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Xilinx Inc (XLNX) SEC Filing 10-Q Quarterly report for the period ending Saturday, June 27, 2020

Xilinx Inc

CIK: 743988 Ticker: XLNX


Exhibit 99.1


Investor Relations Contact:
Suresh Bhaskaran
Xilinx, Inc.
(408) 879-4784
ir@xilinx.com


XILINX REPORTS FIRST QUARTER FISCAL YEAR 2021 RESULTS

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Revenues of $727 million, exceeding initial guidance and in-line with revised guidance
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Record Data Center Group (DCG) revenue, with 10% sequential and 104% annual growth
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Wireless Group (WWG) revenue increased 27% sequentially
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Free cash flow of $230 million, or 32% of revenue
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Returned $146 million to stockholders through dividends and share repurchases

SAN JOSE, Calif., July 30, 2020
-- Xilinx, Inc. (Nasdaq: XLNX), the leader in adaptive and intelligent computing, today announced revenues of $727 million for the first quarter of fiscal year 2021.

GAAP net income for the quarter was $94 million, or $0.38 per diluted share. Non-GAAP net income was $160 million, or $0.65 per diluted share.

The Xilinx Board of Directors declared a quarterly cash dividend of $0.38 per outstanding share of common stock payable on September 3, 2020 to all stockholders of record at the close of business on August 13, 2020.

Additional first quarter of fiscal year 2021 comparisons are provided in the charts below.

Q1 2021 Financial Highlights
(In millions, except EPS)

 
GAAP
 
 
 
 
 
 
 
 
Q1
Q4
Q1
 
 
 
 
FY2021
FY2020
FY2020
 
Q-T-Q
Y-T-Y
Net revenues*
$727
$756
$850
 
-4%
-14%
Operating income
$176
$178
$251
 
-1%
-30%
Net income
$94
$162
$241
 
-42%
-61%
Diluted earnings per share
$0.38
$0.65
$0.94
 
-42%
-60%
 
 
 
 
 
 
 
 
Non-GAAP
 
 
 
 
 
 
 
 
Q1
Q4
Q1
 
 
 
 
FY2021
FY2020
FY2020
 
Q-T-Q
Y-T-Y
Net revenues*
$727
$756
$850
 
-4%
-14%
Operating income
$187
$218
$260
 
-14%
-28%
Net income
$160
$193
$249
 
-17%
-36%
Diluted earnings per share
$0.65
$0.78
$0.97
 
-17%
-33%
 
 
* No adjustment between GAAP and Non-GAAP



The following information was filed by Xilinx Inc (XLNX) on Thursday, July 30, 2020 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.
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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par valueXLNXThe 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 filerxAccelerated filer
 o
Non-accelerated filero
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, 2020June 29, 2019
Net revenues$726,673  $849,632  
Cost of revenues:
Cost of products sold226,103  283,500  
Amortization of acquisition-related intangibles6,697  3,269  
Total cost of revenues232,800  286,769  
Gross margin493,873  562,863  
Operating expenses:
Research and development210,113  204,100  
Selling, general and administrative105,383  107,425  
Amortization of acquisition-related intangibles2,862  400  
Total operating expenses318,358  311,925  
Operating income175,515  250,938  
Interest and other income (expense), net(12,153) 11,612  
Income before income taxes163,362  262,550  
Provision for income taxes69,526  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:
Basic243,180  253,268  
Diluted245,543  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, 2020June 29, 2019
Net income$93,836  $241,459  
Other comprehensive income, net of tax:
Change in net unrealized gains (losses) on available-for-sale securities368  9,754  
Reclassification adjustment for (gains) losses on available-for-sale securities(277) (433) 
Change in unrealized gains (losses) on hedging transactions7,129  430  
Reclassification adjustment for (gains) losses on hedging transactions1,687  822  
Cumulative translation adjustment, net(2,867) (635) 
Other comprehensive income6,040  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, 2020March 28, 2020
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents$1,227,376  $1,777,703  
Short-term investments1,771,959  489,513  
Accounts receivable, net305,180  273,028  
Inventories292,213  304,340  
Prepaid expenses and other current assets67,935  64,557  
Total current assets3,664,663  2,909,141  
Property, plant and equipment, at cost993,031  989,315  
Accumulated depreciation and amortization(631,503) (616,741) 
Net property, plant and equipment361,528  372,574  
Goodwill619,196  619,196  
Acquisition-related intangibles, net190,785  200,344  
Other assets608,591  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 liabilities264,818  231,439  
Income taxes payable54,246  36,217  
Other accrued liabilities126,193  216,634  
Current portion of long-term debt499,461  499,260  
Total current liabilities1,047,236  1,085,681  
Long-term debt1,491,752  747,110  
Long-term income taxes payable504,401  447,383  
Other long-term liabilities81,721  98,111  
Commitments and contingencies (Note 17)
Stockholders' equity:
Preferred stock, $.01 par value—  —  
Common stock, $.01 par value2,432  2,438  
Additional paid-in capital1,194,748  1,145,083  
Retained earnings1,136,710  1,187,805  
Accumulated other comprehensive loss(14,237) (20,277) 
Total stockholders’ equity2,319,653  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, 2020June 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 software31,749  23,853  
Amortization - others15,059  9,085  
Stock-based compensation50,383  42,753  
Benefit for deferred income taxes(8,979) (2,114) 
Others2,640  (10,240) 
Changes in assets and liabilities:
Accounts receivable, net(32,152) 29,211  
Inventories12,127  (21,400) 
Prepaid expenses and other current assets(1,925) 620  
Other assets(23,018) (13,408) 
Accounts payable1,333  (9,106) 
Accrued liabilities29,622  (13,830) 
Income taxes payable74,796  21,333  
Net cash provided by operating activities245,471  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 securities318,857  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  
Payment of dividends to stockholders(92,414) (93,961) 
Proceeds from issuance of long-term debt, net744,423  —  
Other financing activities(10,002) (4,881) 
Net cash provided by (used in) financing activities585,086  (547,956) 
Net increase (decrease) in cash and cash equivalents(550,327) 45,536  
Cash and cash equivalents at beginning of period1,777,703  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, 2020Common Stock
Outstanding
Additional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Total
Stockholders'
Equity
(In thousands, except per share amounts)SharesAmount
Balance as of March 28, 2020243,810  $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, net106   (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, 2020243,231  $2,432  $1,194,748  $1,136,710  $(14,237) $2,319,653  



Three Months Ended June 29, 2019Common Stock
Outstanding
Additional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Total
Stockholders'
Equity
(In thousands, except per share amounts)SharesAmount
Balance as of March 30, 2019253,891  $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, net96   (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, 2019251,020  $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 securities24,998  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 securities409,742  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 securities150,999  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 securities1,000  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, 2020March 28, 2020
(In thousands)Amortized CostGross Unrealized GainsGross Unrealized LossesEstimated Fair ValueAmortized CostGross Unrealized GainsGross Unrealized LossesEstimated Fair Value
Money market funds$567,333  $—  $—  $567,333  $656,038  $—  $—  $656,038  
Financial institution
securities524,980  —  —  524,980  325,000  —  —  325,000  
Non-financial institution
securities505,464  —  (1) 505,463  476,735  —  —  476,735  
U.S. government and
agency securities549,523   (31) 549,498  216,178  95  —  216,273  
Foreign government and
agency securities595,058  —  (36) 595,022  254,283   (17) 254,273  
Mortgage-backed securities
109,067  2,146  (319) 110,894  156,836  2,445  (477) 158,804  
Asset-backed securities868  16  —  884  2,533  18  (2) 2,549  
Commercial mortgage-
backed securities44,922  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 Months12 Months or GreaterTotal
(In thousands)Fair ValueGross Unrealized LossesFair ValueGross Unrealized LossesFair ValueGross Unrealized Losses
Non-financial institution securities$44,978  $(1) $—  $—  $44,978  $(1) 
U.S. government and
    agency securities416,542  (31) —  —  416,542  (31) 
Foreign government and
    agency securities74,942  (36) —  —  74,942  (36) 
Mortgage-backed securities7,216  (104) 15,299  (215) 22,515  (319) 
Commercial mortgage-
backed securities18,857  (109) 1,979  (153) 20,836  (262) 
$562,535  $(281) $17,278  $(368) $579,813  $(649) 
March 28, 2020
Less Than 12 Months12 Months or GreaterTotal
(In thousands)Fair ValueGross Unrealized LossesFair ValueGross Unrealized LossesFair ValueGross Unrealized Losses
Mortgage-backed securities$13,492  $(88) $31,819  $(389) $45,311  $(477) 
Asset-backed securities1,641  (2) —  —  1,641  (2) 
Foreign government and
    agency securities30,998  (17) —  —  30,998  (17) 
Commercial mortgage-
    backed securities30,593  (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 years3,714  3,755  
Due after five years through ten years17,149  17,834  
Due after ten years131,567  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, 2020June 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, 2020June 29, 2019
Stock-based compensation included in:
Cost of revenues$2,721  $2,613  
Research and development30,369  24,874  
Selling, general and administrative17,293  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 SharesWeighted-Average Grant-Date Fair Value Per Share
March 30, 20197,331  $59.54  
Granted2,756  $109.53  
Vested(2,820) $55.24  
Cancelled(487) $75.09  
March 28, 20206,780  $80.53  
Granted127  $84.34  
Vested(144) $78.09  
Cancelled(378) $80.16  
June 27, 20206,385  $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, 2020June 29, 2019
Risk-free interest rate0.3 %2.1 %
Dividend yield1.7 %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

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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, 2020June 29, 2019
Net income available to common stockholders$93,836  $241,459  
Weighted average common shares outstanding-basic243,180  253,268  
Dilutive effect of employee equity incentive plans2,363  4,660  
Weighted average common shares outstanding-diluted245,543  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, 2020March 28, 2020
Raw materials$33,968  $35,562  
Work-in-process188,322  204,501  
Finished goods69,923  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.

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The following table summarizes the carrying value of the 2021 Notes as of June 27, 2020 and March 28, 2020:
(In thousands)June 27, 2020March 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, 2020June 29, 2019
Contractual coupon interest$3,750  $3,750  
Amortization of debt issuance costs61  61  
Amortization of debt discount, net141  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, 2020March 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, 2020June 29, 2019
Contractual coupon interest$5,444  $6,542  
Amortization of debt issuance costs142  142  
Amortization of debt discount, net29  29  
Total interest expense related to the 2024 Notes$5,615  $6,713  

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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 costs45  
Amortization of debt discount, net 
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.

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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, 2020June 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, 2020March 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.

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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  
202211,979  
20237,342  
20246,292  
2025