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GRAIL SPIN-OFF | 9 Months Ended
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Sep. 29, 2024
Discontinued Operations and Disposal Groups [Abstract] |
GRAIL SPIN-OFF |
2. 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. The carrying amounts of GRAIL’s assets and liabilities included as part of the disposal group were as follows:
In millions |
Cash and cash equivalents | $ | 968 |
Accounts receivable, net | 13 |
Inventory, net | 22 |
Prepaid expenses and other current assets | 27 |
Property and equipment, net | 80 |
Operating lease right-of-use assets | 74 |
Intangible assets, net | 2,201 |
Other assets | 14 |
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 6) | 1 |
Tax adjustment for difference between the book and tax values of our retained investment in GRAIL | 57 |
Total recorded to additional paid-in capital as a result of the GRAIL Spin-Off | $ | 2,399 |
See note 10. Segment Information for GRAIL’s results of operations, prior to the Spin-Off, included in our condensed consolidated statements of operations for the periods presented within. In planning for and executing the Spin-Off, we incurred $53 million in separation-related transaction costs during YTD 2024, which were recognized in selling, general, and administrative expense. These transaction costs primarily related to financial advisory, legal, regulatory and other professional services fees directly related to the Spin-Off. 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). The Agreements determine the treatment of the assets, employees, liabilities and obligations (including certain tax-related assets and liabilities) of Illumina attributable to periods prior to, at and after GRAIL’s separation and also govern certain relationships between Illumina and GRAIL after the Spin-Off.

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/205-20/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 360 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/360/tableOfContent + Details
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