base of instruments in several markets, including clinical and reference laboratories, which could deter acceptance of our products. In addition, some of these companies have formed alliances with genomics companies that provide them access to genetic information that may be incorporated into their diagnostic tests, potentially creating a competitive advantage for them. A portion of our revenue is increasingly derived from a small number of large, centralized laboratory customers. If these customers continue to represent a growing share of our total sales, the loss of, or reduction in purchases by, any one of these key customers could materially and adversely affect our business, financial condition, and results of operations. Increased customer concentration may result in greater pricing pressure, reduced negotiating leverage, and increased exposure to credit risk. As a result, our operating results could therefore fluctuate more significantly from period to period in the future, depending on the purchasing patterns of these large customers. --- ## Modified: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) **Key changes:** - Reworded sentence: "We use foreign exchange forward contracts to manage foreign currency risks related to monetary assets and liabilities denominated in currencies other than the U.S." - Reworded sentence: "Changes in fair value are recorded as a component of accumulated other comprehensive (loss) income and are reclassified to revenue in the same period the underlying hedged transactions are recorded." - Reworded sentence: "Changes in fair value of the ineffective portions of our cash flow hedges, if any, are recognized in other income (expense), net." - Reworded sentence: "Estimated net losses reported in accumulated other comprehensive (loss) income expected to be recognized into earnings within the next 12 months are $15 million as of December 28, 2025." **Prior (2025):** We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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, we rely upon prices set by management, adjusted for applicable discounts. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment and payment is typically due within 30 days from invoice. In instances where right of payment or transfer of title is contingent upon the customer's acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from genotyping and sequencing services, including cancer detection testing services related to the GRAIL business, is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, or payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expense when incurred as the amortization period for such costs, if capitalized, would have been one year or less. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers by us. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. **Current (2026):** We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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, we rely upon prices set by management, adjusted for applicable discounts. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment and payment is typically due within 30 days from invoice. In instances where right of payment or transfer of title is contingent upon the customer's acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from genotyping and sequencing services, including cancer detection testing services related to the GRAIL business, is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, or payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expense when incurred as the amortization period for such costs, if capitalized, would have been one year or less. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers by us. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. --- ## Modified: Armed conflict in Ukraine, Russia, the Middle East or elsewhere could also negatively impact us. **Key changes:** - Reworded sentence: "The impact of the Russia-Ukraine conflict, and armed conflict in the Middle East or elsewhere on general economic conditions is uncertain and could in the future have a negative effect on our results of operations, cash flows, financial condition or growth prospects." - Reworded sentence: "The impact of these sanctions and export restrictions, along with the spillover effect of ongoing civil, political and economic disturbances on surrounding areas, has affected our ability to ship products into the region, and has reduced our sales in the region." - Removed sentence: "The impact of the Russia-Ukraine conflict, and armed conflict in the Middle East or elsewhere on general economic conditions is currently unknown and could in the future have a negative effect on our results of operations, cash flows, financial condition or growth prospects." **Prior (2025):** As a result of the armed conflict between Russia and Ukraine, doing business in the Ukraine may not be practicable. In addition, the U.S. and other countries have imposed sanctions on Russia, including its major financial institutions and certain other businesses and individuals, as well as restrictions on exports to Russia. These sanctions and export restrictions have increased in magnitude over time. Russia has responded in kind, and the continuation of the conflict may result in additional sanctions and export restrictions being enacted by the U.S. or other countries. The impact of these sanctions and export restrictions, along with the spillover effect of ongoing civil, political and economic disturbances on surrounding areas, has affected our ability to ship products into the region, and has reduced our sales. Sanctions or export restrictions currently prohibit our ability to collect or pay liabilities owed by or to certain Russian entities or to supply products and services, directly or indirectly, into Russia. The impact of the Russia-Ukraine conflict, and armed conflict in the Middle East or elsewhere on general economic conditions is currently unknown and could in the future have a negative effect on our results of operations, cash flows, financial condition or growth prospects. **Current (2026):** The impact of the Russia-Ukraine conflict, and armed conflict in the Middle East or elsewhere on general economic conditions is uncertain and could in the future have a negative effect on our results of operations, cash flows, financial condition or growth prospects. For example, as a result of the armed conflict between Russia and Ukraine, doing business in the Ukraine is challenging and may not be practicable. In addition, the U.S. and other countries have imposed sanctions on Russia, including its major financial institutions and certain other businesses and individuals, as well as restrictions on exports to Russia. These sanctions and export restrictions have increased in magnitude over time. Russia has responded in kind, and the continuation of the conflict may result in additional sanctions and export restrictions being enacted by the U.S. or other countries. The impact of these sanctions and export restrictions, along with the spillover effect of ongoing civil, political and economic disturbances on surrounding areas, has affected our ability to ship products into the region, and has reduced our sales in the region. Sanctions or export restrictions currently prohibit our ability to collect or pay liabilities owed by or to certain Russian entities or to supply products and services, directly or indirectly, into Russia. 28 28 28 --- ## Modified: LIQUIDITY AND CAPITAL RESOURCES **Key changes:** - Reworded sentence: "As of December 28, 2025, we had $1,418 million in cash and cash equivalents, of which $444 million was held by foreign subsidiaries." - Reworded sentence: "In 2025, we received proceeds from net sales of our strategic investments of $103 million." - Reworded sentence: "The 2025 Term Notes matured and were repaid in cash on December 12, 2025." - Reworded sentence: "As of December 28, 2025, there were no outstanding borrowings." - Reworded sentence: "In 2025, we paid $1.3 million in aggregate Covered Revenue Payments related to aggregate Covered Revenues for the period Q4 2024 through Q3 2025 of $142 million." **Prior (2025):** As of December 29, 2024, we had $1,127 million in cash and cash equivalents, of which approximately $439 million was held by our foreign subsidiaries. Cash and cash equivalents increased by $79 million from the prior year due primarily to factors described in the "Cash Flow Summary" below. Our primary source of liquidity, other than our holdings of cash, cash equivalents, and investments, has been cash flows from operations and, from time to time, issuances of debt. In 2024, we received net proceeds from the issuance of our 2026 Term Notes of $497 million and repaid our delayed draw term loan of $750 million. Our ability to generate cash from operations, supplemented with the issuance of debt and/or liquidation of our short-term investments, provides us with the financial flexibility we need to meet operating, investing, and financing needs. In connection with the Spin-Off, we derecognized GRAIL's cash and cash equivalents of $968 million, which included the required Disposal Funding (see note 2. GRAIL Spin-Off). As of December 29, 2024, we had $93 million in short-term investments, comprised of marketable equity securities. In September 2024, the European Commission withdrew its previously imposed fine of €432 million. Accordingly, we reversed the related accrual and recognized a net gain of $481 million in Q3 2024. The guarantees we provided in October 2023 to satisfy the obligation in lieu of cash payment while we appealed the European Commission's jurisdictional and fine decisions are no longer outstanding. Refer to note 9. Legal Proceedings for additional details. In June 2024, we entered into a 364-day Delayed Draw Credit Facility, which provided us with a senior unsecured term loan credit facility in an aggregate principal amount of up to $750 million. On June 20, 2024, we borrowed $750 million on the Delayed Draw Credit Facility. The delayed draw term loan incurred interest at a rate of 6.7%. On September 9, 2024, we repaid the full principal amount outstanding under the Delayed Draw Credit Facility, as well as accrued interest, in an aggregate amount of $761 million and terminated the Delayed Draw Credit Agreement. On September 9, 2024, we issued $500 million aggregate principal amount of 2026 Term Notes. We received net proceeds of $497 million, which were used to repay a portion of the outstanding debt under the Delayed Draw Credit Agreement. The 2026 Term Notes, which mature on September 9, 2026, accrue interest at a rate of 4.650% per annum, payable semi-annually on March 9 and September 9 of each year, beginning on March 9, 2025. We may redeem for cash all or any portion of the 2026 Term Notes, at our option, at any time prior to maturity. In December 2022, we issued $500 million aggregate principal amount of 2025 Term Notes and $500 million aggregate principal amount of 2027 Term Notes. The 2025 Term Notes, which mature on December 12, 2025, and the 2027 Term Notes, which mature on December 13, 2027, accrue interest at a rate of 5.800% and 5.750% per annum, respectively, payable semi-annually in June and December of each year. In March 2021, we issued $500 million aggregate principal amount of 2031 Term Notes, which mature on March 23, 2031 and accrue interest at a rate of 2.550% per annum, payable semi-annually in March and September of each year. We may redeem for cash all or any portion of the 2025, 2027, or 2031 Term Notes, at our option, at any time prior to maturity. In January 2023, we entered into the Revolving Credit Agreement, which provides us with a $750 million senior unsecured five-year revolving credit facility, including a $40 million sublimit for swingline borrowings and a $50 million sublimit for letters of credit. The credit facility matures, and all amounts outstanding become due and payable in full, on January 4, 2028, subject to two one-year extensions at our option, the consent of the extending lenders, and certain other conditions. As of December 29, 2024, there were no outstanding borrowings. As of December 29, 2024, the fair value of our contingent consideration liability related to GRAIL was $71 million, of which $70 million was included in other long-term liabilities. The contingent value rights entitle the holders to receive future cash payments on a quarterly basis (Covered Revenue Payments) representing a pro rata portion of certain GRAIL-related revenues (Covered Revenues) each year through August 2033. This reflects a 2.5% payment right to the first $1 billion of revenue each year for 12 years. Revenue above $1 billion each year is subject to a 9% contingent payment right during this same period. In 2024, we paid $1.1 million in aggregate Covered Revenue Payments related to Covered Revenues for the period Q4 2023 through Q3 2024 of $117 million in aggregate. In August 2024, our Board of Directors authorized a new share repurchase program, which cancels and supersedes all prior and available repurchase authorizations, to repurchase up to $1.5 billion of our outstanding common stock. The repurchases may be completed through open market purchases, pursuant to Rule 10b5-1 or Rule 10b-18, or through an accelerated share repurchase program. Authorizations to repurchase up to $1.4 billion of our outstanding common stock remained available as of December 29, 2024. Subsequent to December 29, 2024 and through February 11, 2025, we repurchased an additional 1.0 million shares of our common stock for $126 million. 38 38 38 We had $3 million (plus recallable distributions of approximately $10 million), $46 million, and $47 million, respectively, remaining in our capital commitments to three venture capital investment funds as of December 29, 2024 that are callable through April 2026, July 2029, and December 2034, respectively. The impact of the 2017 Tax Cuts and Jobs Act resulted in a one-time transition tax on earnings of certain foreign subsidiaries which we elected to pay in installments. As of December 29, 2024, we owed $39 million, which we expect to pay within the next year. Our other short-term and long-term material cash requirements, from known contractual obligations as of December 29, 2024, include operating lease liabilities, uncertain tax positions, and amounts due under our executive deferred compensation plan, as discussed in the Consolidated Financial Statements section of this report. We anticipate that our current cash, cash equivalents, and short-term investments, together with cash provided by operating activities and available borrowing capacity under the Revolving Credit Facility, are sufficient to fund our near-term capital and operating needs for at least the next 12 months. Operating needs include the planned costs to operate our business, including amounts required to fund working capital and capital expenditures. Our primary short-term needs for capital, which are subject to change, may include: •support of commercialization efforts related to our current and future products; •acquisitions of equipment and other fixed assets for use in our current and future manufacturing and research and development facilities; •the continued advancement of research and development efforts; •potential strategic acquisitions and investments; •repayment of debt obligations; •repurchases of our outstanding common stock; and •the evolving needs of our facilities, including costs of leasing and building out facilities. We expect that our revenue and results of operations, as well as the status of each of our new product development programs, will significantly impact our cash management decisions. Our future capital requirements and the adequacy of our available funds will depend on many factors, including: •our ability to successfully commercialize and further develop our technologies and create innovative products in our markets; •scientific progress in our research and development programs and the magnitude of those programs; •competing technological and market developments; and •the need to enter into collaborations with other companies or acquire other companies or technologies to enhance or complement our product and service offerings. **Current (2026):** As of December 28, 2025, we had $1,418 million in cash and cash equivalents, of which $444 million was held by foreign subsidiaries. Cash and cash equivalents increased by $291 million from the prior year due to factors described in the "Cash Flow Summary" below. Our primary source of liquidity, other than holdings of cash, cash equivalents, and investments, has been cash flows from operations and, from time to time, issuances of debt. In 2025, we received net proceeds from the issuance of our 2030 Term Notes of $495 million, and repaid $500 million for our 2025 Term Notes. Our ability to generate cash from operations, supplemented with the issuance of debt and/or liquidation of our short-term investments, provides us with the financial flexibility we need to meet operating, investing, and financing needs. In 2025, we received proceeds from net sales of our strategic investments of $103 million. As of December 28, 2025, we had $215 million remaining in short-term investments, comprised of marketable equity securities. Subsequent to December 28, 2025 and through February 11, 2026, we received additional proceeds of approximately $104 million from subsequent sales of our short-term strategic investments. In November 2025, we issued $500 million aggregate principal amount of 2030 Term Notes. We received net proceeds of $495 million. The 2030 Term Notes, which mature on December 12, 2030, accrue interest at a rate of 4.750% per annum, payable semi-annually on June 12 and December 12 of each year, beginning on June 12, 2026. We may redeem for cash all or any portion of the 2030 Term Notes, at our option, at any time prior to maturity. In September 2024, we issued $500 million aggregate principal amount of 2026 Term Notes, which mature on September 9, 2026 and accrue interest at a rate of 4.650% per annum, payable semi-annually in March and September of each year. In December 2022, we issued $500 million aggregate principal amount of 2025 Term Notes and $500 million aggregate principal amount of 2027 Term Notes. The 2025 Term Notes matured and were repaid in cash on December 12, 2025. The 2027 Term Notes mature on December 13, 2027 and accrue interest at a rate of 5.750% per annum, payable semi-annually in June and December of each year. In March 2021, we issued $500 million aggregate principal amount of 2031 Term Notes, which mature on March 23, 2031, and accrue interest at a rate of 2.550% per annum, payable semi-annually in March and September of each year. We may redeem for cash all or any portion of the 2026, 2027, or 2031 Term Notes, at our option, at any time prior to maturity. In January 2023, we entered into the Revolving Credit Agreement, which provides us with a $750 million senior unsecured five-year revolving credit facility, including a $40 million sublimit for swingline borrowings and a $50 million sublimit for letters of credit. The credit facility matures, and all amounts outstanding become due and payable in full, on January 4, 2028, subject to two one-year extensions at our option, the consent of the extending lenders, and certain other conditions. As of December 28, 2025, there were no outstanding borrowings. On June 22, 2025, we entered into a Stock Purchase Agreement (the Purchase Agreement) with Standard BioTools to acquire SomaLogic and other specified assets for $350 million in cash, subject to customary adjustments. The Purchase Agreement further provides for, in connection with the revenues generated from certain products and services, (i) royalty streams and (ii) up to $75 million in potential milestone payments to Standard BioTools. The transaction was completed on January 30, 2026. See note 13. Subsequent Events for further details. As of December 28, 2025, the fair value of our contingent consideration liability related to GRAIL was $54 million, of which $52 million was included in other long-term liabilities. The contingent value rights entitle the holders to receive future cash payments on a quarterly basis (Covered Revenue Payments) representing a pro rata portion of certain GRAIL-related revenues (Covered Revenues) each year through August 2033. This reflects a 2.5% payment right to the first $1 billion of revenue each year for 12 years. Revenue above $1 billion each year is subject to a 9% contingent payment right during this same period. In 2025, we paid $1.3 million in aggregate Covered Revenue Payments related to aggregate Covered Revenues for the period Q4 2024 through Q3 2025 of $142 million. In August 2024, our Board of Directors authorized a share repurchase program, which canceled and superseded all prior and available repurchase authorizations, to repurchase up to $1.5 billion of our outstanding common stock. The repurchases may be completed through open market purchases, pursuant to Rule 10b5-1 or Rule 10b-18, or through an accelerated share repurchase program. Authorizations to repurchase up to $643 million of our outstanding common stock remained available as of December 28, 2025. Subsequent to December 28, 2025 and through February 11, 2026, we repurchased an additional approximate 264,000 shares of our common stock for approximately $32 million. We intend to continue to repurchase incremental shares over the course of 2026. We had $3 million, $33 million, and $25 million, respectively, remaining in capital commitments to three investment funds as of December 28, 2025 that are callable through April 2026, July 2029, and December 2034, respectively. 40 40 40 Our other short-term and long-term material cash requirements, from known contractual obligations as of December 28, 2025, include operating lease liabilities, uncertain tax positions, and amounts due under our executive deferred compensation plan, as discussed in the Consolidated Financial Statements section of this report. We anticipate our current cash, cash equivalents, and short-term investments, together with cash provided by operations and available borrowing capacity under the Revolving Credit Facility, are sufficient to fund our near-term capital and operating needs for at least the next 12 months, including the SomaLogic acquisition that was completed on January 30, 2026 and funded from cash on hand. See note 13. Subsequent Events for further details. Operating needs include the planned costs to operate our business, including amounts required to fund working capital and capital expenditures. Our primary short-term needs for capital, which are subject to change, may include: •support of commercialization efforts related to our current and future products; •acquisitions of equipment and other fixed assets for use in our current and future manufacturing and research and development facilities; •the continued advancement of research and development efforts; •potential strategic acquisitions and investments; •repayment of debt obligations; •repurchases of our outstanding common stock; and •the evolving needs of our facilities, including costs of leasing and building out facilities. We expect that our revenue and results of operations, as well as the status of each of our new product development programs, will significantly impact our cash management decisions. Our future capital requirements and the adequacy of our available funds will depend on many factors, including: •our ability to successfully commercialize and further develop our technologies and create innovative products in our markets; •scientific progress in our research and development programs and the magnitude of those programs; •competing technological and market developments; and •the need to enter into collaborations with other companies or acquire other companies or technologies to enhance or complement our product and service offerings. --- ## Modified: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) **Key changes:** - Reworded sentence: "A summary of the restructuring liability is as follows: In millionsEmployee Separation CostsOther CostsTotalAmount recorded in accrued liabilities as of December 31, 2023$17 $1 $18 Expense recorded12 4 16 Cash payments(24)(2)(26)Adjustments to accrual(3)(1)(4)Amount recorded in accrued liabilities as of December 29, 20242 2 4 Expense recorded47 - 47 Cash payments(42)(2)(44)Adjustments to accrual - - - Amount recorded in accrued liabilities as of December 28, 2025$7 $ - $7" **Prior (2025):** We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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, we rely upon prices set by management, adjusted for applicable discounts. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment and payment is typically due within 30 days from invoice. In instances where right of payment or transfer of title is contingent upon the customer's acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from genotyping and sequencing services, including cancer detection testing services related to the GRAIL business, is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, or payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expense when incurred as the amortization period for such costs, if capitalized, would have been one year or less. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers by us. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. **Current (2026):** We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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, we rely upon prices set by management, adjusted for applicable discounts. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment and payment is typically due within 30 days from invoice. In instances where right of payment or transfer of title is contingent upon the customer's acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from genotyping and sequencing services, including cancer detection testing services related to the GRAIL business, is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, or payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expense when incurred as the amortization period for such costs, if capitalized, would have been one year or less. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers by us. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. --- ## Modified: Remaining Performance Obligations **Key changes:** - Reworded sentence: "Most performance obligations are generally satisfied within approximately six months after the contract execution date." **Prior (2025):** We regularly enter into contracts with multiple performance obligations. These contracts are believed to be firm as of the balance sheet date. However, we may allow customers to make product substitutions as we launch new products. The timing of shipments depends on several factors, including agreed upon shipping schedules, which may span multiple quarters. Most performance obligations are generally satisfied within a short time frame, approximately three to six months, after the contract execution date. As of December 29, 2024, the aggregate amount of the transaction price allocated to remaining performance obligations was $657 million, of which approximately 78% is expected to be converted to revenue in 2025, approximately 10% in the following twelve months, and the remainder thereafter. three 66 66 66 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents **Current (2026):** We regularly enter into contracts with multiple performance obligations. These contracts are believed to be firm as of the balance sheet date. However, we may allow customers to make product substitutions as we launch new products. The timing of shipments depends on several factors, including agreed upon shipping schedules, which may span multiple quarters. Most performance obligations are generally satisfied within approximately six months after the contract execution date. As of December 28, 2025, the aggregate amount of the transaction price allocated to remaining performance obligations was $738 million, of which approximately 77% is expected to be converted to revenue in 2026, approximately 13% in the following twelve months, and the remainder thereafter. --- ## Modified: Revolving Credit Agreement **Key changes:** - Reworded sentence: "In January 2023, we entered into a credit agreement (the Revolving Credit Agreement), which provides us with a $750 million senior unsecured five-year revolving credit facility, including a $40 million sublimit for swingline borrowings and a $50 million sublimit for letters of credit (the Revolving Credit Facility)." - Removed sentence: "The credit agreement dated as of March 8, 2021 and the commitments thereunder were terminated as of January 4, 2023." - Reworded sentence: "As of December 28, 2025, there were no borrowings or letters of credit outstanding under the credit facility, and we were in compliance with all financial and operating covenants." **Prior (2025):** On January 4, 2023, we entered into a new credit agreement (the Revolving Credit Agreement), which provides us with a $750 million senior unsecured five-year revolving credit facility, including a $40 million sublimit for swingline borrowings and a $50 million sublimit for letters of credit (the Revolving Credit Facility). Proceeds of the loans under the Revolving Credit Facility may be used to finance working capital needs and for general corporate purposes. The credit agreement dated as of March 8, 2021 and the commitments thereunder were terminated as of January 4, 2023. The Revolving Credit Facility matures, and all amounts outstanding become due and payable in full, on January 4, 2028, subject to two one-year extensions at our option, the consent of the extending lenders and certain other conditions. We may prepay amounts borrowed and terminate commitments under the Revolving Credit Facility at any time without premium or penalty. As of December 29, 2024, there were no borrowings or letters of credit outstanding under the credit facility, and we were in compliance with all financial and operating covenants. 75 75 75 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents **Current (2026):** In January 2023, we entered into a credit agreement (the Revolving Credit Agreement), which provides us with a $750 million senior unsecured five-year revolving credit facility, including a $40 million sublimit for swingline borrowings and a $50 million sublimit for letters of credit (the Revolving Credit Facility). Proceeds of the loans under the Revolving Credit Facility may be used to finance working capital needs and for general corporate purposes. The Revolving Credit Facility matures, and all amounts outstanding become due and payable in full, on January 4, 2028, subject to two one-year extensions at our option, the consent of the extending lenders and certain other conditions. We may prepay amounts borrowed and terminate commitments under the Revolving Credit Facility at any time without premium or penalty. As of December 28, 2025, there were no borrowings or letters of credit outstanding under the credit facility, and we were in compliance with all financial and operating covenants. Loans under the Revolving Credit Facility will have a variable interest rate based on either the term secured overnight financing rate (SOFR) or the alternate base rate, plus an applicable rate that varies with our debt rating and, in the case of loans bearing interest based on term SOFR, a credit spread adjustment equal to 0.10% per annum. The Revolving Credit Agreement includes an option for us to elect to increase commitments under the credit facility or enter into one or more tranches of term loans in the aggregate principal amount of up to $250 million, subject to consent of the lenders providing the additional commitments or loans and certain other conditions. The Revolving Credit Agreement contains financial and operating covenants. Pursuant to the Revolving Credit Agreement, we are required to maintain a ratio of total debt to adjusted annual earnings before interest, taxes, depreciation and amortization (EBITDA), calculated based on the four consecutive fiscal quarters ending with the most recent fiscal quarter, of not greater than 3.50 to 1.00 as of the end of each fiscal quarter. Upon the consummation of any Qualified Acquisition (as defined in the Revolving Credit Agreement) and us providing notice to the Administrative Agent, the ratio increases to 4.00 to 1.00 for the fiscal quarter in which the acquisition is consummated and the three consecutive fiscal quarters thereafter. The operating covenants include, among other things, limitations on (i) the incurrence of indebtedness by our subsidiaries, (ii) liens on our and our subsidiaries assets, and (iii) certain fundamental changes and the disposition of assets by us and our subsidiaries. The Credit Agreement contains other customary covenants, representations and warranties, and events of default. 75 75 75 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents --- ## Modified: 9. LEGAL PROCEEDINGS **Key changes:** - Reworded sentence: "We are involved in various lawsuits and claims arising in the ordinary course of business, including actions with respect to intellectual property, employment, and contractual matters." **Prior (2025):** Amount recorded in accrued liabilities as of January 1, 2023 Expense recorded Amount recorded in accrued liabilities as of December 31, 2023 Expense recorded Amount recorded in accrued liabilities as of December 29, 2024 9. LEGAL PROCEEDINGSWe are 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, we assess, on a regular basis, the probability and range of possible loss based on the developments in these matters. A liability is recorded in the consolidated 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 resolutions could occur, assessing contingencies is highly subjective and requires judgments about future events. We regularly review outstanding legal matters to determine the adequacy of the liabilities accrued and related disclosures in consideration of many factors, which include, but are not limited to, past history, scientific and other evidence, and the specifics and status of each matter. We may change our estimates if our assessment of the various factors changes and the amount of ultimate loss may differ from our estimates, resulting in a material effect on our business, financial condition, results of operations, and/or cash flows. **Current (2026):** We are 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, we assess, on a regular basis, the probability and range of possible loss based on the developments in these matters. A liability is recorded in the consolidated 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 resolutions could occur, assessing contingencies is highly subjective and requires judgments about future events. We regularly review outstanding legal matters to determine the adequacy of the liabilities accrued and related disclosures in consideration of many factors, which include, but are not limited to, past history, scientific and other evidence, and the specifics and status of each matter. We may change our estimates if our assessment of the various factors changes and the amount of ultimate loss may differ from our estimates, resulting in a material effect on our business, financial condition, results of operations, and/or cash flows. --- ## Modified: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) **Key changes:** - Reworded sentence: "Our manufacturing operations in Singapore operate under various tax holidays and incentives, which will begin to expire in 2035." - Reworded sentence: "We recognized expense of $9 million, $6 million, and $2 million in 2025, 2024, and 2023, respectively, related to potential interest and penalties on uncertain tax positions." - Added sentence: "The following table summarizes income taxes paid (net of refunds): In millions202520242023Federal$22 $31 $(2)State7 - 4 Foreign44 74 63 Total$73 $105 $65 90 90 90 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents" **Prior (2025):** We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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, we rely upon prices set by management, adjusted for applicable discounts. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment and payment is typically due within 30 days from invoice. In instances where right of payment or transfer of title is contingent upon the customer's acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from genotyping and sequencing services, including cancer detection testing services related to the GRAIL business, is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, or payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expense when incurred as the amortization period for such costs, if capitalized, would have been one year or less. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers by us. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. **Current (2026):** We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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, we rely upon prices set by management, adjusted for applicable discounts. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment and payment is typically due within 30 days from invoice. In instances where right of payment or transfer of title is contingent upon the customer's acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from genotyping and sequencing services, including cancer detection testing services related to the GRAIL business, is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, or payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expense when incurred as the amortization period for such costs, if capitalized, would have been one year or less. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers by us. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. --- ## Modified: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) **Key changes:** - Reworded sentence: "The carrying amounts of GRAIL's assets and liabilities included as part of the disposal group were as follows:In millionsCash and cash equivalents$968 Accounts receivable, net13 Inventory, net22 Prepaid expenses and other current assets27 Property and equipment, net80 Operating lease right-of-use assets74 Intangible assets, net (1)2,201 Other assets14 Accounts payable(12)Accrued liabilities (118)Operating lease liabilities(62)Other long term-liabilities(469)GRAIL net assets$2,738 Amount of GRAIL net assets recorded to short-term investments$397 Amount of GRAIL net assets recorded to additional paid-in capital$2,341 Additional adjustments recorded to additional paid-in capital as a result of the GRAIL Spin-Off:Non-contingent indemnification liability (see Note 7)1 Tax adjustment for difference between the book and tax values of our retained investment in GRAIL57 Total recorded to additional paid-in capital as a result of the GRAIL Spin-Off$2,399 _____________ Cash and cash equivalents Accounts receivable, net Inventory, net Prepaid expenses and other current assets Property and equipment, net Operating lease right-of-use assets Intangible assets, net (1) GRAIL net assets Amount of GRAIL net assets recorded to short-term investments Amount of GRAIL net assets recorded to additional paid-in capital Additional adjustments recorded to additional paid-in capital as a result of the GRAIL Spin-Off: Non-contingent indemnification liability (see Note 7) Tax adjustment for difference between the book and tax values of our retained investment in GRAIL Total recorded to additional paid-in capital as a result of the GRAIL Spin-Off (1)Includes IPR&D with a carrying value of $140 million after impairment." - Reworded sentence: "In connection with the Spin-Off, Illumina and GRAIL entered into various agreements to effect the Spin-Off and provide a framework for GRAIL's relationship with Illumina after the Spin-Off, including a separation and distribution agreement, an employee matters agreement, a tax matters agreement, an amended supply and commercialization agreement and a stockholder's and registration rights agreement (the Agreements)." **Prior (2025):** We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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, we rely upon prices set by management, adjusted for applicable discounts. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment and payment is typically due within 30 days from invoice. In instances where right of payment or transfer of title is contingent upon the customer's acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from genotyping and sequencing services, including cancer detection testing services related to the GRAIL business, is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, or payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expense when incurred as the amortization period for such costs, if capitalized, would have been one year or less. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers by us. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. **Current (2026):** We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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, we rely upon prices set by management, adjusted for applicable discounts. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment and payment is typically due within 30 days from invoice. In instances where right of payment or transfer of title is contingent upon the customer's acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from genotyping and sequencing services, including cancer detection testing services related to the GRAIL business, is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, or payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expense when incurred as the amortization period for such costs, if capitalized, would have been one year or less. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers by us. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. --- ## Modified: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) **Key changes:** - Added sentence: "Restricted stock units (RSU) and performance stock units (PSU) are both considered restricted stock." - Added sentence: "The determination of the amount of share-based compensation expense for our PSU requires the use of certain estimates and assumptions that affect the amount of share-based compensation expense recognized in our consolidated statements of operations." - Added sentence: "The fair value of restricted stock and performance stock units that do not include a market condition is determined by the closing market price of our common stock on the date of grant." - Added sentence: "PSU that do not include a market condition represent 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." - Added sentence: "At each reporting period, we reassess the probability of the achievement of such corporate performance goals and any increase or decrease in share-based compensation expense resulting from an adjustment in the estimated shares to be released is treated as a cumulative catch-up in the period of adjustment." **Prior (2025):** We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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, we rely upon prices set by management, adjusted for applicable discounts. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment and payment is typically due within 30 days from invoice. In instances where right of payment or transfer of title is contingent upon the customer's acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from genotyping and sequencing services, including cancer detection testing services related to the GRAIL business, is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, or payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expense when incurred as the amortization period for such costs, if capitalized, would have been one year or less. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers by us. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. **Current (2026):** We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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, we rely upon prices set by management, adjusted for applicable discounts. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment and payment is typically due within 30 days from invoice. In instances where right of payment or transfer of title is contingent upon the customer's acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from genotyping and sequencing services, including cancer detection testing services related to the GRAIL business, is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, or payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expense when incurred as the amortization period for such costs, if capitalized, would have been one year or less. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers by us. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. --- ## Modified: Regulatory authorities in China have added Illumina to the List of Unreliable Entities, which could result in fines or restrictions on our ability to do business in China and could have a material adverse effect on our revenue and results of operations. **Key changes:** - Reworded sentence: "On February 4, 2025, regulatory authorities in China announced that Illumina had been added to the List of Unreliable Entities under the Provisions of the List of Unreliable Entities (the UEL Provisions)." - Reworded sentence: "On March 4, 2025, we received a notice from regulatory authorities in China that Illumina would no longer be permitted to export sequencing instruments into China." - Reworded sentence: "Our revenue from the Greater China region, which includes China, Taiwan, and Hong Kong, was $243 million in 2025." **Prior (2025):** On February 4, 2025, China's Ministry of Commerce (MOFCOM) announced that it had added Illumina to its List of Unreliable Entities under the Provisions of the List of Unreliable Entities (the UEL Provisions). Under the UEL Provisions, potential penalties for companies placed on the List of Unreliable Entities can include monetary fines, restrictions or prohibitions on the sale of goods in China, engaging in import and export activities related to China, making investments in, or extracting investments from, China, denial of entry of our relevant personnel into China, restrictions or revocation of work permits, stay or residence status of our relevant personnel in China, or other measures. MOFCOM has not announced what penalties will be imposed on us and we cannot currently predict the duration of our inclusion on the List of Unreliable Entities or any actions that may ultimately be taken by MOFCOM. The decision to place us on the List of Unreliable Entities and any future decision to take action to impose and enforce penalties or restrictions against us could have a material adverse effect on our revenue and results of operations. Furthermore, if, as a result of any such penalties or restrictions, we were to cease entirely or curtail operations in China, we could incur material impairment charges related to any such exit or disposal activities. Our revenue from the Greater China region, which includes China, Taiwan, and Hong Kong, was $308 million in 2024. See note 3. Revenue. **Current (2026):** On February 4, 2025, regulatory authorities in China announced that Illumina had been added to the List of Unreliable Entities under the Provisions of the List of Unreliable Entities (the UEL Provisions). Under the UEL Provisions, potential penalties for companies placed on the List of Unreliable Entities can include monetary fines, restrictions or prohibitions on the sale of goods in China, engaging in import and export activities related to China, making investments in, or extracting investments from, China, denial of entry of our relevant personnel into China, restrictions or revocation of work permits, stay or residence status of our relevant personnel in China, or other measures. On March 4, 2025, we received a notice from regulatory authorities in China that Illumina would no longer be permitted to export sequencing instruments into China. On November 5, 2025, such regulatory authorities decided that, effective November 10, 2025, Illumina would again be permitted to export sequencing instruments to Chinese companies, but such transactions remain subject to approval on a case-by-case basis. 16 16 16 We cannot currently predict the duration of our inclusion on the List of Unreliable Entities, and whether further actions may be taken by the regulatory authorities in China. Any future decision by such regulatory authorities to take action to impose and enforce additional penalties or restrictions against us could have a material adverse effect on our revenue and results of operations. Furthermore, if, as a result of any such penalties or restrictions, we were to cease entirely or curtail operations in China, we could incur material impairment charges related to any such exit or disposal activities. Our revenue from the Greater China region, which includes China, Taiwan, and Hong Kong, was $243 million in 2025. See note 2. Revenue. --- ## Modified: Restricted Stock **Key changes:** - Reworded sentence: "We grant restricted stock pursuant to the Second Amended and Restated 2015 Stock Plan and satisfy such grants through the issuance of either new shares or shares from treasury stock." - Reworded sentence: "We issue PSU for which the number of shares issuable at the end of a three-year performance period is based on our performance relative to specified operating margin targets (OM PSU) and PSU with a market condition that vest based on the Company's relative total shareholder return as compared to a peer group of companies measured over a three-fiscal year performance period (rTSR PSU)." - Reworded sentence: "Beginning in 2025, we no longer issue PSU for which the number of shares issuable at the end of a three-year performance period is based on our performance relative to specified earnings per share targets (EPS PSU)." **Prior (2025):** We issue restricted stock units (RSU) and performance stock units (PSU), both of which are considered restricted stock. We grant restricted stock pursuant to the 2015 Stock Plan and satisfy such grants through the issuance of either new shares or shares from treasury stock. RSU are share awards that, upon vesting, will deliver to the holder shares of our common stock. RSU generally vest over a four-year period with equal vesting annually. We issue three different PSU awards. We issue PSU for which the number of shares issuable at the end of a three-year performance period is based on our performance relative to specified earnings per share targets (EPS PSU) and, during 2024, we began to issue PSU for which the number of shares issuable at the end of a three-year performance period is based on our performance relative to specified operating margin targets (OM PSU). During 2023, we began to issue PSU with a market condition that vest based on the Company's relative total shareholder return as compared to a peer group of companies measured over a three-fiscal year performance period (rTSR PSU). Depending on the actual performance over the measurement period, an rTSR PSU award recipient could receive up to 175% of the granted award. Shares issuable under all PSU awards are subject to continued employment through the vesting period. three-fiscal 77 77 77 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents **Current (2026):** We issue restricted stock units (RSU) and performance stock units (PSU), both of which are considered restricted stock. We grant restricted stock pursuant to the Second Amended and Restated 2015 Stock Plan and satisfy such grants through the issuance of either new shares or shares from treasury stock. RSU are share awards that, upon vesting, will deliver to the holder shares of our common stock. RSU generally vest over a four-year period with equal vesting annually. We issue PSU for which the number of shares issuable at the end of a three-year performance period is based on our performance relative to specified operating margin targets (OM PSU) and PSU with a market condition that vest based on the Company's relative total shareholder return as compared to a peer group of companies measured over a three-fiscal year performance period (rTSR PSU). Depending on the actual performance over the measurement period, an rTSR PSU award recipient could receive up to 175% of the granted award. Beginning in 2025, we no longer issue PSU for which the number of shares issuable at the end of a three-year performance period is based on our performance relative to specified earnings per share targets (EPS PSU). Shares issuable under all RSU and PSU awards are subject to continued employment through the vesting period. three-fiscal Restricted stock activity was as follows: Restricted Stock Units (RSU)Performance Stock Units(PSU) (1)Weighted-Average Grant-Date Fair Value per ShareUnits in thousandsRSUPSUOutstanding at January 1, 20231,611 74 $311.23 $446.74 Awarded2,032 39 $195.94 $239.98 Vested(987) - $268.08 $ - Cancelled(458)(113)$253.52 $299.98 Outstanding at December 31, 20232,198 - $236.32 $ - Awarded2,788 729 $133.73 $164.38 Unvested adjustment for GRAIL Spin-Off107 12 $ - $ - Vested(771) - $249.70 $ - Cancelled(443)(41)$195.11 $167.68 Outstanding at December 29, 20243,879 700 $158.60 $164.87 Awarded1,812 407 $86.70 $85.67 Vested(1,307)(55)$180.78 $247.32 Cancelled(646)(196)$142.26 $156.52 Outstanding at December 28, 20253,738 856 $118.82 $123.77 _____________ --- ## Modified: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) **Key changes:** - Reworded sentence: "We have elected to account for the global intangible low-taxed income (GILTI) as a period cost in our consolidated financial statements." - Reworded sentence: "Significant components of deferred tax assets and liabilities were as follows: In millionsDecember 28,2025December 29,2024Deferred tax assets: Net operating losses$125 $189 Tax credits290 252 Other accruals and reserves32 40 Stock compensation31 34 Capitalized U.S." - Reworded sentence: "Based on the available evidence as of December 28, 2025, we were not able to conclude it is more likely than not certain deferred tax assets will be realized." - Reworded sentence: "As of December 28, 2025, we had net operating loss carryforwards for federal and state tax purposes of $59 million and $1,829 million, respectively, which will begin to expire in 2036 and 2026, respectively, unless utilized prior." - Reworded sentence: "The deferred tax assets as of December 28, 2025 are net of any previous limitations due to Section 382 and 383." **Prior (2025):** We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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, we rely upon prices set by management, adjusted for applicable discounts. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment and payment is typically due within 30 days from invoice. In instances where right of payment or transfer of title is contingent upon the customer's acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from genotyping and sequencing services, including cancer detection testing services related to the GRAIL business, is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, or payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expense when incurred as the amortization period for such costs, if capitalized, would have been one year or less. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers by us. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. **Current (2026):** We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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, we rely upon prices set by management, adjusted for applicable discounts. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment and payment is typically due within 30 days from invoice. In instances where right of payment or transfer of title is contingent upon the customer's acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from genotyping and sequencing services, including cancer detection testing services related to the GRAIL business, is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, or payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expense when incurred as the amortization period for such costs, if capitalized, would have been one year or less. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers by us. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. --- ## Modified: (In millions, except par value) **Key changes:** - Reworded sentence: "December 28,2025December 29,2024ASSETSCurrent assets: Cash and cash equivalents$1,418 $1,127 Short-term investments215 93 Accounts receivable, net854 735 Inventory, net564 547 Prepaid expenses and other current assets238 244 Total current assets3,289 2,746 Property and equipment, net759 815 Operating lease right-of-use assets370 419 Goodwill1,113 1,113 Intangible assets, net210 295 Deferred tax assets, net454 567 Other assets449 348 Total assets$6,644 $6,303 LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities: Accounts payable$240 $221 Accrued liabilities846 827 Term debt, current portion499 499 Total current liabilities1,585 1,547 Operating lease liabilities486 554 Term debt1,490 1,490 Other long-term liabilities360 339 Commitments and contingencies Stockholders' equity: Preferred stock, $0.01 par value, 10 million shares authorized; no shares issued and outstanding at December 28, 2025 and December 29, 2024 - - Common stock, $0.01 par value, 320 million shares authorized; 201 million shares issued and 153 million outstanding at December 28, 2025; 200 million shares issued and 159 million outstanding at December 29, 20242 2 Additional paid-in capital7,822 7,525 Accumulated other comprehensive (loss) income(10)22 Accumulated deficit(392)(1,242)Treasury stock, at cost; 48 million shares and 41 million shares at December 28, 2025 and December 29, 2024, respectively(4,699)(3,934)Total stockholders' equity2,723 2,373 Total liabilities and stockholders' equity$6,644 $6,303 Preferred stock, $0.01 par value, 10 million shares authorized; no shares issued and outstanding at December 28, 2025 and December 29, 2024 Common stock, $0.01 par value, 320 million shares authorized; 201 million shares issued and 153 million outstanding at December 28, 2025; 200 million shares issued and 159 million outstanding at December 29, 2024 Treasury stock, at cost; 48 million shares and 41 million shares at December 28, 2025 and December 29, 2024, respectively See accompanying notes to consolidated financial statements." **Prior (2025):** December 29,2024December 31,2023ASSETSCurrent assets: Cash and cash equivalents$1,127 $1,048 Short-term investments93 6 Accounts receivable, net735 734 Inventory, net547 587 Prepaid expenses and other current assets244 234 Total current assets2,746 2,609 Property and equipment, net815 1,007 Operating lease right-of-use assets419 544 Goodwill1,113 2,545 Intangible assets, net295 2,993 Deferred tax assets, net567 56 Other assets348 357 Total assets$6,303 $10,111 LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities: Accounts payable$221 $245 Accrued liabilities827 1,325 Term debt, current portion499 - Total current liabilities1,547 1,570 Operating lease liabilities554 687 Term debt1,490 1,489 Other long-term liabilities339 620 Commitments and contingencies Stockholders' equity: Preferred stock, $0.01 par value, 10 million shares authorized; no shares issued and outstanding at December 29, 2024 and December 31, 2023 - - Common stock, $0.01 par value, 320 million shares authorized; 200 million shares issued and 159 million outstanding at December 29, 2024; 199 million shares issued and 159 million outstanding at December 31, 20232 2 Additional paid-in capital7,525 9,555 Accumulated other comprehensive income (loss)22 (1)Accumulated deficit(1,242)(19)Treasury stock, at cost; 41 million shares and 40 million shares at December 29, 2024 and December 31, 2023, respectively(3,934)(3,792)Total stockholders' equity2,373 5,745 Total liabilities and stockholders' equity$6,303 $10,111 Preferred stock, $0.01 par value, 10 million shares authorized; no shares issued and outstanding at December 29, 2024 and December 31, 2023 Common stock, $0.01 par value, 320 million shares authorized; 200 million shares issued and 159 million outstanding at December 29, 2024; 199 million shares issued and 159 million outstanding at December 31, 2023 Treasury stock, at cost; 41 million shares and 40 million shares at December 29, 2024 and December 31, 2023, respectively See accompanying notes to consolidated financial statements. 50 50 50 **Current (2026):** December 28,2025December 29,2024ASSETSCurrent assets: Cash and cash equivalents$1,418 $1,127 Short-term investments215 93 Accounts receivable, net854 735 Inventory, net564 547 Prepaid expenses and other current assets238 244 Total current assets3,289 2,746 Property and equipment, net759 815 Operating lease right-of-use assets370 419 Goodwill1,113 1,113 Intangible assets, net210 295 Deferred tax assets, net454 567 Other assets449 348 Total assets$6,644 $6,303 LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities: Accounts payable$240 $221 Accrued liabilities846 827 Term debt, current portion499 499 Total current liabilities1,585 1,547 Operating lease liabilities486 554 Term debt1,490 1,490 Other long-term liabilities360 339 Commitments and contingencies Stockholders' equity: Preferred stock, $0.01 par value, 10 million shares authorized; no shares issued and outstanding at December 28, 2025 and December 29, 2024 - - Common stock, $0.01 par value, 320 million shares authorized; 201 million shares issued and 153 million outstanding at December 28, 2025; 200 million shares issued and 159 million outstanding at December 29, 20242 2 Additional paid-in capital7,822 7,525 Accumulated other comprehensive (loss) income(10)22 Accumulated deficit(392)(1,242)Treasury stock, at cost; 48 million shares and 41 million shares at December 28, 2025 and December 29, 2024, respectively(4,699)(3,934)Total stockholders' equity2,723 2,373 Total liabilities and stockholders' equity$6,644 $6,303 Preferred stock, $0.01 par value, 10 million shares authorized; no shares issued and outstanding at December 28, 2025 and December 29, 2024 Common stock, $0.01 par value, 320 million shares authorized; 201 million shares issued and 153 million outstanding at December 28, 2025; 200 million shares issued and 159 million outstanding at December 29, 2024 Treasury stock, at cost; 48 million shares and 41 million shares at December 28, 2025 and December 29, 2024, respectively See accompanying notes to consolidated financial statements. 52 52 52 --- ## Modified: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) **Key changes:** - Reworded sentence: "Our commitments to the Funds are as follows: Dollars in millionsCapital commitmentsCallable through dateRemaining callable as of December 28, 2025Fund I$100 April 2026$3 Fund II$150 July 2029$33 Fund III$60 December 2034$25 Dollars in millions Capital commitments Callable through date Remaining callable as of December 28, 2025 Fund I Fund II Fund III" **Prior (2025):** We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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, we rely upon prices set by management, adjusted for applicable discounts. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment and payment is typically due within 30 days from invoice. In instances where right of payment or transfer of title is contingent upon the customer's acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from genotyping and sequencing services, including cancer detection testing services related to the GRAIL business, is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, or payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expense when incurred as the amortization period for such costs, if capitalized, would have been one year or less. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers by us. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. **Current (2026):** We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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, we rely upon prices set by management, adjusted for applicable discounts. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment and payment is typically due within 30 days from invoice. In instances where right of payment or transfer of title is contingent upon the customer's acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from genotyping and sequencing services, including cancer detection testing services related to the GRAIL business, is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, or payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expense when incurred as the amortization period for such costs, if capitalized, would have been one year or less. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers by us. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. --- ## Modified: Fair Value Measurements **Key changes:** - Reworded sentence: "The following table presents the hierarchy for assets and liabilities measured at fair value on a recurring basis: December 28, 2025December 29, 2024In millionsLevel 1Level 2Level 3TotalLevel 1Level 2Level 3TotalAssets:Money market funds (cash equivalents)$1,173 $ - $ - $1,173 $931 $ - $ - $931 Marketable equity securities215 - - 215 93 - - 93 Other investments - - 32 32 - - 17 17 Deferred compensation plan assets - 79 - 79 - 70 - 70 Total assets measured at fair value$1,388 $79 $32 $1,499 $1,024 $70 $17 $1,111 Liabilities:Contingent consideration liabilities$ - $ - $54 $54 $ - $ - $73 $73 Deferred compensation plan liabilities - 72 - 72 - 65 - 65 Total liabilities measured at fair value$ - $72 $54 $126 $ - $65 $73 $138 Other investments Deferred compensation plan liabilities Marketable equity securities are measured at fair value based on quoted trade prices in active markets." - Removed sentence: "68 68 68 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents" **Prior (2025):** The fair value of assets and liabilities are 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 use of observable inputs and minimize use of unobservable inputs. We use 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 approximate the related fair values due to the short-term maturities of these instruments. **Current (2026):** The fair value of assets and liabilities are 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 use of observable inputs and minimize use of unobservable inputs. We use 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 approximate the related fair values due to the short-term maturities of these instruments. --- ## Modified: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) **Key changes:** - Reworded sentence: "The weighted average shares used to calculate basic and diluted earnings (loss) per share were as follows: Years EndedIn millionsDecember 28,2025December 29,2024December 31,2023Weighted average shares outstanding155 159 158 Effect of potentially dilutive common shares from:Equity awards1 - - Weighted average shares used in calculating diluted earnings (loss) per share156 159 158 Antidilutive shares:Equity awards2 4 3 Convertible senior notes - - 1 Potentially dilutive shares excluded due to antidilutive effect2 4 4 Weighted average shares outstanding Weighted average shares used in calculating diluted earnings (loss) per share Potentially dilutive shares excluded due to antidilutive effect" **Prior (2025):** We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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, we rely upon prices set by management, adjusted for applicable discounts. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment and payment is typically due within 30 days from invoice. In instances where right of payment or transfer of title is contingent upon the customer's acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from genotyping and sequencing services, including cancer detection testing services related to the GRAIL business, is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, or payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expense when incurred as the amortization period for such costs, if capitalized, would have been one year or less. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers by us. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. **Current (2026):** We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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, we rely upon prices set by management, adjusted for applicable discounts. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment and payment is typically due within 30 days from invoice. In instances where right of payment or transfer of title is contingent upon the customer's acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from genotyping and sequencing services, including cancer detection testing services related to the GRAIL business, is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, or payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expense when incurred as the amortization period for such costs, if capitalized, would have been one year or less. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers by us. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. --- ## Modified: Employee Stock Purchase Plan **Key changes:** - Reworded sentence: "During 2025, 2024, and 2023, approximately 0.6 million, 0.5 million, and 0.4 million shares, respectively, were issued under the ESPP." **Prior (2025):** The 2000 Employee Stock Purchase Plan, or ESPP, permits eligible employees to purchase common stock at a discount 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 day of the offering period or purchase date, whichever is lower. The initial offering period commenced in July 2000. During 2024, 2023, and 2022, approximately 0.5 million, 0.4 million, and 0.3 million shares, respectively, were issued under the ESPP. As of December 29, 2024, approximately 12.4 million shares remained available for issuance under the ESPP, which includes an increase of 0.5 million shares pursuant to the terms of the ESPP to account for the GRAIL Spin-Off. 80 80 80 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents **Current (2026):** The 2000 Employee Stock Purchase Plan, or ESPP, permits eligible employees to purchase common stock at a discount 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 day of the offering period or purchase date, whichever is lower. The initial offering period commenced in July 2000. During 2025, 2024, and 2023, approximately 0.6 million, 0.5 million, and 0.4 million shares, respectively, were issued under the ESPP. As of December 28, 2025, approximately 11.8 million shares remained available for issuance under the ESPP. The assumptions used for the specified reporting periods and the resulting estimates of weighted-average fair value per share for stock purchased under the ESPP were as follows: 202520242023Risk-free interest rate3.82% - 4.94% 4.35% - 5.54% 0.78% - 5.54%Expected volatility41% - 48% 41% - 49% 41% - 51%Expected term0.5 - 1.0 year 0.5 - 1.1 year 0.5 - 1.1 yearExpected dividends0%0%0%Weighted-average grant-date fair value per share$25.94 $37.24 $49.87 --- ## Modified: Venture Funds **Key changes:** - Reworded sentence: "The aggregate carrying amount of the Funds, included in other assets, was $235 million and $201 million as of December 28, 2025 and December 29, 2024, respectively." **Prior (2025):** We invest in three venture capital investment funds (the Funds), which are accounted for as equity-method investments. The aggregate carrying amount of the Funds, included in other assets, was $201 million and $168 million as of December 29, 2024 and December 31, 2023, respectively. We recorded a net gain of $5 million in 2024, and net losses of $33 million and $25 million in 2023 and 2022, respectively, in other expense, net. 67 67 67 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents **Current (2026):** We invest in three venture capital investment funds (the Funds), which are accounted for as equity-method investments. The aggregate carrying amount of the Funds, included in other assets, was $235 million and $201 million as of December 28, 2025 and December 29, 2024, respectively. We recorded net gains of $22 million and $5 million in 2025 and 2024, respectively, and a net loss of $33 million in 2023, in other income (expense), net. 68 68 68 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents --- ## Modified: (Accumulated **Key changes:** - Reworded sentence: "Deficit) Reclassification of liability-classified awards Spin-Off of GRAIL (see Note 8) See accompanying notes to consolidated financial statements." **Prior (2025):** See accompanying notes to consolidated financial statements. 53 53 53 ILLUMINA, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(In millions) Years EndedDecember 29,2024December 31,2023January 1,2023Cash flows from operating activities: Net loss$(1,223)$(1,161)$(4,404)Adjustments to reconcile net loss to net cash provided by operating activities:Depreciation expense224 235 215 Amortization of intangible assets130 197 179 Share-based compensation expense370 380 366 Deferred income taxes(112)(33)(23)Net losses on strategic investments312 40 122 Change in fair value of contingent consideration liabilities(315)(24)(205)(Gain) loss on Helix contingent value right(15)(10)7 Goodwill and intangible (IPR&D) impairment1,889 827 3,914 Property and equipment and right-of-use asset impairment46 100 9 Other14 17 8 Changes in operating assets and liabilities:Accounts receivable(25)(40)(12)Inventory19 (20)(135)Prepaid expenses and other current assets(14)11 16 Operating lease right-of-use assets and liabilities, net(32)(16)(8)Other assets(15)5 19 Accounts payable(4)(44)(38)Accrued liabilities(440)15 381 Other long-term liabilities28 (1)(19)Net cash provided by operating activities837 478 392 Cash flows from investing activities: Net purchases of property and equipment(128)(195)(286)Net purchases of strategic investments(52)(6)(40)Cash paid for acquisitions and intangible assets, net of cash acquired(81)(30)(265)Cash received for Helix contingent value right83 - - Net cash used in investing activities(178)(231)(591)Cash flows from financing activities: Proceeds from debt, net of issuance costs1,241 (1)991 Payments on debt obligations(750)(1,235) - Payments on contingent consideration liabilities(1)(1) - Proceeds from issuance of common stock56 67 63 Taxes paid related to net share settlement of equity awards(32)(40)(54)Common stock repurchases(116) - - GRAIL cash deconsolidated as a result of spin-off(968) - - Net cash (used in) provided by financing activities(570)(1,210)1,000 Effect of exchange rate changes on cash and cash equivalents(10) - (22)Net increase (decrease) in cash and cash equivalents79 (963)779 Cash and cash equivalents at beginning of year1,048 2,011 1,232 Cash and cash equivalents at end of year$1,127 $1,048 $2,011 Supplemental cash flow information: Cash paid for interest$83 $73 $17 Cash paid for income taxes$105 $65 $122 Cash paid for operating lease liabilities$132 $123 $112 Purchases of property and equipment included in accounts payable and accrued liabilities$4 $12 $16 GRAIL net assets, excluding cash and cash equivalents, deconsolidated as a result of spin-off$1,770 $ - $ - Net purchases of property and equipment Purchases of property and equipment included in accounts payable and accrued liabilities See accompanying notes to consolidated financial statements. 54 54 54 **Current (2026):** Deficit) Reclassification of liability-classified awards Spin-Off of GRAIL (see Note 8) See accompanying notes to consolidated financial statements. 55 55 55 ILLUMINA, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(In millions) Years EndedDecember 28,2025December 29,2024December 31,2023Cash flows from operating activities: Net income (loss)$850 $(1,223)$(1,161)Adjustments to reconcile net income (loss) to net cash provided by operating activities:Depreciation expense203 224 235 Amortization of intangible assets67 130 197 Share-based compensation expense275 370 380 Deferred income taxes119 (112)(33)Net (gains) losses on strategic investments(328)312 40 Change in fair value of contingent consideration liabilities(18)(315)(24)Goodwill and intangible impairment23 1,889 827 Property and equipment and right-of-use asset impairment4 46 100 Non-cash charitable contribution19 - - Gain on Helix contingent value right - (15)(10)Other18 14 17 Changes in operating assets and liabilities:Accounts receivable(108)(25)(40)Inventory(17)19 (20)Prepaid expenses and other current assets(8)(14)11 Operating lease right-of-use assets and liabilities, net(34)(32)(16)Other assets(21)(15)5 Accounts payable2 (4)(44)Accrued liabilities - (440)15 Other long-term liabilities33 28 (1)Net cash provided by operating activities1,079 837 478 Cash flows from investing activities: Net purchases of property and equipment(148)(128)(195)Net sales (purchases) of strategic investments103 (52)(6)Cash paid for acquisitions and intangible assets, net of cash acquired(10)(81)(30)Cash received for Helix contingent value right - 83 - Net cash used in investing activities(55)(178)(231)Cash flows from financing activities: Common stock repurchases(742)(116) - Taxes paid related to net share settlement of equity awards(40)(32)(40)Proceeds from issuance of common stock44 56 67 Payments on contingent consideration liabilities(1)(1)(1)Proceeds from debt, net of issuance costs495 1,241 (1)Payments on debt obligations(500)(750)(1,235)GRAIL cash deconsolidated as a result of spin-off - (968) - Net cash used in financing activities(744)(570)(1,210)Effect of exchange rate changes on cash and cash equivalents11 (10) - Net increase (decrease) in cash and cash equivalents291 79 (963)Cash and cash equivalents at beginning of year1,127 1,048 2,011 Cash and cash equivalents at end of year$1,418 $1,127 $1,048 Supplemental cash flow information: Cash paid for interest$95 $83 $73 Cash paid for income taxes (see Note 10)$73 $105 $65 Cash paid for operating lease liabilities$114 $132 $123 Purchases of property and equipment included in accounts payable and accrued liabilities$22 $4 $12 GRAIL net assets, excluding cash and cash equivalents, deconsolidated as a result of spin-off$ - $1,770 $ - Adjustments to reconcile net income (loss) to net cash provided by operating activities: Goodwill and intangible impairment Non-cash charitable contribution Net purchases of property and equipment Net sales (purchases) of strategic investments Cash paid for income taxes (see Note 10) Purchases of property and equipment included in accounts payable and accrued liabilities See accompanying notes to consolidated financial statements. 56 56 56 --- ## Modified: Shareholder Derivative Complaints **Key changes:** - Added sentence: "On October 17, 2023, a stockholder derivative and class action complaint captioned Icahn Partners LP, et al." - Added sentence: "deSouza, et al., purportedly brought on behalf of Illumina and public holders of Illumina's common stock, was filed in the Delaware Court of Chancery against certain current and former directors (including our former Chief Executive Officer)." - Added sentence: "We are named as a nominal defendant in the complaint." - Added sentence: "The lawsuit alleges the named directors breached their fiduciary duties by knowingly causing Illumina to unlawfully close the GRAIL acquisition, concealing material facts related to the GRAIL acquisition and making inadequate disclosures." - Added sentence: "Before the filing of the complaint, the purported stockholders did not make a demand that our Board of Directors pursue the claims asserted therein." **Prior (2025):** We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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, we rely upon prices set by management, adjusted for applicable discounts. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment and payment is typically due within 30 days from invoice. In instances where right of payment or transfer of title is contingent upon the customer's acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from genotyping and sequencing services, including cancer detection testing services related to the GRAIL business, is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, or payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expense when incurred as the amortization period for such costs, if capitalized, would have been one year or less. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers by us. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. **Current (2026):** On October 17, 2023, a stockholder derivative and class action complaint captioned Icahn Partners LP, et al. v. deSouza, et al., purportedly brought on behalf of Illumina and public holders of Illumina's common stock, was filed in the Delaware Court of Chancery against certain current and former directors (including our former Chief Executive Officer). We are named as a nominal defendant in the complaint. The lawsuit alleges the named directors breached their fiduciary duties by knowingly causing Illumina to unlawfully close the GRAIL acquisition, concealing material facts related to the GRAIL acquisition and making inadequate disclosures. Before the filing of the complaint, the purported stockholders did not make a demand that our Board of Directors pursue the claims asserted therein. The complaint seeks damages, costs and expenses, including attorney fees, the certification and consolidation of a putative class, the issuance of amended disclosures, the removal of conflicted directors and declaratory and other equitable relief. On November 1, 2023, the defendants filed a motion to dismiss the complaint. On February 26, 2024, a stockholder derivative complaint captioned City of Omaha Police and Firefighters Retirement System v. deSouza, et al., purportedly brought on behalf of Illumina, was filed in the Delaware Court of Chancery against certain current and former directors. On April 16, 2024, a stockholder derivative complaint captioned City of Roseville General Employees Retirement System, et al. v. deSouza, et al., purportedly brought on behalf of Illumina, was filed in the Delaware Court of Chancery against certain current and former directors and officers. On March 26, 2024, the defendants filed a motion to dismiss the complaint in the lawsuit filed by City of Omaha Police and Firefighters Retirement System. On May 16, 2024, the defendants filed a motion to dismiss the complaint in the lawsuit filed by City of Roseville General Employees Retirement System, et al. On December 23, 2024, a stockholder derivative complaint captioned The Pavers and Road Builders Benefit Funds v. deSouza, et al., purportedly brought on behalf of Illumina, was filed in the Delaware Court of Chancery against certain current and former directors and officers. Like the complaints described above, the lawsuits allege the named directors and officers breached their fiduciary duties by knowingly causing Illumina to unlawfully close the GRAIL acquisition. Before the filing of the complaint, the purported stockholder did not make a demand that our Board of Directors pursue the claim asserted therein. The complaint seeks damages against the individual defendants and other equitable relief. On January 21, 2025, the defendants filed a motion to dismiss the complaint in the lawsuit filed by The Pavers and Road Builders Benefit Funds. On March 27, 2025, the parties in the Icahn Partners LP, et al. v. deSouza, et al., City of Omaha Police and Firefighters Retirement System v. deSouza, et al., City of Roseville General Employees Retirement System, et al. v. deSouza, et al. and The Pavers and Road Builders Benefit Funds v. deSouza, et al. Delaware shareholder derivative actions filed a stipulation to consolidate those actions. On April 11, 2025, the parties to the Icahn Partners LP, et al. v. deSouza, et al. action informed the court that they had agreed to a settlement in principle of that action involving a release of claims and no payment by any party. On April 17, 2025, the court held a teleconference on the consolidated action, during which it directed the parties to (i) refile the consolidation stipulation once the Icahn Partners LP, et al. v. deSouza, et al. settlement was finalized and (ii) proceed with the briefing on the motion to dismiss the operative complaint in the consolidated action, which is the complaint filed in The Pavers and Road Builders Benefit Funds v. deSouza, et al. 84 84 84 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents --- ## Modified: Marketable Equity Securities **Key changes:** - Reworded sentence: "Our short-term investments consist of marketable equity securities, primarily our retained investment in GRAIL subsequent to the Spin-Off." **Prior (2025):** Our short-term investments consist of marketable equity securities. As of December 29, 2024 and December 31, 2023, the fair value of our marketable equity securities totaled $93 million and $6 million, respectively. The increase in our marketable equity securities relates to the investment we retained in GRAIL subsequent to the Spin-Off, which was initially recorded as $397 million, representing 14.5% of GRAIL's net assets disposed of at Spin-Off. Refer to note 2. GRAIL Spin-Off for details. We recorded an unrealized loss of $309 million in 2024, subsequent to the Spin-Off, based on the fair value of our investment in GRAIL as of December 29, 2024. Gains and (losses) recognized in other expense, net on marketable equity securities were as follows: In millions202420232022Net (losses) recognized during the period on marketable equity securities$(310)$(2)$(81)Less: Net (losses) recognized during the period on marketable equity securities sold during the period - (2) - Net unrealized (losses) recognized during the period on marketable equity securities still held at the reporting date$(310)$ - $(81) Net (losses) recognized during the period on marketable equity securities Less: Net (losses) recognized during the period on marketable equity securities sold during the period Net unrealized (losses) recognized during the period on marketable equity securities still held at the reporting date **Current (2026):** Our short-term investments consist of marketable equity securities, primarily our retained investment in GRAIL subsequent to the Spin-Off. As of December 28, 2025 and December 29, 2024, the fair value of our marketable equity securities totaled $215 million and $93 million, respectively. Gains (losses) recognized in other income (expense), net on marketable equity securities were as follows: In millions20252024 (1)2023Net gains (losses) recognized during the period$315 $(310)$(2)Less: Net gains (losses) recognized during the period on securities disposed of during the period150 - (2)Net unrealized gains (losses) recognized during the period on securities still held at the reporting date$165 $(310)$ - _____________ 2024 (1) Net gains (losses) recognized during the period Less: Net gains (losses) recognized during the period on securities disposed of during the period Net unrealized gains (losses) recognized during the period on securities still held at the reporting date (1)Subsequent to the Spin-Off of GRAIL, we recognized a loss of $309 million in 2024 on our retained investment. loss --- ## Modified: 12. SEGMENT AND GEOGRAPHIC INFORMATIONReportable Segment Information **Key changes:** - Reworded sentence: "As of December 28, 2025, we have one reportable segment, Core Illumina." - Reworded sentence: "91 91 91 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents" **Prior (2025):** As of December 29, 2024, we have one reportable segment, Core Illumina. Prior to the Spin-Off of GRAIL, on June 24, 2024, our reportable segments included both Core Illumina and GRAIL. See note 2. GRAIL Spin-Off for details. We continue to disclose certain historical information for GRAIL prior to the Spin-Off. Segment information is consistent with how our Chief Operating Decision Maker (CODM), who is our Chief Executive Officer, reviews financial information, makes operating decisions, allocates resources, and assesses performance. We also consider the way budgets and forecasts are prepared and reviewed and the basis on which executive compensation is determined. Core Illumina: Core Illumina's products and services serve customers in the research, clinical and applied markets, and enable the adoption of a variety of genomic solutions. Core Illumina sells products and provides services to GRAIL, and vice versa, in accordance with contractual agreements between the entities. GRAIL: GRAIL is a healthcare company focused on early detection of multiple cancers. Prior to the Spin-Off of GRAIL into a separate, independent public company, GRAIL was required to be held and operated separately and independently from Illumina pursuant to the transitional measures ordered by the European Commission. Our CODM allocates resources and evaluates business performance based on revenues and net income (loss). Net income (loss) is used in the annual budgeting and monthly forecasting processes and to monitor and assess budgeted/forecasted versus actual results. Our CODM does not evaluate segments using asset information. The accounting policies for segments are the same as those described in the summary of significant accounting policies. 92 92 92 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents **Current (2026):** As of December 28, 2025, we have one reportable segment, Core Illumina. Prior to the Spin-Off of GRAIL, on June 24, 2024, our reportable segments included both Core Illumina and GRAIL. See note 8. GRAIL Spin-Off for details. We continue to disclose certain historical information for GRAIL prior to the Spin-Off. Segment information is consistent with how our Chief Operating Decision Maker (CODM), who is our Chief Executive Officer, reviews financial information, makes operating decisions, allocates resources, and assesses performance. We also consider the way budgets and forecasts are prepared and reviewed and the basis on which executive compensation is determined. 91 91 91 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents --- ## Modified: Share-Based Compensation **Key changes:** - Reworded sentence: "Share-based compensation expense, which includes expense for both equity and liability-classified awards, reported in our consolidated statements of operations was as follows: In millions202520242023Cost of product revenue$20 $25 $29 Cost of service and other revenue3 6 7 Research and development107 146 155 Selling, general and administrative145 194 189 Share-based compensation expense, before taxes275 371 380 Related income tax benefits(61)(83)(87)Share-based compensation expense, net of taxes$214 $288 $293 As of December 28, 2025, unrecognized compensation cost, related to restricted stock and ESPP shares issued to date, of $391 million was expected to be recognized over a weighted-average period of approximately 2.3 years." **Prior (2025):** Share-based compensation expense is incurred related to restricted stock, employee stock purchase plan (ESPP), stock options, and, prior to the GRAIL Spin-Off on June 24, 2024, cash-based equity incentive awards. Forfeitures are accounted for, as incurred, as a reversal of share-based compensation expense related to awards that will not vest. Restricted stock units (RSU) and performance stock units (PSU) are both considered restricted stock. The determination of the amount of share-based compensation expense for our PSU requires the use of certain estimates and assumptions that affect the amount of share-based compensation expense recognized in our consolidated statements of operations. The fair value of restricted stock and performance stock units that do not include a market condition is determined by the closing market price of our common stock on the date of grant. PSU that do not include a market condition represent 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, we reassess the probability of the achievement of such corporate performance goals and any increase or decrease in share-based compensation expense resulting from an adjustment in the estimated shares to be released is treated as a cumulative catch-up in the period of adjustment. The fair value of performance stock units that include a market condition is determined on the date of grant using a Monte Carlo simulation, which includes assumptions for expected volatility, risk-free interest rate and dividend yield. These unobservable inputs represent a Level 3 measurement because they are supported by little or no market activity and reflect our own assumptions in measuring fair value. Share-based compensation expense is recognized based on the fair value on a straight-line basis over the requisite service periods of the awards. Compensation expense for PSU that include a market condition is recognized over the requisite service period regardless of whether the market conditions are achieved. 63 63 63 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents **Current (2026):** Share-based compensation expense is incurred related to restricted stock, employee stock purchase plan (ESPP), stock options, and, prior to the GRAIL Spin-Off in 2024, cash-based equity incentive awards. Forfeitures are accounted for, as incurred, as a reversal of share-based compensation expense related to awards that will not vest. 65 65 65 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents --- ## Modified: Accounting Pronouncements Pending Adoption **Key changes:** - Reworded sentence: "In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses - Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures." - Reworded sentence: "In September 2025, the FASB issued ASU 2025-06, Targeted Improvements to the Accounting for Internal-Use Software." **Prior (2025):** In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses - Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40). The new standard requires a company to provide disaggregated disclosures, in the notes to the financial statements, of specified categories of expenses that are included in line items on the face of the income statement. The standard is effective for us beginning in fiscal year 2027 and interim periods within fiscal year 2028, with early adoption permitted. The new standard is expected to be applied prospectively, but retrospective application is permitted. We are currently evaluating the impact of ASU 2024-03 on the consolidated financial statements and related disclosures. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures. The new standard requires a company to expand its existing income tax disclosures, specifically related to the rate reconciliation and income taxes paid. The standard is effective for us beginning in fiscal year 2025, with early adoption permitted, and is expected to be applied prospectively, but retrospective application is permitted. We are currently evaluating the impact of ASU 2023-09 on the consolidated financial statements and related disclosures. **Current (2026):** In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses - Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures. The new standard requires a company to provide disaggregated disclosures, in the notes to the financial statements, of specified categories of expenses that are included in line items on the face of the income statement. The standard is effective for us beginning in fiscal year 2027 and interim periods within fiscal year 2028, with early adoption permitted. The new standard is expected to be applied prospectively, but retrospective application is permitted. We are currently evaluating the impact of ASU 2024-03 on the consolidated financial statements and related disclosures. In September 2025, the FASB issued ASU 2025-06, Targeted Improvements to the Accounting for Internal-Use Software. The new standard is intended to modernize the recognition and disclosure framework for capitalized internal-use software costs, removing the previous "development" stage model and introducing a more judgment-based approach. The standard is effective for us beginning in our first quarter of fiscal year 2028, with early adoption permitted, and can be applied using a prospective, retrospective, or modified transition approach. We are currently evaluating the impact of ASU 2025-06 on the consolidated financial statements. In November 2025, the FASB issued ASU 2025-09, Derivatives and Hedging, Hedge Accounting Improvements. The new standard is intended to better align the hedge accounting model with risk management activities. The standard is effective for us beginning in our first quarter of fiscal year 2027, with early adoption permitted, and is applied on a prospective basis. We are currently evaluating the impact of ASU 2025-09 on the consolidated financial statements. In December 2025, the FASB issued ASU 2025-10, Accounting for Government Grants Received by Business Entities. The new standard provides guidance on the recognition, measurement, and presentation of government grants. The standard is effective for us beginning in our first quarter of fiscal year 2029, with early adoption permitted, and can be applied using a modified prospective, modified retrospective or full retrospective transition approach. We are currently evaluating the impact of ASU 2025-10 on the consolidated financial statements. --- ## Modified: MARKET INFORMATION **Key changes:** - Reworded sentence: "20252024 HighLowHighLowFirst Quarter$153.06 $79.30 $145.50 $123.54 Second Quarter$95.99 $68.70 $136.02 $98.27 Third Quarter$111.00 $91.36 $137.18 $103.57 Fourth Quarter$138.80 $88.00 $156.66 $125.06 30 30 30" **Prior (2025):** Our common stock has been quoted on The Nasdaq Global Select Market under the symbol "ILMN" since July 28, 2000. The following table sets forth, for the fiscal periods indicated, the quarterly high and low sales prices per share of our common stock as reported on The Nasdaq Global Select Market. 20242023 HighLowHighLowFirst Quarter$145.50 $123.54 $238.55 $182.00 Second Quarter$136.02 $98.27 $233.42 $181.62 Third Quarter$137.18 $103.57 $195.64 $127.37 Fourth Quarter$156.66 $125.06 $143.93 $89.00 28 28 28 **Current (2026):** Our common stock has been quoted on The Nasdaq Global Select Market under the symbol "ILMN" since July 28, 2000. The following table sets forth, for the fiscal periods indicated, the quarterly high and low sales prices per share of our common stock as reported on The Nasdaq Global Select Market. 20252024 HighLowHighLowFirst Quarter$153.06 $79.30 $145.50 $123.54 Second Quarter$95.99 $68.70 $136.02 $98.27 Third Quarter$111.00 $91.36 $137.18 $103.57 Fourth Quarter$138.80 $88.00 $156.66 $125.06 30 30 30 --- ## Modified: 6. STOCKHOLDERS' EQUITY **Key changes:** - Reworded sentence: "The 2015 Stock and Incentive Compensation Plan (the 2015 Stock Plan) and the New Hire Stock and Incentive Plan allow for the issuance of stock options, performance stock options, restricted stock units and awards and performance stock units." - Added sentence: "76 76 76 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents" **Prior (2025):** In the normal course of business, we enter into agreements to purchase goods or services that are not cancelable without penalty, primarily related to licensing and supply arrangements. For those agreements with variable terms, we do not estimate the total obligation beyond any minimum quantities or pricing as of the reporting date. Licensing agreements under which we commit to minimum royalty payments, some of which are subject to adjustment, may be terminated prior to the expiration of underlying intellectual property under certain circumstances. Annual minimum payments for noncancelable purchase obligations as of December 29, 2024 totaled $212 million, approximately half of which are due within the next twelve months. 7. STOCKHOLDERS' EQUITYThe 2015 Stock and Incentive Compensation Plan (the 2015 Stock Plan) and the New Hire Stock and Incentive Plan allow for the issuance of stock options, performance stock options, restricted stock units and awards and performance stock units. In 2023, the Company's stockholders approved an amended and restated version of the 2015 Stock Plan and increased the maximum number of shares authorized for issuance by 8.0 million shares. In connection with the GRAIL Spin-Off, all unvested RSU and PSU were equitably adjusted pursuant to the plan to preserve their intrinsic value and the number of shares reserved for issuance under the 2015 Stock Plan was increased by 160,000 shares. As of December 29, 2024, approximately 5.4 million shares remained available for future grants under the 2015 Stock Plan. There is no set number of shares reserved for issuance under the New Hire Stock and Incentive Plan. **Current (2026):** The 2015 Stock and Incentive Compensation Plan (the 2015 Stock Plan) and the New Hire Stock and Incentive Plan allow for the issuance of stock options, performance stock options, restricted stock units and awards and performance stock units. In Q2 2025, the Company's stockholders approved an amendment and restatement of the Amended and Restated 2015 Stock Plan to, among other things, increase the maximum number of shares authorized for issuance by 7.9 million shares. In 2024, in connection with the GRAIL Spin-Off, all unvested RSU and PSU were equitably adjusted pursuant to the plan to preserve their intrinsic value and the number of shares reserved for issuance under the 2015 Stock Plan was increased by 160,000 shares. As of December 28, 2025, approximately 11.5 million shares remained available for future grants under the Second Amended and Restated 2015 Stock Plan. There is no set number of shares reserved for issuance under the New Hire Stock and Incentive Plan. 76 76 76 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents --- ## Modified: the Program **Key changes:** - Reworded sentence: "September 29, 2025 - October 26, 2025 October 27, 2025 - November 23, 2025 November 24, 2025 - December 28, 2025 (1)Average price paid per share excludes the excise tax on share repurchases imposed as part of the Inflation Reduction Act of 2022." **Prior (2025):** Fourth Quarter (1) (1)Average price paid per share excludes the excise tax on share repurchases imposed as part of the Inflation Reduction Act of 2022. (1) Repurchases during the fourth quarter of 2024 were as follows: In thousands, except price per share Total Number of SharesPurchased Average PricePaid per Share(1)Total Number ofShares Purchased as Part of PubliclyAnnounced ProgramApproximate DollarValue of Sharesthat May Yet BePurchased Underthe ProgramSeptember 30, 2024 - October 27, 2024101 $128.72 101 $1,388,718 October 28, 2024 - November 24, 202433 $129.91 33 $1,384,404 November 25, 2024 - December 29, 2024 - $ - - $1,384,404 Total134 $129.02 134 $1,384,404 _____________ **Current (2026):** First Quarter Second Quarter Fourth Quarter (1) (1)Average price paid per share excludes the excise tax on share repurchases imposed as part of the Inflation Reduction Act of 2022. (1) Repurchases during the fourth quarter of 2025 were as follows: In thousands, except price per share Total Number of SharesPurchased Average PricePaid per Share (1)Total Number ofShares Purchased as Part of PubliclyAnnounced ProgramApproximate DollarValue of Sharesthat May Yet BePurchased Underthe ProgramSeptember 29, 2025 - October 26, 2025 - $ - - $684,405 October 27, 2025 - November 23, 2025204 $120.35 204 $659,842 November 24, 2025 - December 28, 2025133 $129.93 133 $642,605 Total337 $124.12 337 $642,605 _____________ --- ## Modified: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) **Key changes:** - Reworded sentence: "Changes in the estimated fair value of our contingent consideration liabilities were as follows: In millionsBalance as of January 1, 2023$412 Change in estimated fair value(24)Cash payments(1)Balance as of December 31, 2023387 Acquisition2 Change in estimated fair value(315)Cash payments(1)Balance as of December 29, 202473 Change in estimated fair value(18)Cash payments(1)Balance as of December 28, 2025$54 The fair value of our contingent consideration liability related to GRAIL was $54 million and $71 million as of December 28, 2025 and December 29, 2024, respectively, of which $52 million and $70 million, respectively, was included in other long-term liabilities, with the remaining balances included in accrued liabilities." - Reworded sentence: "Covered Revenues for the periods Q4 2024 through Q3 2025, Q4 2023 through Q3 2024, and Q4 2022 through Q3 2023 were $142 million, $117 million, and $85 million, respectively, driven primarily by sales of GRAIL's Galleri test." - Reworded sentence: "Subsequent to the GRAIL Spin-Off, we no longer have access to GRAIL management's forecasts." **Prior (2025):** We reassess the fair value of contingent consideration related to acquisitions on a quarterly basis, with changes in the fair value, subsequent to the acquisition date, recognized in selling, general and administrative expense. The contingent value rights issued as part of the GRAIL acquisition entitle the holders to receive future cash payments on a quarterly basis (Covered Revenue Payments) representing a pro rata portion of certain GRAIL-related revenues (Covered Revenues) each year for a 12-year period (through August 2033). As defined in the Contingent Value Rights Agreement, this will reflect a 2.5% payment right to the first $1 billion of revenue each year for 12 years. Revenue above $1 billion each year will be subject to a 9% contingent payment right during this same period. Covered Revenues for the periods Q4 2023 through Q3 2024, Q4 2022 through Q3 2023, and Q4 2021 through Q3 2022 were $117 million, $85 million, and $42 million, respectively, driven primarily by sales of GRAIL's Galleri test. Covered Revenue Payments relating to such periods were $1.1 million, $803,000, and $396,000 in 2024, 2023, and 2022, respectively. A portion of the Covered Revenue Payments in 2022 were applied to reimburse us for certain expenses. The fair value of our contingent consideration liability related to GRAIL was $71 million and $387 million as of December 29, 2024 and December 31, 2023, respectively, of which $70 million and $385 million, respectively, was included in other long-term liabilities, with the remaining balances included in accrued liabilities. We use a Monte Carlo simulation to estimate the fair value of the GRAIL contingent consideration liability. Estimates and assumptions used in the Monte Carlo simulation include forecasted revenues for GRAIL, a revenue risk premium, a revenue volatility estimate, an operational leverage ratio and a counterparty credit spread. These unobservable inputs represent a Level 3 measurement because they are supported by little or no market activity and reflect our own assumptions in measuring fair value. Subsequent to the Spin-Off, we no longer have access to GRAIL management's forecasts. Therefore, we must rely on information made public by GRAIL's management and, beginning in Q4 2024, information published in analyst reports to estimate forecasted revenues through August 2033. In August 2024, GRAIL publicly announced a corporate restructure, including a reduction in headcount and planned hires and a substantial decrease in certain R&D projects and investments. To estimate the liability as of December 29, 2024, we selected a revenue risk premium of 9%, which was derived from reconciling our forecasted revenues for GRAIL to GRAIL's market capitalization based on a 60-day trailing average. The significant decrease in the contingent consideration liability from December 31, 2023 was due to a decrease in the forecasted revenues, following revised revenue projections announced by GRAIL in May 2024 and the restructuring announcement in August 2024. 69 69 69 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents **Current (2026):** We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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, we rely upon prices set by management, adjusted for applicable discounts. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment and payment is typically due within 30 days from invoice. In instances where right of payment or transfer of title is contingent upon the customer's acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from genotyping and sequencing services, including cancer detection testing services related to the GRAIL business, is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, or payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expense when incurred as the amortization period for such costs, if capitalized, would have been one year or less. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers by us. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. --- ## Modified: Derivative Financial Instruments **Key changes:** - Reworded sentence: "64 64 64 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents" **Prior (2025):** We are exposed to foreign exchange rate risks in the normal course of business and use derivative financial instruments to partially offset this exposure. We do not use derivative financial instruments for speculative or trading purposes. Foreign exchange contracts are carried at fair value in other current assets, other assets, accrued liabilities, or other long-term liabilities, as appropriate, on the consolidated balance sheets. The cash flows associated with such foreign exchange contracts, or derivative financial instruments, are classified as cash flows from operating activities in the consolidated statements of cash flows, which is the same category as the hedged transaction. We use foreign exchange forward contracts to manage foreign currency risks related to monetary assets and liabilities denominated in currencies other than the U.S. dollar. These derivative financial instruments have terms of one month or less and are not designated as hedging instruments. Changes in fair value of these derivatives are recognized in other expense, net, along with the re-measurement gain or loss on the foreign currency denominated assets or liabilities. As of December 29, 2024, we had foreign exchange forward contracts in place to hedge exposures in the euro, Japanese yen, Australian dollar, Canadian dollar, Singapore dollar, Chinese Yuan Renminbi, and British pound. As of December 29, 2024 and December 31, 2023, the total notional amounts of outstanding forward contracts in place for these foreign currency purchases were $477 million and $926 million, respectively. In September 2024, as a result of the European Commission withdrawing its previously imposed fine, the related forward contracts we previously entered into for a total notional amount of €432 million were terminated. 62 62 62 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents **Current (2026):** We are exposed to foreign exchange rate risks in the normal course of business and use derivative financial instruments to partially offset this exposure. We do not use derivative financial instruments for speculative or trading purposes. Foreign exchange contracts are carried at fair value in other current assets, other assets, accrued liabilities, or other long-term liabilities, as appropriate, on the consolidated balance sheets. The cash flows associated with such foreign exchange contracts, or derivative financial instruments, are classified as cash flows from operating activities in the consolidated statements of cash flows, which is the same category as the hedged transaction. 64 64 64 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents --- ## Modified: 7. SUPPLEMENTAL BALANCE SHEET DETAILSAccounts Receivable **Key changes:** - Reworded sentence: "Accounts Receivable In millionsDecember 28,2025December 29,2024Trade accounts receivable, gross$861 $744 Allowance for credit losses(7)(9)Total accounts receivable, net$854 $735 Inventory In millionsDecember 28,2025December 29,2024Raw materials$254 $225 Work in process398 404 Finished goods45 31 Inventory, gross697 660 Inventory reserve(133)(113)Total inventory, net$564 $547" **Prior (2025):** Accounts Receivable In millionsDecember 29,2024December 31,2023Trade accounts receivable, gross$744 $741 Allowance for credit losses(9)(7)Total accounts receivable, net$735 $734 Inventory In millionsDecember 29,2024December 31,2023Raw materials$225 $276 Work in process404 402 Finished goods31 30 Inventory, gross660 708 Inventory reserve(113)(121)Total inventory, net$547 $587 **Current (2026):** Accounts Receivable In millionsDecember 28,2025December 29,2024Trade accounts receivable, gross$861 $744 Allowance for credit losses(7)(9)Total accounts receivable, net$854 $735 Inventory In millionsDecember 28,2025December 29,2024Raw materials$254 $225 Work in process398 404 Finished goods45 31 Inventory, gross697 660 Inventory reserve(133)(113)Total inventory, net$564 $547 --- ## Modified: Purchases of Equity Securities by the Issuer **Key changes:** - Reworded sentence: "In August 2024, our Board of Directors authorized a share repurchase program, which canceled and superseded all prior and available repurchase authorizations, to repurchase up to $1.5 billion of our outstanding common stock." - Reworded sentence: "Shares repurchased in open market transactions pursuant to this program during 2025 were as follows: In thousands, except price per share Total Number of SharesPurchased Average PricePaid per Share (1)Total Number ofShares Purchased as Part of PubliclyAnnounced ProgramApproximate DollarValue of Sharesthat May Yet BePurchased Underthe ProgramFirst Quarter1,728 $115.74 1,728 $1,184,405 Second Quarter4,489 $84.66 4,489 $804,406 Third Quarter1,236 $97.10 1,236 $684,405 Fourth Quarter (1)337 $124.12 337 $642,605 Total7,790 $95.23 7,790 $642,605 _____________" **Prior (2025):** In August 2024, our Board of Directors authorized a new share repurchase program, which cancels and supersedes all prior and available repurchase authorizations, to repurchase up to $1.5 billion of our outstanding common stock. The repurchases may be completed through open market purchases, pursuant to Rule 10b5-1 or Rule 10b-18, or through an accelerated share repurchase program. We did not repurchase any shares under the prior program during 2024. Shares repurchased in open market transactions pursuant to the new program during 2024 were as follows: In thousands, except price per share Total Number of SharesPurchased Average PricePaid per Share(1)Total Number ofShares Purchased as Part of PubliclyAnnounced ProgramApproximate DollarValue of Sharesthat May Yet BePurchased Underthe ProgramThird Quarter770 $127.71 770 $1,401,684 Fourth Quarter (1)134 $129.02 134 $1,384,404 Total904 $127.90 904 $1,384,404 _____________ **Current (2026):** In August 2024, our Board of Directors authorized a share repurchase program, which canceled and superseded all prior and available repurchase authorizations, to repurchase up to $1.5 billion of our outstanding common stock. The repurchases may be completed through open market purchases, pursuant to Rule 10b5-1 or Rule 10b-18, or through an accelerated share repurchase program. Shares repurchased in open market transactions pursuant to this program during 2025 were as follows: In thousands, except price per share Total Number of SharesPurchased Average PricePaid per Share (1)Total Number ofShares Purchased as Part of PubliclyAnnounced ProgramApproximate DollarValue of Sharesthat May Yet BePurchased Underthe ProgramFirst Quarter1,728 $115.74 1,728 $1,184,405 Second Quarter4,489 $84.66 4,489 $804,406 Third Quarter1,236 $97.10 1,236 $684,405 Fourth Quarter (1)337 $124.12 337 $642,605 Total7,790 $95.23 7,790 $642,605 _____________ --- ## Modified: Revenue by Geographic Area **Key changes:** - Reworded sentence: "Based on region of destination (in millions)202520242023Americas (1)$2,406 $2,441 $2,521 Europe1,264 1,185 1,140 Greater China (2)243 308 384 Asia-Pacific, Middle East and Africa (3)430 438 459 Total revenue$4,343 $4,372 $4,504 Americas (1) Greater China (2) Asia-Pacific, Middle East and Africa (3) _____________ (1)Americas revenue included United States revenue of $2,243 million, $2,288 million, and $2,359 million in 2025, 2024, and 2023, respectively." **Prior (2025):** Based on region of destination (in millions)202420232022(1)Americas(2)$2,441 $2,521 $2,479 Europe1,185 1,140 1,089 Greater China(3)308 384 472 Asia-Pacific, Middle East and Africa(4)438 459 544 Total revenue$4,372 $4,504 $4,584 2022(1) Americas(2) Greater China(3) Asia-Pacific, Middle East and Africa(4) _____________ (1)We implemented a new global commercial structure in Q1 2023 to improve operating efficiencies and better align with local markets. We integrated Asia-Pacific and Japan with emerging markets across the Middle East, Africa, Turkey, and Commonwealth of Independent States (CIS). Beginning in Q1 2023, and going forward, we report regional results for the following regions: Americas, Europe, Greater China, and Asia-Pacific, Middle East and Africa (AMEA). Prior period amounts have been reclassified to conform to this new presentation. (2)Americas revenue included United States revenue of $2,288 million, $2,359 million, and $2,290 million in 2024, 2023 and 2022, respectively. (3)Region includes revenue from China, Taiwan, and Hong Kong. (4)Region includes revenue from Russia and Turkey. **Current (2026):** Based on region of destination (in millions)202520242023Americas (1)$2,406 $2,441 $2,521 Europe1,264 1,185 1,140 Greater China (2)243 308 384 Asia-Pacific, Middle East and Africa (3)430 438 459 Total revenue$4,343 $4,372 $4,504 Americas (1) Greater China (2) Asia-Pacific, Middle East and Africa (3) _____________ (1)Americas revenue included United States revenue of $2,243 million, $2,288 million, and $2,359 million in 2025, 2024, and 2023, respectively. (2)Region includes revenue from China, Taiwan, and Hong Kong. (3)Region includes revenue from Russia and Turkey. 67 67 67 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents --- ## Modified: 10. INCOME TAXES **Key changes:** - Reworded sentence: "Income (loss) before income taxes summarized by region was as follows: In millions202520242023United States$331 $(1,834)$(1,735)Foreign755 655 618 Total income (loss) before income taxes$1,086 $(1,179)$(1,117) Total income (loss) before income taxes 86 86 86 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents" **Prior (2025):** Loss before income taxes summarized by region was as follows: In millions202420232022United States$(1,834)$(1,735)$(4,942)Foreign655 618 606 Total loss before income taxes$(1,179)$(1,117)$(4,336) Total loss before income taxes 88 88 88 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents **Current (2026):** Income (loss) before income taxes summarized by region was as follows: In millions202520242023United States$331 $(1,834)$(1,735)Foreign755 655 618 Total income (loss) before income taxes$1,086 $(1,179)$(1,117) Total income (loss) before income taxes 86 86 86 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents --- ## Modified: CONSOLIDATED FINANCIAL STATEMENTS **Key changes:** - Reworded sentence: "INDEX TO CONSOLIDATED FINANCIAL STATEMENTSPageReport of Independent Registered Public Accounting Firm (PCAOB ID: 42)50Consolidated Balance Sheets52Consolidated Statements of Operations53Consolidated Statements of Comprehensive Income (Loss)54Consolidated Statements of Stockholders' Equity55Consolidated Statements of Cash Flows56Notes to the Consolidated Financial Statements571." - Reworded sentence: "Segment and Geographic Information9113." - Reworded sentence: "Segment and Geographic Information 91 13." **Prior (2025):** INDEX TO CONSOLIDATED FINANCIAL STATEMENTSPageReport of Independent Registered Public Accounting Firm (PCAOB ID: 42)48Consolidated Balance Sheets50Consolidated Statements of Operations51Consolidated Statements of Comprehensive Loss52Consolidated Statements of Stockholders' Equity53Consolidated Statements of Cash Flows54Notes to the Consolidated Financial Statements551. Organization and Significant Accounting Policies552. GRAIL Spin-Off653. Revenue664. Investments and Fair Value Measurements675. Goodwill, Intangible Assets, and Acquisitions706. Debt and Other Commitments747. Stockholders' Equity778. Supplemental Balance Sheet Details829. Legal Proceedings8410. Income Taxes8811. Employee Benefit Plans9112. Segment and Geographic Information92 Report of Independent Registered Public Accounting Firm (PCAOB ID: 42) 48 Consolidated Balance Sheets 50 Consolidated Statements of Operations 51 Consolidated Statements of Comprehensive Loss 52 Consolidated Statements of Stockholders' Equity 53 Consolidated Statements of Cash Flows 54 Notes to the Consolidated Financial Statements 55 1. Organization and Significant Accounting Policies 55 2. GRAIL Spin-Off 65 3. Revenue 66 4. Investments and Fair Value Measurements 67 5. Goodwill, Intangible Assets, and Acquisitions 70 6. Debt and Other Commitments 74 7. Stockholders' Equity 77 8. Supplemental Balance Sheet Details 82 9. Legal Proceedings 84 10. Income Taxes 88 11. Employee Benefit Plans 91 12. Segment and Geographic Information 92 47 47 47 **Current (2026):** INDEX TO CONSOLIDATED FINANCIAL STATEMENTSPageReport of Independent Registered Public Accounting Firm (PCAOB ID: 42)50Consolidated Balance Sheets52Consolidated Statements of Operations53Consolidated Statements of Comprehensive Income (Loss)54Consolidated Statements of Stockholders' Equity55Consolidated Statements of Cash Flows56Notes to the Consolidated Financial Statements571. Organization and Significant Accounting Policies572. Revenue673. Investments and Fair Value Measurements684. Intangible Assets, Goodwill and Acquisitions715. Debt and Other Commitments746. Stockholders' Equity767. Supplemental Balance Sheet Details808. GRAIL Spin-Off829. Legal Proceedings8410. Income Taxes8611. Employee Benefit Plans9112. Segment and Geographic Information9113. Subsequent Events93 Report of Independent Registered Public Accounting Firm (PCAOB ID: 42) 50 Consolidated Balance Sheets 52 Consolidated Statements of Operations 53 Consolidated Statements of Comprehensive Income (Loss) 54 Consolidated Statements of Stockholders' Equity 55 Consolidated Statements of Cash Flows 56 Notes to the Consolidated Financial Statements 57 1. Organization and Significant Accounting Policies 57 2. Revenue 67 3. Investments and Fair Value Measurements 68 4. Intangible Assets, Goodwill and Acquisitions 71 5. Debt and Other Commitments 74 6. Stockholders' Equity 76 7. Supplemental Balance Sheet Details 80 8. GRAIL Spin-Off 82 9. Legal Proceedings 84 10. Income Taxes 86 11. Employee Benefit Plans 91 12. Segment and Geographic Information 91 13. Subsequent Events 93 49 49 49 --- ## Modified: Geographic Data **Key changes:** - Reworded sentence: "Long-lived assets, consisting of property and equipment and operating lease right-of-use assets, were as follows: In millionsDecember 28,2025December 29,2024United States$660 $750 Singapore281 279 United Kingdom119 124 Other countries69 81 Total long-lived assets, net$1,129 $1,234 Total long-lived assets, net Refer to note 2." - Removed sentence: "94 94 94 Table of Contents Table of Contents" **Prior (2025):** Long-lived assets, consisting of property and equipment and operating lease right-of-use assets, were as follows: In millionsDecember 29,2024December 31,2023United States$750 $1,040 Singapore279 298 United Kingdom124 136 Other countries81 77 Total long-lived assets, net$1,234 $1,551 Total long-lived assets, net Refer to note 3. Revenue for revenue by geographic area. 94 94 94 Table of Contents Table of Contents **Current (2026):** Long-lived assets, consisting of property and equipment and operating lease right-of-use assets, were as follows: In millionsDecember 28,2025December 29,2024United States$660 $750 Singapore281 279 United Kingdom119 124 Other countries69 81 Total long-lived assets, net$1,129 $1,234 Total long-lived assets, net Refer to note 2. Revenue for revenue by geographic area. Refer to note 2. Revenue --- ## Modified: Liability-Classified Awards **Key changes:** - Reworded sentence: "Prior to the GRAIL Spin-Off in 2024, we granted cash-based equity incentive awards to GRAIL employees, which were accounted for as liability-classified awards." - Reworded sentence: "We recognized share-based compensation expense for these cash-based equity incentive awards of $52 million in 2024, prior to the Spin-Off of GRAIL, and of $95 million in 2023." **Prior (2025):** We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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, we rely upon prices set by management, adjusted for applicable discounts. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment and payment is typically due within 30 days from invoice. In instances where right of payment or transfer of title is contingent upon the customer's acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from genotyping and sequencing services, including cancer detection testing services related to the GRAIL business, is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, or payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expense when incurred as the amortization period for such costs, if capitalized, would have been one year or less. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers by us. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. **Current (2026):** Prior to the GRAIL Spin-Off in 2024, we granted cash-based equity incentive awards to GRAIL employees, which were accounted for as liability-classified awards. In connection with the Spin-Off, these awards were assumed by GRAIL. For purposes of valuation and performance measurement of the awards, GRAIL's stand-alone value calculation, as estimated by GRAIL based on its analysis and on input from independent valuation advisors and analyses, was used. The awards generally had terms of four years and vested in four equal installments on each anniversary of the grant date, subject to continued employment through the vesting period. four Cash-based equity incentive award activity was as follows: In millionsOutstanding at January 1, 2023$293 Granted116 Vested and paid in cash(77)Cancelled(32)Change in fair value(8)Outstanding at December 31, 2023292 Granted67 Vested and paid in cash(54)Cancelled(13)Change in fair value(9)Derecognition for GRAIL Spin-Off (1)(283)Outstanding at December 29, 2024 and December 28, 2025$ - _____________ Vested and paid in cash Vested and paid in cash Derecognition for GRAIL Spin-Off (1) Outstanding at December 29, 2024 and December 28, 2025 (1)The estimated liability immediately prior to the Spin-Off, recorded in accrued liabilities, was $53 million, which was disposed of as part of GRAIL's net assets. See note 8. GRAIL Spin-Off for additional details. We recognized share-based compensation expense for these cash-based equity incentive awards of $52 million in 2024, prior to the Spin-Off of GRAIL, and of $95 million in 2023. 78 78 78 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents --- ## Modified: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) **Key changes:** - Reworded sentence: "On June 2, 2025, (i) Alex Aravanis filed his opening brief in support of his motion to dismiss, (ii) Francis deSouza, John W." - Added sentence: "By letter dated October 13, 2025, Mr." - Added sentence: "Warner requested that the Board reconsider his demand in light of developments in the various shareholder cases related to the acquisition of GRAIL." - Added sentence: "On February 4, 2026, the Board unanimously determined that it was in the best interest of the Company and its shareholders continuing to defer a final decision on the demand." - Removed sentence: "On June 3, 2024, Elaine Wang made requests to inspect certain books and records under Delaware law and the Company sent a production of documents in response to that demand." **Prior (2025):** We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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, we rely upon prices set by management, adjusted for applicable discounts. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment and payment is typically due within 30 days from invoice. In instances where right of payment or transfer of title is contingent upon the customer's acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from genotyping and sequencing services, including cancer detection testing services related to the GRAIL business, is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, or payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expense when incurred as the amortization period for such costs, if capitalized, would have been one year or less. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers by us. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. **Current (2026):** We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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, we rely upon prices set by management, adjusted for applicable discounts. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment and payment is typically due within 30 days from invoice. In instances where right of payment or transfer of title is contingent upon the customer's acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from genotyping and sequencing services, including cancer detection testing services related to the GRAIL business, is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, or payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expense when incurred as the amortization period for such costs, if capitalized, would have been one year or less. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers by us. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. --- ## Modified: Accrued Liabilities **Key changes:** - Reworded sentence: "In millionsDecember 28,2025December 29,2024Contract liabilities, current portion$270 $260 Accrued compensation expenses (1)249 252 Accrued taxes payable107 101 Operating lease liabilities, current portion78 79 Other, including warranties (2)142 135 Total accrued liabilities$846 $827 _____________ Accrued compensation expenses (1) Operating lease liabilities, current portion Operating lease liabilities, current portion Other, including warranties (2) (1)Includes employee separation costs related to restructuring activities." - Reworded sentence: "80 80 80 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents" **Prior (2025):** In millionsDecember 29,2024December 31,2023Legal contingencies(1)$26 $484 Contract liabilities, current portion260 252 Accrued compensation expenses252 223 Accrued taxes payable101 79 Operating lease liabilities, current portion79 86 Liability-classified equity incentive awards - 55 Other, including warranties(2)109 146 Total accrued liabilities$827 $1,325 _____________ Legal contingencies(1) Accrued compensation expenses Operating lease liabilities, current portion Operating lease liabilities, current portion Other, including warranties(2) (1)See note 9. Legal Proceedings for additional details. (2)See table below for changes in the reserve for product warranties. 82 82 82 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents **Current (2026):** In millionsDecember 28,2025December 29,2024Contract liabilities, current portion$270 $260 Accrued compensation expenses (1)249 252 Accrued taxes payable107 101 Operating lease liabilities, current portion78 79 Other, including warranties (2)142 135 Total accrued liabilities$846 $827 _____________ Accrued compensation expenses (1) Operating lease liabilities, current portion Operating lease liabilities, current portion Other, including warranties (2) (1)Includes employee separation costs related to restructuring activities. (2)See table below for changes in the reserve for product warranties. 80 80 80 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents --- ## Modified: Property and Equipment **Key changes:** - Reworded sentence: "In millionsDecember 28,2025December 29,2024Leasehold improvements$755 $772 Machinery and equipment705 683 Computer hardware and software493 478 Furniture and fixtures43 53 Buildings44 44 Construction in progress82 39 Total property and equipment, gross2,122 2,069 Accumulated depreciation(1,363)(1,254)Total property and equipment, net$759 $815" **Prior (2025):** Property and equipment are stated at cost, subject to review for impairment, and depreciated over the estimated useful lives of the assets, using the straight-line method. Depreciation 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 expensed 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. Costs incurred to develop internal-use software during the application development stage are recorded at cost as computer software. Costs incurred in the development of such internal-use software, including external direct costs of materials and services and applicable compensation costs of employees devoted to specific software application development, are capitalized. Costs incurred outside of the application development stage are expensed as incurred. The estimated useful lives of the major classes of property and equipment are generally as follows: Buildings and leasehold improvements4 to 20 yearsMachinery and equipment3 to 5 yearsComputer hardware and software3 to 9 yearsFurniture and fixtures7 years 4 to 20 years 3 to 5 years 3 to 9 years 7 years Leases We have various non-cancellable operating lease agreements for office, lab, manufacturing, and distribution facilities. These leases have remaining lease terms of 1 year to 14 years, which represent the non-cancellable periods of the leases and include extension options that we determined are reasonably certain to be exercised. We exclude extension options that are not reasonably certain to be exercised from our lease terms, ranging from 2 years to 20 years. Our lease payments consist primarily of fixed rental payments for the right to use the underlying leased assets over the lease terms, as well as payments for common-area-maintenance and administrative services. We often receive customary incentives from our landlords, such as reimbursements for tenant improvements and rent abatement periods, which effectively reduce the total lease payments owed for these leases. Leases are classified as operating or financing at commencement. As of December 29, 2024, we do not have any financing leases. 60 60 60 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents **Current (2026):** Property and equipment are stated at cost, subject to review for impairment, and depreciated over the estimated useful lives of the assets, using the straight-line method. Depreciation 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 expensed 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. Costs incurred to develop internal-use software during the application development stage are recorded at cost as computer software. Costs incurred in the development of such internal-use software, including external direct costs of materials and services and applicable compensation costs of employees devoted to specific software application development, are capitalized. Costs incurred outside of the application development stage are expensed as incurred. The estimated useful lives of the major classes of property and equipment are generally as follows: Buildings and leasehold improvements4 to 20 yearsMachinery and equipment3 to 5 yearsComputer hardware and software3 to 9 yearsFurniture and fixtures7 years 4 to 20 years 3 to 5 years 3 to 9 years 7 years Leases We have various non-cancellable operating lease agreements for office, lab, manufacturing, and distribution facilities. These leases have remaining lease terms of 1 year to 13 years, which represent the non-cancellable periods of the leases and include extension options that we determined are reasonably certain to be exercised. We exclude extension options that are not reasonably certain to be exercised from our lease terms, ranging from 2 years to 20 years. Our lease payments consist primarily of fixed rental payments for the right to use the underlying leased assets over the lease terms, as well as payments for common-area-maintenance and administrative services. We may receive customary incentives from our landlords, such as reimbursements for tenant improvements and rent abatement periods, which effectively reduce the total lease payments owed for these leases. Leases are classified as operating or financing at commencement. As of December 28, 2025, we do not have any financing leases. 62 62 62 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents --- ## Modified: Revenue by Source **Key changes:** - Reworded sentence: "202520242023In millionsSequencingMicroarrayTotalSequencingMicroarrayTotalSequencingMicroarrayTotalConsumables$2,939 $288 $3,227 $2,858 $297 $3,155 $2,790 $293 $3,083 Instruments465 17 482 484 17 501 685 19 704 Total product revenue3,404 305 3,709 3,342 314 3,656 3,475 312 3,787 Service and other revenue581 53 634 651 65 716 637 80 717 Total revenue$3,985 $358 $4,343 $3,993 $379 $4,372 $4,112 $392 $4,504" **Prior (2025):** 202420232022In millionsSequencingMicroarrayTotalSequencingMicroarrayTotalSequencingMicroarrayTotalConsumables$2,858 $297 $3,155 $2,790 $293 $3,083 $2,919 $306 $3,225 Instruments484 17 501 685 19 704 709 19 728 Total product revenue3,342 314 3,656 3,475 312 3,787 3,628 325 3,953 Service and other revenue651 65 716 637 80 717 543 88 631 Total revenue$3,993 $379 $4,372 $4,112 $392 $4,504 $4,171 $413 $4,584 **Current (2026):** 202520242023In millionsSequencingMicroarrayTotalSequencingMicroarrayTotalSequencingMicroarrayTotalConsumables$2,939 $288 $3,227 $2,858 $297 $3,155 $2,790 $293 $3,083 Instruments465 17 482 484 17 501 685 19 704 Total product revenue3,404 305 3,709 3,342 314 3,656 3,475 312 3,787 Service and other revenue581 53 634 651 65 716 637 80 717 Total revenue$3,985 $358 $4,343 $3,993 $379 $4,372 $4,112 $392 $4,504 --- ## Modified: Retirement Plan **Key changes:** - Reworded sentence: "We have a 401(k) savings plan covering substantially all of our employees in the United States, as well as other defined contribution plans covering certain non-U.S." **Prior (2025):** We have a 401(k) savings plan covering substantially all of our employees in the United States. Our contributions to the plan are discretionary. During 2024, 2023, and 2022, we made matching contributions of $34 million, $36 million, and $30 million, respectively. **Current (2026):** We have a 401(k) savings plan covering substantially all of our employees in the United States, as well as other defined contribution plans covering certain non-U.S. employees. During 2025, 2024, and 2023, we made matching contributions of $48 million, $45 million, and $46 million, respectively, related to our defined contribution plans. --- ## Modified: Gross Margin **Key changes:** - Reworded sentence: "2025-2024Dollars in millions20252024Change% ChangeGross profit (loss):Core Illumina$2,870$2,909$(39)(1)%GRAIL - (38)38 (100)Eliminations - (10)10 (100)Consolidated gross profit$2,870$2,861$9 - %Gross margin:Core Illumina66.1 %67.1 %GRAIL**Consolidated gross margin66.1 %65.4 % 2025-2024 _____________ *Not meaningful." **Prior (2025):** 2024-2023Dollars in millions20242023Change% ChangeGross profit (loss):Core Illumina$2,909$2,856$53 2 %GRAIL(38)(96)58 (60)Eliminations(10)(16)6 (38)Consolidated gross profit$2,861$2,744$117 4 %Gross margin:Core Illumina67.1 %64.4 %GRAIL**Consolidated gross margin65.4 %60.9 % _____________ *Not meaningful. The increase in Core Illumina gross margin in 2024 was driven primarily by a favorable impact from the execution of our operational excellence initiatives that continue to deliver cost savings, including freight, and improve productivity, a more favorable revenue mix towards sequencing consumables, and a decrease in warranty and field service costs, partially offset by higher strategic partnership revenue that is lower margin. The decrease in GRAIL gross loss in 2024 was due to the Spin-Off in Q2 2024. 35 35 35 **Current (2026):** 2025-2024Dollars in millions20252024Change% ChangeGross profit (loss):Core Illumina$2,870$2,909$(39)(1)%GRAIL - (38)38 (100)Eliminations - (10)10 (100)Consolidated gross profit$2,870$2,861$9 - %Gross margin:Core Illumina66.1 %67.1 %GRAIL**Consolidated gross margin66.1 %65.4 % 2025-2024 _____________ *Not meaningful. The decrease in Core Illumina gross margin in 2025 was primarily due to higher costs related to tariffs and a $23 million intangible asset impairment, partially offset by lower strategic partnership revenue, that is lower margin, and a more favorable product mix towards consumables. The decrease in GRAIL gross loss in 2025 was due to the Spin-Off in Q2 2024. 37 37 37 --- ## Modified: the Program **Key changes:** - Reworded sentence: "First Quarter Second Quarter Fourth Quarter (1) (1)Average price paid per share excludes the excise tax on share repurchases imposed as part of the Inflation Reduction Act of 2022." **Prior (2025):** Fourth Quarter (1) (1)Average price paid per share excludes the excise tax on share repurchases imposed as part of the Inflation Reduction Act of 2022. (1) Repurchases during the fourth quarter of 2024 were as follows: In thousands, except price per share Total Number of SharesPurchased Average PricePaid per Share(1)Total Number ofShares Purchased as Part of PubliclyAnnounced ProgramApproximate DollarValue of Sharesthat May Yet BePurchased Underthe ProgramSeptember 30, 2024 - October 27, 2024101 $128.72 101 $1,388,718 October 28, 2024 - November 24, 202433 $129.91 33 $1,384,404 November 25, 2024 - December 29, 2024 - $ - - $1,384,404 Total134 $129.02 134 $1,384,404 _____________ **Current (2026):** First Quarter Second Quarter Fourth Quarter (1) (1)Average price paid per share excludes the excise tax on share repurchases imposed as part of the Inflation Reduction Act of 2022. (1) Repurchases during the fourth quarter of 2025 were as follows: In thousands, except price per share Total Number of SharesPurchased Average PricePaid per Share (1)Total Number ofShares Purchased as Part of PubliclyAnnounced ProgramApproximate DollarValue of Sharesthat May Yet BePurchased Underthe ProgramSeptember 29, 2025 - October 26, 2025 - $ - - $684,405 October 27, 2025 - November 23, 2025204 $120.35 204 $659,842 November 24, 2025 - December 28, 2025133 $129.93 133 $642,605 Total337 $124.12 337 $642,605 _____________ --- ## Modified: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) **Key changes:** - Reworded sentence: "Core Illumina: Core Illumina's products and services serve customers in the research, clinical and applied markets, and enable the adoption of a variety of genomic solutions." - Reworded sentence: "In millions202520242023Depreciation and amortization:Core Illumina$270 $280 $273 GRAIL - 74 159 Consolidated depreciation and amortization$270 $354 $432 Capital expenditures:Core Illumina$148 $137 $183 GRAIL - 5 13 Eliminations - - (1)Consolidated capital expenditures$148 $142 $195 92 92 92 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents" **Prior (2025):** We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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, we rely upon prices set by management, adjusted for applicable discounts. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment and payment is typically due within 30 days from invoice. In instances where right of payment or transfer of title is contingent upon the customer's acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from genotyping and sequencing services, including cancer detection testing services related to the GRAIL business, is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, or payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expense when incurred as the amortization period for such costs, if capitalized, would have been one year or less. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers by us. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. **Current (2026):** We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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, we rely upon prices set by management, adjusted for applicable discounts. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment and payment is typically due within 30 days from invoice. In instances where right of payment or transfer of title is contingent upon the customer's acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from genotyping and sequencing services, including cancer detection testing services related to the GRAIL business, is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, or payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expense when incurred as the amortization period for such costs, if capitalized, would have been one year or less. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers by us. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. --- ## Modified: Financial Overview **Key changes:** - Reworded sentence: "In 2024, we outlined key strategic goals focused on a return to revenue growth and improved margin performance by the end of 2027." **Prior (2025):** Since 2023, macroeconomic factors such as inflation, exchange rate fluctuations and concerns about an economic downturn, competitive challenges in our China region, and the sanctions imposed on Russia as a result of the armed conflict between Russia and Ukraine have impacted both Illumina directly and our customers' behavior. For example, some customers experienced supply chain pressures that delayed their lab expansions and others are managing inventory and capital more conservatively. We expect these factors to continue to have an impact on our sales and results of operations in 2025, the size and duration of which is significantly uncertain. In February 2025, we were added to China's Ministry of Commerce List of Unreliable Entities, the implications of which are currently uncertain. See the risk factor "China's Ministry of Commerce has added Illumina to its List of Unreliable Entities" in Risk Factors within the Business & Market Information section of this report for additional information. During 2024, we made significant progress towards our strategic goals to accelerate growth and expand operating margins. We focused on operational excellence initiatives, to improve productivity and achieve cost savings, and on our capital allocation strategy, including obtaining authorization for a new share repurchase program. We expect to continue to make further progress towards these goals in 2025, including a focus on returning to revenue growth. Financial highlights for 2024 included the following: •Revenue decreased 3% in 2024 to $4.4 billion compared to $4.5 billion in 2023 primarily due to a decrease in sequencing instruments revenue, driven by fewer shipments of our high-throughput and mid-throughput instruments, offset by increases in sequencing consumables revenue. •Gross profit as a percentage of revenue (gross margin) was 65.4% in 2024 compared to 60.9% in 2023. The increase in gross margin was driven primarily by execution of our operational excellence initiatives that continue to deliver cost savings, including freight, and improve productivity, a more favorable revenue mix towards sequencing consumables, and a decrease in warranty and field service costs. This was partially offset by higher strategic partnership revenue that is lower margin. Our gross margin depends on many factors, including: market conditions that may impact our pricing; sales mix changes among consumables, instruments, services, and development and licensing revenue; product mix changes between established products and new products; excess and obsolete inventories; royalties; our cost structure for manufacturing operations relative to volume; freight costs; and product support obligations. 32 32 32 •Loss from operations was $0.8 billion in 2024 compared to $1.1 billion in 2023. The decrease was due to a decrease in operating expense of $119 million and an increase in gross profit of $117 million. The decrease in operating expense included a $476 million favorable impact in legal contingency and settlement, as a result of the European Commission withdrawing, in September 2024, its previously imposed fine, a decrease of $323 million in GRAIL operating expenses, as a result of the Spin-Off in Q2 2024, an increase in the gains recognized on our GRAIL contingent consideration liability of $290 million, and a decrease in restructuring charges of $86 million, offset by an increase in goodwill and intangible impairment of $1,062 million. We continue to focus on our cost reduction initiatives to accelerate progress toward higher margins and create flexibility for further investment in high-growth areas. •Our effective tax rate was (3.8)% and (3.9)% in 2024 and 2023, respectively. In 2024, the variance from the U.S. federal statutory tax rate of 21% was primarily because of the income tax expense impact of the impairment of goodwill, which is nondeductible for tax purposes, the income tax expense impact of the reversal of the European Commission fine related to the GRAIL acquisition, which is excluded from taxable income, the income tax expense impact of research and development expense capitalization for tax purposes, and the income tax expense impact of GRAIL pre-acquisition net operating losses on GILTI, the utilization of U.S. foreign tax credits, and the Pillar Two global minimum top-up tax. This was partially offset by the mix of earnings in jurisdictions with lower statutory tax rates than the U.S. federal statutory tax rate, such as in Singapore. •We ended 2024 with cash, cash equivalents, and short-term investments totaling $1,220 million, of which approximately $439 million was held by our foreign subsidiaries. 33 33 33 **Current (2026):** In 2024, we outlined key strategic goals focused on a return to revenue growth and improved margin performance by the end of 2027. Throughout 2025, we experienced several headwinds including macroeconomic factors such as tariffs, inflation, exchange rate fluctuations and concerns about an economic downturn, competitive challenges in our China region, the sanctions imposed on Russia as a result of the armed conflict between Russia and Ukraine, and reductions in the U.S. government's funding of the NIH, all of which have impacted both Illumina directly and our customers' behavior. For example, some customers, specifically research customers, continue to manage inventory and capital more conservatively and some labs are delaying projects due to funding concerns. Additionally, in early 2025, we were added to the unreliable entities list by regulatory authorities in China. See the risk factor "Regulatory authorities in China have added Illumina to the List of Unreliable Entities" in Risk Factors within the Business & Market Information section of this report for additional information. We expect these factors to continue to impact our sales and results of operations in 2026 and beyond, the size and duration of which is significantly uncertain. Beginning in April 2025, the U.S. government and several other countries enacted tariffs. Under the current tariff environment, the largest cost impact to us relates to importation from our manufacturing facility in Singapore. The remainder is a mix of importation of parts and sub-assemblies to our manufacturing operations in the United States and importation into China. We have and will continue to take several actions to fully mitigate the impact of these tariffs, and we partially mitigated the impact in 2025, through supply chain optimization, cost measures, and pricing actions. Based on the current tariff environment, our aim is to more fully mitigate the impact in 2026. Despite these challenges, we made significant progress towards our strategic goals in achieving revenue growth and improving operating margins in 2025. During 2025, we focused on our operational excellence initiatives to improve productivity and achieve cost savings and on our capital allocation strategy, including significant share repurchases. In early 2025, we also implemented an incremental $100 million cost reduction program for 2025, including optimizing stock-based compensation and non-labor spending and accelerating certain productivity measures, as well as workforce reductions, to help mitigate the expected impact of a reduction in revenue and related operating income from our Greater China business, as a result of being added to the List of Unreliable Entities, and the uncertainty in the U.S. government's funding of the NIH. We expect to make further progress towards our strategic goals in 2026. 34 34 34 Financial highlights for 2025 included the following: •Core Illumina revenue was $4.34 billion in 2025 and relatively flat compared to revenue of $4.33 billion in 2024. Consumables revenue increased primarily due to demand for high-throughput consumables, partially offset by decreased service and other revenue, primarily due to decreased revenue from our strategic partnerships, and a decrease in instruments revenue, primarily due to fewer shipments of our high- and mid-throughput sequencing instruments. Total revenue in 2025 was impacted, across all products and services, by a decrease in revenue in our Greater China region of $65 million, primarily due to our inclusion on the List of Unreliable Entities. Consolidated revenue decreased 1% in 2025 to $4.34 billion compared to $4.37 billion in 2024 primarily due to a decrease in service and other revenue, driven by a decrease in GRAIL service and other revenue of $55 million as a result of the Spin-Off in 2024. •Core Illumina gross margin was 66.1% in 2025 compared to 67.1% in 2024. Gross margin decreased primarily due to higher costs related to tariffs and a $23 million intangible asset impairment, partially offset by lower strategic partnership revenue, that is lower margin, and a more favorable product mix towards consumables. Consolidated gross margin was 66.1% in 2025 compared to 65.4% in 2024, and the increase was driven by the Spin-Off of GRAIL in 2024. Our gross margin depends on many factors, including: market conditions that may impact our pricing; sales mix changes among consumables, instruments, services, and development and licensing revenue; product mix changes between established products and new products; excess and obsolete inventories; royalties; our cost structure for manufacturing operations relative to volume; freight costs; tariffs; and product support obligations. •Core Illumina income from operations was $807 million in 2025 compared to $1,473 million in 2024. Total operating expense increased $628 million and gross profit decreased $39 million. The increase in Core Illumina operating expense was primarily due to a gain of $456 million recognized in 2024 for legal contingency and settlement, primarily related to the withdrawn European Commission fine, and a gain recognized on our contingent consideration liabilities, primarily related to the GRAIL CVRs, of $315 million, partially offset by a decrease in acquisition-related costs, which included $53 million in 2024 directly related to the GRAIL Spin-Off. Excluding these impacts, Core Illumina operating expense decreased in 2025, primarily due to our continued focus on our operational excellence and cost reduction initiatives to accelerate growth and expand operating margins. Consolidated income from operations was $807 million in 2025 compared to a loss of $833 million in 2024. Total operating expense decreased $1,631 million and gross profit increased $9 million. The decrease in operating expense was primarily driven by a decrease in GRAIL operating expense of $2,267 million due to the Spin-Off in 2024, primarily related to the $1,886 million goodwill and intangible asset impairments recognized in 2024. •Our effective tax rate was 21.7% and (3.8)% in 2025 and 2024, respectively. The variance from the U.S. federal statutory tax rate of 21% was primarily due to the net change to valuation allowances against certain deferred tax assets in the U.S. and Singapore. The income tax rate in 2025 was favorably impacted by the mix of earnings in jurisdictions with lower statutory tax rates than the U.S. federal statutory tax rate, such as Singapore. •We ended 2025 with cash, cash equivalents, and short-term investments totaling $1,633 million, of which approximately $444 million was held by our foreign subsidiaries. 35 35 35 --- ## Modified: Operating Expense **Key changes:** - Reworded sentence: "2025-2024Dollars in millions20252024Change% ChangeResearch and development:Core Illumina$967 $988 $(21)(2)%GRAIL - 189 (189)(100)Eliminations - (8)8 (100)Consolidated research and development967 1,169 (202)(17)Selling, general and administrative:Core Illumina1,086 900 186 21 GRAIL - 192 (192)(100)Consolidated selling, general and administrative1,086 1,092 (6)(1)Goodwill and intangible impairment:Core Illumina - 3 (3)(100)GRAIL - 1,886 (1,886)(100)Consolidated goodwill and intangible impairment - 1,889 (1,889)(100)Legal contingency and settlement:Core Illumina10 (456)466 (102)Total consolidated operating expense$2,063 $3,694 $(1,631)(44)% 2025-2024 Core Illumina R&D expense decreased by $21 million, or 2%, in 2025 primarily due to decreases in employee-related compensation costs, including share-based compensation expense related to our optimization efforts, and a decrease in outside professional services, partially offset by an increase in restructuring charges of $14 million." **Prior (2025):** 2024-2023Dollars in millions20242023Change% ChangeResearch and development:Core Illumina$988 $1,030 $(42)(4)%GRAIL189 338 (149)(44)Eliminations(8)(14)6 (43)Consolidated research and development1,169 1,354 (185)(14)Selling, general and administrative:Core Illumina900 1,248 (348)(28)GRAIL192 366 (174)(48)Eliminations - (2)2 (100)Consolidated selling, general and administrative1,092 1,612 (520)(32)Goodwill and intangible impairment:Core Illumina3 6 (3)(50)GRAIL1,886 821 1,065 130 Consolidated goodwill and intangible impairment1,889 827 1,062 128 Legal contingency and settlement:Core Illumina(456)20 (476)(2,380)Total consolidated operating expense$3,694 $3,813 $(119)(3)% Core Illumina R&D expense decreased by $42 million, or 4%, in 2024 primarily due to decreases in headcount and employee compensation costs, and restructuring charges of $25 million, as we focus on cost reduction initiatives. Core Illumina SG&A expense decreased by $348 million, or 28%, in 2024 primarily due to an increase in the gains recognized on our GRAIL contingent consideration liability of $290 million, a decrease in proxy contest charges of $30 million, and decreases in restructuring charges of $61 million, facility related costs, and employee compensation costs, as we continue to exit certain of our facilities and focus on our cost reduction initiatives. The decrease was partially offset by an increase in share-based compensation expense related to PSU awards. The decrease in GRAIL R&D and SG&A expense in 2024 was due to the Spin-Off in Q2 2024. GRAIL goodwill and intangible impairment in 2024 consisted of goodwill impairment of $1,466 million and IPR&D impairment of $420 million as a result of impairment tests performed in Q2 2024. Core Illumina goodwill and intangible impairment for 2024 consisted of an IPR&D impairment recorded in Q1 2024. GRAIL goodwill and intangible impairment for 2023 consisted of goodwill impairment of $712 million and IPR&D impairment of $109 million as a result of an interim impairment test performed in Q3 2023. See note 5. Goodwill, Intangible Assets, and Acquisitions. Core Illumina legal contingency and settlement in 2024 primarily consisted of a gain recognized in Q3 2024 of $489 million for the reversal of the EC fine accrual, and related accrued interest, following the European Commission's decision to withdraw its previously imposed fine. Core Illumina legal contingency and settlement for 2023 primarily consisted of an adjustment to our accrual for the fine previously imposed by the European Commission and other patent litigation settlement activity. See note 9. Legal Proceedings for additional details. 36 36 36 **Current (2026):** 2025-2024Dollars in millions20252024Change% ChangeResearch and development:Core Illumina$967 $988 $(21)(2)%GRAIL - 189 (189)(100)Eliminations - (8)8 (100)Consolidated research and development967 1,169 (202)(17)Selling, general and administrative:Core Illumina1,086 900 186 21 GRAIL - 192 (192)(100)Consolidated selling, general and administrative1,086 1,092 (6)(1)Goodwill and intangible impairment:Core Illumina - 3 (3)(100)GRAIL - 1,886 (1,886)(100)Consolidated goodwill and intangible impairment - 1,889 (1,889)(100)Legal contingency and settlement:Core Illumina10 (456)466 (102)Total consolidated operating expense$2,063 $3,694 $(1,631)(44)% 2025-2024 Core Illumina R&D expense decreased by $21 million, or 2%, in 2025 primarily due to decreases in employee-related compensation costs, including share-based compensation expense related to our optimization efforts, and a decrease in outside professional services, partially offset by an increase in restructuring charges of $14 million. Core Illumina SG&A expense increased by $186 million, or 21%, in 2025. In 2024, we recognized a net gain on our contingent consideration liabilities, primarily related to the GRAIL CVRs, of $315 million. Excluding this impact, SG&A expense decreased in 2025 primarily due to a decrease in acquisition-related costs, which included $53 million of expenses incurred related to the Spin-Off of GRAIL, a decrease in restructuring charges of $32 million, primarily due to lease and other asset impairments recognized in 2024, decreases in employee-related compensation costs, including share-based compensation expense related to optimization efforts, and a decrease in outside professional services. These decreases were partially offset by a $19 million non-cash donation to the Illumina Foundation. The decrease in GRAIL R&D and SG&A expense in 2025 was due to the Spin-Off in Q2 2024. GRAIL goodwill and intangible impairment in 2024 consisted of goodwill impairment of $1,466 million and an IPR&D intangible asset impairment of $420 million. Core Illumina goodwill and intangible impairment in 2024 consisted of an IPR&D intangible asset impairment. See note 4. Intangible Assets, Goodwill and Acquisitions for additional details. Core Illumina legal contingency and settlement in 2024 primarily consisted of a gain of $489 million resulting from the reversal of the EC fine accrual, and related accrued interest, following the European Commission's decision to withdraw its previously imposed fine. See note 8. GRAIL Spin-Off for additional details. 38 38 38 --- ## Modified: RESULTS OF OPERATIONS **Key changes:** - Reworded sentence: "To enhance comparability, the following table sets forth audited consolidated statement of operations data for 2025, 2024, and 2023, stated as a percentage of total revenue." **Prior (2025):** To enhance comparability, the following table sets forth audited consolidated statement of operations data for 2024, 2023, and 2022, stated as a percentage of total revenue.(1) 202420232022Revenue: Product revenue83.6 %84.1 %86.2 %Service and other revenue16.4 15.9 13.8 Total revenue100.0 100.0 100.0 Cost of revenue: Cost of product revenue23.3 26.1 25.0 Cost of service and other revenue8.4 8.7 6.4 Amortization of acquired intangible assets2.9 4.3 3.8 Total cost of revenue34.6 39.1 35.2 Gross profit65.4 60.9 64.8 Operating expense: Research and development26.7 30.1 28.8 Selling, general and administrative25.0 35.8 28.3 Goodwill and intangible impairment43.2 18.3 85.4 Legal contingency and settlement(10.4)0.4 13.5 Total operating expense84.5 84.6 156.0 Loss from operations(19.1)(23.7)(91.2)Other income (expense): Interest income1.1 1.3 0.2 Interest expense(2.3)(1.7)(0.6)Other expense, net(6.7)(0.7)(3.0)Total other expense, net(7.9)(1.1)(3.4)Loss before income taxes(27.0)(24.8)(94.6)Provision for income taxes1.0 1.0 1.5 Net loss(28.0)%(25.8)%(96.1)% _____________ (1)Percentages may not recalculate due to rounding. Revenue 2024-2023Dollars in millions20242023Change% ChangeCore Illumina:Consumables$3,169 $3,106 $63 2 %Instruments501 706 (205)(29)Total product revenue3,670 3,812 (142)(4)Service and other revenue662 626 36 6 Total Core Illumina revenue4,332 4,438 (106)(2)GRAIL:Service and other revenue55 93 (38)(41)Eliminations(15)(27)12 (44)Total consolidated revenue$4,372 $4,504 $(132)(3)% 34 34 34 Core Illumina consumables revenue increased in 2024 primarily due to an increase in sequencing consumables revenue of $59 million, driven primarily by an increase in NovaSeq X consumables, partially offset by decreases in consumables across our other high-throughput instruments, as customers transition to NovaSeq X, and across our mid-throughput instruments. Core Illumina instruments revenue decreased in 2024 primarily due to a decrease in sequencing instruments revenue of $203 million, driven by fewer shipments of our high-throughput instruments, following the first year of NovaSeq X shipments in 2023, and fewer shipments of our mid-throughput instruments, as capital and cash flow constraints continue to impact our customer's purchasing behavior. Core Illumina service and other revenue increased in 2024 primarily due to increased revenue from strategic partnerships and extended maintenance service contracts, partially offset by decreased revenues from genotyping services and development and licensing agreements. The decrease in GRAIL revenue in 2024 was due to the Spin-Off in Q2 2024. **Current (2026):** To enhance comparability, the following table sets forth audited consolidated statement of operations data for 2025, 2024, and 2023, stated as a percentage of total revenue. (1) 202520242023Revenue: Product revenue85.4 %83.6 %84.1 %Service and other revenue14.6 16.4 15.9 Total revenue100.0 100.0 100.0 Cost of revenue: Cost of product revenue25.5 23.3 26.1 Cost of service and other revenue6.9 8.4 8.7 Amortization of acquired intangible assets1.5 2.9 4.3 Total cost of revenue33.9 34.6 39.1 Gross profit66.1 65.4 60.9 Operating expense: Research and development22.3 26.7 30.1 Selling, general and administrative25.0 25.0 35.8 Goodwill and intangible impairment - 43.2 18.3 Legal contingency and settlement0.2 (10.4)0.4 Total operating expense47.5 84.5 84.6 Income (loss) from operations18.6 (19.1)(23.7)Other income (expense): Interest income0.9 1.1 1.3 Interest expense(2.3)(2.3)(1.7)Other income (expense), net7.8 (6.7)(0.7)Total other income (expense), net6.4 (7.9)(1.1)Income (loss) before income taxes25.0 (27.0)(24.8)Provision for income taxes5.4 1.0 1.0 Net income (loss)19.6 %(28.0)%(25.8)% Other income (expense), net Total other income (expense), net _____________ (1)Percentages may not recalculate due to rounding. Revenue 2025-2024Dollars in millions20252024Change% ChangeCore Illumina:Consumables$3,227 $3,169 $58 2 %Instruments482 501 (19)(4)Total product revenue3,709 3,670 39 1 Service and other revenue634 662 (28)(4)Total Core Illumina revenue4,343 4,332 11 - GRAIL:Service and other revenue - 55 (55)(100)Eliminations - (15)15 (100)Total consolidated revenue$4,343 $4,372 $(29)(1)% 2025-2024 36 36 36 Core Illumina consumables revenue increased in 2025 primarily due to demand for high-throughput consumables as customers continue to transition to NovaSeq X. Core Illumina instruments revenue decreased in 2025 primarily due to fewer shipments of our high- and mid-throughput instruments, as capital and cash flow constraints continue to impact our customer's purchasing behavior, partially offset by an increase in MiSeq i100 Series shipments. Core Illumina service and other revenue decreased in 2025 primarily due to decreased revenue from our strategic partnerships. Total revenue in 2025 was impacted, across all products and services, by a decrease in revenue in our Greater China region of $65 million, primarily due to our inclusion on the List of Unreliable Entities in the beginning of the year. The decrease in GRAIL revenue in 2025 was due to the Spin-Off in Q2 2024. --- ## Modified: (In millions, except per share amounts) **Key changes:** - Reworded sentence: "Years EndedDecember 28,2025December 29,2024December 31,2023Revenue: Product revenue$3,709 $3,656 $3,787 Service and other revenue634 716 717 Total revenue4,343 4,372 4,504 Cost of revenue:Cost of product revenue1,107 1,017 1,177 Cost of service and other revenue300 367 392 Amortization of acquired intangible assets66 127 191 Total cost of revenue1,473 1,511 1,760 Gross profit2,870 2,861 2,744 Operating expense:Research and development967 1,169 1,354 Selling, general and administrative1,086 1,092 1,612 Goodwill and intangible impairment - 1,889 827 Legal contingency and settlement10 (456)20 Total operating expense2,063 3,694 3,813 Income (loss) from operations807 (833)(1,069)Other income (expense):Interest income40 46 58 Interest expense(101)(100)(77)Other income (expense), net340 (292)(29)Total other income (expense), net279 (346)(48)Income (loss) before income taxes1,086 (1,179)(1,117)Provision for income taxes236 44 44 Net income (loss)$850 $(1,223)$(1,161)Earnings (loss) per share:Basic$5.47 $(7.69)$(7.34)Diluted$5.45 $(7.69)$(7.34)Shares used in computing earnings (loss) per share:Basic155 159 158 Diluted156 159 158 See accompanying notes to consolidated financial statements." **Prior (2025):** Years EndedDecember 29,2024December 31,2023January 1,2023Revenue: Product revenue$3,656 $3,787 $3,953 Service and other revenue716 717 631 Total revenue4,372 4,504 4,584 Cost of revenue:Cost of product revenue1,017 1,177 1,144 Cost of service and other revenue367 392 295 Amortization of acquired intangible assets127 191 173 Total cost of revenue1,511 1,760 1,612 Gross profit2,861 2,744 2,972 Operating expense:Research and development1,169 1,354 1,321 Selling, general and administrative1,092 1,612 1,297 Goodwill and intangible impairment1,889 827 3,914 Legal contingency and settlement(456)20 619 Total operating expense3,694 3,813 7,151 Loss from operations(833)(1,069)(4,179)Other income (expense):Interest income46 58 11 Interest expense(100)(77)(26)Other expense, net(292)(29)(142)Total other expense, net(346)(48)(157)Loss before income taxes(1,179)(1,117)(4,336)Provision for income taxes44 44 68 Net loss$(1,223)$(1,161)$(4,404)Loss per share:Basic$(7.69)$(7.34)$(28.00)Diluted$(7.69)$(7.34)$(28.00)Shares used in computing loss per share:Basic159 158 157 Diluted159 158 157 See accompanying notes to consolidated financial statements. 51 51 51 **Current (2026):** Years EndedDecember 28,2025December 29,2024December 31,2023Revenue: Product revenue$3,709 $3,656 $3,787 Service and other revenue634 716 717 Total revenue4,343 4,372 4,504 Cost of revenue:Cost of product revenue1,107 1,017 1,177 Cost of service and other revenue300 367 392 Amortization of acquired intangible assets66 127 191 Total cost of revenue1,473 1,511 1,760 Gross profit2,870 2,861 2,744 Operating expense:Research and development967 1,169 1,354 Selling, general and administrative1,086 1,092 1,612 Goodwill and intangible impairment - 1,889 827 Legal contingency and settlement10 (456)20 Total operating expense2,063 3,694 3,813 Income (loss) from operations807 (833)(1,069)Other income (expense):Interest income40 46 58 Interest expense(101)(100)(77)Other income (expense), net340 (292)(29)Total other income (expense), net279 (346)(48)Income (loss) before income taxes1,086 (1,179)(1,117)Provision for income taxes236 44 44 Net income (loss)$850 $(1,223)$(1,161)Earnings (loss) per share:Basic$5.47 $(7.69)$(7.34)Diluted$5.45 $(7.69)$(7.34)Shares used in computing earnings (loss) per share:Basic155 159 158 Diluted156 159 158 See accompanying notes to consolidated financial statements. 53 53 53 --- ## Modified: Share-Based Compensation **Key changes:** - Reworded sentence: "Share-based compensation expense is incurred related to restricted stock, employee stock purchase plan (ESPP), stock options, and, prior to the GRAIL Spin-Off in 2024, cash-based equity incentive awards." - Reworded sentence: "65 65 65 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents" **Prior (2025):** Share-based compensation expense is incurred related to restricted stock, employee stock purchase plan (ESPP), stock options, and, prior to the GRAIL Spin-Off on June 24, 2024, cash-based equity incentive awards. Forfeitures are accounted for, as incurred, as a reversal of share-based compensation expense related to awards that will not vest. Restricted stock units (RSU) and performance stock units (PSU) are both considered restricted stock. The determination of the amount of share-based compensation expense for our PSU requires the use of certain estimates and assumptions that affect the amount of share-based compensation expense recognized in our consolidated statements of operations. The fair value of restricted stock and performance stock units that do not include a market condition is determined by the closing market price of our common stock on the date of grant. PSU that do not include a market condition represent 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, we reassess the probability of the achievement of such corporate performance goals and any increase or decrease in share-based compensation expense resulting from an adjustment in the estimated shares to be released is treated as a cumulative catch-up in the period of adjustment. The fair value of performance stock units that include a market condition is determined on the date of grant using a Monte Carlo simulation, which includes assumptions for expected volatility, risk-free interest rate and dividend yield. These unobservable inputs represent a Level 3 measurement because they are supported by little or no market activity and reflect our own assumptions in measuring fair value. Share-based compensation expense is recognized based on the fair value on a straight-line basis over the requisite service periods of the awards. Compensation expense for PSU that include a market condition is recognized over the requisite service period regardless of whether the market conditions are achieved. 63 63 63 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents **Current (2026):** Share-based compensation expense is incurred related to restricted stock, employee stock purchase plan (ESPP), stock options, and, prior to the GRAIL Spin-Off in 2024, cash-based equity incentive awards. Forfeitures are accounted for, as incurred, as a reversal of share-based compensation expense related to awards that will not vest. 65 65 65 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents --- ## Modified: Other Income (Expense) **Key changes:** - Reworded sentence: "2025-2024Dollars in millions20252024Change% ChangeInterest income$40 $46 $(6)(13)%Interest expense(101)(100)(1)1 Other income (expense), net340 (292)632 (216)Total other income (expense), net (1)$279 $(346)$625 (181)% 2025-2024 Other income (expense), net Total other income (expense), net (1) _____________ (1)Total other income (expense), net in 2024 primarily relates to Core Illumina segment." **Prior (2025):** 2024-2023Dollars in millions20242023Change% ChangeInterest income$46 $58 $(12)(21)%Interest expense(100)(77)(23)30 Other expense, net(292)(29)(263)907 Total other expense, net$(346)$(48)$(298)621 % Total other expense, net primarily relates to the Core Illumina segment. Interest income consisted primarily of interest on our money market funds, which decreased in 2024 primarily due to a lower cash balance throughout the year, as compared to prior year, partially offset by an increase in average interest rates. Interest expense consisted primarily of interest on our outstanding term debt, including on our delayed draw term loan, and a loss on debt extinguishment of $5 million related to the repayment of our delayed draw term loan. The increase in other expense, net in 2024 was primarily driven by an increase in net losses recognized on our strategic investments of $272 million, which included an unrealized loss of $309 million on our retained investment in GRAIL subsequent to the Spin-Off. This was offset by a favorable net impact related to foreign currency activity, as compared to the prior year, and an increase of $5 million in the gains recognized on our Helix contingent value right, which was settled in Q3 2024. **Current (2026):** 2025-2024Dollars in millions20252024Change% ChangeInterest income$40 $46 $(6)(13)%Interest expense(101)(100)(1)1 Other income (expense), net340 (292)632 (216)Total other income (expense), net (1)$279 $(346)$625 (181)% 2025-2024 Other income (expense), net Total other income (expense), net (1) _____________ (1)Total other income (expense), net in 2024 primarily relates to Core Illumina segment. Interest income consisted primarily of interest earned on our money market funds. Interest expense consisted primarily of interest on our outstanding term debt. The increase in other income (expense), net in 2025 was primarily due to net gains (realized and unrealized) recognized on our strategic investments of $328 million in 2025 compared to net losses of $312 million recognized in 2024, which primarily related to our retained investment in GRAIL for both periods. This increase was partially offset by a $15 million gain on our Helix contingent value right in 2024. --- ## Modified: 4. INTANGIBLE ASSETS, GOODWILL AND ACQUISITIONS Intangible Assets **Key changes:** - Reworded sentence: "Intangible Assets December 28, 2025December 29, 2024In millionsGrossCarryingAmountAccumulatedAmortizationIntangible Assets,NetGrossCarryingAmountAccumulatedAmortizationIntangible Assets,NetDeveloped technologies$436 $(335)$101 $465 $(305)$160 Licensed technologies234 (143)91 234 (114)120 License agreements24 (14)10 19 (13)6 Customer relationships16 (14)2 16 (14)2 Database12 (6)6 12 (5)7 Trade name2 (2) - 2 (2) - Total intangible assets, net$724 $(514)$210 $748 $(453)$295 We regularly perform reviews to determine if an event has occurred that may indicate identifiable intangible assets are potentially impaired." - Reworded sentence: "71 71 71 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents" **Prior (2025):** December 29, 2024December 31, 2023In millionsGrossCarryingAmountAccumulatedAmortizationIntangible Assets,NetGrossCarryingAmountAccumulatedAmortizationImpairmentIntangible Assets,NetDeveloped technologies$465 $(305)$160 $2,807 $(585)$ - $2,222 Licensed technologies234 (114)120 274 (133) - 141 License agreements19 (13)6 14 (13) - 1 Customer relationships16 (14)2 14 (13) - 1 Database12 (5)7 12 (3) - 9 Trade name2 (2) - 43 (14) - 29 Total finite-lived intangible assets, net748 (453)295 3,164 (761) - 2,403 In-process research and development (IPR&D) - - - 705 - (115)590 Total intangible assets, net$748 $(453)$295 $3,869 $(761)$(115)$2,993 In-process research and development (IPR&D) In-process research and development (IPR&D) The significant decrease in developed technologies, trade name, and IPR&D reflect the GRAIL intangible assets disposed of in connection with the Spin-Off. See note 2. GRAIL Spin-Off for details. Also, in Q1 2024, we placed into service (reflected in developed technologies), with a useful life of 10 years, the $35 million IPR&D intangible asset we acquired in 2021, net of impairments recognized in 2024 and 2023 of $3 million and $6 million, respectively. As a result of the Fluent BioSciences acquisition in Q3 2024, we recorded a developed technology asset of $42 million, with a useful life of 7 years, and a customer relationship asset of $2 million, with a useful life of 11 years. We are still finalizing the allocation of the purchase price as it relates to the completion of certain tax returns. We expect to finalize the valuation as soon as practicable, but no later than one year after the acquisition. As a result of an acquisition in Q4 2023, we recorded a developed technology asset of $19 million, with a useful life of 10 years. We finalized the allocation of the purchase price in Q4 2024 with no material adjustments to provisional amounts. The estimated future annual amortization of finite-lived intangible assets is shown in the following table. Actual amortization expense to be reported in future periods could differ from these estimates as a result of acquisitions, divestitures, and asset impairments, among other factors. In millionsEstimated Annual Amortization2025$69 202657 202755 202852 202923 Thereafter39 Total$295 73 73 73 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents **Current (2026):** Intangible Assets December 28, 2025December 29, 2024In millionsGrossCarryingAmountAccumulatedAmortizationIntangible Assets,NetGrossCarryingAmountAccumulatedAmortizationIntangible Assets,NetDeveloped technologies$436 $(335)$101 $465 $(305)$160 Licensed technologies234 (143)91 234 (114)120 License agreements24 (14)10 19 (13)6 Customer relationships16 (14)2 16 (14)2 Database12 (6)6 12 (5)7 Trade name2 (2) - 2 (2) - Total intangible assets, net$724 $(514)$210 $748 $(453)$295 We regularly perform reviews to determine if an event has occurred that may indicate identifiable intangible assets are potentially impaired. During 2025, we performed a recoverability test when the planned use of a finite-lived intangible asset changed, resulting in an impairment charge of $23 million recorded in cost of product revenue. We concluded the carrying value of the intangible asset exceeded its estimated fair value, which was determined using a discounted cash flow model that included estimates and assumptions for projected future cash flows. The estimates and assumptions used in our assessment of fair value represent Level 3 measurements as they are supported by little or no market activity and reflect our own assumptions in measuring fair value. As a result of the Fluent BioSciences acquisition in 2024, we recorded a developed technology asset of $42 million, with a useful life of 7 years, and a customer relationship asset of $2 million, with a useful life of 11 years. We finalized the allocation of the purchase price in 2025 with no material adjustments to provisional amounts. The estimated future annual amortization of intangible assets is shown in the following table. Actual amortization expense to be reported in future periods could differ from these estimates as a result of acquisitions, divestitures, and asset impairments, among other factors. 71 71 71 Table of ContentsILLUMINA, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Table of Contents --- ## Modified: (In millions) **Key changes:** - Reworded sentence: "Years Ended December 28,2025December 29,2024December 31,2023Net income (loss)$850 $(1,223)$(1,161)Unrealized (loss) gain on cash flow hedges, net of deferred tax(32)23 (4)Total comprehensive income (loss)$818 $(1,200)$(1,165) See accompanying notes to consolidated financial statements." **Prior (2025):** Years Ended December 29,2024December 31,2023January 1,2023Net loss$(1,223)$(1,161)$(4,404)Unrealized gain (loss) on cash flow hedges, net of deferred tax23 (4)(14)Total comprehensive loss$(1,200)$(1,165)$(4,418) See accompanying notes to consolidated financial statements. 52 52 52 **Current (2026):** Years Ended December 28,2025December 29,2024December 31,2023Net income (loss)$850 $(1,223)$(1,161)Unrealized (loss) gain on cash flow hedges, net of deferred tax(32)23 (4)Total comprehensive income (loss)$818 $(1,200)$(1,165) See accompanying notes to consolidated financial statements. 54 54 54 --- ## Modified: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) **Key changes:** - Reworded sentence: "Leases As of December 28, 2025, the maturities of our operating lease liabilities were as follows: In millions2026$1012027106202887202982203080Thereafter205Total remaining lease payments661Less: imputed interest(97)Total operating lease liabilities564Less: current portion(78)Long-term operating lease liabilities$486Weighted-average remaining lease term7.4 yearsWeighted-average discount rate4.4 % Total remaining lease payments The components of our lease costs were as follows: In millions202520242023Operating lease costs$78 $93 $116 Sublease income(12)(19)(20)Variable lease costs (1)20 25 27 Total lease costs$86 $99 $123 Operating lease costs Variable lease costs (1) _____________ (1)Variable lease costs include non-fixed maintenance charges and property taxes." **Prior (2025):** We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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, we rely upon prices set by management, adjusted for applicable discounts. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment and payment is typically due within 30 days from invoice. In instances where right of payment or transfer of title is contingent upon the customer's acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from genotyping and sequencing services, including cancer detection testing services related to the GRAIL business, is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, or payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expense when incurred as the amortization period for such costs, if capitalized, would have been one year or less. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers by us. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. **Current (2026):** We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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, we rely upon prices set by management, adjusted for applicable discounts. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment and payment is typically due within 30 days from invoice. In instances where right of payment or transfer of title is contingent upon the customer's acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from genotyping and sequencing services, including cancer detection testing services related to the GRAIL business, is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, or payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expense when incurred as the amortization period for such costs, if capitalized, would have been one year or less. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers by us. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. --- *Data sourced from SEC EDGAR. Last updated 2026-06-01.*