Illumina Inc. (NASDAQ:ILMN)

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Illumina Inc., effective income tax rate (EITR) reconciliation

	Dec 31, 2020	Dec 29, 2019	Dec 30, 2018	Dec 31, 2017	Dec 31, 2016
U.S. federal statutory tax rate	21.00%	21.00%	21.00%	35.00%	35.00%
Effective income tax rate, before impact of U.S. Tax Reform	23.36%	11.45%	11.30%	20.61%	23.72%
Effective income tax rate	23.36%	11.45%	12.53%	35.00%	23.72%

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-29), 10-K (reporting date: 2018-12-30), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

The financial data reveals significant volatility in the effective income tax rate (EITR) between 2016 and 2020, coinciding with a major shift in the U.S. federal statutory tax environment.

Statutory Tax Rate Transition: The U.S. federal statutory tax rate remained constant at 35.00% through 2017 before decreasing to 21.00% in 2018, where it remained stable through 2020.
Effective Income Tax Rate Volatility: The reported EITR exhibited substantial fluctuations over the five-year period. After starting at 23.72% in 2016, the rate climbed to 35.00% in 2017. A sharp contraction followed, with the rate falling to 12.53% in 2018 and 11.45% in 2019, before rebounding to 23.36% in 2020.
Analysis of Tax Reform Impact: A significant divergence is observed in 2017, where the EITR before the impact of U.S. Tax Reform was 20.61%, while the final reported EITR was 35.00%. This indicates that the accounting adjustments related to the transition to the new tax regime resulted in a substantial increase in the reported tax expense for that fiscal year.
Tax Efficiency and Normalization: In 2018 and 2019, the EITR remained well below the statutory rate of 21.00%, which suggests the presence of significant tax credits, deductions, or the impact of earnings in lower-tax jurisdictions. By 2020, the EITR increased to 23.36%, exceeding the statutory rate and indicating a return to a higher tax burden or the exhaustion of previous tax advantages.

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Illumina Inc., components of deferred tax assets and liabilities

US$ in millions

	Dec 31, 2020	Dec 29, 2019	Dec 30, 2018	Dec 31, 2017	Dec 31, 2016
Net operating losses	26)	21)	26)	18)	20)
Tax credits	70)	63)	63)	57)	43)
Other accruals and reserves	21)	12)	28)	25)	24)
Stock compensation	17)	20)	20)	19)	38)
Deferred rent	—)	—)	30)	28)	38)
Cost sharing adjustment	—)	21)	21)	21)	32)
Other amortization	17)	16)	13)	12)	16)
Obligations under financing leases	—)	—)	70)	27)	—)
Operating lease liabilities	156)	158)	—)	—)	—)
Investments	—)	2)	1)	13)	—)
Other	53)	45)	28)	26)	38)
Gross deferred tax assets	360)	358)	300)	246)	249)
Valuation allowance on deferred tax assets	(81)	(13)	(15)	(25)	(18)
Deferred tax assets	279)	345)	285)	221)	231)
Purchased intangible amortization	(27)	(27)	(32)	(26)	(53)
Convertible debt	(20)	(30)	(41)	(18)	(37)
Property and equipment	(34)	(47)	(94)	(44)	(17)
Operating lease right-of-use assets	(108)	(111)	—)	—)	—)
Investments	(137)	(62)	(45)	(40)	—)
Other	(6)	(5)	(3)	(5)	—)
Deferred tax liabilities	(332)	(282)	(215)	(133)	(108)
Deferred tax assets (liabilities), net	(53)	63)	70)	88)	122)

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-29), 10-K (reporting date: 2018-12-30), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

Between 2016 and 2020, the net deferred tax position transitioned from a net asset of 122 million to a net liability of 53 million. This shift indicates a growing imbalance where the accumulation of deferred tax liabilities outpaced the growth of deferred tax assets over the five-year period.

Growth in Gross Deferred Tax Assets: Gross deferred tax assets exhibited a consistent upward trend, rising from 249 million in 2016 to 360 million in 2020. This growth was primarily driven by an increase in tax credits, which rose from 43 million to 70 million, and the emergence of operating lease liabilities, which contributed 158 million in 2019 and 156 million in 2020.
Expansion of Deferred Tax Liabilities: Deferred tax liabilities grew substantially from 108 million in 2016 to 332 million in 2020. The primary driver of this increase was the liability associated with investments, which expanded from 40 million in 2017 to 137 million in 2020. Additionally, the introduction of operating lease right-of-use assets in 2019 created a liability of 111 million, remaining relatively stable at 108 million in 2020.
Valuation Allowance Analysis: The valuation allowance on deferred tax assets remained relatively low and stable between 2016 and 2019, fluctuating between 13 million and 25 million. However, a significant increase was observed in 2020, where the allowance jumped to 81 million, suggesting a more conservative outlook regarding the realizability of certain deferred tax assets.
Specific Asset and Liability Fluctuations: Property and equipment liabilities peaked in 2018 at 94 million before declining to 34 million by 2020. Similarly, convertible debt liabilities showed volatility, reaching a high of 41 million in 2018 before decreasing to 20 million by 2020. Stock compensation assets remained relatively flat, ending the period at 17 million, down from 38 million in 2016.

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Illumina Inc., deferred tax assets and liabilities, classification

US$ in millions

		Dec 31, 2020	Dec 29, 2019	Dec 30, 2018	Dec 31, 2017	Dec 31, 2016
	Deferred tax assets, net	20)	64)	70)	88)	123)
	Deferred tax liabilities	73)	1)	—)	—)	1)

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-29), 10-K (reporting date: 2018-12-30), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

The analysis of deferred tax accounts reveals a significant shift in the balance sheet position between 2016 and 2020, characterized by a steady erosion of assets and a sharp increase in liabilities.

Deferred Tax Assets, Net: A consistent downward trend is observed, with the balance decreasing from 123 million US dollars in 2016 to 20 million US dollars by December 31, 2020. This represents a total reduction of approximately 83.7% over the five-year period, indicating a steady realization or write-down of temporary tax differences.
Deferred Tax Liabilities: Tax liabilities remained negligible or absent from 2016 through 2019, with values recorded at or below 1 million US dollars. However, a substantial increase occurred in 2020, where the balance rose sharply to 73 million US dollars, signaling the emergence of significant temporary differences that will result in future taxable amounts.
Net Deferred Tax Position: The overall net deferred tax posture inverted over the observed timeframe. While the company maintained a net asset position of approximately 122 million US dollars in 2016, the convergence of declining assets and rising liabilities resulted in a net deferred tax liability position of 53 million US dollars by the end of 2020.

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Illumina Inc., Financial Data: Reported vs. Adjusted

Illumina Inc., adjustments to financial statements

US$ in millions

	Dec 31, 2020	Dec 29, 2019	Dec 30, 2018	Dec 31, 2017	Dec 31, 2016
Adjustment to Total Assets
Total assets (as reported)	7,585)	7,316)	6,959)	5,257)	4,281)
Less: Noncurrent deferred tax assets, net	20)	64)	70)	88)	123)
Total assets (adjusted)	7,565)	7,252)	6,889)	5,169)	4,157)
Adjustment to Total Liabilities
Total liabilities (as reported)	2,891)	2,703)	3,053)	2,288)	1,966)
Less: Noncurrent deferred tax liabilities, net	73)	1)	—)	—)	1)
Total liabilities (adjusted)	2,818)	2,702)	3,053)	2,288)	1,966)
Adjustment to Total Illumina Stockholders’ Equity
Total Illumina stockholders’ equity (as reported)	4,694)	4,613)	3,758)	2,749)	2,197)
Less: Net deferred tax assets (liabilities)	(53)	63)	70)	88)	122)
Total Illumina stockholders’ equity (adjusted)	4,747)	4,550)	3,688)	2,661)	2,075)
Adjustment to Net Income Attributable To Illumina Stockholders
Net income attributable to Illumina stockholders (as reported)	656)	1,002)	826)	726)	463)
Add: Deferred income tax expense (benefit)	117)	5)	(18)	34)	7)
Net income attributable to Illumina stockholders (adjusted)	773)	1,007)	808)	760)	469)

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-29), 10-K (reporting date: 2018-12-30), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

An analysis of the financial position from 2016 to 2020 reveals a consistent growth trajectory in total assets and stockholders' equity, alongside a divergence between reported and adjusted figures resulting from the removal of deferred taxes.

Asset and Liability Trends: Reported total assets grew steadily from US$ 4,281 million in 2016 to US$ 7,585 million in 2020. Adjusted total assets followed a similar upward trend, remaining consistently lower than reported assets throughout the period. This indicates that deferred tax assets contributed a positive value to the reported balance sheet. Total liabilities peaked in 2018 at US$ 3,053 million before stabilizing; notably, the gap between reported and adjusted liabilities remained negligible until 2020, where adjusted liabilities were lower by US$ 73 million, suggesting an increase in recognized deferred tax liabilities.
Stockholders' Equity Evolution: Reported stockholders' equity increased from US$ 2,197 million in 2016 to US$ 4,694 million in 2020. Between 2016 and 2019, adjusted equity was consistently lower than reported equity, reflecting the impact of deferred tax assets. However, a reversal occurred in 2020, where adjusted equity (US$ 4,747 million) exceeded reported equity (US$ 4,694 million). This shift signifies a change in the net impact of deferred tax adjustments on the company's book value.
Net Income Performance: Reported net income showed an upward trend from 2016, peaking in 2019 at US$ 1,002 million before declining to US$ 656 million in 2020. Adjusted net income remained consistently higher than reported figures in most years, particularly in 2020, where adjusted net income was US$ 773 million. The variance of US$ 117 million in 2020 indicates that deferred tax expenses significantly reduced reported profitability during that fiscal year, whereas the adjusted figures provide a view of operational performance stripped of these tax accounting effects.

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Illumina Inc., Financial Ratios: Reported vs. Adjusted

Illumina Inc., adjusted financial ratios

	Dec 31, 2020	Dec 29, 2019	Dec 30, 2018	Dec 31, 2017	Dec 31, 2016
Net Profit Margin
Reported net profit margin	20.25%	28.28%	24.78%	26.38%	19.29%
Adjusted net profit margin	23.87%	28.42%	24.24%	27.62%	19.57%
Total Asset Turnover
Reported total asset turnover	0.43	0.48	0.48	0.52	0.56
Adjusted total asset turnover	0.43	0.49	0.48	0.53	0.58
Financial Leverage
Reported financial leverage	1.62	1.59	1.85	1.91	1.95
Adjusted financial leverage	1.59	1.59	1.87	1.94	2.00
Return on Equity (ROE)
Reported ROE	13.98%	21.72%	21.98%	26.41%	21.06%
Adjusted ROE	16.28%	22.13%	21.91%	28.56%	22.62%
Return on Assets (ROA)
Reported ROA	8.65%	13.70%	11.87%	13.81%	10.81%
Adjusted ROA	10.22%	13.89%	11.73%	14.70%	11.29%

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-29), 10-K (reporting date: 2018-12-30), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

The removal of deferred taxes reveals a consistent positive variance in profitability and return metrics, particularly in the final year of the observed period. While operational efficiency and leverage trends remain similar across both reported and adjusted figures, the tax adjustments highlight a significant underlying difference in net earnings performance.

Profitability Margins: The reported net profit margin exhibited volatility, peaking at 28.28% in 2019 before declining to 20.25% in 2020. The adjusted net profit margin remained consistently higher than the reported figures for most of the period. The most substantial divergence occurred in 2020, where the adjusted margin was 3.62 percentage points higher than the reported margin, suggesting that deferred tax expenses significantly suppressed reported profitability in that year.
Asset Utilization and Leverage: Total asset turnover shows a steady downward trend, decreasing from a reported 0.56 in 2016 to 0.43 in 2020. The adjusted figures mirror this decline almost exactly, indicating that deferred tax adjustments have negligible impact on asset efficiency. Similarly, financial leverage decreased from 1.95 in 2016 to 1.62 in 2020, with adjusted leverage following a nearly identical trajectory, reflecting a general reduction in the company's reliance on debt relative to equity.
Returns on Equity and Assets: Reported Return on Equity (ROE) and Return on Assets (ROA) followed a similar pattern of growth through 2017, followed by a general decline, ending at 13.98% and 8.65% respectively in 2020. The adjusted figures provide a more optimistic view of performance; the adjusted ROE in 2020 was 16.28%, and the adjusted ROA was 10.22%. This indicates that the removal of deferred taxes mitigates the perceived decline in returns, particularly during the 2020 fiscal year.
Comparative Impact of Tax Adjustments: The impact of adjusting for deferred taxes is most pronounced in the profitability and return ratios (Net Profit Margin, ROE, and ROA) and least impactful on the efficiency and solvency ratios (Asset Turnover and Financial Leverage). The gap between reported and adjusted metrics widened significantly toward the end of the period, suggesting an increasing influence of deferred tax accounting on the reported bottom-line results.

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	Dec 31, 2020	Dec 29, 2019	Dec 30, 2018	Dec 31, 2017	Dec 31, 2016
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to Illumina stockholders	656)	1,002)	826)	726)	463)
Revenue	3,239)	3,543)	3,333)	2,752)	2,398)
Profitability Ratio
Net profit margin¹	20.25%	28.28%	24.78%	26.38%	19.29%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Illumina stockholders	773)	1,007)	808)	760)	469)
Revenue	3,239)	3,543)	3,333)	2,752)	2,398)
Profitability Ratio
Adjusted net profit margin²	23.87%	28.42%	24.24%	27.62%	19.57%

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-29), 10-K (reporting date: 2018-12-30), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

2020 Calculations

¹ Net profit margin = 100 × Net income attributable to Illumina stockholders ÷ Revenue
= 100 × 656 ÷ 3,239 = 20.25%

² Adjusted net profit margin = 100 × Adjusted net income attributable to Illumina stockholders ÷ Revenue
= 100 × 773 ÷ 3,239 = 23.87%

An analysis of the financial performance from 2016 to 2020 reveals a period of growth in profitability that peaked in 2019, followed by a contraction in 2020. Both reported and adjusted metrics follow a similar trajectory, although a widening divergence between the two is observable in the final year of the period.

Net Income Trends: Reported net income grew consistently from US$ 463 million in 2016 to a peak of US$ 1,002 million in 2019, before declining to US$ 656 million in 2020. Adjusted net income followed a similar upward trend, reaching US$ 1,007 million in 2019. A notable divergence occurred in 2020, where adjusted net income was US$ 773 million, representing a US$ 117 million premium over the reported net income.
Net Profit Margin Volatility: The adjusted net profit margin increased from 19.57% in 2016 to a peak of 28.42% in 2019. Despite a decline to 23.87% in 2020, the adjusted margin remained higher than the reported margin of 20.25%. This indicates that adjustments for non-recurring items or specific tax treatments provided a buffer to the perceived profitability during the 2020 downturn.
Reported vs. Adjusted Variance: Between 2016 and 2019, the variance between reported and adjusted profit margins was relatively minimal, often remaining within one percentage point. However, 2020 exhibited the most significant gap of the five-year period, with the adjusted margin exceeding the reported margin by 3.62 percentage points, suggesting a higher concentration of non-operating expenses or tax impacts in the reported figures for that year.

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	Dec 31, 2020	Dec 29, 2019	Dec 30, 2018	Dec 31, 2017	Dec 31, 2016
As Reported
Selected Financial Data (US$ in millions)
Revenue	3,239)	3,543)	3,333)	2,752)	2,398)
Total assets	7,585)	7,316)	6,959)	5,257)	4,281)
Activity Ratio
Total asset turnover¹	0.43	0.48	0.48	0.52	0.56
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Revenue	3,239)	3,543)	3,333)	2,752)	2,398)
Adjusted total assets	7,565)	7,252)	6,889)	5,169)	4,157)
Activity Ratio
Adjusted total asset turnover²	0.43	0.49	0.48	0.53	0.58

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-29), 10-K (reporting date: 2018-12-30), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

2020 Calculations

¹ Total asset turnover = Revenue ÷ Total assets
= 3,239 ÷ 7,585 = 0.43

² Adjusted total asset turnover = Revenue ÷ Adjusted total assets
= 3,239 ÷ 7,565 = 0.43

Between 2016 and 2020, a consistent increase in the asset base was accompanied by a gradual decline in asset utilization efficiency. While total assets expanded significantly over the five-year period, the turnover ratios decreased, indicating that the growth in the asset base outpaced the corresponding growth in revenue generation.

Asset Base Expansion: Reported total assets grew steadily from US$ 4,281 million in 2016 to US$ 7,585 million in 2020. Adjusted total assets followed a nearly identical trajectory, increasing from US$ 4,157 million to US$ 7,565 million. This represents a substantial increase in the company's total resource investment over the analyzed period.
Total Asset Turnover Trends: A downward trend is observed in asset efficiency. The adjusted total asset turnover ratio declined from 0.58 in 2016 to 0.43 in 2020. While a slight recovery was noted in 2019, where the adjusted ratio rose to 0.49 from 0.48 in 2018, the efficiency metric ultimately reached its lowest point in 2020. The reported total asset turnover exhibited a similar pattern, decreasing from 0.56 in 2016 to 0.43 in 2020.
Analysis of Adjusted versus Reported Metrics: The divergence between reported and adjusted figures was most pronounced in 2016, with the adjusted total asset turnover being 0.02 points higher than the reported ratio. Over time, this variance diminished, with both the reported and adjusted total asset turnover ratios converging at 0.43 by December 31, 2020. This suggests that the impact of the adjustments on the efficiency ratio became negligible by the end of the period.

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	Dec 31, 2020	Dec 29, 2019	Dec 30, 2018	Dec 31, 2017	Dec 31, 2016
As Reported
Selected Financial Data (US$ in millions)
Total assets	7,585)	7,316)	6,959)	5,257)	4,281)
Total Illumina stockholders’ equity	4,694)	4,613)	3,758)	2,749)	2,197)
Solvency Ratio
Financial leverage¹	1.62	1.59	1.85	1.91	1.95
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted total assets	7,565)	7,252)	6,889)	5,169)	4,157)
Adjusted total Illumina stockholders’ equity	4,747)	4,550)	3,688)	2,661)	2,075)
Solvency Ratio
Adjusted financial leverage²	1.59	1.59	1.87	1.94	2.00

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-29), 10-K (reporting date: 2018-12-30), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

2020 Calculations

¹ Financial leverage = Total assets ÷ Total Illumina stockholders’ equity
= 7,585 ÷ 4,694 = 1.62

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted total Illumina stockholders’ equity
= 7,565 ÷ 4,747 = 1.59

A consistent expansion of the balance sheet is evident from 2016 to 2020. Both reported and adjusted total assets grew substantially, with reported assets increasing from 4,281 million US$ to 7,585 million US$. Simultaneously, stockholders' equity experienced a parallel upward trajectory, indicating significant internal capital accumulation over the five-year period.

Asset and Equity Growth: Total assets rose steadily each year, with the adjusted total assets tracking closely behind reported values. Reported stockholders' equity grew from 2,197 million US$ in 2016 to 4,694 million US$ in 2020. This synchronized growth suggests that the increase in the company's asset base was largely funded by equity growth, contributing to a more robust capital structure.
Financial Leverage Trends: A general downward trend in financial leverage is observed. Reported financial leverage decreased from 1.95 in 2016 to 1.62 in 2020, while adjusted financial leverage declined from 2.00 to 1.59 over the same period. The most pronounced reduction in leverage occurred between 2018 and 2019, reflecting a strategic shift toward lower financial risk and a reduced reliance on debt relative to equity.
Analysis of Adjusted versus Reported Metrics: Between 2016 and 2018, adjusted financial leverage was consistently higher than reported leverage, driven by lower adjusted equity values. However, by 2019 and 2020, this relationship inverted or converged. By December 31, 2020, adjusted stockholders' equity of 4,747 million US$ exceeded reported equity of 4,694 million US$, resulting in an adjusted leverage ratio of 1.59, which is lower than the reported ratio of 1.62.

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	Dec 31, 2020	Dec 29, 2019	Dec 30, 2018	Dec 31, 2017	Dec 31, 2016
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to Illumina stockholders	656)	1,002)	826)	726)	463)
Total Illumina stockholders’ equity	4,694)	4,613)	3,758)	2,749)	2,197)
Profitability Ratio
ROE¹	13.98%	21.72%	21.98%	26.41%	21.06%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Illumina stockholders	773)	1,007)	808)	760)	469)
Adjusted total Illumina stockholders’ equity	4,747)	4,550)	3,688)	2,661)	2,075)
Profitability Ratio
Adjusted ROE²	16.28%	22.13%	21.91%	28.56%	22.62%

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-29), 10-K (reporting date: 2018-12-30), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

2020 Calculations

¹ ROE = 100 × Net income attributable to Illumina stockholders ÷ Total Illumina stockholders’ equity
= 100 × 656 ÷ 4,694 = 13.98%

² Adjusted ROE = 100 × Adjusted net income attributable to Illumina stockholders ÷ Adjusted total Illumina stockholders’ equity
= 100 × 773 ÷ 4,747 = 16.28%

Between 2016 and 2020, a general trajectory of growth in both net income and stockholders' equity was observed, although profitability metrics experienced a notable downturn in the final year of the period. The consistent divergence between reported and adjusted figures indicates the influence of non-recurring items or specific tax adjustments on the overall financial performance.

Net Income Trends: Reported net income attributable to stockholders grew steadily from 463 million USD in 2016 to a peak of 1,002 million USD in 2019, before declining to 656 million USD in 2020. Adjusted net income followed a similar pattern, peaking at 1,007 million USD in 2019. Notably, the variance between reported and adjusted net income widened significantly in 2020, where adjusted net income was 117 million USD higher than the reported figure.
Stockholders' Equity Expansion: A consistent upward trend in total stockholders' equity is evident over the five-year period. Reported equity increased from 2,197 million USD in 2016 to 4,694 million USD in 2020, representing a more than two-fold increase. Adjusted equity mirrored this growth, rising from 2,075 million USD to 4,747 million USD in the same timeframe.
Return on Equity (ROE) Performance: The reported ROE exhibited volatility, peaking at 26.41% in 2017 before entering a period of relative stability around 21-22% in 2018 and 2019. A sharp contraction occurred in 2020, with the reported ROE falling to 13.98%. Adjusted ROE followed a nearly identical path, peaking at 28.56% in 2017 and declining to 16.28% in 2020.
Comparative Analysis of Reported vs. Adjusted Metrics: Adjusted ROE remained higher than reported ROE in four of the five years analyzed, most notably in 2017 and 2020. In 2020, the adjusted ROE provided a more favorable view of capital efficiency (16.28%) compared to the reported ROE (13.98%), suggesting that the exclusion of certain reported expenses or tax impacts mitigated the perceived decline in performance.

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	Dec 31, 2020	Dec 29, 2019	Dec 30, 2018	Dec 31, 2017	Dec 31, 2016
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to Illumina stockholders	656)	1,002)	826)	726)	463)
Total assets	7,585)	7,316)	6,959)	5,257)	4,281)
Profitability Ratio
ROA¹	8.65%	13.70%	11.87%	13.81%	10.81%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Illumina stockholders	773)	1,007)	808)	760)	469)
Adjusted total assets	7,565)	7,252)	6,889)	5,169)	4,157)
Profitability Ratio
Adjusted ROA²	10.22%	13.89%	11.73%	14.70%	11.29%

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-29), 10-K (reporting date: 2018-12-30), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

2020 Calculations

¹ ROA = 100 × Net income attributable to Illumina stockholders ÷ Total assets
= 100 × 656 ÷ 7,585 = 8.65%

² Adjusted ROA = 100 × Adjusted net income attributable to Illumina stockholders ÷ Adjusted total assets
= 100 × 773 ÷ 7,565 = 10.22%

The financial performance from 2016 to 2020 is characterized by a consistent expansion of the asset base coupled with fluctuating profitability, leading to variability in asset utilization efficiency. While total assets grew steadily throughout the period, net income experienced a peak in 2019 followed by a notable contraction in 2020.

Net Income Trends: Reported net income grew from US$ 463 million in 2016 to a peak of US$ 1,002 million in 2019, before declining to US$ 656 million in 2020. Adjusted net income followed a similar trajectory, peaking at US$ 1,007 million in 2019. The adjusted figures consistently remained higher than reported figures from 2017 onward, suggesting the impact of non-recurring items or specific tax adjustments that softened the reported bottom line.
Asset Base Expansion: A sustained upward trend in total assets is evident. Reported total assets increased from US$ 4,281 million in 2016 to US$ 7,585 million by 2020. Adjusted total assets mirrored this growth, rising from US$ 4,157 million to US$ 7,565 million over the same period. This indicates a period of significant capital investment and balance sheet growth.
Return on Assets (ROA) Analysis: The Reported ROA fluctuated, reaching a high of 13.81% in 2017 and falling to its lowest point of 8.65% in 2020. The Adjusted ROA provided a more optimistic view of efficiency, peaking at 14.70% in 2017. Despite the growth in assets, the decline in both reported and adjusted ROA in 2020 indicates that the growth in the asset base outpaced the generation of net income during that fiscal year.
Comparative Divergence: The gap between reported and adjusted ROA widened significantly in 2020, where the adjusted ROA of 10.22% outperformed the reported ROA of 8.65%. This divergence suggests that underlying operational performance, when adjusted for specific accounting or tax effects, was more resilient than the reported figures imply.

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