NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Nature of Operations
Xilinx, Inc. (Xilinx or the Company) designs, develops and markets programmable devices and associated technologies, including advanced ICs in the form of PLDs, software design tools and predefined system functions delivered as IP. In addition to its programmable platforms, the Company provides design services, customer training, field engineering and technical support. The wafers used to manufacture its products are obtained primarily from independent wafer manufacturers located in Taiwan and Korea. The Company is dependent on these foundries to produce and deliver silicon wafers on a timely basis. The Company is also dependent on subcontractors, primarily located in the Asia Pacific region, to provide semiconductor assembly, test and shipment services. Xilinx is a global company with sales offices throughout the world. The Company derives over
one-half
of its revenues from international sales, primarily in the Asia Pacific region, Europe and Japan.
|
|
Note 2.
|
Summary of Significant Accounting Policies and Concentrations of Risk
|
Basis of Presentation
The accompanying consolidated financial statements include the accounts of Xilinx and its wholly-owned subsidiaries after elimination of all intercompany transactions. The Company uses a
52
- to
53
-week fiscal year ending on the Saturday nearest March 31. Fiscal
2016
was a 53-week year ended on
April 2, 2016
. Each of Fiscal
2015
and
2014
was a 52-week year, ended on
March 28, 2015
and
March 29, 2014
, respectively. Fiscal
2017
will be a 52-week year ending on
April 1, 2017
.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of net revenues and expenses during the reporting period. Such estimates relate to, among others, the useful lives of assets, assessment of recoverability of property, plant and equipment, long-lived assets and goodwill, inventory write-downs, allowances for doubtful accounts, customer returns, deferred tax assets, stock-based compensation, potential reserves relating to litigation and tax matters, valuation of certain investments and derivative financial instruments as well as other accruals or reserves. Actual results may differ from those estimates and such differences may be material to the financial statements.
Cash Equivalents and Investments
Cash equivalents consist of highly liquid investments with original maturities from the date of purchase of three months or less. These investments consist of money market funds, non-financial institution securities, U.S. and foreign government and agency securities, municipal bonds and financial institution securities. Short-term investments consist of mortgage-backed securities, non-financial institution securities, U.S. and foreign government and agency securities, financial institution securities, asset-backed securities, bank loans, a debt mutual fund and municipal bonds with original maturities greater than three months and remaining maturities less than one year from the balance sheet date. Long-term investments consist of mortgage-backed securities, a debt mutual fund, auction rate securities, municipal bonds and asset-backed securities with remaining maturities greater than one year, unless the investments are specifically identified to fund current operations, in which case they are classified as short-term investments. As of
April 2, 2016
and
March 28, 2015
, long-term investments also included approximately
$10.0 million
and
$10.3 million
, respectively, of auction rate securities that experienced failed auctions in the fourth quarter of fiscal 2008. These auction rate securities are secured primarily by pools of student loans originated under Federal Family Education Loan Program that are substantially guaranteed by the U. S. Department of Education. Equity investments are also classified as long-term investments since they are not intended to fund current operations.
The Company maintains its cash balances with various banks with high quality ratings, and with investment banking and asset management institutions. The Company manages its liquidity risk by investing in a variety of money market funds, high-grade commercial paper, corporate bonds, municipal bonds, U.S. and foreign government and agency securities, asset-backed securities, mortgage-backed securities, bank loans and debt mutual funds. This diversification of investments is consistent with its policy to maintain liquidity and ensure the ability to collect principal. The Company maintains an offshore investment portfolio denominated in U.S. dollars. All investments are made pursuant to corporate investment policy guidelines. Investments include Euro commercial paper, Euro dollar bonds, Euro dollar floating rate notes, offshore time deposits, U.S. and foreign government and agency securities, asset-backed securities, bank loans and mortgage-backed securities issued by U.S. government-sponsored enterprises and agencies.
Management classifies investments as available-for-sale or held-to-maturity at the time of purchase and re-evaluates such designation at each balance sheet date, although classification is not generally changed. Securities are classified as held-to-maturity when the Company has the positive intent and the ability to hold the securities until maturity. Held-to-maturity securities are carried at cost adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization, as well as any interest on the securities, is included in interest income.
No
investments were classified as held-to-maturity as of
April 2, 2016
or
March 28, 2015
. Available-for-sale securities are carried at fair value with the unrealized gains or losses, net of tax, included as a component of accumulated other comprehensive income (loss) in stockholders' equity. See "Note 3. Fair Value Measurements" for information relating to the determination of fair value. Realized gains and losses on available-for-sale securities are included in interest and other expense, net, and declines in value judged to be other than temporary are included in impairment loss on investments. In determining if and when a decline in value below the adjusted cost of marketable debt and equity securities is other than temporary, we evaluate on an ongoing basis the market conditions, trends of earnings, financial condition, credit ratings, any underlying collateral and other key measures for our investments. The cost of securities matured or sold is based on the specific identification method.
In determining whether a decline in value of non-marketable equity investments in private companies is other than temporary, the assessment is made by considering available evidence including the general market conditions in the investee's industry, the investee's product development status, the investee's ability to meet business milestones and the financial condition and near-term prospects of the individual investee, including the rate at which the investee is using its cash, the investee's need for possible additional funding at a lower valuation and bona fide offers to purchase the investee from a prospective acquirer. When a decline in value is deemed to be other than temporary, the Company recognizes an impairment loss in the current period's operating results to the extent of the decline.
Accounts Receivable
The allowance for doubtful accounts reflects the Company's best estimate of probable losses inherent in the accounts receivable balance. The Company determines the allowance based on the aging of Xilinx's accounts receivable, historical experience, known troubled accounts, management judgment and other currently available evidence. Xilinx writes off accounts receivable against the allowance when Xilinx determines a balance is uncollectible and no longer actively pursues collection of the receivable. The amounts of accounts receivable written off were insignificant for all periods presented.
Inventories
Inventories are stated at the lower of actual cost (determined using the first-in, first-out method), or market (estimated net realizable value) and are comprised of the following:
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|
|
|
|
|
|
|
|
(In thousands)
|
April 2, 2016
|
|
March 28, 2015
|
Raw materials
|
$
|
15,346
|
|
|
$
|
14,174
|
|
Work-in-process
|
123,675
|
|
|
183,472
|
|
Finished goods
|
39,529
|
|
|
33,682
|
|
|
$
|
178,550
|
|
|
$
|
231,328
|
|
The Company reviews and sets standard costs quarterly to approximate current actual manufacturing costs. The Company's manufacturing overhead standards for product costs are calculated assuming full absorption of actual spending over actual volumes. Given the cyclicality of the market, the obsolescence of technology and product lifecycles, the Company writes down inventory based on forecasted demand and technological obsolescence. These forecasts are developed based on inputs from the Company's customers, including bookings and extended but uncommitted demand forecasts, and internal analyses such as customer historical purchasing trends and actual and anticipated design wins, as well as market and economic conditions, technology changes, new product introductions and changes in strategic direction. These factors require estimates that may include uncertain elements. The estimates of future demand that the Company uses in the valuation of inventory are the basis for its published revenue forecasts, which are also consistent with our short-term manufacturing plans. The differences between the Company's demand forecast and the actual demand in the recent past have not resulted in any material write down in the Company's inventory. If the Company's demand forecast for specific products is greater than actual demand and the Company fails to reduce manufacturing output accordingly, the Company could be required to write down additional inventory, which would have a negative impact on the Company's gross margin.
Property, Plant and Equipment
Property, plant and equipment are recorded at cost, net of accumulated depreciation. Depreciation for financial reporting purposes is computed using the straight-line method over the estimated useful lives of the assets of
three
to
five
years for machinery, equipment, furniture and fixtures and
15
to
30
years for buildings. Depreciation expense totaled
$50.8 million
,
$55.3 million
and
$55.5 million
for fiscal
2016
,
2015
and
2014
, respectively.
Impairment of Long-Lived Assets
The Company evaluates the carrying value of long-lived assets and certain identifiable intangible assets to be held and used for impairment if indicators of potential impairment exist. Impairment indicators are reviewed on a quarterly basis. When indicators of impairment exist and assets are held for use, the Company estimates future undiscounted cash flows attributable to the assets. In the event such cash flows are not expected to be sufficient to recover the recorded value of the assets, the assets are written down to their estimated fair values based on the expected discounted future cash flows attributable to the assets or based on appraisals. When assets are removed from operations and held for sale, Xilinx estimates impairment losses as the excess of the carrying value of the assets over their fair value. See "Note 8. Restructuring Charges" for more information about the Company's write-offs of acquisition-related intangibles recorded in fiscal 2015.
Goodwill
Goodwill is not amortized but is subject to impairment tests on an annual basis, or more frequently if indicators of potential impairment exist, using a fair-value-based approach. Based on the impairment review performed during the fourth quarter of fiscal
2016
, there was
no
impairment of goodwill in fiscal
2016
. Unless there are indicators of impairment, the Company's next impairment review for goodwill will be performed and completed in the
fourth
quarter of fiscal
2017
. To date, no impairment indicators have been identified.
Revenue Recognition
Sales to distributors are made under agreements providing distributor price adjustments and rights of return under certain circumstances. Revenue and costs relating to distributor sales are deferred until products are sold by the distributors to the distributors' end customers. For fiscal
2016
, approximately
60%
of the Company's net revenues were from products sold to distributors for subsequent resale to OEMs or their subcontract manufacturers. Revenue recognition depends on notification from the distributor that product has been sold to the distributor's end customer. Also reported by the distributor are product resale price, quantity and end customer shipment information, as well as inventory on hand. Reported distributor inventory on hand is reconciled to deferred revenue balances monthly. The Company maintains system controls to validate distributor data and to verify that the reported information is accurate. Deferred income on shipments to distributors reflects the estimated effects of distributor price adjustments and the amount of gross margin expected to be realized when distributors sell through product purchased from the Company. Accounts receivable from distributors are recognized and inventory is relieved when title to inventories transfers, typically upon shipment from Xilinx at which point the Company has a legally enforceable right to collection under normal payment terms.
As of
April 2, 2016
, the Company had
$70.9 million
of deferred revenue and
$19.1 million
of deferred cost of revenues recognized as a net
$51.8 million
of deferred income on shipments to distributors. As of
March 28, 2015
, the Company had
$87.7 million
of deferred revenue and
$21.6 million
of deferred cost of revenues recognized as a net
$66.1 million
of deferred income on shipments to distributors. The deferred income on shipments to distributors that will ultimately be recognized in the Company's consolidated statement of income will be different than the amount shown on the consolidated balance sheet due to actual price adjustments issued to the distributors when the product is sold to their end customers.
Revenue from sales to the Company's direct customers is recognized upon shipment provided that persuasive evidence of a sales arrangement exists, the price is fixed or determinable, title has transferred, collection of resulting receivables is reasonably assured, and there are no customer acceptance requirements and no remaining significant obligations. For each of the periods presented, there were no significant acceptance provisions with the Company's direct customers.
Revenue from software licenses is deferred and recognized as revenue over the term of the licenses of one year. Revenue from support services is recognized when the service is performed. Revenue from Support Products, which includes software and services sales, was less than
5%
of net revenues for all of the periods presented.
Allowances for end customer sales returns are recorded based on historical experience and for known pending customer returns or allowances.
Foreign Currency Translation
The U.S. dollar is the functional currency for the Company's Ireland and Singapore subsidiaries. Monetary assets and liabilities that are not denominated in the functional currency are remeasured into U.S. dollars, and the resulting gains or losses are included in the consolidated statements of income under interest and other expense, net. The remeasurement gains or losses were immaterial for all fiscal periods presented.
The local currency is the functional currency for each of the Company's other wholly-owned foreign subsidiaries. Assets and liabilities are translated from foreign currencies into U.S. dollars at month-end exchange rates and statements of income are translated at the average monthly exchange rates. Exchange gains or losses arising from translation of foreign currency denominated assets and liabilities (i.e., cumulative translation adjustment) are included as a component of accumulated other comprehensive income (loss) in stockholders' equity.
Derivative Financial Instruments
To reduce financial risk, the Company periodically enters into financial arrangements as part of the Company's ongoing asset and liability management activities. Xilinx uses derivative financial instruments to hedge fair values of underlying assets and liabilities or future cash flows which are exposed to foreign currency or commodity price fluctuations. The Company does not enter into derivative financial instruments for trading or speculative purposes. See "Note 5. Derivative Financial Instruments" for detailed information about the Company's derivative financial instruments.
Research and Development Expenses
Research and development costs are current period expenses and charged to expense as incurred.
Stock-Based Compensation
The Company has equity incentive plans that are more fully discussed in "Note 6. Stock-Based Compensation Plans." The authoritative guidance of accounting for share-based payment requires the Company to measure the cost of all employee equity awards (that are expected to be exercised or vested) based on the grant-date fair value of those awards, and to record that cost as compensation expense over the period during which the employee is required to perform service in exchange for the award (over the vesting period of the award). The authoritative guidance of accounting for share-based payment requires cash flows resulting from excess tax benefits to be classified as a part of cash flows from financing activities. Excess tax benefits are realized tax benefits from tax deductions for exercised options in excess of the deferred tax asset attributable to stock compensation costs for such options. The exercise price of employee stock options is equal to the market price of Xilinx common stock (defined as the closing trading price reported by The NASDAQ Global Select Market) on the date of grant. Additionally, Xilinx's ESPP is deemed a compensatory plan under the authoritative guidance of accounting for share-based payments. Accordingly, the ESPP is included in the computation of stock-based compensation expense.
The Company uses the straight-line attribution method to recognize stock-based compensation costs over the requisite service period of the award. Upon exercise, cancellation or expiration of stock options, deferred tax assets for options with multiple vesting dates are eliminated for each vesting period on a first-in, first-out basis as if each award had a separate vesting period.
Income Taxes
All income tax amounts reflect the use of the liability method
under the accounting for income taxes, as interpreted by FASB authoritative guidance for measuring uncertain tax positions
.
Under this method, deferred tax assets and liabilities are determined based on the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities for financial and income tax reporting purposes.
Product Warranty and Indemnification
The Company generally sells products with a limited warranty for product quality. The Company provides an accrual for known product issues if a loss is probable and can be reasonably estimated. As of the end of both fiscal
2016
and
2015
, the accrual balance of the product warranty liability was immaterial.
The Company offers, subject to certain terms and conditions, to indemnify customers and distributors for costs and damages awarded against these parties in the event the Company's hardware products are found to infringe third-party intellectual property
rights, including patents, copyrights or trademarks, and to compensate certain customers for limited specified costs they actually incur in the event our hardware products experience epidemic failure. To a lesser extent, the Company may from time-to-time offer limited indemnification with respect to its software products. The terms and conditions of these indemnity obligations are limited by contract, which obligations are typically perpetual from the effective date of the agreement. The Company has historically received only a limited number of requests for indemnification under these provisions and has not made any significant payments pursuant to these provisions. The Company cannot estimate the maximum amount of potential future payments, if any, that the Company may be required to make as a result of these obligations due to the limited history of indemnification claims and the unique facts and circumstances that are likely to be involved in each particular claim and indemnification provision. However, there can be no assurances that the Company will not incur any financial liabilities in the future as a result of these obligations.
Concentrations of Credit Risk
Avnet, one of the Company's distributors, distributes the Company's products worldwide. As of
April 2, 2016
and
March 28, 2015
, Avnet accounted for
75%
and
67%
of the Company's total net accounts receivable, respectively. Resale of product through Avnet accounted for
50%
,
43%
and
46%
of the Company's worldwide net revenues in fiscal
2016
,
2015
and
2014
, respectively. The percentage of net accounts receivable due from Avnet and the percentage of worldwide net revenues from Avnet are consistent with historical patterns.
Xilinx is subject to concentrations of credit risk primarily in its trade accounts receivable and investments in debt securities to the extent of the amounts recorded on the consolidated balance sheet. The Company attempts to mitigate the concentration of credit risk in its trade receivables through its credit evaluation process, collection terms and distributor sales to diverse end customers and through geographical dispersion of sales. Xilinx generally does not require collateral for receivables from its end customers or from distributors.
No
end customer accounted for more than 10% of the Company's worldwide net revenues for any of the periods presented.
The Company mitigates concentrations of credit risk in its investments in debt securities by currently investing more than
86%
of its portfolio in AA 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
April 2, 2016
, approximately
35%
of the portfolio consisted of mortgage-backed securities. All of the mortgage-backed securities in the investment portfolio were issued by U.S. government-sponsored enterprises and agencies and are rated AA+ by Standard & Poor's and AAA by Moody's Investors Service.
The global credit markets may experience adverse conditions that negatively impact the values of various types of investment and non-investment grade securities. The global credit and capital markets may experience significant volatility and disruption due to instability in the global financial system, uncertainty related to global economic conditions and concerns regarding sovereign financial stability. Therefore, there is a risk that we may incur other-than-temporary impairment charges for certain types of investments should credit market conditions deteriorate. See "Note 4. Financial Instruments" for a table of the Company's available-for-sale securities.
Adoption of New Accounting Standard for Classification of Deferred Taxes
In November 2015, the FASB issued the authoritative guidance regarding balance sheet classification of deferred taxes. The guidance requires companies to classify all deferred tax assets and liabilities as non-current on the balance sheet instead of separating deferred taxes into current and non-current amounts. This guidance is effective for public business entities for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The amendments can be applied retrospectively or prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. The Company adopted this guidance in the fourth quarter of fiscal year 2016 on a prospective basis, and therefore, no adjustments were made to the prior periods.
Recent Accounting Pronouncements
In April 2014, the FASB issued the authoritative guidance that outlines a new global revenue recognition standard that replaces virtually all existing US GAAP guidance on contracts with customers and the related other assets and deferred costs. The guidance
provides a five-step process for recognizing revenue that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard also requires expanded qualitative and quantitative disclosures relating to the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In July 2015, FASB approved the deferral of the effective date of this guidance by one year. As a result, this guidance will be effective for the Company beginning in fiscal year 2019, with an option to early adopt in fiscal year 2018. The new standard is required to be applied retrospectively to each prior reporting period presented, or retrospectively with the cumulative effect of initially applying it recognized at the date of initial application. The Company is currently evaluating the full impact of this new guidance on its consolidated financial statements, including selection of the transition method. However, assuming all other revenue recognition criteria have been met, it is likely that the new guidance would require the Company to recognize revenue and cost relating to distributor sales upon product delivery, subject to estimated allowance for distributor price adjustments and rights of return.
In July 2015, the FASB issued the authoritative guidance that requires an entity to measure inventory at the lower of cost or net realizable value (NRV). NRV is the estimated selling price in the ordinary course of business, less reasonably predictable cost of completion, disposal, and transportation. This guidance is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years, which for Xilinx would be the first quarter of fiscal year 2018. The amendments should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. The Company is currently evaluating the impact of this new guidance on its consolidated financial statements.
In January 2016, the FASB issued the final guidance regarding how companies measure equity investments that do not result in consolidation and are not accounted for under the equity method and how they present changes in the fair value of financial liabilities measured under the fair value option that are attributable to their own credit. The new guidance also changes certain disclosure requirements and other aspects of current US GAAP. It does not change the guidance for classifying and measuring investments in debt securities and loans. Early adoption is permitted. The guidance is effective for public business entities for annual periods beginning after December 15, 2017, and interim periods within those annual periods, which for Xilinx would be the first quarter of fiscal year 2019. The Company is currently evaluating the impact of this new guidance on its consolidated financial statements.
In February 2016, the FASB issued the authoritative guidance on leases. The new standard requires the recognition of assets and liabilities arising from lease transactions on the balance sheet and will also require significant additional disclosures about the amount, timing and uncertainty of cash flows from leases. Accordingly, a lessee will recognize a lease asset for its right to use the underlying asset and a lease liability for the corresponding lease obligation. The new standard is effective for public business entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, which for Xilinx would be the first quarter of fiscal year 2020. Early adoption is permitted. The new standard must be adopted using a modified retrospective transition, and provides for certain practical expedients. In addition, the transition will require application of the new guidance at the beginning of the earliest comparative period presented. The Company is currently evaluating the impact of this new guidance on its consolidated financial statements.
In March 2016, the FASB issued the authoritative guidance regarding contingent put and call options in debt instruments. The new guidance simplifies the embedded derivative analysis for debt instruments containing contingent call or put options, whereby a contingent put or call option embedded in a debt instrument would be evaluated for possible separate accounting as a derivative instrument without regard to the nature of the exercise contingency. The new guidance will be effective for public business entities in fiscal years beginning after December 15, 2016, including interim periods within those years, which for Xilinx would be the first quarter of fiscal year 2018. The Company is currently evaluating the impact of this new guidance on its consolidated financial statements.
In March 2016, the FASB finalized its amendments to the guidance in the new revenue standard on assessing whether an entity is a principal or an agent in a revenue transaction. The amendments clarify how an entity should identify the unit of accounting for the principal versus agent evaluation, and how it should apply the control principle to certain types of arrangements, such as service transactions, by explaining what a principal controls before the specified good or service is transferred to the customer. The FASB also addressed how an entity acting as a principal would determine its transaction price when it does not know the price charged to its customer for its goods or services by an intermediary. The amendments have the same effective date and transition requirements as the new revenue standard, which for Xilinx would be the beginning of fiscal year 2019. The Company is currently evaluating the impact of this new guidance on its consolidated financial statements.
In March 2016, the FASB issued the authoritative guidance that simplifies various aspects related to how share-based payments are accounted for and presented in the financial statements. The areas for simplification involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The new guidance will be effective for public business entities in fiscal years
beginning after December 15, 2016, including interim periods within those years, which for Xilinx would be the first quarter of fiscal year 2018. The Company is currently evaluating the impact of this new guidance on its consolidated financial statements.
In April 2016, the FASB finalized amendments to the guidance in the new revenue standard on identifying performance obligations and accounting for licenses of intellectual property. The amendments address implementation issues that were raised by stakeholders and discussed by the Revenue Recognition Transition Resource Group. The amendments have the same effective date and transition requirements as the new revenue standard, which for Xilinx would be the beginning of fiscal year 2019. The Company is currently evaluating the impact of this new guidance on its consolidated financial statements.
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|
Note 3.
|
Fair Value Measurements
|
The guidance for fair value measurements established by the FASB defines fair value as the exchange price that would be received from selling an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which Xilinx would transact and also considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions and risk of nonperformance.
The Company determines the fair value for marketable debt 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. For certain other securities, such as student loan auction rate securities, the Company performs its own valuation analysis using a discounted cash flow pricing model.
The Company validates the consensus prices by taking random samples from each asset type and corroborating those prices using reported trade activity, benchmark yield curves, binding broker/dealer quotes or other relevant price information. There have not been any changes to the Company's fair value methodology during fiscal
2016
and the Company did not adjust or override any fair value measurements as of
April 2, 2016
.
Fair Value Hierarchy
The fair value framework requires the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities. The guidance for fair value measurements requires that assets and liabilities carried at fair value be classified and disclosed in one of the following categories:
Level 1 — Quoted (unadjusted) prices in active markets for identical assets or liabilities.
The Company's Level 1 assets consist of U.S. government and agency securities and money market funds.
Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.
The Company's Level 2 assets consist of financial institution securities, non-financial institution securities, municipal bonds, U.S. government and agency securities, foreign government and agency securities, mortgage-backed securities, debt mutual funds, bank loans, asset-backed securities and commercial mortgage-backed securities. The Company's Level 2 assets and liabilities also include foreign currency forward contracts and commodity swap contracts.
Level 3 — Unobservable inputs to the valuation methodology that are supported by little or no market activity and that are significant to the measurement of the fair value of the assets or liabilities. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques, as well as significant management judgment or estimation.
The Company's Level 3 assets and liabilities include student loan auction rate securities.
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
April 2, 2016
and
March 28, 2015
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 2, 2016
|
(In thousands)
|
|
Quoted
Prices in
Active
Markets for
Identical
Instruments
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total Fair
Value
|
Assets
|
|
|
|
|
|
|
|
|
Cash equivalents:
|
|
|
|
|
|
|
|
|
Money market funds
|
|
$
|
232,698
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
232,698
|
|
Non-financial institution securities
|
|
—
|
|
|
104,964
|
|
|
—
|
|
|
104,964
|
|
Foreign government and agency securities
|
|
—
|
|
|
98,967
|
|
|
—
|
|
|
98,967
|
|
Municipal bonds
|
|
—
|
|
|
1,003
|
|
|
—
|
|
|
1,003
|
|
Short-term investments:
|
|
|
|
|
|
|
|
|
Financial institution securities
|
|
—
|
|
|
284,853
|
|
|
—
|
|
|
284,853
|
|
Non-financial institution securities
|
|
—
|
|
|
460,148
|
|
|
—
|
|
|
460,148
|
|
Municipal bonds
|
|
—
|
|
|
61,579
|
|
|
—
|
|
|
61,579
|
|
U.S. government and agency securities
|
|
81,873
|
|
|
110,420
|
|
|
—
|
|
|
192,293
|
|
Foreign government and agency securities
|
|
—
|
|
|
214,201
|
|
|
—
|
|
|
214,201
|
|
Mortgage-backed securities
|
|
—
|
|
|
1,067,157
|
|
|
—
|
|
|
1,067,157
|
|
Debt mutual fund
|
|
—
|
|
|
35,116
|
|
|
—
|
|
|
35,116
|
|
Bank loans
|
|
—
|
|
|
102,015
|
|
|
—
|
|
|
102,015
|
|
Asset-backed securities
|
|
—
|
|
|
210,051
|
|
|
—
|
|
|
210,051
|
|
Commercial mortgage-backed securities
|
|
—
|
|
|
206,470
|
|
|
—
|
|
|
206,470
|
|
Long-term investments:
|
|
|
|
|
|
|
|
|
Auction rate securities
|
|
—
|
|
|
—
|
|
|
9,977
|
|
|
9,977
|
|
Municipal bonds
|
|
—
|
|
|
7,100
|
|
|
—
|
|
|
7,100
|
|
Mortgage-backed securities
|
|
—
|
|
|
140,382
|
|
|
—
|
|
|
140,382
|
|
Debt mutual fund
|
|
—
|
|
|
56,785
|
|
|
—
|
|
|
56,785
|
|
Asset-backed securities
|
|
—
|
|
|
6,563
|
|
|
—
|
|
|
6,563
|
|
Derivative financial instruments, net
|
|
—
|
|
|
744
|
|
|
—
|
|
|
744
|
|
Total assets measured at fair value
|
|
$
|
314,571
|
|
|
$
|
3,168,518
|
|
|
$
|
9,977
|
|
|
$
|
3,493,066
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 28, 2015
|
(In thousands)
|
|
Quoted
Prices in
Active
Markets for
Identical
Instruments
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total Fair
Value
|
Assets
|
|
|
|
|
|
|
|
|
Cash equivalents:
|
|
|
|
|
|
|
|
|
Money market funds
|
|
$
|
235,583
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
235,583
|
|
Financial institution securities
|
|
—
|
|
|
229,999
|
|
|
—
|
|
|
229,999
|
|
Non-financial institution securities
|
|
—
|
|
|
89,995
|
|
|
—
|
|
|
89,995
|
|
U.S. government and agency securities
|
|
—
|
|
|
200,392
|
|
|
—
|
|
|
200,392
|
|
Foreign government and agency securities
|
|
—
|
|
|
37,996
|
|
|
—
|
|
|
37,996
|
|
Short-term investments:
|
|
|
|
|
|
|
|
|
Financial institution securities
|
|
—
|
|
|
75,000
|
|
|
—
|
|
|
75,000
|
|
Non-financial institution securities
|
|
—
|
|
|
339,029
|
|
|
—
|
|
|
339,029
|
|
Municipal bonds
|
|
—
|
|
|
40,006
|
|
|
—
|
|
|
40,006
|
|
U.S. government and agency securities
|
|
256,514
|
|
|
301,010
|
|
|
—
|
|
|
557,524
|
|
Foreign government and agency securities
|
|
—
|
|
|
159,936
|
|
|
—
|
|
|
159,936
|
|
Mortgage-backed securities
|
|
—
|
|
|
859,330
|
|
|
—
|
|
|
859,330
|
|
Debt mutual fund
|
|
—
|
|
|
38,608
|
|
|
—
|
|
|
38,608
|
|
Bank loans
|
|
—
|
|
|
98,100
|
|
|
—
|
|
|
98,100
|
|
Asset-backed securities
|
|
—
|
|
|
204,510
|
|
|
—
|
|
|
204,510
|
|
Commercial mortgage-backed securities
|
|
—
|
|
|
38,446
|
|
|
—
|
|
|
38,446
|
|
Long-term investments:
|
|
|
|
|
|
|
|
|
Auction rate securities
|
|
—
|
|
|
—
|
|
|
10,312
|
|
|
10,312
|
|
Municipal bonds
|
|
—
|
|
|
9,650
|
|
|
—
|
|
|
9,650
|
|
Mortgage-backed securities
|
|
—
|
|
|
180,906
|
|
|
—
|
|
|
180,906
|
|
Debt mutual fund
|
|
—
|
|
|
56,592
|
|
|
—
|
|
|
56,592
|
|
Asset-backed securities
|
|
—
|
|
|
7,948
|
|
|
—
|
|
|
7,948
|
|
Commercial mortgage-backed securities
|
|
—
|
|
|
1,494
|
|
|
—
|
|
|
1,494
|
|
Total assets measured at fair value
|
|
$
|
492,097
|
|
|
$
|
2,968,947
|
|
|
$
|
10,312
|
|
|
$
|
3,471,356
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Derivative financial instruments, net
|
|
$
|
—
|
|
|
$
|
9,251
|
|
|
$
|
—
|
|
|
$
|
9,251
|
|
Total liabilities measured at fair value
|
|
$
|
—
|
|
|
$
|
9,251
|
|
|
$
|
—
|
|
|
$
|
9,251
|
|
Net assets measured at fair value
|
|
$
|
492,097
|
|
|
$
|
2,959,696
|
|
|
$
|
10,312
|
|
|
$
|
3,462,105
|
|
Changes in Level 3 Instruments Measured at Fair Value on a Recurring Basis
The following table is a reconciliation of all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3):
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended
|
(In thousands)
|
|
April 2, 2016
|
|
March 28, 2015
|
Balance as of beginning of period
|
|
$
|
10,312
|
|
|
$
|
20,160
|
|
Total realized and unrealized gains (losses):
|
|
|
|
|
Included in other comprehensive income (loss)
|
|
(335
|
)
|
|
1,152
|
|
Sales and settlements, net (1)
|
|
—
|
|
|
(11,000
|
)
|
Balance as of end of period
|
|
$
|
9,977
|
|
|
$
|
10,312
|
|
|
|
(1)
|
During fiscal
2015
, the Company redeemed
$11.0 million
of student loan auction rate securities for cash at par value.
|
As of
April 2, 2016
, marketable securities measured at fair value using Level 3 inputs were comprised of
$10.0 million
of student loan auction rate securities.
Financial Instruments Not Recorded at Fair Value on a Recurring Basis
The Company's 2017 Convertible Notes, 2019 Notes and 2021 Notes are measured at fair value on a quarterly basis for disclosure purposes. The fair values of the 2017 Convertible Notes, 2019 Notes and 2021 Notes as of
April 2, 2016
were approximately
$990.5 million
,
$503.6 million
and
$523.6 million
, respectively, based on the last trading price of the respective debentures for the period (classified as Level 2 in fair value hierarchy due to relatively low trading volume).
|
|
Note 4.
|
Financial Instruments
|
The following is a summary of cash equivalents and available-for-sale securities as of the end of the periods presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 2, 2016
|
|
|
March 28, 2015
|
(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
|
$
|
232,698
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
232,698
|
|
|
|
$
|
235,583
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
235,583
|
|
Financial institution
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
securities
|
284,853
|
|
|
—
|
|
|
—
|
|
|
284,853
|
|
|
|
304,999
|
|
|
—
|
|
|
—
|
|
|
304,999
|
|
Non-financial institution
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
securities
|
564,480
|
|
|
862
|
|
|
(230
|
)
|
|
565,112
|
|
|
|
429,005
|
|
|
25
|
|
|
(6
|
)
|
|
429,024
|
|
Auction rate securities
|
10,500
|
|
|
—
|
|
|
(523
|
)
|
|
9,977
|
|
|
|
10,500
|
|
|
—
|
|
|
(188
|
)
|
|
10,312
|
|
Municipal bonds
|
68,938
|
|
|
877
|
|
|
(133
|
)
|
|
69,682
|
|
|
|
49,064
|
|
|
744
|
|
|
(152
|
)
|
|
49,656
|
|
U.S. government and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
agency securities
|
192,291
|
|
|
73
|
|
|
(71
|
)
|
|
192,293
|
|
|
|
757,954
|
|
|
91
|
|
|
(129
|
)
|
|
757,916
|
|
Foreign government and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
agency securities
|
313,168
|
|
|
—
|
|
|
—
|
|
|
313,168
|
|
|
|
197,932
|
|
|
—
|
|
|
—
|
|
|
197,932
|
|
Mortgage-backed securities
|
1,200,071
|
|
|
12,848
|
|
|
(5,380
|
)
|
|
1,207,539
|
|
|
|
1,035,598
|
|
|
8,809
|
|
|
(4,171
|
)
|
|
1,040,236
|
|
Asset-backed securities
|
216,068
|
|
|
1,151
|
|
|
(605
|
)
|
|
216,614
|
|
|
|
211,487
|
|
|
1,130
|
|
|
(159
|
)
|
|
212,458
|
|
Debt mutual funds
|
101,350
|
|
|
—
|
|
|
(9,449
|
)
|
|
91,901
|
|
|
|
101,350
|
|
|
—
|
|
|
(6,150
|
)
|
|
95,200
|
|
Bank loans
|
102,092
|
|
|
25
|
|
|
(102
|
)
|
|
102,015
|
|
|
|
98,131
|
|
|
29
|
|
|
(60
|
)
|
|
98,100
|
|
Commercial mortgage-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
backed securities
|
207,847
|
|
|
432
|
|
|
(1,809
|
)
|
|
206,470
|
|
|
|
40,132
|
|
|
133
|
|
|
(325
|
)
|
|
39,940
|
|
|
$
|
3,494,356
|
|
|
$
|
16,268
|
|
|
$
|
(18,302
|
)
|
|
$
|
3,492,322
|
|
|
|
$
|
3,471,735
|
|
|
$
|
10,961
|
|
|
$
|
(11,340
|
)
|
|
$
|
3,471,356
|
|
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
April 2, 2016
and
March 28, 2015
.
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
April 2, 2016
and
March 28, 2015
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 2, 2016
|
|
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
|
$
|
52,756
|
|
|
$
|
(230
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
52,756
|
|
|
$
|
(230
|
)
|
Auction rate securities
|
—
|
|
|
—
|
|
|
9,977
|
|
|
(523
|
)
|
|
9,977
|
|
|
(523
|
)
|
Municipal bonds
|
10,138
|
|
|
(44
|
)
|
|
3,867
|
|
|
(89
|
)
|
|
14,005
|
|
|
(133
|
)
|
U.S. government and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
agency securities
|
84,024
|
|
|
(71
|
)
|
|
—
|
|
|
—
|
|
|
84,024
|
|
|
(71
|
)
|
Mortgage-backed securities
|
346,560
|
|
|
(3,916
|
)
|
|
114,285
|
|
|
(1,464
|
)
|
|
460,845
|
|
|
(5,380
|
)
|
Asset-backed securities
|
81,038
|
|
|
(502
|
)
|
|
20,793
|
|
|
(103
|
)
|
|
101,831
|
|
|
(605
|
)
|
Debt mutual funds
|
—
|
|
|
—
|
|
|
91,901
|
|
|
(9,449
|
)
|
|
91,901
|
|
|
(9,449
|
)
|
Bank loans
|
34,358
|
|
|
(31
|
)
|
|
42,832
|
|
|
(71
|
)
|
|
77,190
|
|
|
(102
|
)
|
Commercial mortgage-
|
|
|
|
|
|
|
|
|
|
|
|
backed securities
|
141,761
|
|
|
(878
|
)
|
|
2,150
|
|
|
(931
|
)
|
|
143,911
|
|
|
(1,809
|
)
|
|
$
|
750,635
|
|
|
$
|
(5,672
|
)
|
|
$
|
285,805
|
|
|
$
|
(12,630
|
)
|
|
$
|
1,036,440
|
|
|
$
|
(18,302
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 28, 2015
|
|
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
|
$
|
7,190
|
|
|
$
|
(6
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,190
|
|
|
$
|
(6
|
)
|
Auction rate securities
|
—
|
|
|
—
|
|
|
10,312
|
|
|
(188
|
)
|
|
10,312
|
|
|
(188
|
)
|
Municipal bonds
|
10,014
|
|
|
(94
|
)
|
|
1,931
|
|
|
(58
|
)
|
|
11,945
|
|
|
(152
|
)
|
U.S. government and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
agency securities
|
451,296
|
|
|
(129
|
)
|
|
—
|
|
|
—
|
|
|
451,296
|
|
|
(129
|
)
|
Mortgage-backed securities
|
442,786
|
|
|
(2,901
|
)
|
|
48,263
|
|
|
(1,270
|
)
|
|
491,049
|
|
|
(4,171
|
)
|
Asset-backed securities
|
75,009
|
|
|
(159
|
)
|
|
—
|
|
|
—
|
|
|
75,009
|
|
|
(159
|
)
|
Debt mutual fund
|
38,608
|
|
|
(1,392
|
)
|
|
56,592
|
|
|
(4,758
|
)
|
|
95,200
|
|
|
(6,150
|
)
|
Bank loans
|
65,085
|
|
|
(60
|
)
|
|
—
|
|
|
—
|
|
|
65,085
|
|
|
(60
|
)
|
Commercial mortgage-
|
|
|
|
|
|
|
|
|
|
|
|
backed securities
|
5,984
|
|
|
(268
|
)
|
|
944
|
|
|
(57
|
)
|
|
6,928
|
|
|
(325
|
)
|
|
$
|
1,095,972
|
|
|
$
|
(5,009
|
)
|
|
$
|
118,042
|
|
|
$
|
(6,331
|
)
|
|
$
|
1,214,014
|
|
|
$
|
(11,340
|
)
|
As of
April 2, 2016
, the gross unrealized losses that had been outstanding for less than twelve months were primarily related to mortgage-backed securities due to the general rising of the interest-rate environment, although the percentage of such losses to the total estimated fair value of the mortgage-backed securities was relatively insignificant. The gross unrealized losses that had been outstanding for more than twelve months were primarily related to debt mutual funds and mortgage-backed securities, which were primarily due to the general rising of the interest-rate environment and foreign currency movement.
The Company reviewed the investment portfolio and determined that the gross unrealized losses on these investments as of
April 2, 2016
and
March 28, 2015
were temporary in nature as evidenced by the fluctuations in the gross unrealized losses within the investment categories. These investments are highly rated by the credit rating agencies and there have been no defaults on any of these securities, and we have received interest payments as they become due. Additionally, in the past several years a portion of the Company's investment in the auction rate securities and the mortgage-backed securities were 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
April 2, 2016
and
March 28, 2015
. 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 Company also believes that it will be able to collect both principal and interest amounts due to the Company at maturity, given the high credit quality of these investments and any related underlying collateral.
The amortized cost and estimated fair value of marketable debt securities (financial institution securities, non-financial institution securities, auction rate securities, municipal bonds, U.S. and foreign government and agency securities, mortgage-backed securities, asset-backed securities, bank loans and commercial mortgage-backed securities), by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations without call or prepayment penalties.
|
|
|
|
|
|
|
|
|
|
April 2, 2016
|
(In thousands)
|
Amortized
Cost
|
|
Estimated
Fair Value
|
Due in one year or less
|
$
|
1,120,486
|
|
|
$
|
1,120,487
|
|
Due after one year through five years
|
545,350
|
|
|
545,457
|
|
Due after five years through ten years
|
264,616
|
|
|
265,529
|
|
Due after ten years
|
1,229,856
|
|
|
1,236,250
|
|
|
$
|
3,160,308
|
|
|
$
|
3,167,723
|
|
As of
April 2, 2016
,
$1.92 billion
of marketable debt securities with contractual maturities of greater than one year were classified as short-term investments. Additionally, the above table did not include investments in money market and mutual funds because these funds do not have specific contractual maturities.
Certain information related to available-for-sale securities is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
April 2, 2016
|
|
March 28, 2015
|
|
March 29, 2014
|
Gross realized gains on sale of available-for-sale securities
|
$
|
1,248
|
|
|
$
|
15,101
|
|
|
$
|
2,080
|
|
Gross realized losses on sale of available-for-sale securities
|
(878
|
)
|
|
(3,223
|
)
|
|
(2,412
|
)
|
Net realized gains (losses) on sale of available-for-sale securities
|
$
|
370
|
|
|
$
|
11,878
|
|
|
$
|
(332
|
)
|
Amortization of premiums on available-for-sale securities
|
$
|
26,613
|
|
|
$
|
23,579
|
|
|
$
|
27,293
|
|
The cost of securities matured or sold is based on the specific identification method.
|
|
Note 5.
|
Derivative Financial Instruments
|
The Company's primary objective for holding derivative financial instruments is to manage foreign currency exchange rate risk and interest rate risk. As a result of the use of derivative financial instruments, the Company is exposed to the risk that counterparties to derivative contracts may fail to meet their contractual obligations. The Company manages counterparty credit risk in derivative contracts by reviewing counterparty creditworthiness on a regular basis, establishing collateral requirement and limiting exposure to any single counterparty. The right of set-off that exists with certain transactions enables the Company to net amounts due to and from the counterparty, reducing the maximum loss from credit risk in the event of counterparty default.
As of
April 2, 2016
and
March 28, 2015
, the Company had the following outstanding forward currency exchange contracts (in notional amount), which were derivative financial instruments:
|
|
|
|
|
|
|
|
|
(In thousands and U.S. dollars)
|
April 2, 2016
|
|
March 28, 2015
|
Singapore Dollar
|
$
|
26,978
|
|
|
$
|
43,901
|
|
Euro
|
19,123
|
|
|
29,973
|
|
Indian Rupee
|
23,302
|
|
|
22,228
|
|
British Pound
|
10,716
|
|
|
12,946
|
|
Japanese Yen
|
3,387
|
|
|
4,994
|
|
|
$
|
83,506
|
|
|
$
|
114,042
|
|
As part of the Company's strategy to reduce volatility of operating expenses due to foreign exchange rate fluctuations, the Company employs a hedging program with a forward outlook of up to
two years
for major foreign-currency-denominated operating expenses. The outstanding forward currency exchange contracts expire at various dates through
May 2017
. The net unrealized losses, which approximate the fair market value of the outstanding forward currency exchange contracts, are expected to be recognized in the consolidated statements of income within the next
two years
.
As of
April 2, 2016
, all of the forward foreign currency exchange contracts were designated and qualified as cash flow hedges and the effective portion of the gain or loss on the forward contracts was reported as a component of other comprehensive income (loss) and reclassified into net income in the same period during which the hedged transaction affects earnings. The estimated amount of such gains or losses as of
April 2, 2016
that is expected to be reclassified into earnings was not material. The ineffective portion of the gains or losses on the forward contracts was included in the net income for all periods presented.
The Company may enter into forward foreign currency exchange contracts to hedge firm commitments such as acquisitions and capital expenditures. Gains and losses on foreign currency forward contracts that are designated as hedges of anticipated transactions, for which a firm commitment has been attained and the hedged relationship has been effective, are deferred and included in income or expenses in the same period that the underlying transaction is settled. Gains and losses on any instruments not meeting the above criteria are recognized in income or expenses in the consolidated statements of income as they are incurred.
The Company had the following derivative instruments as of
April 2, 2016
and
March 28, 2015
, located on the consolidated balance sheet, utilized for risk management purposes detailed above:
|
|
|
|
|
|
|
|
|
|
|
|
Foreign Exchange Contracts
|
|
Asset Derivatives
|
|
Liability Derivatives
|
(In thousands)
|
Balance Sheet Location
|
Fair Value
|
|
Balance Sheet Location
|
Fair Value
|
April 2, 2016
|
Prepaid expenses and other current assets
|
$
|
2,161
|
|
|
Other accrued liabilities
|
$
|
1,417
|
|
March 28, 2015
|
Prepaid expenses and other current assets
|
$
|
—
|
|
|
Other accrued liabilities
|
$
|
9,320
|
|
The Company does not offset or net the fair value amounts of derivative financial instruments in its consolidated balance sheets. The potential effect of rights of set-off associated with the derivative financial instruments was not material to the Company's consolidated balance sheet for all periods presented.
The following table summarizes the effect of derivative instruments on the consolidated statements of income for fiscal
2016
and
2015
:
|
|
|
|
|
|
|
|
|
|
Foreign Exchange Contracts
|
(In thousands)
|
2016
|
|
2015
|
Amount of losses recognized in other comprehensive income on derivative (effective portion of cash flow hedging)
|
$
|
(7,779
|
)
|
|
$
|
(8,321
|
)
|
|
|
|
|
Amount of losses reclassified from accumulated other comprehensive income into income (effective portion) *
|
$
|
(7,225
|
)
|
|
$
|
(2,753
|
)
|
|
|
|
|
Amount of gains recorded (ineffective portion) *
|
$
|
10
|
|
|
$
|
43
|
|
|
|
*
|
Recorded in Interest and Other Expense location within the consolidated statements of income.
|
|
|
Note 6.
|
Stock-Based Compensation Plans
|
The Company's equity incentive plans are broad-based, long-term retention programs that cover employees, consultants and non-employee directors of the Company. These plans are intended to attract and retain talented employees, consultants and non-employee directors and to provide such persons with a proprietary interest in the Company.
Stock-Based Compensation
The following table summarizes stock-based compensation expense related to stock awards granted under the Company's equity incentive plans and rights to acquire stock granted under the Company's ESPP:
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
April 2, 2016
|
|
March 28, 2015
|
|
March 29, 2014
|
Stock-based compensation included in:
|
|
|
|
|
|
Cost of revenues
|
$
|
7,977
|
|
|
$
|
8,101
|
|
|
$
|
7,602
|
|
Research and development
|
59,692
|
|
|
50,185
|
|
|
46,197
|
|
Selling, general and administrative
|
44,315
|
|
|
40,994
|
|
|
40,515
|
|
Restructuring charges
|
—
|
|
|
579
|
|
|
—
|
|
Stock-based compensation effect on income before taxes
|
111,984
|
|
|
99,859
|
|
|
94,314
|
|
Income tax effect
|
(34,119
|
)
|
|
(29,268
|
)
|
|
(27,327
|
)
|
Net stock-based compensation effect on net income
|
$
|
77,865
|
|
|
$
|
70,591
|
|
|
$
|
66,987
|
|
In accordance with the authoritative guidance on accounting for share-based payments, the Company adjusts stock-based compensation on a quarterly basis for changes to the estimate of expected equity award forfeitures based on actual forfeiture experience. The effect of adjusting the forfeiture rate for all expense amortization was recognized in the period the forfeiture estimate was changed, and was not material for all periods presented.
As of
April 2, 2016
and
March 28, 2015
, the ending inventory balances included
$2.0 million
of capitalized stock-based compensation. During fiscal
2016
,
2015
and
2014
, the tax benefit realized for the tax deduction from option exercises and other awards, including amounts credited to additional paid-in capital, totaled
$56.3 million
,
$55.0 million
and
$67.0 million
, respectively.
The fair values of stock options and stock purchase plan rights under the Company's equity incentive plans and ESPP were estimated as of the grant date using the Black-Scholes option pricing model. The Company's expected stock price volatility assumption is estimated using implied volatility of the Company's traded options. The expected life of options granted is based on the historical exercise activity as well as the expected disposition of all options outstanding. The expected life of options granted also considers the actual contractual term.
The Company's stock-based compensation expense relating to options granted during fiscal
2016
,
2015
and
2014
were not material.
The weighted-average fair value per share of stock purchase rights granted under the ESPP during fiscal
2016
,
2015
and
2014
were
$11.20
,
$9.17
and
$11.11
, respectively. These fair values per share were estimated at the date of grant using the following weighted-average assumptions:
|
|
|
|
|
|
|
|
|
|
|
Employee Stock Purchase Plan
|
|
2016
|
|
2015
|
|
2014
|
Expected life of options (years)
|
1.3
|
|
|
1.3
|
|
|
1.3
|
|
Expected stock price volatility
|
0.26
|
|
|
0.25
|
|
|
0.24
|
|
Risk-free interest rate
|
0.5
|
%
|
|
0.3
|
%
|
|
0.2
|
%
|
Dividend yield
|
2.7
|
%
|
|
2.9
|
%
|
|
2.4
|
%
|
The estimated fair values of restricted stock unit (RSU) awards were calculated based on the market price of Xilinx common stock on the date of grant, reduced by the present value of dividends expected to be paid on Xilinx common stock prior to vesting. The per share weighted-average fair value of RSUs granted during fiscal
2016
,
2015
and
2014
were
$41.19
,
$43.11
and
$38.90
, respectively. The weighted average fair value of RSUs granted in fiscal
2016
,
2015
and
2014
were calculated based on estimates at the date of grant using the following weighted-average assumptions:
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
2014
|
Risk-free interest rate
|
1.3
|
%
|
|
0.8
|
%
|
|
0.7
|
%
|
Dividend yield
|
2.8
|
%
|
|
2.5
|
%
|
|
2.5
|
%
|
Options outstanding that have vested and are expected to vest in future periods as of
April 2, 2016
are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
(Shares and intrinsic value in thousands)
|
|
Number of Shares
|
|
Weighted-Average Exercise Price Per Share
|
|
Weighted-Average Remaining Contractual Term (Years)
|
|
Aggregate Intrinsic Value
(1)
|
Vested (i.e., exercisable)
|
|
1,241
|
|
|
$25.33
|
|
0.98
|
|
$
|
27,653
|
|
Expected to vest
|
|
15
|
|
|
$31.74
|
|
1.73
|
|
$
|
246
|
|
Total vested and expected to vest
|
|
1,256
|
|
|
$25.41
|
|
0.99
|
|
$
|
27,899
|
|
|
|
|
|
|
|
|
|
|
Total outstanding
|
|
1,257
|
|
|
$25.42
|
|
0.99
|
|
$
|
27,917
|
|
|
|
(1)
|
These amounts represent the difference between the exercise price and
$47.62
, the closing price per share of Xilinx's stock on
April 2, 2016
, for all in-the-money options outstanding.
|
Options outstanding that are expected to vest are net of estimated future option forfeitures in accordance with the authoritative guidance of accounting for share-based payment, which are estimated when compensation costs are recognized. Options with a fair value of
$344 thousand
completed vesting during fiscal
2016
. As of
April 2, 2016
, total unrecognized stock-based compensation costs related to stock options and ESPP were
$64 thousand
and
$12.9 million
, respectively. The total unrecognized stock-based compensation cost for stock options and ESPP is expected to be recognized over a weighted-average period of
0.6 years
and
0.8 years
, respectively.
Employee Stock Option Plans
Under the Company's stock option plans (Option Plans), options reserved for future issuance of common shares to employees and directors of the Company total
14.2 million
shares as of
April 2, 2016
, including
12.9 million
shares available for future grants under the 2007 Equity Incentive Plan (2007 Equity Plan). Options to purchase shares of the Company's common stock under the Option Plans are granted at
100%
of the fair market value of the stock on the date of grant. The contractual term for stock awards granted under the 2007 Equity Plan is
seven
years from the grant date. Prior to April 1, 2007, stock options granted by the Company generally expire
ten
years from the grant date. Stock awards granted to existing and newly hired employees generally vest over a
four
-year period from the date of grant.
A summary of shares available for grant under the 2007 Equity Plan is as follows:
|
|
|
|
|
(Shares in thousands)
|
|
Shares Available for Grant
|
March 30, 2013
|
|
15,990
|
|
Additional shares reserved
|
|
2,000
|
|
Stock options granted
|
|
(8
|
)
|
Stock options cancelled
|
|
26
|
|
RSUs granted
|
|
(3,297
|
)
|
RSUs cancelled
|
|
326
|
|
March 29, 2014
|
|
15,037
|
|
Additional shares reserved
|
|
3,000
|
|
Stock options cancelled
|
|
6
|
|
RSUs granted
|
|
(3,201
|
)
|
RSUs cancelled
|
|
531
|
|
March 28, 2015
|
|
15,373
|
|
Stock options cancelled
|
|
10
|
|
RSUs granted
|
|
(3,088
|
)
|
RSUs cancelled
|
|
634
|
|
April 2, 2016
|
|
12,929
|
|
The types of awards allowed under the 2007 Equity Plan include incentive stock options, non-qualified stock options, RSUs, restricted stock and stock appreciation rights. To date, the Company has issued a mix of non-qualified stock options and RSUs under the 2007 Equity Plan.
A summary of the Company's Option Plans activity and related information is as follows:
|
|
|
|
|
|
|
|
Options Outstanding
|
(Shares in thousands)
|
Number of Shares
|
|
Weighted-Average Exercise Price Per Share
|
March 30, 2013
|
12,753
|
|
|
$28.01
|
Granted
|
8
|
|
|
$41.08
|
Exercised
|
(7,421
|
)
|
|
$29.95
|
Forfeited/cancelled/expired
|
(60
|
)
|
|
$35.61
|
March 29, 2014
|
5,280
|
|
|
$25.22
|
Granted
|
—
|
|
|
—
|
|
Exercised
|
(2,009
|
)
|
|
$25.80
|
Forfeited/cancelled/expired
|
(24
|
)
|
|
$32.22
|
March 28, 2015
|
3,247
|
|
|
$24.81
|
Granted
|
—
|
|
|
—
|
|
Exercised
|
(1,977
|
)
|
|
$24.38
|
Forfeited/cancelled/expired
|
(13
|
)
|
|
$32.10
|
April 2, 2016
|
1,257
|
|
|
$25.42
|
Options exercisable at:
|
|
|
|
April 2, 2016
|
1,241
|
|
|
$25.33
|
March 28, 2015
|
3,173
|
|
|
$24.59
|
The total pre-tax intrinsic value of options exercised during fiscal
2016
and
2015
was
$42.6 million
and
$37.3 million
, respectively. This intrinsic value represents the difference between the exercise price and the fair market value of the Company's common stock on the date of exercise.
Since the Company adopted the policy of retiring all repurchased shares of its common stock, new shares are issued upon employees' exercise of their stock options.
The following information relates to options outstanding and exercisable under the Option Plans as of
April 2, 2016
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options Outstanding
|
|
Options Exercisable
|
|
|
|
|
Weighted-
|
|
Weighted-
|
|
|
|
Weighted-
|
(Shares in thousands)
|
|
|
|
Average
|
|
Average
|
|
|
|
Average
|
|
|
|
|
Remaining
|
|
Exercise
|
|
|
|
Exercise
|
|
|
Options
|
|
Contractual Term
|
|
Price Per
|
|
Options
|
|
Price Per
|
Range of Exercise Prices
|
|
Outstanding
|
|
(Years)
|
|
Share
|
|
Exercisable
|
|
Share
|
$18.97 - $19.79
|
|
5
|
|
|
0.18
|
|
$19.22
|
|
5
|
|
|
$19.22
|
$20.57 - $29.27
|
|
1,105
|
|
|
0.76
|
|
$24.32
|
|
1,105
|
|
|
$24.32
|
$30.21 - $38.56
|
|
147
|
|
|
2.75
|
|
$33.90
|
|
131
|
|
|
$33.84
|
|
|
1,257
|
|
|
0.99
|
|
$25.42
|
|
1,241
|
|
|
$25.33
|
RSU Awards
A summary of the Company's RSU activity and related information is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
RSUs Outstanding
|
(Shares and intrinsic value in thousands)
|
Number of Shares
|
|
Weighted-Average Grant-Date Fair Value Per Share
|
|
Weighted Average Remaining Contractual Term (Years)
|
|
Aggregate Intrinsic Value
(1)
|
March 30, 2013
|
5,996
|
|
|
$30.83
|
|
|
|
|
Granted
|
3,297
|
|
|
$38.90
|
|
|
|
|
Vested
(2)
|
(2,066
|
)
|
|
$29.25
|
|
|
|
|
Cancelled
|
(326
|
)
|
|
$32.28
|
|
|
|
|
March 29, 2014
|
6,901
|
|
|
$35.08
|
|
|
|
|
Granted
|
3,201
|
|
|
$43.11
|
|
|
|
|
Vested
(2)
|
(2,698
|
)
|
|
$33.82
|
|
|
|
|
Cancelled
|
(531
|
)
|
|
$32.91
|
|
|
|
|
March 28, 2015
|
6,873
|
|
|
$39.07
|
|
|
|
|
Granted
|
3,088
|
|
|
$41.19
|
|
|
|
|
Vested
(2)
|
(2,691
|
)
|
|
$37.23
|
|
|
|
|
Cancelled
|
(592
|
)
|
|
$39.43
|
|
|
|
|
April 2, 2016
|
6,678
|
|
|
$40.74
|
|
2.31
|
|
$
|
318,023
|
|
|
|
|
|
|
|
|
|
|
|
Expected to vest as of April 2, 2016
|
5,426
|
|
|
$40.71
|
|
2.31
|
|
$
|
258,375
|
|
|
|
(1)
|
Aggregate intrinsic value for RSUs represents the closing price per share of Xilinx's stock on
April 2, 2016
of
$47.62
, multiplied by the number of RSUs outstanding or expected to vest as of
April 2, 2016
.
|
|
|
(2)
|
The number of RSUs vested includes shares that the Company withheld on behalf of employees to satisfy the statutory tax withholding requirements.
|
RSUs with a fair value of
$100.2 million
were vested during fiscal
2016
. As of
April 2, 2016
, total unrecognized stock-based compensation costs related to non-vested RSUs was
$179.7 million
. The total unrecognized stock-based compensation cost for RSUs is expected to be recognized over a weighted-average period of
2.5 years
.
Employee Stock Purchase Plan
Under the Company's ESPP, qualified employees can obtain a
24
-month purchase right to purchase the Company's common stock at the end of each
six
-month exercise period. Participation is limited to
15%
of the employee's annual earnings up to a maximum of
$21 thousand
in a calendar year. Approximately
81%
of all eligible employees participate in the ESPP. The purchase price of the stock is
85%
of the lower of the fair market value at the beginning of the
24
-month offering period or at the end of each
six
-month exercise period. Employees purchased
1.1 million
shares for
$37.6 million
in fiscal
2016
,
1.2 million
shares for
$39.0 million
in fiscal 2015, and
1.2 million
shares for
$37.9 million
in fiscal 2014. The next scheduled purchase under the ESPP is in the second quarter of fiscal
2017
. As of
April 2, 2016
,
9.4 million
shares were available for future issuance.
Note 7. Balance Sheet Information
The following tables disclose the current liabilities that individually exceed 5% of the respective consolidated balance sheet amounts in each fiscal year. Individual balances that are less than 5% of the respective consolidated balance sheet amounts are aggregated and disclosed as "other."
|
|
|
|
|
|
|
|
|
(In thousands)
|
2016
|
|
2015
|
Accrued payroll and related liabilities:
|
|
|
|
Accrued compensation
|
$
|
73,823
|
|
|
$
|
79,312
|
|
Deferred compensation plan liability
|
74,180
|
|
|
70,163
|
|
Other
|
6,291
|
|
|
7,125
|
|
|
$
|
154,294
|
|
|
$
|
156,600
|
|
|
|
|
|
|
|
|
|
|
Other accrued liabilities:
|
|
|
|
Interest payable
|
$
|
5,591
|
|
|
$
|
5,432
|
|
Forward currency exchange contracts
|
1,417
|
|
|
9,320
|
|
Restructuring Charges
|
1,164
|
|
|
14,634
|
|
Other
|
36,936
|
|
|
35,290
|
|
|
$
|
45,108
|
|
|
$
|
64,676
|
|
|
|
Note 8.
|
Restructuring Charges
|
During the fourth quarter of fiscal 2015, the Company announced restructuring measures designed to realign resources and drive overall operating efficiencies. These measures impacted approximately
120
positions, or
3%
of the Company's global workforce, in various geographies and functions worldwide. The reorganization plan was substantially completed by the end of the first quarter of fiscal 2016.
The Company recorded total restructuring charges of
$24.5 million
in the fourth quarter of fiscal 2015, primarily related to severance pay expenses and write-offs of acquisition-related intangibles. As of the end of fiscal 2016, the remaining balance of the restructuring accrual was
$1.2 million
, which is expected to be settled within the next few quarters.
Xilinx leases some of its facilities and office buildings under non-cancelable operating leases that expire at various dates through
October 2021
. 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. Approximate future minimum lease payments under non-cancelable operating leases are as follows:
|
|
|
|
|
Fiscal
|
(In thousands)
|
2017
|
$
|
5,106
|
|
2018
|
3,138
|
|
2019
|
2,885
|
|
2020
|
2,078
|
|
2021
|
1,494
|
|
Thereafter
|
956
|
|
Total
|
$
|
15,657
|
|
Aggregate future rental income to be received, which includes rents from both owned and leased property, totaled
$2.7 million
as of
April 2, 2016
. Rent expense, net of rental income, under all operating leases was
$4.5 million
for fiscal
2016
,
$3.2 million
for fiscal
2015
, and
$3.1 million
for fiscal
2014
. Rental income was not material for fiscal
2016
,
2015
or
2014
.
Other commitments as of
April 2, 2016
totaled
$108.9 million
and consisted of purchases of inventory and other non-cancelable purchase obligations related to subcontractors that manufacture silicon wafers and provide assembly and test services. The Company expects to receive and pay for these materials and services in the next
three
to
six
months, as the products meet delivery and quality
specifications. As of
April 2, 2016
, the Company had
$33.8 million
of non-cancelable license obligations to providers of electronic design automation software and hardware/software maintenance expiring at various dates through
December 2018
. As of
April 2, 2016
, the Company also had open purchase obligations totaling
$15.0 million
related to the renovation of one of its properties. The Company expects to receive and pay for these materials and services within the next
six
months.
|
|
Note 10.
|
Net Income Per Common Share
|
The computation of basic net income per common share for all periods presented is derived from the information on the consolidated statements of income, and there are no reconciling items in the numerator used to compute diluted net income per common share. The following table summarizes the computation of basic and diluted net income per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands, except per share amounts)
|
2016
|
|
2015
|
|
2014
|
Net income available to common stockholders
|
$
|
550,867
|
|
|
$
|
648,216
|
|
|
$
|
630,388
|
|
Weighted average common shares outstanding-basic
|
257,184
|
|
|
265,480
|
|
|
266,431
|
|
Dilutive effect of employee equity incentive plans
|
2,260
|
|
|
3,257
|
|
|
4,508
|
|
Dilutive effect of 2017 Convertible Notes and warrants
|
9,223
|
|
|
7,386
|
|
|
8,544
|
|
Dilutive effect of 2037 Convertible Notes
|
—
|
|
|
—
|
|
|
7,913
|
|
Weighted average common shares outstanding-diluted
|
268,667
|
|
|
276,123
|
|
|
287,396
|
|
Basic earnings per common share
|
$
|
2.14
|
|
|
$
|
2.44
|
|
|
$
|
2.37
|
|
Diluted earnings per common share
|
$
|
2.05
|
|
|
$
|
2.35
|
|
|
$
|
2.19
|
|
The total shares used in the denominator of the diluted net income per common share calculation includes potentially dilutive common equivalent shares outstanding that are not included in basic net income per common share by applying the treasury stock method to the impact of the equity incentive plans and to the incremental shares issuable assuming conversion of the Company's convertible debt and warrants (see "Note 13. Debt and Credit Facility" for more discussion of our debt and warrants).
Outstanding stock options and RSUs under the Company's stock award plans to purchase approximately
4.6 million
,
4.1 million
and
5.1 million
shares, for fiscal
2016
,
2015
or
2014
respectively, were excluded from diluted net income per common share by applying the treasury stock method, as their inclusion would have been antidilutive. These options and RSUs 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.
To hedge against potential dilution upon conversion of the 2017 Convertible Notes, the Company also purchased call options on its common stock from the hedge counterparties. The call options give the Company the right to purchase up to
20.5 million
shares of its common stock at
$29.26
per share. These call options are not considered for purposes of calculating the total shares outstanding under the basic and diluted net income per share, as their effect would be anti-dilutive. Upon exercise, the call options would serve to neutralize the dilutive effect of the 2017 Convertible Notes and potentially reduce the weighted number of diluted shares used in per share calculations.
|
|
Note 11.
|
Interest and Other Expense, Net
|
The components of interest and other expense, net are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
April 2, 2016
|
|
March 28, 2015
|
|
March 29, 2014
|
Interest income
|
$
|
40,180
|
|
|
$
|
35,876
|
|
|
$
|
28,079
|
|
Interest expense
|
(55,456
|
)
|
|
(55,431
|
)
|
|
(54,035
|
)
|
Other income (expense), net
|
(17,780
|
)
|
|
4,553
|
|
|
(3,597
|
)
|
|
$
|
(33,056
|
)
|
|
$
|
(15,002
|
)
|
|
$
|
(29,553
|
)
|
|
|
Note 12.
|
Accumulated Other Comprehensive Loss
|
Comprehensive loss is defined as the change in equity of a company during a period from transactions and other events and circumstances from non-owner sources. The components of accumulated other comprehensive loss are as follows:
|
|
|
|
|
|
|
|
|
(In thousands)
|
2016
|
|
2015
|
Accumulated unrealized losses on available-for-sale securities, net of tax
|
$
|
(1,260
|
)
|
|
$
|
(238
|
)
|
Accumulated unrealized gains (losses) on hedging transactions, net of tax
|
256
|
|
|
(7,523
|
)
|
Accumulated cumulative translation adjustment, net of tax
|
(5,627
|
)
|
|
(3,388
|
)
|
Accumulated other comprehensive loss
|
$
|
(6,631
|
)
|
|
$
|
(11,149
|
)
|
The related tax effects of other comprehensive loss were not material for all periods presented.
|
|
Note 13.
|
Debt and Credit Facility
|
2017 Convertible Notes
As of
April 2, 2016
, the Company had
$600.0 million
principal amount of 2017 Convertible Notes outstanding. The 2017 Convertible Notes are senior in right of payment to the Company's existing and future unsecured indebtedness that is expressly subordinated in right of payment to the 2017 Convertible Notes, and are ranked equally with all of our other existing and future unsecured senior indebtedness, including the 2019 and 2021 Notes discussed below. The Company may not redeem the 2017 Convertible Notes prior to maturity.
The 2017 Convertible Notes are convertible, subject to certain conditions, into shares of Xilinx common stock at a conversion rate of
34.1754
shares of common stock per
$1 thousand
principal amount of the 2017 Convertible Notes, representing an effective conversion price of approximately
$29.26
per share of common stock. The conversion rate is subject to adjustment for certain events as outlined in the indenture governing the 2017 Convertible Notes but will not be adjusted for accrued interest. One of the conditions allowing holders of the 2017 Convertible Notes to convert during any fiscal quarter is if the last reported sale price of the Company's common stock for at least 20 trading days during a period of 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day. This condition was met as of
April 2, 2016
and as a result, the 2017 Convertible Notes were convertible at the option of the holders. As of
April 2, 2016
, the 2017 Convertible Notes were classified as a current liability on the Company's consolidated balance sheet. Additionally, a portion of the equity component attributable to the conversion feature of the 2017 Convertible Notes was classified in temporary stockholders' equity. The amount classified as temporary equity was equal to the difference between the principal amount and carrying value of the 2017 Convertible Notes.
Upon conversion, the Company would pay the holders of the 2017 Convertible Notes cash up to the aggregate principal amount of the 2017 Convertible Notes. If the conversion value exceeds the principal amount, the Company would deliver shares of its common stock with respect to the remainder of its conversion obligation in excess of the aggregate principal amount (conversion spread). Accordingly, there is no adjustment to the numerator in the net income per common share computation for the cash settled portion of the 2017 Convertible Notes, as that portion of the debt liability will always be settled in cash. The conversion spread will be included in the denominator for the computation of diluted net income per common share, using the treasury stock method.
The carrying values of the liability and equity components of the 2017 Convertible Notes are reflected in the Company's consolidated balance sheets as follows:
|
|
|
|
|
|
|
|
|
(In thousands)
|
2016
|
|
2015
|
Liability component:
|
|
|
|
Principal amount of the 2017 Convertible Notes
|
$
|
600,000
|
|
|
$
|
600,000
|
|
Unamortized discount of liability component
|
(18,135
|
)
|
|
(33,679
|
)
|
Hedge accounting adjustment – sale of interest rate swap
|
5,241
|
|
|
9,732
|
|
Net carrying value of the 2017 Convertible Notes
|
$
|
587,106
|
|
|
$
|
576,053
|
|
|
|
|
|
|
|
Equity component (including temporary equity) – net carrying value
|
$
|
66,415
|
|
|
$
|
66,415
|
|
The remaining unamortized debt discount, net of the hedge accounting adjustment from the sale of the interest rate swap, is being amortized as additional non-cash interest expense over the expected remaining term of the 2017 Convertible Notes. As of
April 2, 2016
, the remaining term of the 2017 Convertible Notes is
1.2
years. As of
April 2, 2016
, the if-converted value of the 2017 Convertible Notes was
$970.0 million
.
Interest expense related to the 2017 Convertible Notes was included in interest and other expense, net on the consolidated statements of income as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
April 2, 2016
|
|
March 28, 2015
|
|
March 29, 2014
|
Contractual coupon interest
|
$
|
15,750
|
|
|
$
|
15,750
|
|
|
$
|
15,750
|
|
Amortization of debt issuance costs
|
1,448
|
|
|
1,448
|
|
|
1,448
|
|
Amortization of debt discount, net
|
11,052
|
|
|
11,052
|
|
|
11,052
|
|
Total interest expense related to the 2017 Convertible Notes
|
$
|
28,250
|
|
|
$
|
28,250
|
|
|
$
|
28,250
|
|
To hedge against potential dilution upon conversion of the 2017 Convertible Notes, the Company also purchased call options on its common stock from the hedge counterparties. The call options give the Company the right to purchase up to
20.5 million
shares of its common stock at
$29.26
per share. The call options will terminate upon the earlier of the maturity of the 2017 Convertible Notes or the last day any of the 2017 Convertible Notes remain outstanding. To reduce the hedging cost, under separate transactions the Company sold warrants to the hedge counterparties, which give the hedge counterparties the right to purchase up to
20.5 million
shares of the Company's common stock at
$41.45
per share. These warrants expire on a gradual basis over a specified period starting on September 13, 2017.
2019 and 2021 Notes
On March 12, 2014, the Company issued
$500.0 million
principal amount of 2019 Notes and
$500.0 million
principal amount of 2021 Notes with maturity dates of
March 15, 2019
and
March 15, 2021
respectively. The 2019 and 2021 Notes were offered to the public at a discounted price of
99.477%
and
99.281%
of par, respectively. Interest on the 2019 and 2021 Notes is payable semiannually on March 15 and September 15.
The Company received net proceeds of
$990.1 million
from issuance of the 2019 and 2021 Notes, after the debt discounts and deduction of debt issuance costs. The debt discounts and issuance costs are amortized to interest expense over the lives of the 2019 and 2021 Notes.
The following table summarizes the carrying value of the 2019 and 2021 Notes in the Company's consolidated balance sheets:
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
2016
|
|
2015
|
Principal amount of the 2019 Notes
|
|
$
|
500,000
|
|
|
$
|
500,000
|
|
Unamortized discount of the 2019 Notes
|
|
(1,560
|
)
|
|
(2,073
|
)
|
Principal amount of the 2021 Notes
|
|
500,000
|
|
|
500,000
|
|
Unamortized discount of the 2021 Notes
|
|
(2,605
|
)
|
|
(3,088
|
)
|
Total senior notes
|
|
$
|
995,835
|
|
|
$
|
994,839
|
|
Interest expense related to the 2019 and 2021 Notes was included in interest and other expense, net on the consolidated statements of income as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
April 2, 2016
|
|
March 28, 2015
|
|
March 29, 2014
|
Contractual coupon interest
|
|
$
|
25,625
|
|
|
$
|
25,625
|
|
|
$
|
1,210
|
|
Amortization of debt issuance costs
|
|
586
|
|
|
586
|
|
|
52
|
|
Amortization of debt discount, net
|
|
995
|
|
|
970
|
|
|
80
|
|
Total interest expense related to the 2019 and 2021 Notes
|
|
$
|
27,206
|
|
|
$
|
27,181
|
|
|
$
|
1,342
|
|
2037 Convertible Notes
On March 12, 2014, the Company paid
$1.23 billion
in cash to redeem all of the outstanding
$689.6 million
(principal amount) of its 2037 Convertible Notes. In accordance with the authoritative guidance for convertible debentures issued by the FASB, the redemption payment was allocated between the liability (
$377.6 million
) and equity (
$856.5 million
) components of the convertible debentures, using the equivalent rate that reflected the borrowing rate for a similar non-convertible debt prior to the redemption. As a result, the Company recognized a loss on extinguishment of convertible debentures of
$9.8 million
, net of the unamortized
debt discount (
$315.4 million
), the write-off of the unamortized debt issuance costs (
$5.1 million
) and unamortized embedded derivative valuation (
$1.3 million
).
Prior to the redemption, interest expense related to the 2037 Convertible Notes was included in interest and other expense, net on the consolidated statements of income, and was recognized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
April 2, 2016
|
|
March 28, 2015
|
|
March 29, 2014
|
Contractual coupon interest
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
20,065
|
|
Amortization of debt issuance costs
|
—
|
|
|
—
|
|
|
223
|
|
Amortization of embedded derivative
|
—
|
|
|
—
|
|
|
58
|
|
Amortization of debt discount
|
—
|
|
|
—
|
|
|
5,187
|
|
Fair value adjustment of embedded derivative
|
—
|
|
|
—
|
|
|
(1,090
|
)
|
Total interest expense related to the 2037 Convertible Notes
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
24,443
|
|
Revolving Credit Facility
On
December 7, 2011
, the Company entered into a
$250.0 million
senior unsecured revolving credit facility with a syndicate of banks (expiring in
December 2016
). Borrowings under the credit facility will bear interest at a benchmark rate plus an applicable margin based upon the Company's credit rating. In connection with the credit facility, the Company is required to maintain certain financial and non-financial covenants. As of
April 2, 2016
, the Company had made
no
borrowings under this credit facility and was not in violation of any of the covenants.
Note 14. Stockholders' Equity
Preferred Stock
The Company's Certificate of Incorporation authorized
2.0 million
shares of undesignated preferred stock. The preferred stock may be issued in one or more series. The Board of Directors is authorized to determine or alter the rights, preferences, privileges and restrictions granted to, or imposed upon, any wholly unissued series of preferred stock. As of
April 2, 2016
and
March 28, 2015
,
no
preferred shares were issued or outstanding.
Common Stock and Debentures Repurchase Programs
The Board of Directors has approved stock repurchase programs enabling the Company to repurchase its common stock in the open market or through negotiated transactions with independent financial institutions. In November 2014, the Board authorized the repurchase of an additional
$800.0 million
of the Company's common stock (2014 Repurchase Program). The 2014 Repurchase Program has no stated expiration date.
Through
April 2, 2016
, the Company has used up
$595.8 million
of the
$800.0 million
authorized under the 2014 Repurchase Program, leaving
$204.2 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
April 2, 2016
and
March 28, 2015
.
During fiscal
2016
, the Company repurchased
9.7 million
shares of common stock in the open market for a total of approximately
$443.2 million
under the 2014 Repurchase Programs. During fiscal
2015
, the Company repurchased
15.3 million
shares of common stock in the open market for a total of
$650.0 million
.
The provision for income taxes consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
April 2, 2016
|
|
March 28, 2015
|
|
March 29, 2014
|
Federal:
|
|
|
|
|
|
|
Current
|
|
$
|
21,366
|
|
|
$
|
61,308
|
|
|
$
|
16,692
|
|
Deferred
|
|
42,146
|
|
|
17,121
|
|
|
48,021
|
|
|
|
63,512
|
|
|
78,429
|
|
|
64,713
|
|
State:
|
|
|
|
|
|
|
Current
|
|
2,447
|
|
|
3,330
|
|
|
1,333
|
|
Deferred
|
|
1,781
|
|
|
1,803
|
|
|
5,954
|
|
|
|
4,228
|
|
|
5,133
|
|
|
7,287
|
|
Foreign:
|
|
|
|
|
|
|
Current
|
|
18,016
|
|
|
9,433
|
|
|
7,264
|
|
Deferred
|
|
202
|
|
|
(1,135
|
)
|
|
(126
|
)
|
|
|
18,218
|
|
|
8,298
|
|
|
7,138
|
|
Total
|
|
$
|
85,958
|
|
|
$
|
91,860
|
|
|
$
|
79,138
|
|
The domestic and foreign components of income before income taxes were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
April 2, 2016
|
|
March 28, 2015
|
|
March 29, 2014
|
Domestic
|
|
$
|
37,568
|
|
|
$
|
110,881
|
|
|
$
|
83,617
|
|
Foreign
|
|
599,257
|
|
|
629,195
|
|
|
625,909
|
|
Income before income taxes
|
|
$
|
636,825
|
|
|
$
|
740,076
|
|
|
$
|
709,526
|
|
The tax benefits associated with stock-based compensation recorded in additional paid-in capital were
$11.4 million
,
$13.9 million
and
$26.4 million
, for fiscal
2016
,
2015
and
2014
, respectively.
As of
April 2, 2016
, the Company had federal and state net operating loss carryforwards of approximately
$15.4 million
. If unused, these carryforwards will expire at various dates through fiscal
2030
. All of the federal and state net operating loss carryforwards are subject to change of ownership limitations provided by the Internal Revenue Code and similar state provisions. The Company had state research tax credit carryforwards of approximately
$167.5 million
. The credits have no expiration date. Some of the state credit carryforwards are subject to change of ownership limitations provided by state provisions similar to that of the Internal Revenue Code. The state credit carryforwards include
$95.7 million
that is not likely to be recovered and has been reduced by a valuation allowance.
Unremitted foreign earnings that are considered to be permanently invested outside the U.S., and on which no U.S. taxes have been provided, are approximately
$3.10 billion
as of
April 2, 2016
. The residual U.S. tax liability, if such amounts were remitted, would be approximately
$1.04 billion
.
The provision for income taxes reconciles to the amount derived by applying the Federal statutory income tax rate to income before provision for taxes as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
April 2, 2016
|
|
March 28, 2015
|
|
March 29, 2014
|
Income before provision for taxes
|
|
$
|
636,825
|
|
|
$
|
740,076
|
|
|
$
|
709,526
|
|
Federal statutory tax rate
|
|
35
|
%
|
|
35
|
%
|
|
35
|
%
|
Computed expected tax
|
|
222,889
|
|
|
259,027
|
|
|
248,334
|
|
State taxes, net of federal benefit
|
|
3,177
|
|
|
2,458
|
|
|
4,664
|
|
Foreign earnings at lower tax rates
|
|
(112,942
|
)
|
|
(141,372
|
)
|
|
(143,336
|
)
|
Tax credits
|
|
(25,211
|
)
|
|
(26,633
|
)
|
|
(23,389
|
)
|
Other
|
|
(1,955
|
)
|
|
(1,620
|
)
|
|
(7,135
|
)
|
Provision for income taxes
|
|
$
|
85,958
|
|
|
$
|
91,860
|
|
|
$
|
79,138
|
|
The Company has manufacturing operations in Singapore where the Company has been granted "Pioneer Status" that is effective through fiscal 2021. The Pioneer Status reduces the Company's tax on the majority of Singapore income from
17%
to
zero
percent. The benefits of Pioneer Status in Singapore for fiscal
2016
, fiscal
2015
and fiscal
2014
were approximately
$51.3 million
(
$0.19
per diluted share),
$66.0 million
(
$0.24
per diluted share), and
$60.3 million
(
$0.21
per diluted share), respectively, on income considered permanently reinvested outside the U.S. The tax effect of operations in low tax jurisdictions on the Company's overall tax rate is reflected in the table above.
The major components of deferred tax assets and liabilities consisted of the following as of
April 2, 2016
and
March 28, 2015
:
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
2016
|
|
2015
|
Deferred tax assets:
|
|
|
|
|
Stock-based compensation
|
|
$
|
22,128
|
|
|
$
|
18,233
|
|
Deferred income on shipments to distributors
|
|
9,307
|
|
|
9,207
|
|
Accrued expenses
|
|
32,771
|
|
|
28,318
|
|
Tax credit carryforwards
|
|
95,424
|
|
|
86,650
|
|
Deferred compensation plan
|
|
27,412
|
|
|
26,079
|
|
Low income housing and other investments
|
|
8,265
|
|
|
10,247
|
|
Other
|
|
11,538
|
|
|
10,706
|
|
Subtotal
|
|
206,845
|
|
|
189,440
|
|
Valuation allowance
|
|
(62,179
|
)
|
|
(52,552
|
)
|
Total deferred tax assets
|
|
144,666
|
|
|
136,888
|
|
Deferred tax liabilities:
|
|
|
|
|
Unremitted foreign earnings
|
|
(335,522
|
)
|
|
(280,322
|
)
|
Convertible debt
|
|
(2,349
|
)
|
|
(3,220
|
)
|
Other
|
|
(1,699
|
)
|
|
(3,987
|
)
|
Total deferred tax liabilities
|
|
(339,570
|
)
|
|
(287,529
|
)
|
Total net deferred tax liabilities
|
|
$
|
(194,904
|
)
|
|
$
|
(150,641
|
)
|
In November 2015, the FASB issued authoritative guidance which requires companies to classify all deferred tax assets and liabilities as non-current on the balance sheet instead of separating deferred taxes into current and non-current amounts. The Company has adopted this guidance in the fourth quarter of fiscal year 2016 on a prospective basis. As a result, the Company's 2016 current deferred tax assets were reclassified and netted with non-current deferred tax assets or deferred tax liabilities, depending on the tax jurisdiction.
Long-term deferred tax assets of
$66.6 million
and
$59.7 million
as of
April 2, 2016
and
March 28, 2015
, respectively, were included in other assets on the consolidated balance sheet.
As of
April 2, 2016
and
March 28, 2015
, gross deferred tax assets were offset by valuation allowances of
$62.2 million
and
$52.6 million
, respectively, which were associated with state tax credit carryforwards.
The aggregate changes in the balance of gross unrecognized tax benefits for fiscal
2016
and
2015
were as follows:
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
2016
|
|
2015
|
Balance as of beginning of fiscal year
|
|
$
|
30,089
|
|
|
$
|
26,398
|
|
Increases in tax positions for prior years
|
|
786
|
|
|
97
|
|
Decreases in tax positions for prior years
|
|
(606
|
)
|
|
(37
|
)
|
Increases in tax positions for current year
|
|
4,757
|
|
|
4,822
|
|
Settlements
|
|
(85
|
)
|
|
—
|
|
Lapses in statutes of limitation
|
|
(942
|
)
|
|
(1,191
|
)
|
Balance as of end of fiscal year
|
|
$
|
33,999
|
|
|
$
|
30,089
|
|
If the remaining balance of
$34.0 million
and
$30.1 million
of unrecognized tax benefits as of
April 2, 2016
and
March 28, 2015
, respectively, were realized in a future period, it would result in a tax benefit of
$15.3 million
and
$12.5 million
, respectively, thereby reducing the effective tax rate.
The Company's policy is to include interest and penalties related to income tax liabilities within the provision for income taxes on the consolidated statements of income. The balances of accrued interest and penalties recorded in the consolidated balance sheets and the amounts of interest and penalties included in the Company's provisions for income taxes were not material for any period presented.
The Company is no longer subject to U.S. federal or Ireland audits by taxing authorities for years through fiscal 2011. The Company is no longer subject to U.S. state audits for years through fiscal 2010.
The Company has been subject to examination by the IRS for fiscal 2012 through 2014. During the fourth quarter of fiscal 2016, the IRS completed its fieldwork and issued a Revenue Agent Report. The case has been moved forward to the Joint Committee on Taxation for review. As a result, the audit remains officially open until such review is completed.
The Company believes its provision for unrecognized tax benefits is adequate for adjustments that may result from tax audits. However, the outcome of tax audits cannot be predicted with certainty. If any issues addressed in the Company's tax audits are resolved in a manner not consistent with management's expectations, the Company could be required to adjust its provision for income taxes in the period such resolution occurs. It is reasonably possible that changes to the Company's unrecognized tax benefits could be significant in the next twelve months due to tax audit settlements and lapses of statutes of limitation. As a result of uncertainties regarding tax audits and their possible outcomes, an estimate of the range of increase or decrease that could occur in the next twelve months cannot be made at this time.
Note 16. Segment Information
Xilinx designs, develops and markets programmable logic semiconductor devices and the related software design tools. The Company operates and tracks its results in one operating segment. Xilinx sells its products to OEMs and to electronic components distributors who resell these products to OEMs or subcontract manufacturers.
Geographic revenue information for fiscal
2016
,
2015
and
2014
reflects the geographic location of the distributors or OEMs who purchased the Company's products. This may differ from the geographic location of the end customers. Long-lived assets include property, plant and equipment, which were based on the physical location of the asset as of the end of each fiscal year.
Net revenues by geographic region were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
April 2, 2016
|
|
March 28, 2015
|
|
March 29, 2014
|
North America:
|
|
|
|
|
|
United States
|
$
|
592,422
|
|
|
$
|
625,434
|
|
|
$
|
610,276
|
|
Other
|
118,240
|
|
|
112,900
|
|
|
97,416
|
|
Total North America
|
710,662
|
|
|
738,334
|
|
|
707,692
|
|
|
|
|
|
|
|
Asia Pacific:
|
|
|
|
|
|
China
|
520,562
|
|
|
573,007
|
|
|
564,814
|
|
Other
|
335,304
|
|
|
357,598
|
|
|
375,013
|
|
Total Asia Pacific
|
855,866
|
|
|
930,605
|
|
|
939,827
|
|
|
|
|
|
|
|
Europe
|
424,685
|
|
|
477,102
|
|
|
519,829
|
|
Japan
|
222,668
|
|
|
231,303
|
|
|
215,183
|
|
Worldwide total
|
$
|
2,213,881
|
|
|
$
|
2,377,344
|
|
|
$
|
2,382,531
|
|
Net long-lived assets by country at fiscal year-ends were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
2016
|
|
2015
|
|
2014
|
United States
|
$
|
191,400
|
|
|
$
|
195,353
|
|
|
$
|
237,229
|
|
Foreign:
|
|
|
|
|
|
Ireland
|
43,011
|
|
|
46,216
|
|
|
48,043
|
|
Singapore
|
36,029
|
|
|
43,020
|
|
|
51,569
|
|
Other
|
12,906
|
|
|
16,449
|
|
|
18,248
|
|
Total foreign
|
91,946
|
|
|
105,685
|
|
|
117,860
|
|
Worldwide total
|
$
|
283,346
|
|
|
$
|
301,038
|
|
|
$
|
355,089
|
|
|
|
Note 17.
|
Litigation Settlements and Contingencies
|
Patent Litigation
On November 7, 2014, the Company filed a complaint for declaratory judgment against Papst Licensing GmbH & Co., KG (Papst) in the U.S. District Court for the Northern District of California (Xilinx, Inc. v. Papst Licensing GmbH & Co., KG, Case No. 3:14-CV-04963) (the California Action). On the same date, a patent infringement lawsuit was filed by Papst against the Company in the U.S. District Court for the District of Delaware (Papst Licensing GmbH & Co., KG v. Xilinx, Inc., Case No. 1:14-CV-01376) (the Delaware Action). Both the California Action and the Delaware Action pertain to the same two patents. In the Delaware Action, Papst seeks unspecified damages, interest and costs. On July 9, 2015, the Court in the California Action granted Papst's motion to dismiss for lack of personal jurisdiction, and the California Action was dismissed. The Company has appealed the decision dismissing in the California Action. On September 1, 2015, the Court in the Delaware Action granted the Company's motion to transfer the Delaware Action to the U.S. District Court for the Northern District of California (Papst Licensing GmbH & Co., KG v. Xilinx, Inc., Case No. 3:16-cv-00925-EDL). The Company is unable to estimate its range of possible loss, if any, in this matter at this time.
On July 17, 2014, a patent infringement lawsuit was filed by PLL Technologies, Inc. (PTI) against the Company in the U.S. District Court for the District of Delaware (PLL Technologies, Inc. v. Xilinx, Inc., Case No. 1:14-CV-00945). On April 28, 2015, the United States Patent Trial and Appeal Board granted Xilinx's request for inter partes review (IPR) with respect to all claims in the litigation. On May 5, 2015, the Court ordered the litigation be stayed pending final resolution of the IPR. The lawsuit pertains to one patent and PTI seeks unspecified damages, interest and costs. The Company is unable to estimate its range of possible loss, if any, in this matter at this time.
On May 22, 2015, a patent infringement lawsuit was filed by QuickCompile IP, LLC (QuickCompile) against the Company in the U.S. District Court for the Eastern District of Texas (QuickCompile IP, LLC v. Xilinx, Inc., Case No. 2:15-CV-00820). On April
20, 2016, the parties entered into a settlement agreement pursuant to which the parties entered into a mutual release of claims that included QuickCompile absolutely discharging the Company, its affiliates, and covered third parties from any and all claims, including those before the effective date of the proposed settlement, that arise from or relate to in any way the patents at issue. QuickCompile also granted the Company, its affiliates and covered third parties an irrevocable, perpetual, fully-paid, royalty-free, worldwide license under the patents. The Company did not make any payment to QuickCompile for the license, but the parties acknowledged an agreement involving the patents between QuickCompile and RPX Corporation. On April 21, 2016, the U.S. District Court for the Eastern District of Texas issued an order dismissing the suit with prejudice.
The Company intends to continue to protect and defend our IP vigorously.
Other Matters
On June 11, 2015, John P. Neblett as Chapter 7 Trustee of Valley Forge Composite Technologies, Inc. filed a complaint against Xilinx and others in the U.S. Bankruptcy Court for the Middle District of Pennsylvania (Bankruptcy No. 1:13-bk-05253-JJT). The complaint alleges causes of actions against Xilinx for negligence and civil conspiracy relating to alleged violations of U.S. export laws. It seeks at least
$50.0 million
in damages, together with punitive damages, from the defendants. On September 21, 2015, the action was withdrawn from the U.S. Bankruptcy Court for the Middle District of Pennsylvania and transferred to the U.S. District Court for the Eastern District of Kentucky. On November 2, 2015, Xilinx—along with other defendants—filed a motion to dismiss the complaint. On November 3, 2015, Xilinx filed a motion for sanctions pursuant to Federal Rule of Civil Procedure 11. The Court has not yet adjudicated either motion. The Company is unable to estimate its range of possible loss, if any, in this matter at this time.
From time to time, the Company is involved in various disputes and litigation matters that arise in the ordinary course of its business. These include disputes and lawsuits related to intellectual property, mergers and acquisitions, licensing, contract law, tax, regulatory, distribution arrangements, employee relations and other matters. Periodically, the Company reviews the status of each matter and assesses its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and a range of possible losses can be estimated, the Company accrues a liability for the estimated loss. Legal proceedings are subject to uncertainties, and the outcomes are difficult to predict. Because of such uncertainties, accruals are based only on the best information available at the time. As additional information becomes available, the Company continues to reassess the potential liability related to pending claims and litigation and may revise estimates.
|
|
Note 18.
|
Goodwill and Acquisition-Related Intangibles
|
As of
April 2, 2016
and
March 28, 2015
, the gross and net amounts of goodwill and of acquisition-related intangibles for all acquisitions were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-Average
|
(In thousands)
|
2016
|
|
2015
|
|
Amortization Life
|
Goodwill
|
$
|
159,296
|
|
|
$
|
159,296
|
|
|
|
Core technology, gross
|
77,640
|
|
|
77,640
|
|
|
5.6 years
|
Less accumulated amortization
|
(71,472
|
)
|
|
(64,988
|
)
|
|
|
Core technology, net
|
6,168
|
|
|
12,652
|
|
|
|
Other intangibles, gross
|
46,606
|
|
|
46,606
|
|
|
2.7 years
|
Less accumulated amortization
|
(46,572
|
)
|
|
(46,506
|
)
|
|
|
Other intangibles, net
|
34
|
|
|
100
|
|
|
|
Total acquisition-related intangibles, gross
|
124,246
|
|
|
124,246
|
|
|
|
Less accumulated amortization
|
(118,044
|
)
|
|
(111,494
|
)
|
|
|
Total acquisition-related intangibles, net
|
$
|
6,202
|
|
|
$
|
12,752
|
|
|
|
Amortization expense for acquisition-related intangibles for fiscal
2016
,
2015
and
2014
were
$6.6 million
,
$9.5 million
and
$9.9 million
, respectively. Based on the carrying value of acquisition-related intangibles recorded as of
April 2, 2016
, and assuming no subsequent impairment of the underlying assets, the annual amortization expense for acquisition-related intangibles is expected to be as follows:
|
|
|
|
|
Fiscal
|
(In thousands)
|
2017
|
$
|
4,761
|
|
2018
|
1,374
|
|
2019
|
67
|
|
Total
|
$
|
6,202
|
|
Note 19. Employee Benefit Plans
Xilinx offers various retirement benefit plans for U.S. and non-U.S. employees. Total contributions to these plans were
$11.0 million
,
$13.0 million
and
$13.2 million
in fiscal
2016
,
2015
and
2014
, respectively. For employees in the U.S., Xilinx instituted a Company matching program pursuant to which the Company will match contributions to Xilinx's 401(k) Plan (the 401(k) Plan) based on the amount of salary deferral contributions the participant makes to the 401(k) Plan. Xilinx will match up to
50%
of the first
8%
of an employee's compensation that the employee contributed to their 401(k) account. The maximum Company contribution per year is
$4,500
per employee. As permitted under Section 401(k) of the Internal Revenue Code, the 401(k) Plan allows tax deferred salary deductions for eligible employees. The Compensation Committee of the Board of Directors administers the 401(k) Plan. Participants in the 401(k) Plan may make salary deferrals of up to
25%
of the eligible annual salary, limited by the maximum dollar amount allowed by the Internal Revenue Code. Participants who have reached the age of
50
before the close of the plan year may be eligible to make catch-up salary deferral contributions, up to
25%
of eligible annual salary, limited by the maximum dollar amount allowed by the Internal Revenue Code.
The Company allows its U.S.-based officers, director-level employees and its board members to defer a portion of their compensation under the Deferred Compensation Plan (the Plan). The Compensation Committee administers the Plan. As of
April 2, 2016
, there were more than
187
participants in the Plan who self-direct their contributions into investment options offered by the Plan. The Plan does not allow Plan participants to invest directly in Xilinx's stock. In the event Xilinx becomes insolvent, Plan assets are subject to the claims of the Company's general creditors. There are no Plan provisions that provide for any guarantees or minimum return on investments. As of
April 2, 2016
, Plan assets were
$67.0 million
and obligations were
$74.2 million
. As of
March 28, 2015
, Plan assets were
$59.2 million
and obligations were
$70.2 million
.
Note 20. Subsequent Events
On April 26, 2016, the Company's Board of Directors declared a cash dividend of
$0.33
per common share for the first quarter of fiscal 2017. The dividend is payable on June 8, 2016 to stockholders of record as of May 18, 2016.
On May 16, 2016, the Company's Board of Directors granted an authorization for the Company to repurchase up to
$1.00 billion
of its debt and equity securities.