Analysis of Property, Plant and Equipment
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- Common-Size Income Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value to EBITDA (EV/EBITDA)
- Price to FCFE (P/FCFE)
- Operating Profit Margin since 2005
- Return on Assets (ROA) since 2005
- Total Asset Turnover since 2005
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Property, Plant and Equipment Disclosure
Illumina Inc., balance sheet: property, plant and equipment
US$ in millions
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 the property, plant, and equipment data over the five-year period reveals several noteworthy trends and shifts in asset composition and valuation.
- Leasehold Improvements
- There is a consistent upward trend in the value of leasehold improvements, increasing steadily from $270 million in 2016 to $645 million in 2020. This suggests continuous investment or capital improvements in leased facilities throughout the period.
- Machinery and Equipment
- Machinery and equipment also show a steady increase, rising from $274 million in 2016 to $461 million in 2020. The growth is moderate but consistent, indicating ongoing acquisition or upgrades of manufacturing or operational equipment.
- Computer Hardware and Software
- The value of computer hardware and software exhibits significant growth, climbing from $156 million in 2016 to $305 million in 2020. The acceleration in the latter years, particularly between 2018 and 2019, reflects increased investment in technology assets.
- Furniture and Fixtures
- Furniture and fixtures grow gradually from $24 million in 2016 to $46 million in 2020, showing minor but steady increments. The relative stability suggests consistent maintenance or minor expansions rather than major overhauls.
- Buildings
- The reported values for buildings fluctuate markedly, starting at a low $9 million in 2016, surging to $285 million in 2018, then sharply declining to $44 million in 2019 and 2020. This variability could indicate asset reclassification, disposals, or fluctuations in capitalization policies for buildings.
- Construction in Progress
- Construction in progress displays a declining trend, falling from $307 million in 2016 to $99 million in 2020, with a notable drop between 2018 and 2019. The reduction suggests completion of previously ongoing projects or scaling down of new construction activities.
- Property and Equipment, Gross
- The gross property and equipment balance increases from $1,040 million in 2016 to a peak of $1,596 million in 2018, followed by a decline to $1,457 million in 2019, then rising again to $1,600 million in 2020. This indicates sizable capital expenditures up to 2018, a temporary decrease possibly due to disposals or reclassifications, and renewed investments in 2020.
- Accumulated Depreciation
- Accumulated depreciation consistently increases in magnitude (becoming more negative) from -$327 million in 2016 to -$678 million in 2020. The steady accumulation reflects ongoing depreciation charges related to the aging asset base, consistent with the growth in asset investments.
- Property and Equipment, Net
- The net value shows growth from $713 million in 2016 to $1,075 million in 2018, followed by a notable decrease to $889 million in 2019, and a slight recovery to $922 million in 2020. This pattern indicates that despite new investments, depreciation and possible asset disposals or impairments have intermittently impacted the net carrying value.
Overall, the data reflect a company steadily increasing its investment in leasehold improvements, machinery, and technology assets, with some fluctuations in building-related assets and construction activities. The net property and equipment values demonstrate growth offset by periodic downward adjustments, suggesting active asset management and capitalization policy changes throughout the period.
Asset Age Ratios (Summary)
Illumina Inc., asset age ratios
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).
- Average Age Ratio
- The average age ratio has shown an upward trend over the five-year period, increasing from 31.42% in 2016 to 42.38% in 2020. This indicates that the property, plant, and equipment (PP&E) are aging progressively, with the assets becoming a larger portion of their estimated useful life over time.
- Estimated Total Useful Life
- The estimated total useful life of assets decreased from 12 years in 2016 and 2017 to 11 years in 2018, and then further reduced to 10 years from 2019 onward. This reduction suggests a reassessment and shortening of the expected useful life of the equipment during the period.
- Estimated Age, Time Elapsed Since Purchase
- The estimated age of the assets has remained constant at 4 years throughout the observed period, indicating that the average acquisition age of the assets does not vary significantly year over year.
- Estimated Remaining Life
- The estimated remaining life of the assets has decreased from 8 years in 2016 through 2018 to 6 years in 2019 and 2020. This decline corresponds with the reduction in total useful life and the increasing average age ratio, reflecting that assets are closer to the end of their expected usage duration.
Average Age
| Dec 31, 2020 | Dec 29, 2019 | Dec 30, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Accumulated depreciation | ||||||
| Property and equipment, gross | ||||||
| Asset Age Ratio | ||||||
| Average age1 | ||||||
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 Average age = 100 × Accumulated depreciation ÷ Property and equipment, gross
= 100 × ÷ =
The analysis of the property, plant, and equipment data reveals notable trends over the five-year period.
- Accumulated Depreciation
- The accumulated depreciation shows a consistent upward trend, rising from 327 million USD in 2016 to 678 million USD in 2020. This increase reflects the ongoing consumption and aging of the company's tangible assets, indicating that the assets are being used and depreciated over time at a steady rate.
- Property and Equipment, Gross
- The gross value of property and equipment generally increased from 1,040 million USD in 2016 to 1,600 million USD in 2020, although there was a noticeable decline in 2019 to 1,457 million USD. This fluctuation could suggest a period of reduced capital expenditure or asset disposals during 2019, followed by renewed investment or acquisitions in 2020. Overall, the company's asset base growth trend remains positive.
- Average Age Ratio
- The average age ratio, which measures the relative age of the property and equipment portfolio, rose from 31.42% in 2016 to 42.38% in 2020. This steady increase indicates that the asset base is aging, which may imply a need for future reinvestment or replacement of assets to maintain operational efficiency.
In summary, the company has steadily increased its accumulated depreciation and asset base value over the analyzed period, despite a slight decline in the gross asset value during 2019. The rising average age ratio indicates an aging asset structure, highlighting potential forthcoming capital expenditure requirements to sustain asset productivity.
Estimated Total Useful Life
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 Estimated total useful life = Property and equipment, gross ÷ Depreciation expense
= ÷ =
The financial data for property, plant, and equipment exhibits notable changes over the five-year period ending in 2020. The gross value of property and equipment shows an overall upward trend, with the figure rising from $1,040 million in 2016 to $1,600 million in 2020. This increase demonstrates substantial investment in tangible assets, although there was a slight decline observed in 2019 when the value decreased to $1,457 million from $1,596 million in 2018 before rebounding in 2020.
Depreciation expense also increased steadily during the period, starting at $90 million in 2016 and reaching $156 million by 2020. The trend indicates higher depreciation charges, likely reflecting both the growth in the asset base and the aging of the assets. The consistent increase each year suggests a systematic recognition of asset wear and tear or obsolescence over time.
The estimated total useful life of the assets shows a gradual decrease, moving from 12 years in 2016 and 2017 to 10 years by 2019 and 2020. This reduction in the estimated useful life can imply that assets are either being depreciated over a shorter period due to technological advancements or accelerated depreciation methods, or it may reflect changes in asset composition towards items with shorter useful lives.
- Gross Property and Equipment
- Increased overall by 54% from 2016 to 2020, with a dip in 2019.
- Depreciation Expense
- Increased consistently each year, indicating growing asset base and/or accelerated usage of assets.
- Estimated Useful Life
- Decreased moderately from 12 to 10 years, possibly signaling shorter asset lifecycles or changes in depreciation policy.
In summary, the company has steadily expanded its property and equipment investment base, which is matched by a corresponding increase in depreciation expenses. The shortening useful life estimation suggests a strategic adjustment to asset management or reflects underlying shifts in asset types or usage patterns.
Estimated Age, Time Elapsed since Purchase
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 Time elapsed since purchase = Accumulated depreciation ÷ Depreciation expense
= ÷ =
- Accumulated Depreciation
- The accumulated depreciation value has shown a consistent upward trend over the five-year period. It increased steadily from $327 million in 2016 to $678 million in 2020, more than doubling during this time. This indicates continuous depreciation of the property, plant, and equipment assets, likely reflecting both aging assets and the ongoing addition of newly depreciating assets.
- Depreciation Expense
- Depreciation expense has also increased each year, rising from $90 million in 2016 to $156 million in 2020. The annual depreciation charge grew at a relatively steady rate, suggesting consistent capital expenditure to maintain or expand asset base as well as potential adjustments in depreciation methods or useful life estimates.
- Time Elapsed Since Purchase
- The time elapsed since purchase remained constant at 4 years throughout the entire period. This consistency may imply that the depreciation calculations are based on a fixed asset lifespan or that the company uses a standardized method for assessing asset age and depreciation schedules.
Estimated Remaining Life
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 Estimated remaining life = Property and equipment, net ÷ Depreciation expense
= ÷ =
The analysis of the annual property, plant, and equipment data reveals several notable trends over the five-year period.
- Property and Equipment, Net
- The net property and equipment value shows an overall increasing trend from 2016 to 2018, rising from 713 million US dollars to 1,075 million US dollars. However, in 2019, there is a significant decline to 889 million US dollars, followed by a slight recovery to 922 million US dollars in 2020. This suggests that while investments in property and equipment grew for the initial three years, there was a reduction or increased disposals in the subsequent years, with some stabilization in 2020.
- Depreciation Expense
- The depreciation expense consistently increased throughout the period. It started at 90 million US dollars in 2016 and rose steadily to 156 million US dollars by 2020. The steady growth in depreciation expense is indicative of both increasing asset base till 2018 and/or assets aging, resulting in higher annual depreciation charges. The rise from 140 million in 2018 to 151 million in 2019 and further to 156 million in 2020, despite the reduction in net property and equipment in 2019, may imply accelerated depreciation or asset impairment impacts.
- Estimated Remaining Life
- The estimated remaining life of the assets remained stable at 8 years for the first three years. It then decreased to 6 years from 2019 onwards. This reduction indicates that assets held by the company are aging, and/or newer acquisitions have shorter expected useful lives. The decline in estimated remaining life correlates with the rising depreciation expense and the drop in net property and equipment value seen in 2019 and 2020.
Overall, the data illustrates a phase of asset expansion through 2018, followed by a period of contraction or asset aging. The shortening estimated asset life and increasing depreciation expenses reflect a maturing asset base, which may require future capital investments to replace aging equipment. The slight uptick in net property and equipment in 2020 could suggest initial steps towards such reinvestment.