NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Nature of Operations
Xilinx, Inc. (Xilinx or the Company) designs, develops and markets programmable devices and associated technologies, including advanced ICs in the form of PLDs, boards, software design tools and predefined system functions delivered as IP. In addition to its programmable platforms, the Company provides design services, customer training, field engineering and technical support. The wafers used to manufacture its products are obtained primarily from independent wafer manufacturers located in Taiwan and Korea. The Company is dependent on these foundries to produce and deliver silicon wafers on a timely basis. The Company is also dependent on subcontractors, primarily located in the Asia Pacific region, to provide semiconductor assembly, test and shipment services. Xilinx is a global company with sales offices throughout the world. The Company derives over
one-half
of its revenues from international sales, primarily in the Asia Pacific region, Europe and Japan.
|
|
Note 2.
|
Summary of Significant Accounting Policies and Concentrations of Risk
|
Basis of Presentation
The accompanying consolidated financial statements include the accounts of Xilinx and its wholly-owned subsidiaries after elimination of all intercompany transactions. The Company uses a
52
- to
53
-week fiscal year ending on the Saturday nearest March 31. Fiscal
2019
,
2018
and
2017
were a 52-week year ended on
March 30, 2019
,
March 31, 2018
and
April 1, 2017
, respectively. Fiscal
2020
will be a 52-week year ending on
March 28, 2020
.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of net revenues and expenses during the reporting period. Such estimates relate to, among others, the useful lives of assets, assessment of recoverability of property, plant and equipment, long-lived assets and goodwill, inventory write-downs, allowances for doubtful accounts, valuation of intangible assets, customer returns, deferred tax assets, stock-based compensation, potential reserves relating to litigation and tax matters, valuation of certain investments and derivative financial instruments as well as other accruals or reserves. Actual results may differ from those estimates and such differences may be material to the financial statements.
Cash Equivalents and Investments
Cash equivalents consist of highly liquid investments with original maturities from the date of purchase of three months or less. These investments consist of money market funds, non-financial institution securities, U.S. and foreign government and agency securities and financial institution securities. Short-term investments consist of mortgage-backed securities, non-financial institution securities, U.S. and foreign government and agency securities, financial institution securities, asset-backed securities, commercial mortgage-backed securities and debt mutual funds with original maturities greater than three months and remaining maturities less than one year from the balance sheet date. Long-term investments consist of debt mutual funds. Long-term investments are investments with remaining maturities greater than one year, unless the investments are specifically identified to fund current operations, in which case they are classified as short-term investments. Equity investments are also classified as long-term investments if they are not intended to fund current operations.
The Company maintains its cash balances with various banks with high quality ratings, and with investment banking and asset management institutions. The Company manages its liquidity risk by investing in a variety of money market funds, high-grade commercial paper, corporate bonds, U.S. and foreign government and agency securities, asset-backed securities, mortgage-backed securities, commercial mortgage-backed securities, bank time deposits and debt mutual funds. This diversification of investments is consistent with its policy to maintain liquidity and ensure the ability to collect principal. The Company maintains an offshore investment portfolio denominated in U.S. dollars. All investments are made pursuant to corporate investment policy guidelines. Investments include Euro commercial paper, Euro dollar bonds, Euro dollar floating rate notes, offshore time deposits, U.S. and foreign government and agency securities, asset-backed securities, commercial mortgage-backed securities, debt mutual funds and mortgage-backed securities issued by U.S. government-sponsored enterprises and agencies.
Management classifies investments as available-for-sale or held-to-maturity at the time of purchase and re-evaluates such designation at each balance sheet date, although classification is not generally changed. Securities are classified as held-to-maturity when the Company has the positive intent and the ability to hold the securities until maturity. Held-to-maturity securities are
carried at cost adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization, as well as any interest on the securities, is included in interest income.
No
investments were classified as held-to-maturity as of
March 30, 2019
or
March 31, 2018
. Available-for-sale securities are carried at fair value with the unrealized gains or losses, net of tax, included as a component of accumulated other comprehensive income (loss) in stockholders' equity. See "Note 3. Fair Value Measurements" for information relating to the determination of fair value. Realized gains and losses on available-for-sale securities and declines in value judged to be other than temporary are included in interest and other expense, net. In determining if and when a decline in value below the adjusted cost of available for sale securities is other than temporary, we evaluate on an ongoing basis the market conditions, trends of earnings, financial condition, credit ratings, any underlying collateral and other key measures for our investments. The cost of securities matured or sold is based on the specific identification method.
The Company's investments in non-marketable equity securities of private companies are accounted for under the measurement alternative method upon the adoption of ASU 2016-01. The carrying value is measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Determining whether an observed transaction is similar to a security within the Company's portfolio requires judgment based on the rights and obligations of the securities. The Company's periodic assessment of impairment is made by considering available evidence, including the general market conditions in the investee’s industry, the investee’s product development status and subsequent rounds of financing and the related valuation and/or company's participation in such financings. The Company also assesses the investee’s ability to meet business milestones and the financial condition and near-term prospects of the individual investee, including the rate at which the investee is using its cash, the investee’s need for possible additional funding at a lower valuation and any bona fide offer to purchase the investee from a prospective acquirer.
Accounts Receivable
The allowance for doubtful accounts reflects the Company's best estimate of probable losses inherent in the accounts receivable balance. The Company determines the allowance based on the aging of Xilinx's accounts receivable, historical experience, known troubled accounts, management judgment and other currently available evidence. Xilinx writes off accounts receivable against the allowance when Xilinx determines a balance is uncollectible and no longer actively pursues collection of the receivable. The amounts of accounts receivable written off were insignificant for all periods presented.
Inventories
Inventories are stated at the lower of actual cost (determined using the first-in, first-out method), or market (estimated net realizable value) and are comprised of the following:
|
|
|
|
|
|
|
|
|
(In thousands)
|
March 30, 2019
|
|
March 31, 2018
|
Raw materials
|
$
|
39,727
|
|
|
$
|
14,674
|
|
Work-in-process
|
213,784
|
|
|
167,039
|
|
Finished goods
|
61,847
|
|
|
54,364
|
|
|
$
|
315,358
|
|
|
$
|
236,077
|
|
The Company reviews and sets standard costs quarterly to approximate current actual manufacturing costs. The Company's manufacturing overhead standards for product costs are calculated assuming full absorption of actual spending over actual volumes. Given the cyclicality of the market, the obsolescence of technology and product lifecycles, the Company writes down inventory based on forecasted demand and technological obsolescence. These forecasts are developed based on inputs from the Company's customers, including bookings and extended but uncommitted demand forecasts, and internal analyses such as customer historical purchasing trends and actual and anticipated design wins, as well as market and economic conditions, technology changes, new product introductions and changes in strategic direction. These factors require estimates that may include uncertain elements. The estimates of future demand that the Company uses in the valuation of inventory are the basis for its published revenue forecasts, which are also consistent with our short-term manufacturing plans. The differences between the Company's demand forecast and the actual demand in the recent past have not resulted in any material write down in the Company's inventory. If the Company's demand forecast for specific products is greater than actual demand and the Company fails to reduce manufacturing output accordingly, the Company could be required to write down additional inventory, which would have a negative impact on the Company's gross margin.
Property, Plant and Equipment
Property, plant and equipment are recorded at cost, net of accumulated depreciation. Depreciation for financial reporting purposes is computed using the straight-line method over the estimated useful lives of the assets of
three
to
five
years for machinery, equipment, furniture and fixtures and
15
to
30
years for buildings. Depreciation expense totaled
$53.3 million
,
$46.4 million
and
$45.4 million
for fiscal
2019
,
2018
and
2017
, respectively.
Impairment of Long-Lived Assets
The Company evaluates the carrying value of long-lived assets to be held and used for impairment if indicators of potential impairment exist. Impairment indicators are reviewed on a quarterly basis. When indicators of impairment exist and assets are held for use, the Company estimates future undiscounted cash flows attributable to the assets. In the event such cash flows are not expected to be sufficient to recover the recorded value of the assets, the assets are written down to their estimated fair values based on the expected discounted future cash flows attributable to the assets or based on appraisals. When assets are removed from operations and held for sale, Xilinx estimates impairment losses as the excess of the carrying value of the assets over their fair value.
Goodwill
Goodwill is not amortized but is subject to impairment tests on an annual basis, or more frequently if indicators of potential impairment exist, using a fair-value-based approach. Based on the impairment review performed during the fourth quarter of fiscal
2019
, there was
no
impairment of goodwill in fiscal
2019
. Unless there are indicators of impairment, the Company's next impairment review for goodwill will be performed and completed in the
fourth
quarter of fiscal
2020
. To date, no impairment indicators have been identified.
Revenue Recognition
Revenue from sales to the Company's distributors is recognized upon the transfer of control, which typically occurs at shipment, and is reduced by estimated allowances for distributor price adjustments and rights of return. The distributor price adjustments are estimated using the expected value method based on an analysis of actual and forecasted ship and debit claims, at the distributor and part level to account for current pricing and business trends. For fiscal
2019
, approximately
54%
of the Company's net revenues were from products sold to distributors for subsequent resale to OEMs or their subcontract manufacturers.
Revenue from sales to the Company's non-distributors is recognized net of sales incentives (if any) upon transfer of control to the customer, which typically occurs at shipment. Sales returns and allowances on product sales are recorded as a reduction of revenue.
Revenue from software license agreements and renewals is recognized at point of sales. Revenue from support services is recognized when the service is performed. Revenue from software licenses and support services sales were less than
2%
of net revenues for all of the periods presented.
Foreign Currency Translation
The U.S. dollar is the functional currency for the Company's Ireland and Singapore subsidiaries. Monetary assets and liabilities that are not denominated in the functional currency are remeasured into U.S. dollars, and the resulting gains or losses are included in the consolidated statements of income under interest and other expense, net. The remeasurement gains or losses were immaterial for all fiscal periods presented.
The local currency is the functional currency for each of the Company's other wholly-owned foreign subsidiaries. Assets and liabilities are translated from foreign currencies into U.S. dollars at month-end exchange rates and statements of income are translated at the average monthly exchange rates. Exchange gains or losses arising from translation of foreign currency denominated assets and liabilities (i.e., cumulative translation adjustment) are included as a component of accumulated other comprehensive income (loss) in stockholders' equity.
Derivative Financial Instruments
To reduce financial risk, the Company periodically enters into financial arrangements as part of the Company's ongoing asset and liability management activities. Xilinx uses derivative financial instruments to hedge fair values of underlying assets and liabilities or future cash flows which are exposed to interest rate, foreign currency or commodity price fluctuations. The Company does not
enter into derivative financial instruments for trading or speculative purposes. See "Note 5. Derivative Financial Instruments" for detailed information about the Company's derivative financial instruments.
Research and Development Expenses
Research and development costs are current period expenses and charged to expense as incurred.
Stock-Based Compensation
The Company has equity incentive plans that are more fully discussed in "Note 6. Stock-Based Compensation Plans." The authoritative guidance of accounting for share-based payment requires the Company to measure the cost of all employee equity awards (that are expected to be exercised or vested) based on the grant-date fair value of those awards, and to record that cost as compensation expense over the period during which the employee is required to perform service in exchange for the award (over the vesting period of the award). Additionally, the Company's ESPP is deemed to be a compensatory plan under the authoritative guidance of accounting for share-based payments. Accordingly, the ESPP is included in the computation of stock-based compensation expense.
The Company uses the straight-line attribution method to recognize stock-based compensation costs over the requisite service period of the award. Upon exercise, cancellation or expiration of stock options, deferred tax assets for options with multiple vesting dates are eliminated for each vesting period on a first-in, first-out basis as if each award had a separate vesting period.
Income Taxes
All income tax amounts reflect the use of the liability method
under the accounting for income taxes, as interpreted by Financial Accounting Standards Board (FASB) authoritative guidance for measuring uncertain tax positions
.
Under this method, deferred tax assets and liabilities are determined based on the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities for financial and income tax reporting purposes.
The TCJA introduced GILTI, which subjects a U.S. shareholder to current tax on income earned by certain foreign subsidiaries. The FASB allows companies to either (1) recognize deferred taxes for temporary differences that are expected to reverse as GILTI in future years (deferred method) or (2) account for taxes on GILTI as period costs in the year the tax is incurred (period method). The Company elected the deferred method.
Business Combination
We use the acquisition method of accounting and allocate the fair value of purchase consideration to the assets acquired and liabilities assumed from the acquiree based on their respective fair values as of the acquisition date. The excess of the fair value of purchase consideration over the fair value of these assets acquired and liabilities assumed is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets. Critical estimates in valuing intangible assets include, but are not limited to, expected future cash flows, which includes consideration of future growth and margins, future changes in technology, expected cost and time to develop in-process research and development, brand awareness and discount rates. Fair value estimates are based on the assumptions that management believes a market participant would use in pricing the asset or liability.
Product Warranty and Indemnification
The Company generally sells products with a limited warranty for product quality. The Company provides an accrual for known product issues if a loss is probable and can be reasonably estimated. As of the end of both fiscal
2019
and
2018
, the accrual balance of the product warranty liability was immaterial.
The Company offers, subject to certain terms and conditions, to indemnify customers and distributors for costs and damages awarded against these parties in the event the Company's hardware products are found to infringe third-party intellectual property rights, including patents, copyrights or trademarks, and to compensate certain customers for limited specified costs they actually incur in the event our hardware products experience epidemic failure. To a lesser extent, the Company may from time-to-time offer limited indemnification with respect to its software products. The terms and conditions of these indemnity obligations are limited by contract, which obligations are typically perpetual from the effective date of the agreement. The Company has historically received only a limited number of requests for indemnification under these provisions and has not made any significant payments pursuant to these provisions. The Company cannot estimate the maximum amount of potential future payments, if any, that the Company may be required to make as a result of these obligations due to the limited history of indemnification claims and the
unique facts and circumstances that are likely to be involved in each particular claim and indemnification provision. However, there can be no assurances that the Company will not incur any material financial liabilities in the future as a result of these obligations.
Concentrations of Credit Risk
Avnet, one of the Company's distributors, distributes the Company's products worldwide. As of
March 30, 2019
and
March 31, 2018
, Avnet accounted for
37%
and
61%
of the Company's total net accounts receivable, respectively. We expect our accounts receivable to fluctuate as we partner with our distributors to manage their inventory requirements. Avnet 's revenue accounted for
45%
,
43%
and
45%
of the Company's worldwide net revenues in fiscal
2019
,
2018
and
2017
, respectively. The percentage of worldwide net revenues from Avnet is consistent with historical patterns.
Xilinx is subject to concentrations of credit risk primarily in its trade accounts receivable and investments in debt securities to the extent of the amounts recorded on the consolidated balance sheet. The Company attempts to mitigate the concentration of credit risk in its trade receivables through its credit evaluation process, collection terms and distributor sales to diverse end customers and through geographical dispersion of sales. Xilinx generally does not require collateral for receivables from its end customers or from distributors.
No
other distributor or end customer accounted for more than 10% of the Company's worldwide net revenues for any of the periods presented.
The Company mitigates concentrations of credit risk in its investments in debt securities by currently investing more than
90%
of its portfolio in AA (or its equivalent) or higher-grade securities as rated by Standard & Poor's or Moody's Investors Service equivalent. The Company's methods to arrive at investment decisions are not solely based on the rating agencies' credit ratings. Xilinx also performs additional credit due diligence and conducts regular portfolio credit reviews, including a review of counterparty credit risk related to the Company's forward currency exchange contracts. Additionally, Xilinx limits its investments in the debt securities of a single issuer based upon the issuer's credit rating and attempts to further mitigate credit risk by diversifying risk across geographies and type of issuer.
As of
March 30, 2019
, approximately
21%
of the portfolio consisted of mortgage-backed securities. All of the mortgage-backed securities in the investment portfolio were issued by U.S. government-sponsored enterprises and agencies and are rated AA+ by Standard & Poor's and Aaa by Moody's Investors Service.
The global credit markets may experience adverse conditions that negatively impact the values of various types of investment and non-investment grade securities. The global credit and capital markets may experience significant volatility and disruption due to instability in the global financial system, uncertainty related to global economic conditions and concerns regarding sovereign financial stability. Therefore, there is a risk that we may incur other-than-temporary impairment charges for certain types of investments should credit market conditions deteriorate. See "Note 4. Financial Instruments" for a table of the Company's available-for-sale securities.
Recent Accounting Pronouncements Adopted
Revenue Recognition
In April 2014, the Financial Accounting Standards Board (FASB) issued the authoritative guidance, as amended, that outlines a new revenue recognition standard that replaces virtually all existing U.S. GAAP guidance on contracts with customers and the related other assets and deferred costs. The authoritative guidance provides a five-step process for recognizing revenue that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled, in exchange for those goods or services. The new guidance also requires expanded qualitative and quantitative disclosures relating to the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The new guidance is required to be applied retrospectively to each prior reporting period presented (Full Retrospective), or retrospectively with the cumulative effect of initially applying it recognized at the date of initial application. The Company adopted the new guidance on April 1, 2018, using the Full Retrospective method and restated the comparative prior periods. The Company implemented internal controls and certain system functionality to enable the preparation of financial information on adoption. These changes do not materially affect the Company's internal control over financial reporting.
As a result of the adoption of the authoritative guidance, the Company changed its accounting policy for revenue recognition and the details of the significant changes and quantitative impact of the changes are disclosed below:
Revenue from sales to the Company's distributors is recognized upon the transfer of control, which typically occurs at shipment (sell-in) and is reduced by estimated allowances for distributor price adjustments and rights of return. Previously, revenue was recognized upon reported resale of the product by the distributors to their customers (sell-through) as reduced by actual allowances for distributor price adjustments. Revenue from software license agreements and renewals is recognized at point of sales, whereas previously these were deferred and recognized over the contractual term before the implementation of the authoritative guidance. Revenue recognition related to the Company's other revenue streams, such as direct customers, remains unchanged.
The adoption of this authoritative guidance has an impact on the Company’s consolidated statements of income and balance sheets, but had no impact on net cash provided by or used in operating, financing, or investing activities on the consolidated statements of cash flows.
The impact on the Company's previously reported consolidated statements of income resulting from the adoption of the authoritative guidance is as follows:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2018
|
|
April 1, 2017
|
(In thousands, except per share amounts)
|
As Reported
|
|
As Adjusted
|
|
As Reported
|
|
As Adjusted
|
Consolidated Statements of Income:
|
|
|
|
|
|
|
|
Net revenues
|
$
|
2,539,004
|
|
|
$
|
2,467,023
|
|
|
$
|
2,349,330
|
|
|
$
|
2,356,742
|
|
Cost of revenues
|
756,368
|
|
|
743,419
|
|
|
708,216
|
|
|
708,632
|
|
Gross margin
|
1,782,636
|
|
|
1,723,604
|
|
|
1,641,114
|
|
|
1,648,110
|
|
Operating expenses:
|
|
|
|
|
|
|
|
Research and development
|
639,750
|
|
|
639,750
|
|
|
601,443
|
|
|
601,443
|
|
Selling, general and administrative
|
362,329
|
|
|
362,329
|
|
|
335,150
|
|
|
335,150
|
|
Amortization of acquisition-related intangibles
|
2,152
|
|
|
2,152
|
|
|
5,127
|
|
|
5,127
|
|
Executive transition costs
|
33,351
|
|
|
33,351
|
|
|
—
|
|
|
—
|
|
Total operating expenses
|
1,037,582
|
|
|
1,037,582
|
|
|
941,720
|
|
|
941,720
|
|
Operating income
|
745,054
|
|
|
686,022
|
|
|
699,394
|
|
|
706,390
|
|
Interest and other income (expense), net
|
5,357
|
|
|
5,357
|
|
|
(8,314
|
)
|
|
(8,314
|
)
|
Income before income taxes
|
750,411
|
|
|
691,379
|
|
|
691,080
|
|
|
698,076
|
|
Provision for income taxes
|
238,030
|
|
|
227,398
|
|
|
68,568
|
|
|
69,943
|
|
Net income
|
$
|
512,381
|
|
|
$
|
463,981
|
|
|
$
|
622,512
|
|
|
$
|
628,133
|
|
Net income per common share:
|
|
|
|
|
|
|
|
Basic
|
$
|
2.05
|
|
|
$
|
1.86
|
|
|
$
|
2.47
|
|
|
$
|
2.49
|
|
Diluted
|
$
|
1.99
|
|
|
$
|
1.80
|
|
|
$
|
2.32
|
|
|
$
|
2.34
|
|
Shares used in per share calculations
|
|
|
|
|
|
|
|
Basic
|
249,595
|
|
|
249,595
|
|
|
252,301
|
|
|
252,301
|
|
Diluted
|
257,960
|
|
|
257,960
|
|
|
268,813
|
|
|
268,813
|
|
|
|
|
|
|
|
|
|
Consolidated Balance Sheets:
|
|
|
|
|
|
|
|
Accounts receivable
|
$
|
372,144
|
|
|
$
|
382,246
|
|
|
$
|
243,915
|
|
|
$
|
283,850
|
|
Other assets
|
342,644
|
|
|
337,402
|
|
|
275,440
|
|
|
272,407
|
|
Deferred income on shipments to distributors
|
25,166
|
|
|
—
|
|
|
54,567
|
|
|
—
|
|
Other accrued liabilities
|
59,772
|
|
|
59,680
|
|
|
95,098
|
|
|
95,209
|
|
Deferred tax liabilities
|
75
|
|
|
75
|
|
|
317,639
|
|
|
330,479
|
|
Retained earnings
|
$
|
1,483,538
|
|
|
$
|
1,513,656
|
|
|
$
|
1,726,312
|
|
|
$
|
1,804,830
|
|
Equity Investments
In January 2016, the FASB issued final authoritative guidance regarding how companies measure equity investments that do not result in consolidation and are not accounted for under the equity method and how they present changes in the fair value of financial
liabilities measured under the fair value option that are attributable to their own credit. The authoritative guidance also changes certain disclosure requirements and other aspects of current U.S. GAAP on this matter. The authoritative guidance does not change the guidance for classifying and measuring investments in debt securities and loans. The Company adopted this authoritative guidance on April 1, 2018 and recorded the balance of the unrealized losses of
$11.0 million
as of the end of fiscal 2018 from its investment in debt mutual funds and equity securities to retained earnings, less the related deferred taxes of
$2.6 million
. Subsequent changes in fair value from such investments are recorded in the consolidated statements of income.
Income Taxes
In October 2016, the FASB issued authoritative guidance on income taxes which eliminates the deferred tax effects of intra-entity asset transfers other than inventory. As a result, a reporting entity would recognize the tax expense from the sale of an asset in the seller’s tax jurisdiction when the transfer occurs, even though the pre-tax effects of that transaction are eliminated in consolidation. The authoritative guidance is effective for public business entities in fiscal years beginning after December 15, 2017 and requires the adoption be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings. The Company adopted this authoritative guidance on April 1, 2018. Accordingly,
$13.8 million
of prepaid taxes associated with prior period intra-entity asset transfers was reclassified to retained earnings.
Recent Accounting Pronouncements Not Yet Adopted
Leases
In February 2016, the FASB issued authoritative guidance on leases. The new authoritative guidance requires the recognition of assets and liabilities arising from lease transactions on the balance sheet and will also require significant additional disclosures about the amount, timing and uncertainty of cash flows from leases. Accordingly, a lessee will recognize a lease asset for its right to use the underlying asset and a lease liability for the corresponding lease obligation. The new authoritative guidance is effective for public business entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, which for Xilinx would be the first quarter of fiscal 2020. Even though early adoption is permitted, Xilinx has decided not to early adopt such authoritative guidance. This authoritative guidance must be adopted using a modified retrospective transition with application of the new authoritative guidance for leases that existed at or are entered into after the beginning of the earliest comparative period presented. To help with the transition to the new guidance, certain practical expedients are provided.
On July 30, 2018, the FASB provided entities with an additional (and optional) transition method to adopt the new lease requirements by allowing entities to initially apply the requirements by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Consequently, an entity’s reporting for the comparative periods presented in the financial statements in which the entity adopts the new lease requirements would continue to be in accordance with historical GAAP. An entity electing this additional (and optional) transition method must provide the required disclosures for all periods that continue to be in accordance with historical GAAP. The amendments do not change the existing disclosure requirements in historical GAAP. The amendments have the same effective date as the new leases standard, which for Xilinx would be the first quarter of fiscal 2020.
The Company plans to adopt the new standard using the optional transition method and apply the guidance to leases existing at, or entered into after, the beginning of the period of adoption, as well as certain practical expedients permitted under the transition guidance. The Company believes the impact upon adoption of the new lease guidance will be the recognition of right-of-use assets and lease liabilities on the Company's consolidated balance sheets and the impact is immaterial.
Derivatives and Hedging
In August 2017, the FASB issued authoritative guidance that amended the accounting for hedging activities. The guidance permits more hedging strategies to be eligible for hedge accounting and simplifies the application of hedge accounting guidance in areas where practice issues exist. The new authoritative guidance will be effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2018, which for Xilinx would be the first quarter of fiscal 2020. Early adoption is permitted, including adoption in any interim periods after issuance of the authoritative guidance. The Company does not expect a material impact on its consolidated statements of income upon adoption of this authoritative guidance.
Cloud Computing Arrangements
On August 29, 2018, the FASB issued new guidance requiring a customer in a cloud computing arrangement (i.e., hosting arrangement) that is a service contract to follow the internal-use software guidance to determine which implementation costs to capitalize as assets or expense as incurred. Capitalized implementation costs related to a hosting arrangement that is a service contract will be amortized over the term of the hosting arrangement, beginning when the module or component of the hosting arrangement is ready for its intended use. Entities will need to maintain appropriate records to capture the portion of their costs that qualify for capitalization. For public entities, the guidance is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, which for Xilinx would be the first quarter of fiscal 2021. Early adoption is permitted, including adoption in any interim period. Entities have the option to apply the guidance prospectively to all implementation costs incurred after the date of adoption or retrospectively. The Company is currently evaluating the impact of this new authoritative guidance on its consolidated financial statements.
|
|
Note 3.
|
Fair Value Measurements
|
The guidance for fair value measurements established by the FASB defines fair value as the exchange price that would be received from selling an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which Xilinx would transact and also considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions and risk of nonperformance.
The Company determines the fair value for marketable debt and equity securities using industry standard pricing services, data providers and other third-party sources and by internally performing valuation testing and analysis. The Company primarily uses a consensus price or weighted-average price for its fair value assessment. The Company determines the consensus price using market prices from a variety of industry standard pricing services, data providers, security master files from large financial institutions and other third party sources and uses those multiple prices as inputs into a distribution-curve-based algorithm to determine the daily market value. The pricing services use multiple inputs to determine market prices, including reportable trades, benchmark yield curves, credit spreads and broker/dealer quotes as well as other industry and economic events. For certain securities with short maturities, such as discount commercial paper and certificates of deposit, the security is accreted from purchase price to face value at maturity. If a subsequent transaction on the same security is observed in the marketplace, the price on the subsequent transaction is used as the current daily market price and the security will be accreted to face value based on the revised price.
The Company validates the consensus prices by taking random samples from each asset type and corroborating those prices using reported trade activity, benchmark yield curves, binding broker/dealer quotes or other relevant price information. There have not been any changes to the Company's fair value methodology during fiscal
2019
and the Company did not adjust or override any fair value measurements as of
March 30, 2019
.
Fair Value Hierarchy
The fair value framework requires the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities. The guidance for fair value measurements requires that assets and liabilities carried at fair value be classified and disclosed in one of the following categories:
Level 1 — Quoted (unadjusted) prices in active markets for identical assets or liabilities.
The Company's Level 1 assets consist of U.S. government securities, money market funds and marketable equity securities.
Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.
The Company's Level 2 assets consist of financial institution securities, non-financial institution securities, U.S. agency securities, foreign government and agency securities, mortgage-backed securities, debt mutual funds, asset-backed securities and commercial mortgage-backed securities. The Company's Level 2 assets and liabilities also include foreign currency forward contracts and interest rate swap contracts.
Level 3 — Unobservable inputs to the valuation methodology that are supported by little or no market activity and that are significant to the measurement of the fair value of the assets or liabilities. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques, as well as significant management judgment or estimation.
The Company has no Level 3 assets and liabilities measured at fair value on a recurring basis.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
In instances where the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company's assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability. The following tables present information about the Company's assets and liabilities measured at fair value on a recurring basis as of
March 30, 2019
and
March 31, 2018
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 30, 2019
|
(In thousands)
|
|
Quoted
Prices in
Active
Markets for
Identical
Instruments
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total Fair
Value
|
Assets
|
|
|
|
|
|
|
|
|
Cash equivalents:
|
|
|
|
|
|
|
|
|
Money market funds
|
|
$
|
428,150
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
428,150
|
|
Financial institution securities
|
|
—
|
|
|
287,945
|
|
|
—
|
|
|
287,945
|
|
Non-financial institution securities
|
|
—
|
|
|
461,884
|
|
|
—
|
|
|
461,884
|
|
U.S. government and agency securities
|
|
149,578
|
|
|
53,520
|
|
|
—
|
|
|
203,098
|
|
Foreign government and agency securities
|
|
—
|
|
|
99,750
|
|
|
—
|
|
|
99,750
|
|
Short-term investments:
|
|
|
|
|
|
|
|
|
Financial institution securities
|
|
—
|
|
|
249,850
|
|
|
—
|
|
|
249,850
|
|
Non-financial institution securities
|
|
—
|
|
|
240,040
|
|
|
—
|
|
|
240,040
|
|
U.S. government and agency securities
|
|
93,149
|
|
|
37,838
|
|
|
—
|
|
|
130,987
|
|
Foreign government and agency securities
|
|
—
|
|
|
114,705
|
|
|
—
|
|
|
114,705
|
|
Mortgage-backed securities
|
|
—
|
|
|
670,770
|
|
|
—
|
|
|
670,770
|
|
Debt mutual fund
|
|
—
|
|
|
31,934
|
|
|
—
|
|
|
31,934
|
|
Asset-backed securities
|
|
—
|
|
|
76,369
|
|
|
—
|
|
|
76,369
|
|
Commercial mortgage-backed securities
|
|
—
|
|
|
116,539
|
|
|
—
|
|
|
116,539
|
|
Long-term investments:
|
|
|
|
|
|
|
|
|
Debt mutual fund
|
|
—
|
|
|
53,433
|
|
|
—
|
|
|
53,433
|
|
Total assets measured at fair value
|
|
$
|
670,877
|
|
|
$
|
2,494,577
|
|
|
$
|
—
|
|
|
$
|
3,165,454
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Derivative financial instruments, net
|
|
$
|
—
|
|
|
$
|
9,009
|
|
|
$
|
—
|
|
|
$
|
9,009
|
|
Total liabilities measured at fair value
|
|
$
|
—
|
|
|
$
|
9,009
|
|
|
$
|
—
|
|
|
$
|
9,009
|
|
Net assets measured at fair value
|
|
$
|
670,877
|
|
|
$
|
2,485,568
|
|
|
$
|
—
|
|
|
$
|
3,156,445
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2018
|
(In thousands)
|
|
Quoted
Prices in
Active
Markets for
Identical
Instruments
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total Fair
Value
|
Assets
|
|
|
|
|
|
|
|
|
Cash equivalents:
|
|
|
|
|
|
|
|
|
Money market funds
|
|
$
|
1,291,891
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,291,891
|
|
Financial institution securities
|
|
—
|
|
|
359,901
|
|
|
—
|
|
|
359,901
|
|
Non-financial institution securities
|
|
—
|
|
|
242,904
|
|
|
—
|
|
|
242,904
|
|
U.S. government and agency securities
|
|
996
|
|
|
34,999
|
|
|
—
|
|
|
35,995
|
|
Foreign government and agency securities
|
|
—
|
|
|
179,957
|
|
|
—
|
|
|
179,957
|
|
Short-term investments:
|
|
|
|
|
|
|
|
|
Financial institution securities
|
|
—
|
|
|
75,000
|
|
|
—
|
|
|
75,000
|
|
Non-financial institution securities
|
|
—
|
|
|
81,939
|
|
|
—
|
|
|
81,939
|
|
U.S. government and agency securities
|
|
3,639
|
|
|
19,008
|
|
|
—
|
|
|
22,647
|
|
Mortgage-backed securities
|
|
—
|
|
|
844,397
|
|
|
—
|
|
|
844,397
|
|
Asset-backed securities
|
|
—
|
|
|
91,389
|
|
|
—
|
|
|
91,389
|
|
Commercial mortgage-backed securities
|
|
—
|
|
|
152,870
|
|
|
—
|
|
|
152,870
|
|
Long-term investments:
|
|
|
|
|
|
|
|
|
Debt mutual funds
|
|
—
|
|
|
89,670
|
|
|
—
|
|
|
89,670
|
|
Marketable equity securities
|
|
8,226
|
|
|
—
|
|
|
—
|
|
|
8,226
|
|
Total assets measured at fair value
|
|
$
|
1,304,752
|
|
|
$
|
2,172,034
|
|
|
$
|
—
|
|
|
$
|
3,476,786
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Derivative financial instruments, net
|
|
$
|
—
|
|
|
$
|
26,091
|
|
|
$
|
—
|
|
|
$
|
26,091
|
|
Total liabilities measured at fair value
|
|
$
|
—
|
|
|
$
|
26,091
|
|
|
$
|
—
|
|
|
$
|
26,091
|
|
Net assets measured at fair value
|
|
$
|
1,304,752
|
|
|
$
|
2,145,943
|
|
|
$
|
—
|
|
|
$
|
3,450,695
|
|
For certain of the Company’s financial instruments, including cash held in banks, accounts receivable and accounts payable, the carrying amounts approximate fair value due to their short maturities, and are therefore excluded from the fair value tables above.
Financial Instruments Not Recorded at Fair Value on a Recurring Basis
The Company's
$500.0 million
principal amount of
3.000%
notes due
March 15, 2021
(2021 Notes) and
$750.0 million
principal amount of
2.950%
senior notes due
June 1, 2024
(2024 Notes) are measured at fair value on a quarterly basis for disclosure purposes. The fair values of the 2021 Notes and 2024 Notes as of
March 30, 2019
were approximately,
$501.8 million
and
$743.6 million
, respectively, based on the last trading price of the respective debentures for the period (classified as Level 2 in fair value hierarchy due to relatively low trading volume).
Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis
As of
March 30, 2019
, the Company had non-marketable equity securities in private companies of
$74.6 million
, which were classified as Level 3 assets. The Company’s investments in non-marketable securities of private companies are also recorded at fair value if the Company recognizes an observable price adjustment or an impairment. Such impairment losses or observable price adjustments were not material during all periods presented. The Company’s investments in non-financial assets such as property, plant and equipment, goodwill and acquisition-related intangibles, are recorded at cost (net of accumulated depreciation or amortization, where applicable). These non-financial assets are only measured at fair value when indicators of impairment exist.
|
|
Note 4.
|
Financial Instruments
|
The following is a summary of cash equivalents and available-for-sale securities as of the end of the periods presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 30, 2019
|
|
|
March 31, 2018
|
(In thousands)
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Estimated Fair Value
|
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Estimated Fair Value
|
Money market funds
|
$
|
428,150
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
428,150
|
|
|
|
$
|
1,291,891
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,291,891
|
|
Financial institution
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
securities
|
537,795
|
|
|
—
|
|
|
—
|
|
|
537,795
|
|
|
|
434,901
|
|
|
—
|
|
|
—
|
|
|
434,901
|
|
Non-financial institution
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
securities
|
702,483
|
|
|
3
|
|
|
(562
|
)
|
|
701,924
|
|
|
|
326,219
|
|
|
—
|
|
|
(1,376
|
)
|
|
324,843
|
|
U.S. government and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
agency securities
|
334,185
|
|
|
39
|
|
|
(139
|
)
|
|
334,085
|
|
|
|
58,913
|
|
|
1
|
|
|
(272
|
)
|
|
58,642
|
|
Foreign government and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
agency securities
|
214,455
|
|
|
—
|
|
|
—
|
|
|
214,455
|
|
|
|
179,957
|
|
|
—
|
|
|
—
|
|
|
179,957
|
|
Mortgage-backed securities
|
684,596
|
|
|
809
|
|
|
(14,635
|
)
|
|
670,770
|
|
|
|
866,048
|
|
|
660
|
|
|
(22,311
|
)
|
|
844,397
|
|
Asset-backed securities
|
76,852
|
|
|
—
|
|
|
(483
|
)
|
|
76,369
|
|
|
|
92,751
|
|
|
16
|
|
|
(1,378
|
)
|
|
91,389
|
|
Commercial mortgage-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
backed securities
|
118,115
|
|
|
42
|
|
|
(1,618
|
)
|
|
116,539
|
|
|
|
156,296
|
|
|
1
|
|
|
(3,427
|
)
|
|
152,870
|
|
|
$
|
3,096,631
|
|
|
$
|
893
|
|
|
$
|
(17,437
|
)
|
|
$
|
3,080,087
|
|
|
|
$
|
3,406,976
|
|
|
$
|
678
|
|
|
$
|
(28,764
|
)
|
|
$
|
3,378,890
|
|
Financial institution securities include securities issued or managed by financial institutions in various forms, such as commercial paper and time deposits. Substantially all time deposits were issued by institutions outside the U.S. as of
March 30, 2019
and
March 31, 2018
.
The following tables show the fair values and gross unrealized losses of the Company's investments, aggregated by investment category, for individual securities that have been in a continuous unrealized loss position for the length of time specified, as of
March 30, 2019
and
March 31, 2018
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 30, 2019
|
|
Less Than 12 Months
|
|
12 Months or Greater
|
|
Total
|
(In thousands)
|
Fair Value
|
|
Gross Unrealized Losses
|
|
Fair Value
|
|
Gross Unrealized Losses
|
|
Fair Value
|
|
Gross Unrealized Losses
|
Non-financial institution securities
|
$
|
4,767
|
|
|
$
|
(4
|
)
|
|
$
|
51,044
|
|
|
$
|
(558
|
)
|
|
$
|
55,811
|
|
|
$
|
(562
|
)
|
U.S. government and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
agency securities
|
—
|
|
|
—
|
|
|
13,542
|
|
|
(139
|
)
|
|
13,542
|
|
|
(139
|
)
|
Mortgage-backed securities
|
34,595
|
|
|
(480
|
)
|
|
597,394
|
|
|
(14,155
|
)
|
|
631,989
|
|
|
(14,635
|
)
|
Asset-backed securities
|
—
|
|
|
—
|
|
|
76,103
|
|
|
(483
|
)
|
|
76,103
|
|
|
(483
|
)
|
Commercial mortgage-
|
|
|
|
|
|
|
|
|
|
|
|
backed securities
|
1,354
|
|
|
(3
|
)
|
|
112,294
|
|
|
(1,615
|
)
|
|
113,648
|
|
|
(1,618
|
)
|
|
$
|
40,716
|
|
|
$
|
(487
|
)
|
|
$
|
850,377
|
|
|
$
|
(16,950
|
)
|
|
$
|
891,093
|
|
|
$
|
(17,437
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2018
|
|
Less Than 12 Months
|
|
12 Months or Greater
|
|
Total
|
(In thousands)
|
Fair Value
|
|
Gross Unrealized Losses
|
|
Fair Value
|
|
Gross Unrealized Losses
|
|
Fair Value
|
|
Gross Unrealized Losses
|
Non-financial institution securities
|
$
|
69,780
|
|
|
$
|
(1,146
|
)
|
|
$
|
8,344
|
|
|
$
|
(230
|
)
|
|
$
|
78,124
|
|
|
$
|
(1,376
|
)
|
U.S. government and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
agency securities
|
13,471
|
|
|
(176
|
)
|
|
9,176
|
|
|
(96
|
)
|
|
22,647
|
|
|
(272
|
)
|
Mortgage-backed securities
|
510,988
|
|
|
(11,048
|
)
|
|
299,663
|
|
|
(11,263
|
)
|
|
810,651
|
|
|
(22,311
|
)
|
Asset-backed securities
|
57,128
|
|
|
(876
|
)
|
|
32,696
|
|
|
(502
|
)
|
|
89,824
|
|
|
(1,378
|
)
|
Debt mutual funds
|
—
|
|
|
—
|
|
|
89,670
|
|
|
(11,680
|
)
|
|
89,670
|
|
|
(11,680
|
)
|
Commercial mortgage-
|
|
|
|
|
|
|
|
|
|
|
|
backed securities
|
95,435
|
|
|
(1,760
|
)
|
|
56,051
|
|
|
(1,667
|
)
|
|
151,486
|
|
|
(3,427
|
)
|
|
$
|
746,802
|
|
|
$
|
(15,006
|
)
|
|
$
|
495,600
|
|
|
$
|
(25,438
|
)
|
|
$
|
1,242,402
|
|
|
$
|
(40,444
|
)
|
As of
March 30, 2019
, the gross unrealized losses that had been outstanding for both less than twelve months and more than twelve months were primarily related to mortgage-backed securities due to the general rising of the interest-rate environment, although the percentage of such losses to the total estimated fair value of the mortgage-backed securities was relatively insignificant.
The Company reviewed the investment portfolio and determined that the gross unrealized losses on these investments as of
March 30, 2019
and
March 31, 2018
were temporary in nature as evidenced by the fluctuations in the gross unrealized losses within the investment categories. The marketable debt securities (financial institution securities, non-financial institution securities, U.S. and foreign government and agency securities, asset-back securities, mortgage-backed securities and commercial mortgage-backed securities) are highly rated by the credit rating agencies, there have been no defaults on any of these securities and the Company has received interest payments as they become due. Therefore, the Company believes that it will be able to collect both principal and interest amounts due to the Company. Additionally, in the past several years a portion of the Company's investment in mortgage-backed securities was redeemed or prepaid by the debtors at par. Furthermore, the aggregate of individual unrealized losses that had been outstanding for twelve months or more was not significant as of
March 30, 2019
and
March 31, 2018
. The Company neither intends to sell these marketable debt securities nor concludes that it is more-likely-than-not that it will have to sell them until recovery of their carrying values.
The amortized cost and estimated fair value of marketable debt securities, by contractual maturity, are shown in the table below. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations without call or prepayment penalties.
|
|
|
|
|
|
|
|
|
|
March 30, 2019
|
(In thousands)
|
Amortized
Cost
|
|
Estimated
Fair Value
|
Due in one year or less
|
$
|
1,756,125
|
|
|
$
|
1,756,001
|
|
Due after one year through five years
|
133,780
|
|
|
132,476
|
|
Due after five years through ten years
|
135,971
|
|
|
134,020
|
|
Due after ten years
|
642,605
|
|
|
629,440
|
|
|
$
|
2,668,481
|
|
|
$
|
2,651,937
|
|
As of
March 30, 2019
,
$895.9 million
of marketable debt securities with contractual maturities of greater than one year were classified as short-term investments. Additionally, the above table does not include investments in money market and debt mutual funds because these investments do not have specific contractual maturities.
Certain information related to available-for-sale securities is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended
|
(In thousands)
|
March 30, 2019
|
|
March 31, 2018
|
|
April 1, 2017
|
Proceeds from sale of available-for-sale and equity securities
|
$
|
35,734
|
|
|
$
|
1,161,410
|
|
|
$
|
695,030
|
|
Gross realized gains on sale of available-for-sale securities
|
$
|
372
|
|
|
$
|
7,258
|
|
|
$
|
6,989
|
|
Gross realized losses on sale of available-for-sale securities
|
(51
|
)
|
|
(7,947
|
)
|
|
(3,457
|
)
|
Net realized (losses) gains on sale of available-for-sale securities
|
$
|
321
|
|
|
$
|
(689
|
)
|
|
$
|
3,532
|
|
Amortization of premiums on available-for-sale securities
|
$
|
8,118
|
|
|
$
|
24,569
|
|
|
$
|
29,360
|
|
The cost of securities matured or sold is based on the specific identification method.
Starting April 1, 2018, the Company records the change in the fair value of its investment in debt mutual funds and marketable equity securities as part of its interest and other income (expense), net. This change in fair value was a net decrease of
$5.0 million
for the twelve months ended March 30, 2019 and the Company recorded it within interest and other income (expense), net for the period in the consolidated statements of income.
|
|
Note 5.
|
Derivative Financial Instruments
|
The Company's primary objective for holding derivative financial instruments is to manage foreign currency exchange rate risk and interest rate risk. As a result of the use of derivative financial instruments, the Company is exposed to the risk that counterparties to derivative contracts may fail to meet their contractual obligations. The Company manages counterparty credit risk in derivative contracts by reviewing counterparty creditworthiness on a regular basis, establishing collateral requirement and limiting exposure to any single counterparty. The right of set-off that exists with certain transactions enables the Company to net amounts due to and from the counterparty, reducing the maximum loss from credit risk in the event of counterparty default.
The Company entered into interest rate swap contracts with certain independent financial institutions to manage interest rate risks related to fixed interest rate expenses from its 2024 Notes and floating interest rate income from its investments in marketable debt securities. See “Note 10. Debt and Credit Facility” for more discussion related to interest rate swap contracts. The interest rate swap contracts were designated and qualified as fair value hedges of the 2024 Notes, and were separately accounted for as a derivative. The interest rate swap contracts and the 2024 Notes were initially measured at fair value. Any subsequent changes in fair values of the interest rate swap contracts and the 2024 Notes will be recorded in the Company’s consolidated balance sheets. During the twelve months ended March 30, 2019, the net change in fair values of the interest rate swap contracts and the underlying 2024 Notes was
$18.9 million
, which was recorded as a derivative liability for the interest rate swap contacts (as a component of other long-term liabilities on the consolidated balance sheets) and also a reduction from the carrying amount of 2024 Notes. There was no ineffectiveness during all periods presented.
As of
March 30, 2019
and
March 31, 2018
, the Company had the following outstanding forward currency exchange contracts (in notional amount), which were derivative financial instruments:
|
|
|
|
|
|
|
|
|
(In thousands and U.S. dollars)
|
March 30, 2019
|
|
March 31, 2018
|
Singapore Dollar
|
$
|
29,420
|
|
|
$
|
24,914
|
|
Euro
|
39,408
|
|
|
38,987
|
|
Indian Rupee
|
77,973
|
|
|
62,472
|
|
British Pound
|
10,575
|
|
|
8,155
|
|
Japanese Yen
|
3,840
|
|
|
3,859
|
|
Chinese Yuan
|
34,386
|
|
|
8,260
|
|
|
$
|
195,602
|
|
|
$
|
146,647
|
|
As part of the Company's strategy to reduce volatility of operating expenses due to foreign exchange rate fluctuations, the Company employs a hedging program with a forward outlook of up to
two years
for major foreign-currency-denominated operating expenses. The outstanding forward currency exchange contracts expire at various dates through
February 2021
. The net unrealized gains, which approximate the fair market value of the outstanding forward currency exchange contracts, are expected to be recognized in the consolidated statements of income within the next
two years
.
As of
March 30, 2019
, all of the forward foreign currency exchange contracts were designated and qualified as cash flow hedges and the effective portion of the gain or loss on the forward contracts was reported as a component of other comprehensive income (loss) and reclassified into net income in the same period during which the hedged transaction affects earnings. The estimated amount of such gains or losses as of
March 30, 2019
that is expected to be reclassified into earnings was not material. The ineffective portion of the gains or losses on the forward contracts was included in the net income for all periods presented.
The Company may enter into forward foreign currency exchange contracts to hedge firm commitments such as acquisitions and capital expenditures. Gains and losses on foreign currency forward contracts that are designated as hedges of anticipated transactions, for which a firm commitment has been attained and the hedged relationship has been effective, are deferred and included in income or expenses in the same period that the underlying transaction is settled. Gains and losses on any instruments not meeting the above criteria are recognized in income or expenses in the consolidated statements of income as they are incurred.
The Company had the following derivative instruments as of
March 30, 2019
and
March 31, 2018
, located on the consolidated balance sheet, utilized for risk management purposes detailed above:
|
|
|
|
|
|
|
|
|
|
|
|
Foreign Exchange Contracts
|
|
Asset Derivatives
|
|
Liability Derivatives
|
(In thousands)
|
Balance Sheet Location
|
Fair Value
|
|
Balance Sheet Location
|
Fair Value
|
March 30, 2019
|
Prepaid expenses and other current assets
|
$
|
2,802
|
|
|
Other accrued liabilities
|
$
|
1,722
|
|
March 31, 2018
|
Prepaid expenses and other current assets
|
2,922
|
|
|
Other accrued liabilities
|
12
|
|
The Company does not offset or net the fair value amounts of derivative financial instruments in its consolidated balance sheets. The potential effect of rights of set-off associated with the derivative financial instruments was not material to the Company's consolidated balance sheet for all periods presented.
The following table summarizes the effect of derivative instruments on the consolidated statements of income for fiscal
2019
and
2018
:
|
|
|
|
|
|
|
|
|
|
Foreign Exchange Contracts
|
|
Years Ended
|
(In thousands)
|
March 30, 2019
|
|
|
March 31, 2018
|
|
Amount of (losses)/gains recognized in other comprehensive income on derivative (effective portion of cash flow hedging)
|
$
|
(1,427
|
)
|
|
$
|
862
|
|
Amount of (losses)/gains reclassified from accumulated other comprehensive income into income (effective portion) *
|
(5,603
|
)
|
|
4,655
|
|
Amount of losses recorded (ineffective portion) *
|
(4
|
)
|
|
(14
|
)
|
*Recorded in interest and other expense, net within the consolidated statements of income.
|
|
Note 6.
|
Stock-Based Compensation Plans
|
The Company's equity incentive plans are broad-based, long-term retention programs that cover employees, consultants and non-employee directors of the Company. These plans are intended to attract and retain talented employees, consultants and non-employee directors and to provide such persons with a proprietary interest in the Company.
Stock-Based Compensation
The following table summarizes stock-based compensation expense related to stock awards granted under the Company's equity incentive plans and rights to acquire stock granted under the Company's Amended and Restated 1990 Employee Qualified Stock Purchase Plan (ESPP):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended
|
(In thousands)
|
March 30, 2019
|
|
March 31, 2018
|
|
April 1, 2017
|
Stock-based compensation included in:
|
|
|
|
|
|
Cost of revenues
|
$
|
8,820
|
|
|
$
|
8,492
|
|
|
$
|
8,014
|
|
Research and development
|
86,428
|
|
|
76,790
|
|
|
66,822
|
|
Selling, general and administrative
|
52,694
|
|
|
51,912
|
|
|
48,022
|
|
Executive transition costs
|
—
|
|
|
16,621
|
|
|
—
|
|
Stock-based compensation effect on income before taxes
|
147,942
|
|
|
153,815
|
|
|
122,858
|
|
Income tax effect
|
(29,361
|
)
|
|
(40,188
|
)
|
|
(37,752
|
)
|
Net stock-based compensation effect on net income
|
$
|
118,581
|
|
|
$
|
113,627
|
|
|
$
|
85,106
|
|
The Company adjusts stock-based compensation on a quarterly basis for changes to the estimate of expected equity award forfeitures based on actual forfeiture experience. The effect of adjusting the forfeiture rate for all expense amortization was recognized in the period the forfeiture estimate was changed, and was not material for all periods presented.
During fiscal
2019
,
2018
and
2017
, there were
no
options granted and therefore the Company's stock-based compensation expense related to options, and the number of options outstanding as of
March 30, 2019
, were not material.
As of
March 30, 2019
and
March 31, 2018
, the ending inventory balances included
$2.1 million
of capitalized stock-based compensation. During fiscal
2019
,
2018
and
2017
, the tax benefit realized for the tax deduction from restricted stock units (RSUs) and other awards totaled
$44.4 million
,
$60.6 million
and
$53.3 million
, respectively. The tax deduction includes amounts credited to income tax expense.
The fair values of ESPP were estimated as of the grant date using the Black-Scholes option pricing model. The Company's expected stock price volatility assumption is estimated using implied volatility of the Company's traded options. The expected life of options granted is based on the historical exercise activity as well as the expected disposition of all options outstanding. The expected life of options granted also considers the actual contractual term.
The weighted-average fair value per share of stock purchase rights granted under the ESPP during fiscal
2019
,
2018
and
2017
were
$26.57
,
$17.95
and
$13.00
, respectively. These fair values per share were estimated at the date of grant using the following weighted-average assumptions:
|
|
|
|
|
|
|
|
|
|
|
Employee Stock Purchase Plan
|
|
Fiscal 2019
|
|
Fiscal 2018
|
|
Fiscal 2017
|
Expected life of options (years)
|
1.3
|
|
|
1.3
|
|
|
1.3
|
|
Expected stock price volatility
|
0.33
|
|
|
0.29
|
|
|
0.24
|
|
Risk-free interest rate
|
2.5
|
%
|
|
1.6
|
%
|
|
0.7
|
%
|
Dividend yield
|
1.7
|
%
|
|
2.1
|
%
|
|
2.4
|
%
|
The estimated fair values of RSU awards were calculated based on the market price of Xilinx common stock on the date of grant, reduced by the present value of dividends expected to be paid on Xilinx common stock prior to vesting. The per share weighted-average fair value of RSUs granted during fiscal
2019
,
2018
and
2017
were
$66.94
,
$60.18
and
$44.38
, respectively. The weighted average fair value of RSUs granted in fiscal
2019
,
2018
and
2017
were calculated based on estimates at the date of grant using the following weighted-average assumptions:
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2019
|
|
Fiscal 2018
|
|
Fiscal 2017
|
Risk-free interest rate
|
2.7
|
%
|
|
1.8
|
%
|
|
0.9
|
%
|
Dividend yield
|
2.1
|
%
|
|
2.2
|
%
|
|
2.8
|
%
|
As of
March 30, 2019
, total unrecognized stock-based compensation costs related to ESPP was
$26.0 million
. The total unrecognized stock-based compensation cost for ESPP is expected to be recognized over a weighted-average period of
1.1 years
.
Equity Incentive Plans
As of
March 30, 2019
,
11.3 million
shares are available for future grants under the 2007 Equity Incentive Plan (2007 Equity Plan). The contractual term for stock awards granted under the 2007 Equity Plan is
seven
years from the grant date. Stock awards granted to existing and newly hired employees generally vest over a
four
-year period from the date of grant.
A summary of shares available for grant under the 2007 Equity Plan is as follows:
|
|
|
|
|
(Shares in thousands)
|
|
Shares Available for Grant
|
April 2, 2016
|
|
12,946
|
|
Additional shares reserved
|
|
2,500
|
|
Stock options cancelled
|
|
1
|
|
RSUs granted
|
|
(3,398
|
)
|
RSUs cancelled
|
|
410
|
|
April 1, 2017
|
|
12,459
|
|
Additional shares reserved
|
|
1,900
|
|
RSUs granted
|
|
(3,718
|
)
|
RSUs cancelled
|
|
701
|
|
March 31, 2018
|
|
11,342
|
|
Additional shares reserved
|
|
3,000
|
|
RSUs granted
|
|
(3,559
|
)
|
RSUs cancelled
|
|
536
|
|
March 30, 2019
|
|
11,319
|
|
The types of awards allowed under the 2007 Equity Plan include incentive stock options, non-qualified stock options, RSUs, restricted stock and stock appreciation rights. To date, the Company has issued a mix of non-qualified stock options and RSUs under the 2007 Equity Plan.
The total pre-tax intrinsic value of options exercised during fiscal
2019
and
2018
was
$475 thousand
and
$4.1 million
, respectively. This intrinsic value represents the difference between the exercise price and the fair market value of the Company's common stock on the date of exercise.
Since the Company adopted the policy of retiring all repurchased shares of its common stock, new shares are issued upon employees' exercise of their stock options.
RSU Awards
A summary of the Company's RSU activity and related information is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
RSUs Outstanding
|
(Shares and intrinsic value in thousands)
|
Number of Shares
|
|
Weighted-Average Grant-Date Fair Value Per Share
|
|
Weighted Average Remaining Contractual Term (Years)
|
|
Aggregate Intrinsic Value
(1)
|
April 2, 2016
|
6,619
|
|
|
$40.74
|
|
|
|
|
Granted
|
3,398
|
|
|
$44.38
|
|
|
|
|
Vested
(2)
|
(2,619
|
)
|
|
$39.49
|
|
|
|
|
Cancelled
|
(410
|
)
|
|
$41.63
|
|
|
|
|
April 1, 2017
|
6,988
|
|
|
$42.93
|
|
|
|
|
Granted
|
3,718
|
|
|
$60.18
|
|
|
|
|
Vested
(2)
|
(3,016
|
)
|
|
$43.30
|
|
|
|
|
Cancelled
|
(701
|
)
|
|
$48.16
|
|
|
|
|
March 31, 2018
|
6,989
|
|
|
$51.39
|
|
|
|
|
Granted
|
3,559
|
|
|
$66.94
|
|
|
|
|
Vested
(2)
|
(2,681
|
)
|
|
$49.05
|
|
|
|
|
Cancelled
|
(536
|
)
|
|
$55.09
|
|
|
|
|
March 30, 2019
|
7,331
|
|
|
$59.54
|
|
2.42
|
|
$
|
929,644
|
|
|
|
|
|
|
|
|
|
|
|
Expected to vest as of March 30, 2019
|
5,733
|
|
|
$59.62
|
|
2.42
|
|
$
|
726,876
|
|
|
|
(1)
|
Aggregate intrinsic value for RSUs represents the closing price per share of Xilinx's stock on
March 30, 2019
of
$126.79
, multiplied by the number of RSUs outstanding or expected to vest as of
March 30, 2019
.
|
|
|
(2)
|
The number of RSUs vested includes shares that the Company withheld on behalf of employees to satisfy the statutory tax withholding requirements.
|
RSUs with a fair value of
$131.5 million
vested during fiscal
2019
. As of
March 30, 2019
, total unrecognized stock-based compensation costs related to non-vested RSUs was
$287.2 million
. The total unrecognized stock-based compensation cost for RSUs is expected to be recognized over a weighted-average period of
2.7 years
.
Employee Stock Purchase Plan
Under the Company's ESPP, qualified employees can obtain a
24
-month purchase right to purchase the Company's common stock at the end of each
six
-month exercise period. Participation is limited to
15%
of the employee's annual earnings up to a maximum of
$21 thousand
in a calendar year. Approximately
84%
of all eligible employees participated in the ESPP. The purchase price of the stock is
85%
of the lower of the fair market value at the beginning of the
24
-month offering period or at the end of each
six
-month exercise period. Employees purchased
1.0 million
shares for
$48.3 million
in fiscal
2019
,
918 thousand
shares for
$44.3 million
in fiscal 2018, and
1.2 million
shares for
$39.5 million
in fiscal 2017. The next scheduled purchase under the ESPP is in the second quarter of fiscal
2020
. As of
March 30, 2019
,
11.4 million
shares were available for future issuance.
Note 7. Supplemental Financial Information
The following tables disclose the current liabilities and other assets that individually exceed 5% of the respective consolidated balance sheet amounts in each fiscal year. Individual balances that are less than 5% of the respective consolidated balance sheet amounts are aggregated and disclosed as "other."
|
|
|
|
|
|
|
|
|
(In thousands)
|
March 30, 2019
|
|
|
March 31, 2018
|
|
Accrued payroll and related liabilities:
|
|
|
|
Accrued compensation
|
$
|
120,658
|
|
|
$
|
95,316
|
|
Deferred compensation plan liability
|
118,560
|
|
|
103,434
|
|
Others
|
8,050
|
|
|
7,617
|
|
|
$
|
247,268
|
|
|
$
|
206,367
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
March 30, 2019
|
|
|
March 31, 2018*
|
|
Other accrued liabilities:
|
|
|
|
Interest payable
|
$
|
16,583
|
|
|
$
|
14,169
|
|
Accruals related to software licenses
|
18,660
|
|
|
2,400
|
|
Others
|
46,316
|
|
|
43,111
|
|
|
$
|
81,559
|
|
|
$
|
59,680
|
|
* Prior year balances have been restated to reflect the retrospective application of the new revenue recognition accounting standard.
|
|
|
|
|
|
|
|
|
(In thousands)
|
March 30, 2019
|
|
|
March 31, 2018*
|
|
Other assets:
|
|
|
|
Deferred tax asset
|
$
|
126,702
|
|
|
$
|
96,848
|
|
Trust asset (deferred compensation plan)
|
109,271
|
|
|
95,310
|
|
Others
|
219,594
|
|
|
145,244
|
|
|
$
|
455,567
|
|
|
$
|
337,402
|
|
* Prior year balances have been restated to reflect the retrospective application of the new revenue recognition accounting standard.
Xilinx leases some of its facilities and office buildings under non-cancelable operating leases that expire at various dates through
April 2029
. Additionally, Xilinx entered into a land lease in conjunction with the Company's building in Singapore, which will expire in
November 2035
and the lease cost was settled in an up-front payment in June 2006. Some of the operating leases for facilities and office buildings require payment of operating costs, including property taxes, repairs, maintenance and insurance. Most of the Company's leases contain renewal options for varying terms. Xilinx also leases cars under non-cancelable operating leases that expire at various dates through May 2023. Approximate future minimum lease payments under non-cancelable operating leases are as follows:
|
|
|
|
|
Fiscal
|
(In thousands)
|
2020
|
$
|
11,991
|
|
2021
|
10,747
|
|
2022
|
9,580
|
|
2023
|
5,444
|
|
2024
|
5,338
|
|
Thereafter
|
29,293
|
|
Total
|
$
|
72,393
|
|
Aggregate future rental income to be received, which includes rents from both owned and leased property, totaled
$9.2 million
as of
March 30, 2019
. Rent expense, net of rental income, under all operating leases was
$4.4 million
for fiscal
2019
,
$3.9 million
for fiscal
2018
, and
$5.0 million
for fiscal
2017
. Rental income was not material for fiscal
2019
,
2018
or
2017
.
Other commitments as of
March 30, 2019
totaled
$230.8 million
and consisted of purchases of inventory and other non-cancelable purchase obligations related to subcontractors that manufacture silicon wafers and provide assembly and test services. The Company expects to receive and pay for these materials and services in the next
three
to
six
months, as the products meet delivery
and quality specifications. Additionally, as of
March 30, 2019
, the Company had
$4.4 million
of non-cancelable license obligations to providers of electronic design automation software and hardware/software maintenance,
$18.3 million
related to renovation of two of its properties and
$38.9 million
in commitments primarily related to open purchase orders from ordinary operations. These commitments expire at various dates through
December 2022
.
|
|
Note 9.
|
Net Income Per Common Share
|
The computation of basic net income per common share for all periods presented is derived from the information on the consolidated statements of income, and there are no reconciling items in the numerator used to compute diluted net income per common share. The following table summarizes the computation of basic and diluted net income per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended
|
(In thousands, except per share amounts)
|
March 30, 2019
|
|
|
March 31, 2018
|
|
|
April 1, 2017
|
|
Net income available to common stockholders
|
$
|
889,750
|
|
|
$
|
463,981
|
|
|
$
|
628,133
|
|
Weighted average common shares outstanding-basic
|
252,762
|
|
|
249,595
|
|
|
252,301
|
|
Dilutive effect of employee equity incentive plans
|
3,672
|
|
|
2,754
|
|
|
2,284
|
|
Dilutive effect of 2017 Convertible Notes and warrants
|
—
|
|
|
5,611
|
|
|
14,228
|
|
Weighted average common shares outstanding-diluted
|
256,434
|
|
|
257,960
|
|
|
268,813
|
|
Basic earnings per common share
|
$
|
3.52
|
|
|
$
|
1.86
|
|
|
$
|
2.49
|
|
Diluted earnings per common share
|
$
|
3.47
|
|
|
$
|
1.80
|
|
|
$
|
2.34
|
|
The total shares used in the denominator of the diluted net income per common share calculation include potentially dilutive common equivalent shares outstanding that are not included in basic net income per common share calculation. The diluted shares were calculated by applying the treasury stock method to the impact of the equity incentive plans, the incremental shares issuable assuming conversion of the Company's
$600.0 million
principal amount of
2.625%
convertible notes issued in June 2010 (2017 Convertible Notes), before its maturity on June 15, 2017, and exercise of warrants on a weighted-average outstanding basis, before the final settlements during the third quarter of fiscal 2018. The 2017 Convertible Notes matured during the first quarter of fiscal 2018, and the Company exercised its call options to neutralize the dilutive effect of the incremental shares from the 2017 Convertible Notes. Because the number of diluted shares in the above table for the 12 months ended March 31, 2018 was calculated based on a weighted-average outstanding basis, it included approximately
1.5 million
shares of dilutive impact from the 2017 Convertible Notes through the maturity date and
4.1 million
shares of dilutive impact from warrants before the settlement.
Certain shares of outstanding stock options and RSUs were excluded from diluted net income per common share calculation by applying the treasury stock method, as their inclusion would have been antidilutive. These options and RSUs were immaterial for fiscal
2019
,
2018
and
2017
. but could be dilutive in the future if the Company's average share price increases and is greater than the combined exercise prices and the unamortized fair values of these options and RSUs.
|
|
Note 10.
|
Interest and Other Income (Expense), Net
|
The components of interest and other income (expense), net are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended
|
(In thousands)
|
March 30, 2019
|
|
March 31, 2018
|
|
April 1, 2017
|
Interest income
|
$
|
77,295
|
|
|
$
|
58,604
|
|
|
$
|
51,121
|
|
Interest expense
|
(52,883
|
)
|
|
(45,837
|
)
|
|
(53,953
|
)
|
Other expense, net
|
(12,879
|
)
|
|
(7,410
|
)
|
|
(5,482
|
)
|
|
$
|
11,533
|
|
|
$
|
5,357
|
|
|
$
|
(8,314
|
)
|
|
|
Note 11.
|
Accumulated Other Comprehensive Loss
|
Comprehensive loss is defined as the change in equity of a company during a period from transactions and other events and circumstances from non-owner sources. The components of accumulated other comprehensive loss are as follows:
|
|
|
|
|
|
|
|
|
(In thousands)
|
March 30, 2019
|
|
|
March 31, 2018
|
|
Accumulated unrealized losses on available-for-sale securities, net of tax
|
$
|
(12,725
|
)
|
|
$
|
(29,844
|
)
|
Accumulated unrealized gains on hedging transactions, net of tax
|
95
|
|
|
1,674
|
|
Accumulated cumulative translation adjustment, net of tax
|
(10,780
|
)
|
|
(6,339
|
)
|
Accumulated other comprehensive loss
|
$
|
(23,410
|
)
|
|
$
|
(34,509
|
)
|
The related tax effects of other comprehensive loss were not material for all periods presented.
|
|
Note 12.
|
Debt and Credit Facility
|
2019 and 2021 Notes
On March 12, 2014, the Company issued the 2019 Notes and 2021 Notes at a discounted price of
99.477%
and
99.281%
of par, respectively. Interest on the 2019 Notes and 2021 Notes is payable semi-annually on March 15 and September 15.
The Company received net proceeds of
$990.1 million
from issuance of the 2019 Notes and 2021 Notes, after the debt discounts and deduction of debt issuance costs. The debt discounts and issuance costs are amortized to interest expense over the terms of the 2019 and 2021 Notes. On March 15, 2019, the 2019 Notes matured and the Company paid the aggregate outstanding principal of $
500.0 million
, plus accrued interest. As of
March 30, 2019
, the remaining term of the 2021 Notes is
2.0
years.
The following table summarizes the carrying value of the 2019 Notes and 2021 Notes in the Company's consolidated balance sheets:
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
March 30, 2019
|
|
|
March 31, 2018
|
|
Principal amount of the 2019 Notes
|
|
$
|
—
|
|
|
$
|
500,000
|
|
Unamortized discount of the 2019 Notes
|
|
—
|
|
|
(501
|
)
|
Unamortized debt issuance costs associated with the 2019 Notes
|
|
—
|
|
|
(313
|
)
|
Carrying value of the 2019 Notes
|
|
—
|
|
|
499,186
|
|
Principal amount of the 2021 Notes
|
|
500,000
|
|
|
500,000
|
|
Unamortized discount of the 2021 Notes
|
|
(1,063
|
)
|
|
(1,593
|
)
|
Unamortized debt issuance costs associated with the 2021 Notes
|
|
(467
|
)
|
|
(711
|
)
|
Carrying value of the 2021 Notes
|
|
$
|
498,470
|
|
|
$
|
497,696
|
|
Total carrying value
|
|
$
|
498,470
|
|
|
$
|
996,882
|
|
Interest expense related to the 2019 Notes and 2021 Notes was included in interest and other income (expense), net on the consolidated statements of income as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended
|
(In thousands)
|
|
March 30, 2019
|
|
March 31, 2018
|
|
April 1, 2017
|
Contractual coupon interest
|
|
$
|
24,740
|
|
|
$
|
25,625
|
|
|
$
|
25,625
|
|
Amortization of debt issuance costs
|
|
557
|
|
|
586
|
|
|
586
|
|
Amortization of debt discount, net
|
|
1,030
|
|
|
1,049
|
|
|
1,022
|
|
Total interest expense related to the 2019 and 2021 Notes
|
|
$
|
26,327
|
|
|
$
|
27,260
|
|
|
$
|
27,233
|
|
2024 Notes
On
May 30, 2017
, the Company issued the 2024 Notes at a discounted price of
99.887%
of par. Interest on the 2024 Notes is payable semi-annually on June 1 and December 1.
The Company received net proceeds of
$745.2 million
from the issuance of the 2024 Notes, after the debt discount and deduction of debt issuance costs. The debt discounts and issuance costs are amortized to interest expense over the term of the 2024 Notes. As of
March 30, 2019
, the remaining term of the 2024 Notes is approximately
5.2
years.
In relation to the issuance of the 2024 Notes, the Company entered into interest rate swap contracts with certain independent financial institutions, whereby the Company pays on a semi-annual basis, a variable interest rate equal to the t
hree-month London Interbank Offered Rate (LIBOR) plus 91.43 bps
, and receives on a semi-annual basis, interest income at a fixed interest rate of
2.950%
. The Company incurred a net interest expense of
$3.8 million
during the twelve months ended
March 30, 2019
and earned a net interest income of
$4.4 million
during the twelve months ended
March 31, 2018
, respectively, from the interest rate swap contracts, which was included in interest and other income (expense), net on the consolidated statements of income. As of
March 30, 2019
, the fair value of the interest rate swap contracts was
$10.1 million
, which was recorded in other long-term liabilities on the consolidated balance sheets.
The following table summarizes the carrying value of the 2024 Notes in the Company's consolidated balance sheets:
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
March 30, 2019
|
|
|
March 31, 2018
|
|
Principal amount of the 2024 Notes
|
|
$
|
750,000
|
|
|
$
|
750,000
|
|
Unamortized discount of the 2024 Notes
|
|
(642
|
)
|
|
(755
|
)
|
Unamortized debt issuance costs associated with the 2024 Notes
|
|
(2,932
|
)
|
|
(3,500
|
)
|
Carrying value of the 2024 Notes
|
|
746,426
|
|
|
745,745
|
|
Fair value hedge adjustment - interest rate swap contracts
|
|
(10,089
|
)
|
|
(29,001
|
)
|
Net carrying value of the 2024 Notes
|
|
$
|
736,337
|
|
|
$
|
716,744
|
|
Interest expense related to the 2024 Notes was included in interest and other income (expense), net on the consolidated statements of income as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended
|
(In thousands)
|
|
March 30, 2019
|
|
March 31, 2018
|
|
April 1, 2017
|
Contractual coupon interest (net of interest rate swap)
|
|
$
|
25,875
|
|
|
$
|
14,122
|
|
|
$
|
—
|
|
Amortization of debt issuance costs
|
|
568
|
|
|
473
|
|
|
—
|
|
Amortization of debt discount
|
|
113
|
|
|
92
|
|
|
—
|
|
Total interest expense related to the 2024 Notes
|
|
$
|
26,556
|
|
|
$
|
14,687
|
|
|
$
|
—
|
|
Revolving Credit Facility
On
December 7, 2016
, the Company entered into a
$400.0 million
senior unsecured revolving credit facility that, upon certain conditions, may be extended by an additional
$150.0 million
, with a syndicate of banks (expiring in
December 2021
). Borrowings under the credit facility will bear interest at a benchmark rate plus an applicable margin based upon the Company's credit rating. In connection with the credit facility, the Company is required to maintain certain financial and non-financial covenants. As of
March 30, 2019
, the Company had made
no
borrowings under this credit facility and was not in violation of any of the covenants.
Note 13. Stockholders' Equity
Preferred Stock
The Company's Certificate of Incorporation authorized
2.0 million
shares of undesignated preferred stock. The preferred stock may be issued in one or more series. The Board of Directors is authorized to determine or alter the rights, preferences, privileges and restrictions granted to, or imposed upon, any wholly unissued series of preferred stock. As of
March 30, 2019
and
March 31, 2018
,
no
preferred shares were issued or outstanding.
Common Stock and Debentures Repurchase Programs
The Board of Directors has approved stock repurchase programs enabling the Company to repurchase its common stock in the open market or through negotiated transactions with independent financial institutions. In May 2016, the Board authorized the repurchase of up to
$1.00 billion
of the Company's common stock and debentures (2016 Repurchase Program). The 2016 Repurchase Program has no stated expiration date. In May 2018, the Board also authorized the repurchase of the Company's common stock and debentures up to
$500.0
million (2018 Repurchase Program).
Through
March 30, 2019
, the Company has used
$953.7 million
of the
$1.00 billion
authorized under the 2016 Repurchase Program, leaving
$46.3 million
available for future repurchases. The Company's current policy is to retire all repurchased shares, and consequently,
no
treasury shares were held as of
March 30, 2019
and
March 31, 2018
.
During fiscal
2019
, the Company repurchased
2.4 million
in the open market with independent financial institutions for a total of
$161.6 million
. During fiscal
2018
, the Company repurchased
7.0 million
shares of common stock in the open market and through accelerated share repurchase agreements with multiple independent financial institutions for a total of approximately
$474.3 million
.
The provision for income taxes consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended
|
(In thousands)
|
|
March 30, 2019
|
|
March 31, 2018 *
|
|
April 1, 2017 *
|
Federal:
|
|
|
|
|
|
|
Current
|
|
$
|
90,674
|
|
|
$
|
565,765
|
|
|
$
|
(19,097
|
)
|
Deferred
|
|
(30,746
|
)
|
|
(370,893
|
)
|
|
65,049
|
|
|
|
59,928
|
|
|
194,872
|
|
|
45,952
|
|
State:
|
|
|
|
|
|
|
Current
|
|
4,623
|
|
|
2,520
|
|
|
(938
|
)
|
Deferred
|
|
2,545
|
|
|
7,813
|
|
|
3,170
|
|
|
|
7,168
|
|
|
10,333
|
|
|
2,232
|
|
Foreign:
|
|
|
|
|
|
|
Current
|
|
16,282
|
|
|
23,483
|
|
|
21,121
|
|
Deferred
|
|
(4,796
|
)
|
|
(1,290
|
)
|
|
638
|
|
|
|
11,486
|
|
|
22,193
|
|
|
21,759
|
|
Total
|
|
$
|
78,582
|
|
|
$
|
227,398
|
|
|
$
|
69,943
|
|
* Prior year balances have been restated to reflect the retrospective application of the new revenue recognition accounting standard.
The domestic and foreign components of income before income taxes were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
March 30, 2019
|
|
March 31, 2018 *
|
|
April 1, 2017 *
|
Domestic
|
|
$
|
173,082
|
|
|
$
|
21,198
|
|
|
$
|
43,662
|
|
Foreign
|
|
795,250
|
|
|
670,181
|
|
|
654,414
|
|
Income before income taxes
|
|
$
|
968,332
|
|
|
$
|
691,379
|
|
|
$
|
698,076
|
|
* Prior year balances have been restated to reflect the retrospective application of the new revenue recognition accounting standard.
On December 22, 2017, the TCJA was enacted into law. The TCJA provides for numerous significant tax law changes and modifications including the reduction of the U.S. federal corporate income tax rate from 35% to 21%, the requirement for companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and the creation of new taxes on certain foreign-sourced earnings. Some provisions of the TCJA began to impact the Company in fiscal 2018, while other provisions impacted the Company beginning in fiscal 2019.
SAB 118 allows companies to record provisional amounts and recognize the effect of the tax law changes during a measurement period. The Company recorded provisional income tax expense of
$214.7 million
in its fiscal 2018 results. During fiscal 2019, the Company recorded income tax expense of
$2.4 million
as measurement period adjustments to the provisional amounts recorded in fiscal 2018. The measurement period adjustments include the impact of the Company's accounting policy election to recognize deferred taxes for temporary basis differences that are expected to reverse as GILTI income in future years. The measurement period ended in the third quarter of fiscal 2019. Although the measurement period has closed, further technical guidance related
to the TCJA, including final regulations on a broad range of topics, is expected to be issued. In accordance with ASC 740, the Company will recognize any effects of the guidance in the period that such guidance is issued.
The Company recorded excess tax benefits associated with stock-based compensation of
$14.2 million
,
$21.5 million
, and
$15.4 million
in the provision for income taxes during fiscal 2019, 2018, and 2017 respectively.
As of
March 30, 2019
, the Company had state research tax credit carryforwards of approximately
$195.9 million
. The credits have no expiration date. Some of the state credit carryforwards are subject to change of ownership limitations provided by state provisions similar to that of the Internal Revenue Code. The state credit carryforwards include
$148.0 million
that is not likely to be recovered and has been reduced by a valuation allowance.
The provision for income taxes reconciles to the amount derived by applying the federal statutory income tax rate to income before provision for taxes as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended
|
(In thousands)
|
|
March 30, 2019
|
|
March 31, 2018 *
|
|
April 1, 2017 *
|
Income before provision for taxes
|
|
$
|
968,332
|
|
|
$
|
691,379
|
|
|
$
|
698,076
|
|
Federal statutory tax rate
|
|
21.0
|
%
|
|
31.5
|
%
|
|
35.0
|
%
|
Computed expected tax
|
|
203,350
|
|
|
217,784
|
|
|
244,327
|
|
State taxes, net of federal benefit
|
|
6,379
|
|
|
9,785
|
|
|
1,791
|
|
Foreign earnings at lower tax rates
|
|
(98,387
|
)
|
|
(188,174
|
)
|
|
(120,737
|
)
|
Tax credits
|
|
(31,679
|
)
|
|
(19,708
|
)
|
|
(34,146
|
)
|
Transition tax
|
|
21,063
|
|
|
208,523
|
|
|
—
|
|
Deferred tax remeasurement
|
|
—
|
|
|
21,834
|
|
|
—
|
|
Excess benefits from stock-based compensation
|
|
(14,196
|
)
|
|
(21,520
|
)
|
|
(15,396
|
)
|
Other
|
|
(7,948
|
)
|
|
(1,126
|
)
|
|
(5,896
|
)
|
Provision for income taxes
|
|
$
|
78,582
|
|
|
$
|
227,398
|
|
|
$
|
69,943
|
|
* Prior year balances have been restated to reflect the retrospective application of the new revenue recognition accounting standard.
The Company has manufacturing operations in Singapore where the Company has been granted "Pioneer Status" that is effective through fiscal 2021. The Pioneer Status reduces the Company's tax on the majority of Singapore income from
17%
to
zero
percent. The benefits of Pioneer Status in Singapore for fiscal
2019
, fiscal
2018
and fiscal
2017
were approximately
$48.0 million
(
$0.19
per diluted share),
$61.5 million
(
$0.24
per diluted share), and
$56.2 million
(
$0.21
per diluted share), respectively. The tax effect of operations in low tax jurisdictions on the Company's overall tax rate is reflected in the table above.
The major components of deferred tax assets and liabilities consisted of the following:
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
March 30, 2019
|
|
|
March 31,2018*
|
|
Deferred tax assets:
|
|
|
|
|
Stock-based compensation
|
|
$
|
18,514
|
|
|
$
|
17,213
|
|
Accrued expenses
|
|
7,744
|
|
|
7,340
|
|
Tax credit carryforwards
|
|
155,036
|
|
|
140,406
|
|
Deferred compensation plan
|
|
27,186
|
|
|
24,121
|
|
Low income housing and other investments
|
|
6,366
|
|
|
5,836
|
|
GILTI deferred taxes
|
|
38,410
|
|
|
—
|
|
Other
|
|
22,997
|
|
|
15,338
|
|
Subtotal
|
|
276,253
|
|
|
210,254
|
|
Valuation allowance
|
|
(118,773
|
)
|
|
(101,383
|
)
|
Total deferred tax assets
|
|
157,480
|
|
|
108,871
|
|
Deferred tax liabilities:
|
|
|
|
|
Unremitted foreign earnings
|
|
(5,142
|
)
|
|
(6,185
|
)
|
Intangible assets
|
|
(20,775
|
)
|
|
(762
|
)
|
Distributor price adjustments
|
|
(11,464
|
)
|
|
(168
|
)
|
Other
|
|
(4,975
|
)
|
|
(5,028
|
)
|
Total deferred tax liabilities
|
|
(42,356
|
)
|
|
(12,143
|
)
|
Total net deferred tax assets
|
|
$
|
115,124
|
|
|
$
|
96,728
|
|
* Prior year balances have been restated to reflect the retrospective application of the new revenue recognition accounting standard.
Long-term deferred tax assets of
$126.7 million
and
$96.8 million
as of
March 30, 2019
and
March 31, 2018
, respectively, were included in other assets on the consolidated balance sheet.
As of
March 30, 2019
and
March 31, 2018
, gross deferred tax assets were offset by valuation allowances of
$118.8 million
and
$101.4 million
, respectively, which were primarily associated with state tax credit carryforwards.
The aggregate changes in the balance of gross unrecognized tax benefits were as follows:
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
March 30, 2019
|
|
|
March 31, 2018
|
Balance as of beginning of fiscal year
|
|
$
|
125,148
|
|
|
$
|
30,437
|
|
Increases in tax positions for prior years
|
|
18,156
|
|
|
90,716
|
|
Decreases in tax positions for prior years
|
|
(666
|
)
|
|
(1,063
|
)
|
Increases in tax positions for current year
|
|
5,132
|
|
|
5,158
|
|
Settlements
|
|
—
|
|
|
—
|
|
Lapses in statutes of limitation
|
|
(154
|
)
|
|
(100
|
)
|
Balance as of end of fiscal year
|
|
$
|
147,616
|
|
|
$
|
125,148
|
|
The Company’s total gross unrecognized tax benefits increased by
$22.5 million
during fiscal 2019. If the remaining balance of
$147.6 million
and
$125.1 million
of unrecognized tax benefits as of
March 30, 2019
and
March 31, 2018
, respectively, were realized in a future period, it would result in a tax benefit of
$35.3 million
and
$15.1 million
, respectively, thereby reducing the effective tax rate. Another
$85.5 million
would increase additional paid-in capital. The
$85.5 million
relates to an additional deduction claimed on federal and state amended tax returns for fiscal 2014 for repurchase premium paid in that year in connection with the early redemption of the Company’s 3.125% Junior Convertible debenture due March 15, 2037.
The Company's policy is to include interest and penalties related to income tax liabilities within the provision for income taxes on the consolidated statements of income. The balances of accrued interest and penalties recorded in the consolidated balance
sheets and the amounts of interest and penalties included in the Company's provisions for income taxes were not material for any period presented.
The statutes of limitations have closed for U.S. federal income tax purposes for years through fiscal 2014, for U.S. state income tax purposes for years through fiscal 2010, and for Ireland income tax purposes for years through fiscal 2014.
The Company believes its provision for unrecognized tax benefits is adequate for adjustments that may result from tax audits. However, the outcome of tax audits cannot be predicted with certainty. If any issues addressed in the Company's tax audits are resolved in a manner not consistent with management's expectations, the Company could be required to adjust its provision for income taxes in the period such resolution occurs. It is reasonably possible that changes to the Company's unrecognized tax benefits could be significant in the next twelve months due to tax audit settlements and lapses of statutes of limitation. As a result of uncertainties regarding tax audits and their possible outcomes, an estimate of the range of increase or decrease that could occur in the next twelve months cannot be made at this time.
Note 15. Segment Information
Xilinx designs, develops and markets programmable logic semiconductor devices and the related software design tools. The Company operates and tracks its results in
one
operating segment. Xilinx sells its products to OEMs and to electronic components distributors who resell these products to OEMs or subcontract manufacturers.
Geographic revenue information for fiscal
2019
,
2018
and
2017
reflects the geographic location of the distributors or OEMs who purchased the Company's products. This may differ from the geographic location of the end customers. Long-lived assets include property, plant and equipment, which were based on the physical location of the asset as of the end of each fiscal year.
Net revenues by geographic region were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended
|
(In thousands)
|
March 30, 2019
|
|
March 31, 2018 *
|
|
April 1, 2017 *
|
North America:
|
|
|
|
|
|
United States
|
$
|
748,245
|
|
|
$
|
652,222
|
|
|
$
|
605,999
|
|
Other (individual countries less than 10%)
|
100,478
|
|
|
96,694
|
|
|
132,300
|
|
Total North America
|
848,723
|
|
|
748,916
|
|
|
738,299
|
|
|
|
|
|
|
|
Asia Pacific:
|
|
|
|
|
|
China
|
850,595
|
|
|
638,180
|
|
|
599,812
|
|
Other (individual countries less than 10%)
|
534,987
|
|
|
370,307
|
|
|
358,844
|
|
Total Asia Pacific
|
1,385,582
|
|
|
1,008,487
|
|
|
958,656
|
|
|
|
|
|
|
|
Europe
|
586,893
|
|
|
501,049
|
|
|
461,116
|
|
Japan
|
237,842
|
|
|
208,571
|
|
|
198,671
|
|
Total Foreign
|
2,210,317
|
|
|
1,718,107
|
|
|
1,618,443
|
|
Worldwide Total
|
$
|
3,059,040
|
|
|
$
|
2,467,023
|
|
|
$
|
2,356,742
|
|
* Prior year balances have been restated to reflect the retrospective application of the new revenue recognition accounting standard.
Net long-lived assets by country at fiscal year-ends were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended
|
(In thousands)
|
March 30, 2019
|
|
March 31, 2018
|
|
April 1, 2017
|
United States
|
$
|
212,385
|
|
|
$
|
206,406
|
|
|
$
|
211,995
|
|
Foreign:
|
|
|
|
|
|
Ireland
|
36,984
|
|
|
38,257
|
|
|
40,626
|
|
Singapore
|
62,257
|
|
|
45,013
|
|
|
39,345
|
|
Other (individual countries less than 10%)
|
17,303
|
|
|
14,441
|
|
|
11,859
|
|
Total foreign
|
116,544
|
|
|
97,711
|
|
|
91,830
|
|
Worldwide total
|
$
|
328,929
|
|
|
$
|
304,117
|
|
|
$
|
303,825
|
|
|
|
Note 16.
|
Litigation Settlements and Contingencies
|
Patent Litigation
On February 1, 2017, a patent infringement lawsuit was filed by Godo Kaisha IP Bridge 1 (IP Bridge) against the Company in the U.S. District Court for the Eastern District of Texas (Godo Kaisha IP Bridge 1 v. Xilinx, Inc., Case. No. 2:17-cv-00100). The lawsuit pertains to
two
patents and IP Bridge seeks unspecified damages, interest, attorneys’ fees, costs, and a permanent injunction or an on-going royalty. On September 14, 2017, the court granted the Company’s motion to transfer venue to the U.S. District Court for the Northern District of California. On December 21, 2018, the parties reached an agreement to settle the lawsuit, pursuant to which the parties entered into a patent license agreement dated as of the same date. The patent license agreement does not have a material impact on the Company's financial position or results of operations.
On March 17, 2017, a patent infringement lawsuit was filed by Anza Technology, Inc. (Anza) against the Company in the U.S. District Court for the District of Colorado (Anza Technology, Inc. v. Xilinx, Inc., Case No. 1:17-cv-00687). The lawsuit pertains to
three
patents and Anza seeks unspecified damages, attorney fees, interest, costs, and expenses. On October 27, 2017, the court granted the Company’s motion to transfer venue to the U.S. District Court for the Northern District of California. The parties reached an agreement to settle the lawsuit and it was dismissed with prejudice on July 23, 2018. The amount of the settlement did not have a material impact on the Company's financial position or results of operations.
The Company intends to continue to protect and defend our IP vigorously.
Other Matters
On June 11, 2015, John P. Neblett, as Chapter 7 Trustee of Valley Forge Composite Technologies, Inc., filed a complaint against Xilinx and others in the U.S. Bankruptcy Court for the Middle District of Pennsylvania (Bankruptcy No. 1:13-bk-05253-JJT). The complaint alleges causes of actions against Xilinx for negligence and civil conspiracy relating to alleged violations of U.S. export laws. It seeks at least
$50.0 million
in damages, together with punitive damages, from the defendants. On September 21, 2015, the action was withdrawn from the U.S. Bankruptcy Court for the Middle District of Pennsylvania and transferred to the U.S. District Court for the Eastern District of Kentucky. On November 2, 2015, Xilinx, along with other defendants, filed a motion to dismiss the complaint. On November 3, 2015, Xilinx filed a motion for sanctions pursuant to Federal Rule of Civil Procedure 11. On June 27, 2016, the Court denied both motions. On September 11, 2017, Xilinx, along with other defendants, filed motions for summary judgment seeking to dispose of all claims against them. On July 3, 2018, the Court granted both of Xilinx’s Motions for Summary Judgment, disposing of all claims asserted against Xilinx. On August 1, 2018, the Trustee filed a Notice of Appeal. On August 9, 2018, the Court of Appeals for the Sixth Circuit issued an Order to Show Cause requesting that the appellant address a possible jurisdictional defect. On August 29, 2018, the appellant responded to the Order to Show Cause. On September 10, 2018, appellees, including Xilinx, filed a joint reply. On January 7, 2019, the Court of Appeals issued an order dismissing the appeal for lack of jurisdiction. On February 19, 2019, the District Court issued an order permitting any party seeking to certify the case for appeal to file a motion. On March 11, 2019, defendant Avnet filed a motion to certify the case for appeal. The Court has not yet ruled on Avnet’s motion.
From time to time, the Company is involved in various disputes and litigation matters that arise in the ordinary course of its business. These include disputes and lawsuits related to intellectual property, mergers and acquisitions, licensing, contract law, tax, regulatory, distribution arrangements, employee relations and other matters. Periodically, the Company reviews the status of each matter and assesses its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and a range of possible losses can be estimated, the Company accrues a liability for the estimated loss. Legal proceedings
are subject to uncertainties, and the outcomes are difficult to predict. Because of such uncertainties, accruals are based only on the best information available at the time. As additional information becomes available, the Company continues to reassess the potential liability related to pending claims and litigation and may revise estimates.
|
|
Note 17.
|
Goodwill and Acquisition-Related Intangibles
|
The gross and net amounts of goodwill and of acquisition-related intangibles for all acquisitions were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-Average
|
(In thousands)
|
March 30, 2019
|
|
|
March 31, 2018
|
|
|
Amortization Life
|
Goodwill
|
$
|
340,718
|
|
|
$
|
162,421
|
|
|
|
Core technology, gross
|
107,250
|
|
|
82,480
|
|
|
|
Less accumulated amortization
|
(82,611
|
)
|
|
(78,562
|
)
|
|
|
Core technology, net
|
24,639
|
|
|
3,918
|
|
|
4.3 years
|
Other intangibles, gross
|
51,016
|
|
|
46,966
|
|
|
|
Less accumulated amortization
|
(47,642
|
)
|
|
(46,761
|
)
|
|
|
Other intangibles, net
|
3,374
|
|
|
205
|
|
|
2.5 years
|
In-process research and development (not subject to amortization)
|
52,710
|
|
|
—
|
|
|
|
Total acquisition-related intangibles, gross
|
210,976
|
|
|
129,446
|
|
|
|
Less accumulated amortization
|
(130,253
|
)
|
|
(125,323
|
)
|
|
|
Total acquisition-related intangibles, net
|
$
|
80,723
|
|
|
$
|
4,123
|
|
|
|
Amortization expense for acquisition-related intangibles for fiscal
2019
,
2018
and
2017
were
$4.9 million
,
$2.2 million
and
$5.1 million
, respectively.
During the second quarter of fiscal 2019, the Company recorded
$178.3 million
of goodwill and
$81.5 million
of intangibles attributable to the acquisition of Deephi Technology. Ltd (Deephi Tech). See "Note 20. Business Combination" to the Company's consolidated financial statements.
Based on the carrying value of acquisition-related intangibles recorded as of
March 30, 2019
, and assuming no subsequent impairment of the underlying assets, the annual amortization expense for acquisition-related intangibles is expected to be as follows:
|
|
|
|
|
Fiscal
|
(In thousands)
|
2020
|
$
|
7,464
|
|
2021
|
7,442
|
|
2022
|
6,089
|
|
2023
|
4,954
|
|
Thereafter
|
2,064
|
|
Total
|
$
|
28,013
|
|
In-process research and development is not subject to amortization prior to the completion of the projects and therefore the balance is excluded from the above annual amortization expense schedule.
Note 18. Employee Benefit Plans
Xilinx offers various retirement benefit plans for U.S. and non-U.S. employees. Total contributions to these plans were
$15.1 million
,
$14.7 million
and
$12.9 million
in fiscal
2019
,
2018
and
2017
, respectively. For employees in the U.S., Xilinx instituted a Company matching program pursuant to which the Company will match contributions to Xilinx's 401(k) Plan (the 401(k) Plan) based on the amount of salary deferral contributions the participant makes to the 401(k) Plan. Xilinx will match up to
50%
of the first
8%
of an employee's compensation that the employee contributed to their 401(k) accounts. The maximum Company contribution per year is
$4,500
per employee. As permitted under Section 401(k) of the Internal Revenue Code, the 401(k) Plan allows tax deferred salary deductions for eligible employees. The Compensation Committee of the Board of Directors administers the 401(k) Plan. Participants in the 401(k) Plan may make salary deferrals of up to
75%
of the eligible annual salary, limited by the maximum dollar amount allowed by the Internal Revenue Code. Participants who have reached the age of
50
before the close of the plan year may be eligible to make catch-up salary deferral contributions, up to
75%
of eligible annual salary, limited by the maximum dollar amount allowed by the Internal Revenue Code.
The Company allows its U.S.-based officers, director-level employees and its board members to defer a portion of their compensation under the Deferred Compensation Plan (the Plan). The Compensation Committee administers the Plan. As of
March 30, 2019
, there were
230
participants in the Plan who self-direct their contributions into a menu of hypothetical investment options offered by the Plan that tracks a portfolio of various deemed investment funds. The Plan does not allow Plan participants to invest directly in Xilinx's stock. In the event Xilinx becomes insolvent, Plan assets are subject to the claims of the Company's general creditors. There are no Plan provisions that provide for any guarantees or minimum return on investments. As of
March 30, 2019
, Plan assets of
$109.3 million
were included in other assets within the consolidated balance sheet and obligations of
$118.6 million
were included in accrued payroll and related liabilities. As of
March 31, 2018
, Plan assets were
$95.3 million
and obligations were
$103.4 million
.
Note 19. Executive Transition Costs
During the fourth quarter of fiscal 2018, the Company announced the transition of its President and Chief Executive Officer position, whereby Moshe Gavrielov resigned from those roles and Victor Peng assumed these roles. Additionally, the Company also implemented restructuring measures to realign resources and drive overall operating efficiencies, which impacted approximately
60
positions in various geographies and functions worldwide. The Company recorded total transition charges of
$33.4 million
in the fourth quarter of fiscal 2018, primarily related to severance pay expenses and other benefits. As of the end of fiscal 2019, the remaining accrual for severance and other benefits was immaterial.
Note 20. Business Combination
During the second quarter of fiscal 2019, the Company completed the acquisition of Deephi Tech by acquiring all its outstanding ordinary shares. Deephi Tech was a privately held start-up with industry-leading capabilities in machine learning and focusing on system-level neural network optimization. This acquisition strengthens the Company's capabilities in artificial intelligence applications.
Total purchase consideration to acquire Deephi Tech was
$251.9 million
, including
$11.5 million
of fair value from the Company's preexisting investment in Deephi Tech and
$6.3 million
of cash acquired. The Company incurred
$3.4 million
of acquisition related costs, which was recorded in the operating expenses of consolidated statements of income. Additionally, the Company was required to assess the fair value of its preexisting investment in Deephi Tech and recorded
$6.5 million
gain in its consolidated statements of income as part of interest and other income, net.
Subsequent to the acquisition, the financial results for Deephi Tech are included in the Company's consolidated financial statements. Prior to the acquisition, the financial results for Deephi Tech were not significant for pro forma financial information.
The Company allocated the purchase price to tangible and identified intangible assets acquired and liabilities assumed based on estimated fair values. As additional information becomes available, the Company may further update the preliminary purchase price allocation during the remainder of the measurement period (up to one year from the acquisition date). The preliminary fair values of the assets acquired and liabilities assumed in the acquisition of Deephi Tech, by major class, were recognized as follows:
|
|
|
|
|
|
Amount
|
|
(In thousands)
|
Cash and cash equivalents
|
$
|
6,263
|
|
Tangible assets
|
2,076
|
|
Identifiable intangible assets
|
81,530
|
|
Goodwill
|
178,297
|
|
Deferred tax liabilities
|
(13,702
|
)
|
Other liabilities
|
(2,554
|
)
|
Total
|
$
|
251,910
|
|
The goodwill of
$178.3 million
arising from the acquisition is attributed to the expected synergies and other benefits that will be generated from the combination of the Company and Deephi Tech. The goodwill recognized is expected to be deductible for tax purposes.
The identified intangible assets assumed in the acquisition of Deephi Tech were recognized as follows based upon the preliminary fair values as of the closing date of the acquisition.
|
|
|
|
|
|
|
|
Amount
|
|
Amortization Life
|
|
(In thousands)
|
|
|
Trade Names & Trademarks
|
$
|
1,020
|
|
|
3.0 years
|
Developed Technology
|
24,770
|
|
|
5.0 years
|
Customer Relationships
|
3,030
|
|
|
3.0 years
|
In-Process Research and Development
|
52,710
|
|
|
N/A
|
Total identifiable intangible assets
|
$
|
81,530
|
|
|
|
Note 21. Subsequent Event
On April 18, 2019, the Company's Board of Directors declared a cash dividend of
$0.37
per common share for the first quarter of fiscal 2020. The dividend is payable on June 3, 2019 to stockholders of record as of May 16, 2019.
In April 2019, the Company entered into a definitive agreement to acquire Solarflare Communications, Inc., a leading provider of high-performance and low latency networking solutions for customers. The total consideration is approximately
$400.0 million
, subject to certain closing adjustments.