UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
For the quarterly period ended June 27, 2020 or
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
For the transition period from ________ to _______ .
Commission File Number 000-18548
______________________________________________________________________________
XILINX, INC.
(Exact name of registrant as specified in its charter)
______________________________________________________________________________
| Delaware | 2100 Logic Drive | 77-0188631 | ||||||||||||
| (State or other jurisdiction of incorporation or organization) | San Jose | (I.R.S. Employer Identification No.) | ||||||||||||
| California | 95124 | |||||||||||||
| (Address of principal executive offices) | (Zip Code) | |||||||||||||
(408) 559-7778
(Registrant’s telephone number, including area code)
N/A
(Former name, former address, and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
| Common Stock, $0.01 par value | XLNX | The Nasdaq Global Select Market | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | x | Accelerated filer | o | Non-accelerated filer | o | ||||||||||||
| Smaller reporting company | ☐ | Emerging growth company | ☐ | ||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o | |||||||||||||||||
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x
Shares outstanding of the registrant’s common stock:
| Class | Shares Outstanding as of July 10, 2020 | |||||||
| Common Stock, $0.01 par value | 244,314,000 | |||||||
TABLE OF CONTENTS
2
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be found throughout this Quarterly Report and involve numerous known and unknown risks and uncertainties and are based on current expectations. The reader should not place undue reliance on these forward-looking statements. Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including those risks discussed under "Risk Factors" and elsewhere in this document. Often, forward-looking statements can be identified by the use of forward-looking words, such as "may," "will," "could," "should," "expect," "believe," "anticipate," "estimate," "continue," "plan," "intend," "project" and other similar terminology, or the negative of such terms. We disclaim any responsibility to update or revise any forward-looking statement provided in this Quarterly Report or in any of our other communications for any reason.
PART I.FINANCIAL INFORMATION
Item 1.Financial Statements
XILINX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| Three Months Ended | |||||||||||
| (In thousands, except per share amounts) | June 27, 2020 | June 29, 2019 | |||||||||
| Net revenues | $ | 726,673 | $ | 849,632 | |||||||
| Cost of revenues: | |||||||||||
| Cost of products sold | 226,103 | 283,500 | |||||||||
| Amortization of acquisition-related intangibles | 6,697 | 3,269 | |||||||||
| Total cost of revenues | 232,800 | 286,769 | |||||||||
| Gross margin | 493,873 | 562,863 | |||||||||
| Operating expenses: | |||||||||||
| Research and development | 210,113 | 204,100 | |||||||||
| Selling, general and administrative | 105,383 | 107,425 | |||||||||
| Amortization of acquisition-related intangibles | 2,862 | 400 | |||||||||
| Total operating expenses | 318,358 | 311,925 | |||||||||
| Operating income | 175,515 | 250,938 | |||||||||
| Interest and other income (expense), net | (12,153) | 11,612 | |||||||||
| Income before income taxes | 163,362 | 262,550 | |||||||||
| Provision for income taxes | 69,526 | 21,091 | |||||||||
| Net income | $ | 93,836 | $ | 241,459 | |||||||
| Net income per common share: | |||||||||||
| Basic | $ | 0.39 | $ | 0.95 | |||||||
| Diluted | $ | 0.38 | $ | 0.94 | |||||||
| Cash dividends per common share | $ | 0.38 | $ | 0.37 | |||||||
| Shares used in per share calculations: | |||||||||||
| Basic | 243,180 | 253,268 | |||||||||
| Diluted | 245,543 | 257,928 | |||||||||
See notes to condensed consolidated financial statements.
3
XILINX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
| Three Months Ended | |||||||||||
| (In thousands) | June 27, 2020 | June 29, 2019 | |||||||||
| Net income | $ | 93,836 | $ | 241,459 | |||||||
| Other comprehensive income, net of tax: | |||||||||||
| Change in net unrealized gains (losses) on available-for-sale securities | 368 | 9,754 | |||||||||
| Reclassification adjustment for (gains) losses on available-for-sale securities | (277) | (433) | |||||||||
| Change in unrealized gains (losses) on hedging transactions | 7,129 | 430 | |||||||||
| Reclassification adjustment for (gains) losses on hedging transactions | 1,687 | 822 | |||||||||
| Cumulative translation adjustment, net | (2,867) | (635) | |||||||||
| Other comprehensive income | 6,040 | 9,938 | |||||||||
| Total comprehensive income | $ | 99,876 | $ | 251,397 | |||||||
See notes to condensed consolidated financial statements.
4
XILINX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| (In thousands, except par value amounts) | June 27, 2020 | March 28, 2020 | |||||||||
(unaudited) | |||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 1,227,376 | $ | 1,777,703 | |||||||
| Short-term investments | 1,771,959 | 489,513 | |||||||||
| Accounts receivable, net | 305,180 | 273,028 | |||||||||
| Inventories | 292,213 | 304,340 | |||||||||
| Prepaid expenses and other current assets | 67,935 | 64,557 | |||||||||
| Total current assets | 3,664,663 | 2,909,141 | |||||||||
| Property, plant and equipment, at cost | 993,031 | 989,315 | |||||||||
| Accumulated depreciation and amortization | (631,503) | (616,741) | |||||||||
| Net property, plant and equipment | 361,528 | 372,574 | |||||||||
| Goodwill | 619,196 | 619,196 | |||||||||
| Acquisition-related intangibles, net | 190,785 | 200,344 | |||||||||
| Other assets | 608,591 | 592,079 | |||||||||
| Total Assets | $ | 5,444,763 | $ | 4,693,334 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 102,518 | $ | 102,131 | |||||||
| Accrued payroll and related liabilities | 264,818 | 231,439 | |||||||||
| Income taxes payable | 54,246 | 36,217 | |||||||||
| Other accrued liabilities | 126,193 | 216,634 | |||||||||
| Current portion of long-term debt | 499,461 | 499,260 | |||||||||
| Total current liabilities | 1,047,236 | 1,085,681 | |||||||||
| Long-term debt | 1,491,752 | 747,110 | |||||||||
| Long-term income taxes payable | 504,401 | 447,383 | |||||||||
| Other long-term liabilities | 81,721 | 98,111 | |||||||||
| Commitments and contingencies (Note 17) | |||||||||||
| Stockholders' equity: | |||||||||||
| Preferred stock, $.01 par value | — | — | |||||||||
| Common stock, $.01 par value | 2,432 | 2,438 | |||||||||
| Additional paid-in capital | 1,194,748 | 1,145,083 | |||||||||
| Retained earnings | 1,136,710 | 1,187,805 | |||||||||
| Accumulated other comprehensive loss | (14,237) | (20,277) | |||||||||
| Total stockholders’ equity | 2,319,653 | 2,315,049 | |||||||||
| Total Liabilities and Stockholders’ Equity | $ | 5,444,763 | $ | 4,693,334 | |||||||
See notes to condensed consolidated financial statements.
5
XILINX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Three Months Ended | |||||||||||
| (In thousands) | June 27, 2020 | June 29, 2019 | |||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | 93,836 | $ | 241,459 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization of software | 31,749 | 23,853 | |||||||||
| Amortization - others | 15,059 | 9,085 | |||||||||
| Stock-based compensation | 50,383 | 42,753 | |||||||||
| Benefit for deferred income taxes | (8,979) | (2,114) | |||||||||
| Others | 2,640 | (10,240) | |||||||||
| Changes in assets and liabilities: | |||||||||||
| Accounts receivable, net | (32,152) | 29,211 | |||||||||
| Inventories | 12,127 | (21,400) | |||||||||
| Prepaid expenses and other current assets | (1,925) | 620 | |||||||||
| Other assets | (23,018) | (13,408) | |||||||||
| Accounts payable | 1,333 | (9,106) | |||||||||
| Accrued liabilities | 29,622 | (13,830) | |||||||||
| Income taxes payable | 74,796 | 21,333 | |||||||||
| Net cash provided by operating activities | 245,471 | 298,216 | |||||||||
| Cash flows from investing activities: | |||||||||||
| Purchases of available-for-sale securities | (1,678,000) | (361,315) | |||||||||
| Proceeds from sale and maturity of available-for-sale and equity securities | 318,857 | 707,388 | |||||||||
| Purchases of property, plant and equipment and software | (15,461) | (29,201) | |||||||||
| Other investing activities | (6,280) | 3,549 | |||||||||
| Acquisition of business, net of cash acquired | — | (25,145) | |||||||||
| Net cash provided by (used in) investing activities | (1,380,884) | 295,276 | |||||||||
| Cash flows from financing activities: | |||||||||||
| Repurchases of common stock | (53,682) | (444,995) | |||||||||
| Taxes paid related to net share settlements of restricted stock units | (3,240) | (4,122) | |||||||||
| Proceeds from issuance of common stock through various stock plans | 1 | 3 | |||||||||
| Payment of dividends to stockholders | (92,414) | (93,961) | |||||||||
| Proceeds from issuance of long-term debt, net | 744,423 | — | |||||||||
| Other financing activities | (10,002) | (4,881) | |||||||||
| Net cash provided by (used in) financing activities | 585,086 | (547,956) | |||||||||
| Net increase (decrease) in cash and cash equivalents | (550,327) | 45,536 | |||||||||
| Cash and cash equivalents at beginning of period | 1,777,703 | 1,544,490 | |||||||||
| Cash and cash equivalents at end of period | $ | 1,227,376 | $ | 1,590,026 | |||||||
| Supplemental disclosure of cash flow information: | |||||||||||
| Interest paid | $ | 13,789 | $ | 23,013 | |||||||
| Income taxes paid, net | $ | 3,747 | $ | 1,661 | |||||||
See notes to condensed consolidated financial statements.
6
XILINX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
| Three Months Ended June 27, 2020 | Common Stock Outstanding | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total Stockholders' Equity | ||||||||||||||||||||||||||||||
| (In thousands, except per share amounts) | Shares | Amount | |||||||||||||||||||||||||||||||||
| Balance as of March 28, 2020 | 243,810 | $ | 2,438 | $ | 1,145,083 | $ | 1,187,805 | $ | (20,277) | $ | 2,315,049 | ||||||||||||||||||||||||
| Components of comprehensive income: | |||||||||||||||||||||||||||||||||||
| Net income | — | — | — | 93,836 | — | 93,836 | |||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | 6,040 | 6,040 | |||||||||||||||||||||||||||||
| Issuance of common shares under employee stock plans, net | 106 | 1 | (3,240) | — | — | (3,239) | |||||||||||||||||||||||||||||
| Repurchase and retirement of common stock | (685) | (7) | 2,522 | (52,517) | — | (50,002) | |||||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | 50,383 | — | — | 50,383 | |||||||||||||||||||||||||||||
| Cash dividends declared ($0.38 per common share) | — | — | — | (92,414) | — | (92,414) | |||||||||||||||||||||||||||||
| Balance as of June 27, 2020 | 243,231 | $ | 2,432 | $ | 1,194,748 | $ | 1,136,710 | $ | (14,237) | $ | 2,319,653 | ||||||||||||||||||||||||
| Three Months Ended June 29, 2019 | Common Stock Outstanding | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total Stockholders' Equity | ||||||||||||||||||||||||||||||
| (In thousands, except per share amounts) | Shares | Amount | |||||||||||||||||||||||||||||||||
| Balance as of March 30, 2019 | 253,891 | $ | 2,539 | $ | 1,005,411 | $ | 1,876,969 | $ | (23,410) | $ | 2,861,509 | ||||||||||||||||||||||||
| Components of comprehensive income: | |||||||||||||||||||||||||||||||||||
| Net income | — | — | — | 241,459 | — | 241,459 | |||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | 9,938 | 9,938 | |||||||||||||||||||||||||||||
| Issuance of common shares under employee stock plans, net | 96 | 1 | (4,120) | — | — | (4,119) | |||||||||||||||||||||||||||||
| Repurchase and retirement of common stock | (2,967) | (30) | (163,739) | (281,226) | — | (444,995) | |||||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | 42,753 | — | — | 42,753 | |||||||||||||||||||||||||||||
| Cash dividends declared ($0.37 per common share) | — | — | — | (93,961) | — | (93,961) | |||||||||||||||||||||||||||||
| Balance as of June 29, 2019 | 251,020 | $ | 2,510 | $ | 880,305 | $ | 1,743,241 | $ | (13,472) | $ | 2,612,584 | ||||||||||||||||||||||||
See notes to condensed consolidated financial statements.
7
XILINX, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1.Basis of Presentation
The accompanying interim condensed consolidated financial statements have been prepared in conformity with United States (U.S.) generally accepted accounting principles (GAAP) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X, and should be read in conjunction with the Xilinx, Inc. (Xilinx or the Company) consolidated financial statements filed with the U.S. Securities and Exchange Commission (SEC) on Form 10-K for the fiscal year ended March 28, 2020. The interim financial statements are unaudited, but reflect all adjustments which are, in the opinion of management, of a normal, recurring nature necessary to provide a fair statement of results for the interim periods presented. The results of operations for the interim periods shown in this report are not necessarily indicative of the results that may be expected for the fiscal year ending April 3, 2021 or any future period.
The Company uses a 52- to 53-week fiscal year ending on the Saturday nearest March 31. Fiscal 2021 and fiscal 2020 are 53-week and 52-week years ending on April 3, 2021 and March 28, 2020, respectively. The quarters ended June 27, 2020 and June 29, 2019 each consisted of 13 weeks.
Note 2.Recent Accounting Changes and Accounting Pronouncements
Recent Accounting Pronouncements Adopted
Credit Losses
In June 2016, the FASB issued authoritative guidance to replace the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The guidance requires a forward-looking expected credit loss model for financial assets, including accounts receivable and available for sale debt securities. The Company adopted this authoritative guidance in the first quarter of fiscal 2021 and the impact of the adoption was not material to the Company's condensed consolidated financial statements.
Goodwill
In January 2017, the FASB issued authoritative guidance that simplifies the accounting for goodwill impairment. The authoritative guidance removes Step 2 of the goodwill impairment test, which required a hypothetical purchase price allocation. Goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. All other goodwill impairment guidance remains largely unchanged. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. The Company adopted this authoritative guidance in the first quarter of fiscal 2021 and the adoption did not impact the Company's condensed consolidated financial statements.
Cloud Computing Arrangements
In August 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. The Company adopted this authoritative guidance in the first quarter of fiscal 2021 and the impact of the adoption was not material to the Company's condensed consolidated financial statements.
8
Recent Accounting Pronouncements Not Yet Adopted
Income Taxes
In December 2019, the FASB issued authoritative guidance that simplifies the accounting for income taxes as part of the overall initiative to reduce complexity in accounting standards. Amendments include removal of certain exceptions to the general principles of Accounting Standards Codification 740, Income Taxes. The amendments also include simplification in several other areas, such as recognition of deferred tax assets on step-up in tax basis in goodwill and accounting for franchise tax that is partially based on income. For public entities, the guidance is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years, which for Xilinx would be the first quarter of fiscal 2022. Early adoption is permitted in any interim or annual period, with any adjustments reflected as of the beginning of the fiscal year of adoption. The Company has decided not to early adopt this new authoritative guidance and is currently evaluating the impact of this authoritative guidance on its consolidated financial statements.
Note 3.Significant Customers and Concentrations of Credit Risk
Avnet, Inc. (Avnet), one of the Company’s distributors, distributes the Company’s products worldwide. As of June 27, 2020 and March 28, 2020, Avnet accounted for 29% and 31% of the Company’s total net accounts receivable, respectively. Net revenues from Avnet accounted for 44% and 40% of the Company’s worldwide net revenues in the first quarter of fiscal 2021 and 2020, respectively. While the percentage of worldwide net revenues from Avnet fluctuates from period to period, overall the percentage is within historical ranges.
For the first quarter of fiscal 2021 and 2020, approximately 62% and 50%, respectively, of the Company's net revenues were from products sold to distributors for subsequent resale to original equipment manufacturers (OEMs) or their subcontract manufacturers.
No other distributor or end customer accounted for more than 10% of the Company’s worldwide net revenues for the first quarter of fiscal 2021 and 2020.
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 condensed consolidated balance sheet. The Company attempts to mitigate the concentration of credit risk in its trade receivables through its credit evaluation process, collection terms, 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 distributors.
The Company mitigates concentrations of credit risk in its investments in debt securities by currently investing approximately 97% of its portfolio in AA (or its equivalent) or higher-grade securities as rated by Standard & Poor’s or Moody’s Investors Service. 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 June 27, 2020, all of the mortgage-backed securities in the Company's 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.
Note 4.Fair Value Measurements
The authoritative 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.
9
The Company determines the fair value for marketable debt 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 the first quarter of fiscal 2021 and the Company did not adjust or override any fair value measurements as of June 27, 2020.
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.
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.
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.
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 June 27, 2020 and March 28, 2020:
10
| June 27, 2020 | ||||||||||||||||||||||||||
| (In thousands) | (Level 1) | (Level 2) | (Level 3) | Total Fair Value | ||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||
| Cash equivalents: | ||||||||||||||||||||||||||
| Money market funds | $ | 567,333 | $ | — | $ | — | $ | 567,333 | ||||||||||||||||||
| Financial institution securities | — | 224,980 | — | 224,980 | ||||||||||||||||||||||
| Non-financial institution securities | — | 142,881 | — | 142,881 | ||||||||||||||||||||||
| U.S. government and agency securities | 24,998 | 6,799 | — | 31,797 | ||||||||||||||||||||||
| Foreign government and agency securities | — | 159,983 | — | 159,983 | ||||||||||||||||||||||
| Short-term investments: | ||||||||||||||||||||||||||
| Financial institution securities | — | 300,000 | — | 300,000 | ||||||||||||||||||||||
| Non-financial institution securities | — | 362,582 | — | 362,582 | ||||||||||||||||||||||
| U.S. government and agency securities | 409,742 | 107,959 | — | 517,701 | ||||||||||||||||||||||
| Foreign government and agency securities | — | 435,039 | — | 435,039 | ||||||||||||||||||||||
| Mortgage-backed securities | — | 110,894 | — | 110,894 | ||||||||||||||||||||||
| Asset-backed securities | — | 884 | — | 884 | ||||||||||||||||||||||
| Commercial mortgage-backed securities | — | 44,859 | — | 44,859 | ||||||||||||||||||||||
| Derivative financial instruments, net | — | 1,557 | — | 1,557 | ||||||||||||||||||||||
| Total assets measured at fair value | $ | 1,002,073 | $ | 1,898,417 | $ | — | $ | 2,900,490 | ||||||||||||||||||
| March 28, 2020 | |||||||||||||||||||||||
| (In thousands) | (Level 1) | (Level 2) | (Level 3) | Total Fair Value | |||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Cash equivalents: | |||||||||||||||||||||||
| Money market funds | $ | 656,038 | $ | — | $ | — | $ | 656,038 | |||||||||||||||
| Financial institution securities | — | 175,000 | — | 175,000 | |||||||||||||||||||
| Non-financial institution securities | — | 361,692 | — | 361,692 | |||||||||||||||||||
| U.S. government and agency securities | 150,999 | 62,274 | — | 213,273 | |||||||||||||||||||
| Foreign government and agency securities | — | 244,300 | — | 244,300 | |||||||||||||||||||
| Short-term investments: | |||||||||||||||||||||||
| Financial institution securities | — | 150,000 | — | 150,000 | |||||||||||||||||||
| Non-financial institution securities | — | 115,043 | — | 115,043 | |||||||||||||||||||
| U.S. government and agency securities | 1,000 | 2,000 | — | 3,000 | |||||||||||||||||||
| Foreign government and agency securities | — | 9,973 | — | 9,973 | |||||||||||||||||||
| Mortgage-backed securities | — | 158,804 | — | 158,804 | |||||||||||||||||||
| Asset-backed securities | — | 2,549 | — | 2,549 | |||||||||||||||||||
| Commercial mortgage-backed securities | — | 50,144 | — | 50,144 | |||||||||||||||||||
| Total assets measured at fair value | $ | 808,037 | $ | 1,331,779 | $ | — | $ | 2,139,816 | |||||||||||||||
| Liabilities | |||||||||||||||||||||||
| Derivative financial instruments, net | $ | — | $ | 12,381 | $ | — | $ | 12,381 | |||||||||||||||
| Total liabilities measured at fair value | $ | — | $ | 12,381 | $ | — | $ | 12,381 | |||||||||||||||
| Net assets measured at fair value | $ | 808,037 | $ | 1,319,398 | $ | — | $ | 2,127,435 | |||||||||||||||
11
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), $750.0 million principal amount of 2.950% senior notes due June 1, 2024 (2024 Notes) and $750.0 million principal amount of 2.375% senior notes due June 1, 2030 (2030 Notes) are measured at fair value on a quarterly basis for disclosure purposes. The fair values of the 2021 Notes, 2024 Notes and 2030 Notes as of June 27, 2020 were approximately $508.4 million, $805.8 million and $774.3 million, respectively, based on the last trading price 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 June 27, 2020, the Company had non-marketable equity securities in private companies of $104.6 million, which were classified as Level 3 assets. The Company’s investments in non-marketable securities of private companies are 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 reduced to fair value when impaired.
Note 5.Financial Instruments
The following is a summary of cash equivalents and available-for-sale securities as of the end of the periods presented:
| June 27, 2020 | March 28, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||
| (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 | $ | 567,333 | $ | — | $ | — | $ | 567,333 | $ | 656,038 | $ | — | $ | — | $ | 656,038 | ||||||||||||||||||||||||||||||||||
| Financial institution | ||||||||||||||||||||||||||||||||||||||||||||||||||
| securities | 524,980 | — | — | 524,980 | 325,000 | — | — | 325,000 | ||||||||||||||||||||||||||||||||||||||||||
| Non-financial institution | ||||||||||||||||||||||||||||||||||||||||||||||||||
| securities | 505,464 | — | (1) | 505,463 | 476,735 | — | — | 476,735 | ||||||||||||||||||||||||||||||||||||||||||
| U.S. government and | ||||||||||||||||||||||||||||||||||||||||||||||||||
| agency securities | 549,523 | 6 | (31) | 549,498 | 216,178 | 95 | — | 216,273 | ||||||||||||||||||||||||||||||||||||||||||
| Foreign government and | ||||||||||||||||||||||||||||||||||||||||||||||||||
| agency securities | 595,058 | — | (36) | 595,022 | 254,283 | 7 | (17) | 254,273 | ||||||||||||||||||||||||||||||||||||||||||
Mortgage-backed securities | 109,067 | 2,146 | (319) | 110,894 | 156,836 | 2,445 | (477) | 158,804 | ||||||||||||||||||||||||||||||||||||||||||
| Asset-backed securities | 868 | 16 | — | 884 | 2,533 | 18 | (2) | 2,549 | ||||||||||||||||||||||||||||||||||||||||||
| Commercial mortgage- | ||||||||||||||||||||||||||||||||||||||||||||||||||
| backed securities | 44,922 | 199 | (262) | 44,859 | 50,566 | 134 | (556) | 50,144 | ||||||||||||||||||||||||||||||||||||||||||
| $ | 2,897,215 | $ | 2,367 | $ | (649) | $ | 2,898,933 | $ | 2,138,169 | $ | 2,699 | $ | (1,052) | $ | 2,139,816 | |||||||||||||||||||||||||||||||||||
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 June 27, 2020 and March 28, 2020.
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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 June 27, 2020 and March 28, 2020:
| June 27, 2020 | |||||||||||||||||||||||||||||||||||
| 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 | $ | 44,978 | $ | (1) | $ | — | $ | — | $ | 44,978 | $ | (1) | |||||||||||||||||||||||
| U.S. government and | |||||||||||||||||||||||||||||||||||
| agency securities | 416,542 | (31) | — | — | 416,542 | (31) | |||||||||||||||||||||||||||||
| Foreign government and | |||||||||||||||||||||||||||||||||||
| agency securities | 74,942 | (36) | — | — | 74,942 | (36) | |||||||||||||||||||||||||||||
| Mortgage-backed securities | 7,216 | (104) | 15,299 | (215) | 22,515 | (319) | |||||||||||||||||||||||||||||
| Commercial mortgage- | |||||||||||||||||||||||||||||||||||
| backed securities | 18,857 | (109) | 1,979 | (153) | 20,836 | (262) | |||||||||||||||||||||||||||||
| $ | 562,535 | $ | (281) | $ | 17,278 | $ | (368) | $ | 579,813 | $ | (649) | ||||||||||||||||||||||||
| March 28, 2020 | |||||||||||||||||||||||||||||||||||
| 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 | |||||||||||||||||||||||||||||
| Mortgage-backed securities | $ | 13,492 | $ | (88) | $ | 31,819 | $ | (389) | $ | 45,311 | $ | (477) | |||||||||||||||||||||||
| Asset-backed securities | 1,641 | (2) | — | — | 1,641 | (2) | |||||||||||||||||||||||||||||
| Foreign government and | |||||||||||||||||||||||||||||||||||
| agency securities | 30,998 | (17) | — | — | 30,998 | (17) | |||||||||||||||||||||||||||||
| Commercial mortgage- | |||||||||||||||||||||||||||||||||||
| backed securities | 30,593 | (282) | 2,589 | (274) | 33,182 | (556) | |||||||||||||||||||||||||||||
| $ | 76,724 | $ | (389) | $ | 34,408 | $ | (663) | $ | 111,132 | $ | (1,052) | ||||||||||||||||||||||||
The Company reviewed the investment portfolio and determined that the gross unrealized losses on these investments as of June 27, 2020 and March 28, 2020 were temporary in nature as evidenced by the fluctuations in the gross unrealized losses within the investment categories. The marketable debt securities (non-financial institution securities, U.S. and foreign government and agency securities, asset-backed 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 amount due to the Company. Additionally, in the past several years a portion of the Company's investment in the 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 June 27, 2020 and March 28, 2020. The Company neither intends to sell these investments 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.
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| June 27, 2020 | |||||||||||
| (In thousands) | Amortized Cost | Estimated Fair Value | |||||||||
| Due in one year or less | $ | 2,177,452 | $ | 2,177,394 | |||||||
| Due after one year through five years | 3,714 | 3,755 | |||||||||
| Due after five years through ten years | 17,149 | 17,834 | |||||||||
| Due after ten years | 131,567 | 132,617 | |||||||||
| $ | 2,329,882 | $ | 2,331,600 | ||||||||
As of June 27, 2020, $154.2 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 funds because these investments do not have specific contractual maturities.
Certain information related to available-for-sale securities is as follows:
| Three Months Ended | |||||||||||
| (In thousands) | June 27, 2020 | June 29, 2019 | |||||||||
| Proceeds from sale of available-for-sale securities | $ | 37,657 | $ | 156,094 | |||||||
| Gross realized gains on sale of available-for-sale securities | $ | 360 | $ | 604 | |||||||
| Gross realized losses on sale of available-for-sale securities | — | (39) | |||||||||
| Net realized gains on sale of available-for-sale securities | $ | 360 | $ | 565 | |||||||
| Amortization of premiums (discounts) on available-for-sale securities | $ | (91) | $ | 711 | |||||||
The cost of securities matured or sold is based on the specific identification method.
Note 6.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.
In March and May 2020, the Company entered into interest rate swap contracts with an independent financial institution in an effort to reduce the risk of changes in the underlying benchmark interest rate. During the first quarter of fiscal 2021, the Company unwound the interest rate swap contracts and recognized an immaterial loss. The loss is being amortized as an additional increase to interest expense over the remaining life of the 2030 Notes. There was no ineffectiveness during all periods presented.
Note 7. 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 Employee Stock Purchase Plan (ESPP):
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| Three Months Ended | |||||||||||
| (In thousands) | June 27, 2020 | June 29, 2019 | |||||||||
| Stock-based compensation included in: | |||||||||||
| Cost of revenues | $ | 2,721 | $ | 2,613 | |||||||
| Research and development | 30,369 | 24,874 | |||||||||
| Selling, general and administrative | 17,293 | 15,266 | |||||||||
| $ | 50,383 | $ | 42,753 | ||||||||
Employee Stock Option Plans
The types of awards allowed under the 2007 Equity Incentive Plan (2007 Equity Plan) include incentive stock options, non-qualified stock options, restricted stock units (RSUs), restricted stock and stock appreciation rights. As of June 27, 2020, 15.3 million shares remained available for grant under the 2007 Equity Plan.
RSU Awards
A summary of the Company’s RSU activity and related information is as follows:
| RSUs Outstanding | |||||||||||
| (Shares in thousands) | Number of Shares | Weighted-Average Grant-Date Fair Value Per Share | |||||||||
| March 30, 2019 | 7,331 | $ | 59.54 | ||||||||
| Granted | 2,756 | $ | 109.53 | ||||||||
| Vested | (2,820) | $ | 55.24 | ||||||||
| Cancelled | (487) | $ | 75.09 | ||||||||
| March 28, 2020 | 6,780 | $ | 80.53 | ||||||||
| Granted | 127 | $ | 84.34 | ||||||||
| Vested | (144) | $ | 78.09 | ||||||||
| Cancelled | (378) | $ | 80.16 | ||||||||
| June 27, 2020 | 6,385 | $ | 80.22 | ||||||||
The estimated fair values of RSUs 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 the first quarter of fiscal 2021 was $84.34 ($98.73 for the first quarter of fiscal 2020), which were calculated based on estimates at the date of grant using the following weighted-average assumptions:
| Three Months Ended | |||||||||||
| June 27, 2020 | June 29, 2019 | ||||||||||
| Risk-free interest rate | 0.3 | % | 2.1 | % | |||||||
| Dividend yield | 1.7 | % | 1.2 | % | |||||||
For the majority of RSUs granted, the number of shares of common stock issued on the date the RSU awards vest is net of the minimum statutory withholding requirements that the Company pays in cash to the appropriate taxing authorities on behalf of the Company's employees. During the first three months of fiscal 2021 and 2020, the Company withheld $3.2 million and $4.1 million worth of RSU awards, respectively, to satisfy the employees’ tax obligations. The amounts of excess tax benefits, primarily from RSU vesting, were immaterial for all periods presented.
Employee Stock Purchase Plan
15
The fair values of stock purchase plan rights under the Company’s ESPP were estimated using the Black-Scholes option pricing model. Under the Company’s ESPP, shares are only issued during the second and fourth quarters of each fiscal year. Therefore, no shares were issued during the first quarter of fiscal 2021 or 2020. The next scheduled purchase under the ESPP is in the second quarter of fiscal 2021. As of June 27, 2020, 12.6 million shares were available for future issuance under the Company's ESPP.
Note 8. Net Income Per Common Share
The computation of basic net income per common share for all periods presented is derived from information on the condensed consolidated statements of income, and there are no reconciling items in the numerator used to compute the diluted net income per common share. The following table summarizes the computation of basic and diluted net income per common share:
| (In thousands, except per share amounts) | June 27, 2020 | June 29, 2019 | |||||||||
| Net income available to common stockholders | $ | 93,836 | $ | 241,459 | |||||||
| Weighted average common shares outstanding-basic | 243,180 | 253,268 | |||||||||
| Dilutive effect of employee equity incentive plans | 2,363 | 4,660 | |||||||||
| Weighted average common shares outstanding-diluted | 245,543 | 257,928 | |||||||||
| Basic net income per common share | $ | 0.39 | $ | 0.95 | |||||||
| Diluted net income per common share | $ | 0.38 | $ | 0.94 | |||||||
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.
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 anti-dilutive. These excluded options and RSUs were immaterial for the first quarter of fiscal 2021 and 2020, respectively, 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 9.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) | June 27, 2020 | March 28, 2020 | |||||||||
| Raw materials | $ | 33,968 | $ | 35,562 | |||||||
| Work-in-process | 188,322 | 204,501 | |||||||||
| Finished goods | 69,923 | 64,277 | |||||||||
| $ | 292,213 | $ | 304,340 | ||||||||
Note 10. Debt and Credit Facility
2021 Notes
On March 12, 2014, the Company issued the 2021 Notes at a discounted price of 99.281% of par. Interest on the 2021 Notes is payable semi-annually on March 15 and September 15. The effective interest rate of the 2021 Notes is 3.115%. The coupon interest rate of the 2021 Notes is 3.000%.
The Company received net proceeds of $495.4 million from issuance of the 2021 Notes, after the debt discount and deduction of debt issuance costs. The debt discounts and issuance costs are amortized to interest expense over the terms of the 2021 Notes. As of June 27, 2020, the remaining term of the 2021 Notes is 0.7 years.
16
The following table summarizes the carrying value of the 2021 Notes as of June 27, 2020 and March 28, 2020:
| (In thousands) | June 27, 2020 | March 28, 2020 | |||||||||
| Principal amount of the 2021 Notes | $ | 500,000 | $ | 500,000 | |||||||
| Unamortized discount of the 2021 Notes | (376) | (517) | |||||||||
| Unamortized debt issuance costs associated with 2021 Notes | (163) | (223) | |||||||||
| Carrying value of the 2021 Notes | $ | 499,461 | $ | 499,260 | |||||||
Interest expense related to the 2021 Notes was included in interest and other income (expense), net on the condensed consolidated statements of income as follows:
| Three Months Ended | |||||||||||
| (In thousands) | June 27, 2020 | June 29, 2019 | |||||||||
| Contractual coupon interest | $ | 3,750 | $ | 3,750 | |||||||
| Amortization of debt issuance costs | 61 | 61 | |||||||||
| Amortization of debt discount, net | 141 | 135 | |||||||||
| Total interest expense related to the 2021 Notes | $ | 3,952 | $ | 3,946 | |||||||
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 effective interest rate of the 2024 Notes is 2.968%. The coupon interest rate of the 2024 Notes is 2.950%.
The Company received $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 June 27, 2020, the remaining term of the 2024 Notes is approximately 4.0 years.
The following table summarizes the carrying value of the 2024 Notes as of June 27, 2020 and March 28, 2020:
| (In thousands) | June 27, 2020 | March 28, 2020 | ||||||||||||
| Principal amount of the 2024 Notes | $ | 750,000 | $ | 750,000 | ||||||||||
| Unamortized discount of the 2024 Notes | (496) | (525) | ||||||||||||
| Unamortized debt issuance costs associated with 2024 Notes | (2,223) | (2,365) | ||||||||||||
| Carrying Value of the 2024 Notes | $ | 747,281 | $ | 747,110 | ||||||||||
Interest expense related to the 2024 Notes was included in interest and other income (expense), net on the condensed consolidated statements of income as follows:
| Three Months Ended | |||||||||||
| (In thousands) | June 27, 2020 | June 29, 2019 | |||||||||
| Contractual coupon interest | $ | 5,444 | $ | 6,542 | |||||||
| Amortization of debt issuance costs | 142 | 142 | |||||||||
| Amortization of debt discount, net | 29 | 29 | |||||||||
| Total interest expense related to the 2024 Notes | $ | 5,615 | $ | 6,713 | |||||||
17
2030 Notes
On May 19, 2020, the Company issued the 2030 Notes at a discounted price of 99.973% of par. Interest on the 2030 Notes is payable semi-annually on June 1 and December 1. The effective interest rate of the 2030 Notes is 2.378%. The coupon interest rate of the 2030 Notes is 2.375%.
The Company received $744.4 million from the issuance of the 2030 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 2030 Notes. As of June 27, 2020, the remaining term of the 2030 Notes is approximately 10.0 years.
The following table summarizes the carrying value of the 2030 Notes as of June 27, 2020:
| (In thousands) | June 27, 2020 | |||||||||||||
| Principal amount of the 2030 Notes | $ | 750,000 | ||||||||||||
| Unamortized discount of the 2030 Notes | (200) | |||||||||||||
| Unamortized debt issuance costs associated with 2030 Notes | (5,329) | |||||||||||||
| Carrying Value of the 2030 Notes | $ | 744,471 | ||||||||||||
Interest expense related to the 2030 Notes was included in interest and other income (expense), net on the condensed consolidated statements of income as follows:
| Three Months Ended | ||||||||||||||
| (In thousands) | June 27, 2020 | |||||||||||||
| Contractual coupon interest | $ | 2,042 | ||||||||||||
| Amortization of debt issuance costs | 45 | |||||||||||||
| Amortization of debt discount, net | 2 | |||||||||||||
| Total interest expense related to the 2030 Notes | $ | 2,089 | ||||||||||||
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 nonfinancial covenants. As of June 27, 2020, the Company had made no borrowings under this credit facility and was not in violation of any of the covenants.
Note 11. Common Stock Repurchase Program
The Board of Directors (Board) has approved stock repurchase programs enabling the Company to repurchase its common stock and debentures in the open market or through negotiated transactions with independent financial institutions. On October 22, 2019, the Board authorized another program (2019 Repurchase Program) to repurchase the Company's common stock and debentures up to $1.00 billion. The 2019 Repurchase Program has no stated expiration date.
Through June 27, 2020, the Company has used $716.3 million of the $1.00 billion authorized under the 2019 Repurchase Program, leaving $283.7 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 June 27, 2020 and March 28, 2020.
During the first quarter of fiscal 2021, the Company repurchased 0.7 million shares of common stock in the open market for a total of $53.7 million.
During the first quarter of fiscal 2020, the Company repurchased 1.4 million shares of common stock in the open market for a total of $145.0 million. Additionally, the Company repurchased 1.6 million shares for a total of $179.5 million by entering into a stock repurchase agreement with an independent financial institution.
18
Note 12. Interest and Other Income (Expense), Net
The components of interest and other income (expense), net are as follows:
| Three Months Ended | |||||||||||
| (In thousands) | June 27, 2020 | June 29, 2019 | |||||||||
| Interest income | $ | 4,954 | $ | 17,989 | |||||||
| Interest expense | (11,656) | (10,659) | |||||||||
| Other income (expense), net | (5,451) | 4,282 | |||||||||
| Total interest and other income (expense), net | $ | (12,153) | $ | 11,612 | |||||||
Note 13. Accumulated Other Comprehensive Loss
Comprehensive income (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 the Company's accumulated other comprehensive loss are as follows:
| (In thousands) | June 27, 2020 | March 28, 2020 | |||||||||
| Accumulated unrealized gains on available-for-sale securities, net of tax | $ | 1,410 | $ | 1,319 | |||||||
| Accumulated unrealized losses on hedging transactions, net of tax | (1,354) | (10,170) | |||||||||
| Accumulated cumulative translation adjustment, net of tax | (14,293) | (11,426) | |||||||||
| Total accumulated other comprehensive loss | $ | (14,237) | $ | (20,277) | |||||||
The related tax effects of other comprehensive income (loss) were not material for all periods presented.
Note 14. Income Taxes
The Company recorded a tax provision of $69.5 million for the first quarter of fiscal 2021 as compared to $21.1 million in the same prior year period, representing effective tax rates of 43% and 8%, respectively.
The difference between the U.S. federal statutory tax rate of 21% and the Company's effective tax rate in the first quarter of fiscal 2021 was primarily due to the beneficial impact of income earned in lower tax rate jurisdictions, which was partially offset by the U.S. tax on global intangible low-taxed income (GILTI) and the recognition of prior and current year detrimental impacts of including stock-based compensation in the intercompany research and development (R&D) cost sharing arrangement. The difference between the U.S. federal statutory tax rate of 21% and the Company's effective tax rate in the first quarter of fiscal 2020 was primarily due to the beneficial impact of income earned in lower tax rate jurisdictions, which was partially offset by tax on GILTI.
On June 22, 2020, the United States Supreme Court denied certiorari in the case of Altera Corp. v. Commissioner (“Altera”). The company is not a party to the proceedings but is subject to the findings of the case. The Altera tax case concerns related party R&D cost sharing arrangements and whether stock-based compensation should be included in the pool of costs to be shared. With the Supreme Court’s decision not to hear the Altera case, the decision of the 9th Circuit (which applies to taxpayers such as Xilinx) that stock-based compensation is to be included in the pool of costs to be shared remains in place. During the fiscal quarter ended June 27, 2020, the Company recorded a one-time charge of $56.8 million for prior year taxes and interest representing the cumulative adverse impact for fiscal 2017 through fiscal 2020. Despite the decision in the Altera case, the Company has concluded the related law remains unsettled and will continue to monitor developments and the potential effect on its consolidated financial statements and tax filings.
The Company’s total gross unrecognized tax benefits as of June 27, 2020, determined in accordance with authoritative guidance for measuring uncertain tax positions, increased by $59.1 million in the first quarter of fiscal 2021 to $148.0 million. The total amount of unrecognized tax benefits that, if realized in a future period, would favorably affect the effective tax rate was $105.6 million as of June 27, 2020. 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 audit settlements and their possible outcomes, an estimate of the range of increase or decrease that could occur in the next twelve months cannot be made.
19
The Company’s policy is to include interest and penalties related to income tax liabilities within the provision for income taxes on the condensed consolidated statements of income. The balance of accrued interest and penalties recorded in the condensed consolidated balance sheets was $3.7 million as of June 27, 2020 and not material for the prior period presented. The amounts of interest and penalties included in the Company's provision for income taxes were not material for all periods presented.
The statutes of limitations have closed for U.S. federal income tax purposes for years through fiscal 2014 as well as fiscal 2016, for U.S. state income tax purposes for years through fiscal 2010, and for Ireland income tax purposes for years through fiscal 2015.
Note 15. Leases and Commitments
Xilinx leases some of its facilities and office buildings under non-cancelable operating leases that expire at various dates through August 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. These renewal terms can extend the lease term from 1 to 15 years, and are included in the lease term when it is reasonably certain that the Company will exercise the option. The following table presents the maturities of lease liabilities as of June 27, 2020:
| Fiscal | (In thousands) | ||||
| 2021 (remaining nine months) | $ | 9,971 | |||
| 2022 | 11,979 | ||||
| 2023 | 7,342 | ||||
| 2024 | 6,292 | ||||
| 2025 | |||||