ILMNIllumina, Inc.

In 2024, 2025, the variance from the U.S. federal statutory tax rate of 21% was primarily because 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 $308 million income U.S. tax expense impact 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 impairment 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 goodwill, which is nondeductible for deferred tax purposes, $90 million income tax expense impact of GRAIL pre-acquisition net operating losses on GILTI, the utilization of assets associated with certain U.S. foreign tax credits, and credits may not be achieved. Therefore, a valuation allowance of $62 million was recorded against the Pillar Two global minimum top-up tax, and the $52 million income deferred tax expense impact of capitalizing research and development expenses for assets associated with certain U.S. foreign tax purposes. credits. The income tax rate in 2024 2025 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.

Furthermore, we have and may continue to become subject to stockholder inspection demands under Delaware law, investigations initiated by regulators and law firms, and derivative or other similar litigation that can be expensive, divert management attention and human and financial capital to less productive uses and result in potential reputational damage. The GRAIL acquisition and subsequent litigation resulted in in, among other things (i) the announcement of an investigation by the SEC and others by law firms of possible securities law violations; (ii) stockholder inspection demands seeking to investigate possible breaches of fiduciary duties, corporate wrongdoing or a lack of independence of the members of the Board, including a complaint filed in the Delaware Court of Chancery seeking to inspect books and records captioned Pavers and Road Builders Benefit Funds v. Illumina, Inc.; (iii) the filing of securities class actions in the United States District Court for the Southern District of California: Kangas v. Illumina, Inc. et al., Roy v. Illumina, Inc. et al., and Louisiana Sheriffs’ Pension & Relief Fund v. Illumina, Inc. et al.; (iv) the filing of a stockholder derivative complaint in the United States District Court for the Southern District of California captioned Warner v. deSouza et al.; (v) the filing of a stockholder derivative complaint in the United States District Court for the District of Delaware captioned Wang v. deSouza et al.; (vi) (ii) the filing of two securities class actions in the Superior Court of the State of California, County of San Mateo: Loren Scott Mar v. Illumina, et al. and Scott Zerzanek v. Illumina, Inc. et al.; (vii) (iii) the filing of a stockholder derivative and class action complaint captioned Icahn Partners LP, et al. v. deSouza, et al.; (viii) (iv) the filing of a stockholder derivative complaint captioned City of Omaha Police and Firefighters Retirement System v. deSouza, et al.; (ix) (v) the filing of a stockholder derivative complaint captioned City of Roseville General Employees Retirement System, et al. v. deSouza, et al.; and (x) the filing of a stockholder derivative complaint captioned Thomas P. DiNapoli v. John Thompson et al.; and (xi) (vi) the filing of a stockholder derivative complaint captioned Pavers and Road Builders Benefit Funds v. John Thompson et al. See note 9. Legal Proceedings within the Consolidated Financial Statements for further details. In the event that any of the matters described above result in one or more adverse judgments or settlements, we may experience an adverse impact on our financial condition, results of operations or stock price.

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 August 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 stockholder derivative motion to dismiss the complaint captioned Thomas P. DiNapoli v. John Thompson et al., purportedly brought on behalf of Illumina, was filed in the Delaware Court lawsuit filed by City of Chancery against certain current and former directors. We are named as a nominal defendant in the complaints. The lawsuits allege the named directors and officers breached their fiduciary duties by knowingly causing Illumina to unlawfully close the GRAIL acquisition. The stockholders previously made requests to inspect certain books and records under Delaware law, and they purport to base their complaint in part on documents obtained from Illumina in response to those requests. Before the filing of the complaint, the purported stockholders did not make a demand that our Board of Directors pursue the claim asserted therein. The complaints seek damages against the individual defendants, costs and expenses, including attorney fees and other equitable relief. Roseville General Employees Retirement System, et al.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) 2023-07, Segment Reporting - Improvements to Income Tax Reportable Segment Disclosures. The new standard requires a company to expand its existing income tax disclosures, specifically related disclose incremental segment information on an annual and interim basis, including significant segment expenses and measures of profit or loss that are regularly provided to the rate reconciliation and income taxes paid. CODM. The standard is does not change how an entity identifies its operating segments. The standard was effective for us beginning in fiscal year 2025, with early adoption permitted, 2024 and is expected interim periods within fiscal year 2025. We adopted the standard on its effective date in fiscal year 2024 and applied the amendments retrospectively to be applied prospectively, but retrospective application is permitted. We are currently evaluating the impact of ASU 2023-09 on all prior periods presented in the consolidated financial statements statements. See note 12. Segment and related disclosures. Geographic Information for additional details.