ILLUMINA INC

Accounts Receivable

Inventory

Property and Equipment

Accrued Liabilities

(1)See note 9. Legal Proceedings for additional details.

(2)See table below for changes in the reserve for product warranties.

Changes in the reserve for product warranties were as follows:

Restructuring

In Q2 2023, we implemented a cost reduction initiative that included workforce reductions, the consolidation of certain facilities and other actions to reduce expenses, all as part of a plan to realign operating expenses while maintaining focus on our innovation roadmap and sustainable long-term growth. In both 2024 and 2023, we recorded restructuring charges primarily consisting of asset impairments related to exit activities at certain of our leased facilities.

A summary of the pre-tax restructuring charges is as follows:

(1)For 2024, relates to impairment of right-of-use assets and leasehold improvements for Foster City campus and other property in San Diego.

For 2023, primarily relates to impairment of right-of-use assets and leasehold improvements for our i3 and Foster City campuses.

(2)For 2024, $59 million was recorded in SG&A expense, $2 million in R&D expense, and remainder in cost of revenue.

For 2023, $122 million was recorded in SG&A expense, $24 million in R&D expense, and remainder in cost of revenue.

Total restructuring charges primarily relate to our Core Illumina segment.

In 2024, we recorded right-of-use asset impairments of $12 million and $19 million related to our campus in Foster City, California and another property in San Diego, California, respectively. In 2023, we recorded right-of-use asset impairments of $38 million and $21 million related to our i3 campus in San Diego and our campus in Foster City, respectively. The impairments were determined by comparing the fair values of the impacted right-of-use assets to the carrying values of the assets as of the impairment measurement date. The fair values of the right-of-use assets were estimated using the discounted future cash flows method, which includes estimates and assumptions for future sublease rental rates that reflect current sublease market conditions, as well as discount rates. The estimates and assumptions used in our assessments represent Level 3 measurements because they are supported by little or no market activity and reflect our own assumptions in measuring fair value. In 2024, we recorded $14 million of leasehold improvement impairments related to our Foster City campus and, in 2023, we recorded $16 million and $22 million of leasehold improvement impairments related to our i3 and Foster City campuses, respectively. The right-of-use asset and leasehold improvement impairments were recognized in selling, general and administrative expense. We continue to evaluate our options for the rest of our Foster City campus, for which, as of December 29, 2024, we had remaining assets, consisting primarily of right-of-use assets and leasehold improvements, of $100 million.

A summary of the restructuring liability is as follows: