Xilinx
Annual Report 2014

Plain-text annual report

Delivering Delivering A Generation Ahead A Generation Ahead 2014 Form 10-K & Proxy Statement Xilinx2014AnnualReport_Covers_FINAL_060514.indd 1 6/5/14 4:56 PM 2014 Form 10-K & Proxy Statement Financial Highlights (In Thousands, Except Per Share Amounts) FY 2014 Net Revenues Operating Income Net Income Diluted Earnings Per Share Cash Dividends Paid Per Share Net Revenues By End Markets (Percent of Total Net Revenues) Communications and Data Center Industrial, Aerospace and Defense Broadcast, Consumer and Automotive Other Net Revenues By Geography (Percent of Total Net Revenues) North America Asia Pacific Europe Japan $ 2,382,531 $ 748,927 $ 630,388 2.19 $ 1.00 $ 45% 36% 16% 3% 30% 39% 22% 9% FY 2013 $ 2,168,652 $ 580,732 $ 487,536 1.79 $ 0.88 $ 46% 34% 16% 4% 30% 35% 25% 10% Xilinx2014AnnualReport_Covers_FINAL_060514.indd 2 6/5/14 4:56 PM XilinxAnnualReport2014_SectionPages_FINAL_060514.pdf 1 6/5/14 4:58 PM Delivering A Generation Ahead C M Y CM MY CY CMY K 2014 Form 10-K This page intentionally left blank. United States Securities and Exchange Commission Washington, D.C. 20549 FORM 10-K (Mark One) Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended March 29, 2014 Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ___________ to ____________. Commission File Number 000-18548 Xilinx, Inc. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 2100 Logic Drive, San Jose, CA (Address of principal executive offices) 77-0188631 (I.R.S. Employer Identification No.) 95124 (Zip Code) (Registrant’s telephone number, including area code) (408) 559-7778 Securities registered pursuant to Section 12(b) of the Act: Title of each class Common stock, $0.01 par value Name of each exchange on which registered The NASDAQ Global Select Market Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES NO Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES NO Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES NO Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES NO Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES NO The aggregate market value of the voting stock held by non-affiliates of the registrant based upon the closing price of the registrant’s common stock on September 28, 2013 as reported on the NASDAQ Global Select Market was approximately $10,272,092,000. Shares of common stock held by each executive officer and director and by each person who owns 5% or more of the outstanding common stock have been excluded in that such persons may be deemed affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes. As of April 25, 2014, the registrant had 268,794,081 shares of Common Stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE Parts of the Proxy Statement for the Registrant’s Annual Meeting of Stockholders to be held on August 13, 2014 are incorporated by reference into Part III of this Annual Report on Form 10-K. 1 Xilinx, Inc. Form 10-K For the Fiscal Year Ended March 29, 2014 TABLE OF CONTENTS PART I Item 1. Business Item 1A. Risk Factors Item 1B. Unresolved Staff Comments Item 2. Properties Item 3. Legal Proceedings Item 4. Mine Safety Disclosures PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Item 6. Selected Financial Data Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Item 7A. Quantitative and Qualitative Disclosures about Market Risk Item 8. Financial Statements and Supplementary Data Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Item 9A. Controls and Procedures Item 9B. Other Information PART III Item 10. Directors, Executive Officers and Corporate Governance Item 11. Executive Compensation Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Item 13. Certain Relationships and Related Transactions, and Director Independence Item 14. Principal Accounting Fees and Services PART IV Item 15. Exhibits and Financial Statement Schedules Signatures Page 3 13 22 22 22 23 24 26 27 39 41 77 77 78 79 79 79 80 80 81 84 2 FORWARD-LOOKING STATEMENTS PART I This Annual Report on Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be found throughout this Annual Report and particularly in Items 1. "Business" and 3. "Legal Proceedings" which contain discussions concerning our development efforts, strategy, new product introductions, backlog and litigation. Forward-looking statements involve numerous known and unknown risks and uncertainties that could cause actual results to differ materially and adversely from those expressed or implied. Such risks include, but are not limited to, those discussed throughout this document as well as in Item 1A. "Risk Factors." Often, forward-looking statements can be identified by the use of forward-looking words, such as "anticipates," "believes," "continue," "could," "estimates," "expects," "intends," "may," "plans," "projects," "should," "will," "would" and other similar terminology, or the negative of such terms. We disclaim any responsibility to update or revise any forward-looking statement provided in this Annual Report or in any of our other communications for any reason. ITEM 1. BUSINESS Xilinx, Inc. (Xilinx, the Company or we) designs and develops programmable devices and associated technologies, including: (cid:127) (cid:127) (cid:127) (cid:127) (cid:127) integrated circuits (ICs) in the form of programmable logic devices (PLDs), including programmable System on Chips (SoCs) and three-dimensional ICs, or 3D ICs; software design tools to program the PLDs; targeted reference designs; printed circuit boards; and intellectual property (IP), which consists of Xilinx and various third-party verification and IP cores. In addition to its programmable platforms, Xilinx provides design services, customer training, field engineering and technical support. Our PLDs include field programmable gate arrays (FPGAs), complex programmable logic devices (CPLDs) that our customers program to perform desired logic functions, and programmable SoCs, which combine industry standard ARM® processor-based systems with programmable logic in a single device. We also design and develop 3D ICs, which combine multiple FPGA logic die or a combination of FPGA and transceiver die in a single package to exceed the capacity and bandwidth of monolithic devices. Our product portfolio is designed to provide high integration and quick time-to-market for electronic equipment manufacturers in end markets such as wired and wireless communications, industrial, scientific and medical, aerospace and defense, audio, video and broadcast, consumer, automotive and data processing. We sell our products and services through independent domestic and foreign distributors and through direct sales to original equipment manufacturers (OEMs) and electronic manufacturing service providers (EMS). Sales are generated by these independent distributors, independent sales representative or our direct sales organization. Xilinx was founded and incorporated in California in February 1984. In April 1990, the Company was reincorporated in Delaware. Our corporate facilities and executive offices are located at 2100 Logic Drive, San Jose, California 95124, and our website address is www.xilinx.com. Industry Overview There are three principal types of ICs used in most digital electronic systems: processors, which generally are utilized for control and computing tasks; memory devices, which are used for storing program instructions and data; and logic devices, which generally are used to manage the interchange and manipulation of digital signals within a system. Xilinx designs and develops PLDs, a type of logic device. Alternatives to PLDs may include application specific integrated circuits (ASICs) and application specific standard products (ASSPs). PLDs, ASICs and ASSPs may be utilized in many of the same types of electronic systems. However, differences in unit pricing, development cost, product performance, reliability, power consumption, capacity, features and functionality, ease of use and time-to-market determine which devices are best-suited for specific applications. 3 PLDs have key competitive advantages over ASICs and ASSPs, including: (cid:127) (cid:127) Faster time-to-market and increased design flexibility. Both of these advantages are enabled by Xilinx desktop software which allows users to implement and revise their designs quickly. In contrast, ASICs and ASSPs require significant development time and offer limited, if any, flexibility to make design changes. PLDs are standard components. This means that the same device can be sold to many different users for a myriad of applications. In sharp contrast, ASICs and ASSPs are customized for an individual user or a specific application. PLDs are generally disadvantaged in terms of relative device size when compared to chips that are designed to perform a fixed function in a single or small set of applications. ASICs and ASSPs tend to be smaller than PLDs performing the same fixed function, resulting in a lower unit cost. However, there is a high fixed cost associated with ASIC and ASSP development that is not applicable to PLD customers. This fixed cost of ASIC and ASSP development is expected to significantly increase on next generation technology nodes. From a total cost of development perspective, ASICs and ASSPs have generally been more cost effective when used in high-volume production, and PLDs have generally been more cost effective when used in low- to mid-volume production. However, we expect PLDs to be able to address higher volume applications and gain market share from ASIC and ASSP suppliers as the fixed cost of ASIC and ASSP development increases on next generation technology nodes. An overview of typical PLD end market applications for our products is shown in the following table: End Markets Sub-Segments Applications Communications & Data Center Wireless (cid:127) 3G/4G Base Stations (cid:127) Wireless Backhaul Wireline (cid:127) Enterprise Routers and Switches (cid:127) Metro Optical Networks (cid:127) Data Centers Industrial, Aerospace & Defense Industrial, Scientific and Medical (cid:127) Factory Automation (cid:127) Medical Imaging Test and Measurement (cid:127) Semiconductor Test and Measurement Equipment (cid:127) ASIC Emulation and Prototyping Aerospace and Defense (cid:127) Secure Communications Broadcast, Consumer & Consumer Automotive Automotive Audio, Video and Broadcast Other Miscellaneous (cid:127) Avionics (cid:127) Electronic Warfare and Surveillance (cid:127) Digital Televisions (cid:127) Multifunction Printers (cid:127) Set-Top Boxes (cid:127) Infotainment Systems (cid:127) Driver Information Systems (cid:127) Driver Assistance Systems (cid:127) Cable Head-End Systems (cid:127) Post Production Equipment (cid:127) Broadcast Cameras (cid:127) High Performance Computing (cid:127) Computer Peripherals 4 Strategy and Competition Our strategy for expansion is the displacement of ASICs and ASSPs in the development of next generation electronic systems. The costs and risks associated with application-specific devices can only be justified for high-volume or highly-specialized commodity products. Programmable platforms, alternatively, are becoming critical for our customers to meet increasingly stringent product requirements - cost, power, performance and density - in a business environment characterized by increased complexity, shrinking market windows, rapidly changing market demands, capped engineering budgets, escalating ASIC and ASSP non- recurring engineering costs and increased economic and development risk. With every new generation of FPGAs, our strategy is to increase the performance, density and system-level functionality and integration, while driving down cost and power consumption at each manufacturing process node. This enables us to provide simpler, smarter programmable platforms and design methodologies allowing our customers to focus on innovation and differentiation of their products. Our PLDs compete in the logic IC industry, an industry that is intensely competitive and characterized by rapid technological change, increasing levels of integration, product obsolescence and continuous price erosion. We expect increased competition from our primary PLD competitors such as Altera Corporation (Altera), Lattice Semiconductor Corporation (Lattice) and Microsemi Corporation (Microsemi), and from ASSP vendors such as Broadcom Corporation (Broadcom), Marvell Technology Group, Ltd. (Marvell) and Texas Instruments Incorporated (Texas Instruments), as well as from new companies that may enter the traditional programmable logic market segment. In addition, we expect continued competition from the ASIC market, which has been ongoing since the inception of FPGAs. Other competitors include manufacturers of: high-density programmable logic products characterized by FPGA-type architectures; high-volume and low-cost FPGAs as programmable replacements for ASICs and ASSPs; (cid:127) (cid:127) (cid:127) ASICs and ASSPs with incremental amounts of embedded programmable logic; (cid:127) (cid:127) (cid:127) (cid:127) (cid:127) high-speed, low-density CPLDs; high-performance digital signal processing (DSP) devices; products with embedded processors; products with embedded multi-gigabit transceivers; and other new or emerging programmable logic products. We believe that important competitive factors in the logic IC industry include: (cid:127) (cid:127) (cid:127) (cid:127) (cid:127) (cid:127) (cid:127) (cid:127) (cid:127) (cid:127) (cid:127) product pricing; time-to-market; product performance, reliability, quality, power consumption and density; field upgradability; adaptability of products to specific applications; ease of use and functionality of software design tools; availability and functionality of predefined IP; inventory and supply chain management; access to leading-edge process technology and assembly capacity; ability to provide timely customer service and support; and access to advanced packaging technology. Silicon Product Overview A brief overview of the silicon product offerings is listed in the table below. These products comprise the majority of our revenues. Additionally, some of our more mature product families have been excluded from the table, although they continue to generate revenues. We operate and track our results in one operating segment for financial reporting purposes. 5 Product Families PLDs Kintex®UltraScaleTM Virtex®-7 Kintex-7 Artix®-7 Zynq®-7000 Virtex-6 Spartan®-6 Virtex-5 Date Introduced November 2013 June 2010 June 2010 June 2010 March 2011 February 2009 February 2009 May 2006 See information under the caption "Results of Operations - Net Revenues" in Item 7. "Management’s Discussion and Analysis of Financial Condition and Results of Operations" for information about our revenues from our product families. See also "Note 16. Segment Information" to our consolidated financial statements included in Item 8 "Financial Information and Supplementary Data" for information regarding segments. UltraScale Product Families These devices deliver an ASIC-class advantage, based on the UltraScale architecture and utilizing Taiwan Semiconductor Manufacturing Company Limited's (TSMC) 20SoC gate density process. These devices deliver next generation routing, ASIC- like clocking, and enhancements to logic and fabric to eliminate interconnect bottlenecks while supporting consistent device utilization of more than 90% without performance degradation. (cid:127) Kintex UltraScale FPGAs represent the Company’s second generation mid-range FPGA family. These devices offer high price-performance at the lowest power. Kintex UltraScale devices are designed to meet the requirements for the growing number of key applications including next generation wired and wireless communications and super high vision displays and equipment. (cid:127) Virtex UltraScale devices provide advanced levels of performance, system integration and bandwidth on a single chip. The largest family member delivers 4.4M logic cells, more than doubling Xilinx's industry's highest capacity device and delivering 50M equivalent ASIC gates. Virtex UltraScale devices are expected to be used in the industry’s most challenging applications including: 400G communication applications, high performance computing, intelligence surveillance and reconnaissance systems and ASIC emulation and prototyping. 28 nanometer (nm) Product Families The 7 series devices that comprise our 28nm product families are fabricated on a high-K metal gate, high performance and low power 28nm process technology. These devices are based on a scalable and optimized architecture, which enables design, IP portability and re-use across all families as well as provides designers the ability to achieve the appropriate combination of I/O support, performance, feature quantities, packaging and power consumption to address a wide range of applications. The 7 series devices consist of the following three families: (cid:127) Virtex-7 FPGAs, including 3D ICs, are optimized for applications requiring the highest capacity, performance, DSP and serial connectivity with transceivers operating up to 28G. Target applications include 400G and 100G line cards, high- performance computing and test and measurement applications. (cid:127) Kintex-7 FPGAs represent Xilinx’s first mid-range FPGA family. These devices maximize price-performance and performance per watt. Target applications include wireless LTE infrastructure, video display technology and medical imaging. 6 (cid:127) Artix-7 FPGAs offer the lowest power and system cost at higher performance than alternative high volume FPGAs. These devices are targeted to high volume applications such as handheld portable ultrasound devices, multi-function printers and software defined radios. The Zynq-7000 family is the first family of Xilinx programmable SoCs. This new class of product combines an industry-standard ARM dual-core Cortex™-A9 MPCore™ processing system with Xilinx 28nm architecture. There are five devices in the Zynq-7000 SoC family that allow designers to target cost sensitive as well as high-performance applications from a single platform using industry-standard tools. These devices are designed to enable incremental market opportunities in applications such as industrial motor control, driver assistance and smart surveillance systems, and smart heterogeneous wireless networks. 40nm and 45nm Product Families The Virtex-6 FPGA family consists of 13 devices and is the sixth generation in the Virtex series of FPGAs. Virtex-6 FPGAs are fabricated on a high-performance, 40nm process technology. There are three Virtex-6 families, and each is optimized to deliver different feature mixes to address a variety of markets as follows: (cid:127) Virtex-6 LXT FPGAs - optimized for applications that require high-performance logic, DSP and serial connectivity with low-power 6.6G serial transceivers. (cid:127) Virtex-6 SXT FPGAs - optimized for applications that require ultra-high-performance DSP and serial connectivity with low-power 6.6G serial transceivers. (cid:127) Virtex-6 HXT FPGAs - optimized for communications applications that require the highest-speed serial connectivity with up to 11.2G serial transceivers. The latest generation in the Spartan FPGA series, the Spartan-6 FPGA family, is fabricated on a low-power 45nm process technology. The Spartan-6 family is the PLD industry’s first 45nm high-volume FPGA family, consisting of 11 devices in two product families: (cid:127) (cid:127) Spartan-6 LX FPGAs - optimized for applications that require the lowest cost. Spartan-6 LXT FPGAs - optimized for applications that require LX features plus 3.125G serial transceivers. 65nm Product Families The Virtex-5 FPGA family consists of 26 devices in five product families: Virtex-5 LX FPGAs for logic-intensive designs, Virtex-5 LXT FPGAs for high-performance logic with serial connectivity, Virtex-5 SXT FPGAs for high-performance DSP with serial connectivity, Virtex-5 FXT FPGAs for embedded processing with serial connectivity and Virtex-5 TXT FPGAs for high-bandwidth serial connectivity. Other Product Families Prior generation Virtex families include Virtex-4, Virtex-II Pro, Virtex-II, Virtex-E and the original Virtex family. Spartan family FPGAs include 90nm Spartan-3 FPGAs, the Spartan-3E family and the Spartan-3A family. Prior generation Spartan families include Spartan-IIE, Spartan-II, Spartan XL and the original Spartan family. CPLDs operate on the lowest end of the programmable logic density spectrum. CPLDs are single-chip, nonvolatile solutions characterized by instant-on and universal interconnect. CPLDs combine the advantages of ultra-low power consumption with the benefits of high performance and low cost. Prior generations of CPLDs include the CoolRunnerTM and XC9500 product families. EasyPath™ FPGAs EasyPath FPGAs offer customers a fast, simple method of cost-reducing FPGA designs. EasyPath FPGAs use the same production masks and fabrication process as standard FPGAs and are tested to a specific customer application to improve yield and lower costs. As a result, EasyPath FPGAs provide customers with significant cost reduction when compared to the standard FPGA devices without the conversion risk, engineering effort, or the additional time required to move to an ASIC. The latest generation of EasyPath FPGAs and EasyPath-7 FPGAs provide lower total product cost of ownership for cost-reducing high performance FPGAs. 7 Design Platforms and Services Programmable Platforms We offer three types of programmable platforms that support our customers’ designs and reduce their development efforts: The Base Platform is the delivery vehicle for all of our new silicon offerings used to develop and run customer-specific software applications and hardware designs. Released at launch, the Base Platform is comprised of: FPGA silicon; Vivado® Design Suite design environment; integration support of optional third-party synthesis, simulation, and signal integrity tools; reference designs; development boards and IP. The Domain-Specific Platform targets one of the three primary Xilinx FPGA user profiles: the embedded processing developer; the DSP developer; or the logic/connectivity developer. It accomplishes this by augmenting the Base Platform with a targeted set of integrated technologies, including: higher-level design methodologies and tools; domain-specific IP including embedded, mixed signal, video, DSP and connectivity; domain-specific development hardware and reference designs; and operating systems and software. The Market-Specific Platform enables software or hardware developers to quickly build and run their specific application or solution. Built for specific markets such as automotive, consumer, aerospace and defense, communications, audio, video and broadcast, industrial, or scientific and medical, the Market-Specific Platform integrates both the Base and Domain-Specific Platforms with higher targeted applications elements such as IP, reference designs and boards optimized for a particular market. Design Tools To accommodate the various design methodologies and design flows employed by the wide range of our customers’ user profiles such as system designers, algorithm designers, software coders and logic designers, we provide the appropriate design environment tailored to each user profile for design creation, design implementation and design verification. During April 2012, Xilinx introduced the next-generation Vivado Design Suite designed to improve developer productivity resulting in faster design integration and implementation. The Vivado Design Suite hallmarks include an easy-to-use IP-centric design flow and significant improvement in run times. The standards-based Vivado tools include high-level synthesis to provide a more direct flow in retargeting DSPs and general purpose processor designs into our FPGAs, IP Integrator to rapidly stitch together cores at higher levels of abstraction, and a new analytical place-and-route engine which significantly improves run times. The Vivado Design Suite supports both Xilinx 7 series FPGAs and Zynq-7000, our programmable SoCs. The previous generation tool suite, the ISE® Design Suite, supports Xilinx 7 series FPGAs, programmable SoCs and all previous generation FPGAs, enabling customers to transition to the Vivado Design Suite when the timing is right for their design needs. Both the Vivado Design Suite and ISE Design Suite operate with a wide range of third-party Electronic Design Automation software point-tools offerings. Intellectual Property Xilinx and various third parties offer hundreds of no charge and fee-bearing IP core licenses covering Ethernet, memory controllers, Interlaken and PCIe® interfaces, as well as an abundance of domain-specific IP in the areas of embedded, DSP and connectivity, and market-specific IP cores. In addition, our products and technology leverage industry standards such as ARM AMBA® AXI-4 interconnect technology, IP-XACT and IEEE P1735 encryption to facilitate plug-and-play FPGA design and take advantage of the large ecosystem of ARM IP developers. Development Boards, Kits and Configuration Products In addition to the broad selection of legacy development boards presently offered, we have introduced a new unified board strategy that enables the creation of a standardized and coordinated set of base boards available both from Xilinx and our ecosystem vendors, all utilizing the industry-standard extensions that enable customization for market specific applications. Adopting this standard for all of our base boards enables the creation of a scalable and extensible delivery mechanism for all Xilinx programmable platforms. We also offer comprehensive development kits including hardware, design tools, IP and reference designs that are designed to streamline and accelerate the development of domain-specific and market-specific applications. 8 Finally, Xilinx offers a range of configuration products including one-time programmable and in-system programmable storage devices to configure Xilinx FPGAs. These programmable read-only memory (PROM) products support all of our FPGA devices. Third-Party Alliances Xilinx and certain third parties have developed and continue to offer a robust ecosystem of IP, boards, tools, services and support through the Xilinx alliance program. Xilinx also works with these third parties to promote our programmable platforms through third-party tools, IP, software, boards and design services. Engineering Services Xilinx engineering services provide customers with engineering resources to augment their design teams and to provide expert design-specific advice. Xilinx tailors its engineering services to the needs of its customers, ranging from hands-on training to full design creation and implementation. Research and Development Our research and development (R&D) activities are primarily directed toward the design of new ICs, the development of new software design automation tools for hardware and embedded software, the design of logic IP, the adoption of advanced semiconductor manufacturing processes for ongoing cost reductions, performance and signal integrity improvements and lowering PLD power consumption. As a result of our R&D efforts, we have introduced a number of new products during the past several years including the Virtex UltraScale, Kintex UltraScale, Virtex-7, Kintex-7, Artix-7 and Zynq-7000 families. We have made enhancements to our IP core offerings and introduced Vivado tools, our next generation software design suite. We extended our collaboration with our foundry suppliers in the development of 65nm, 45nm, 40nm and 28nm manufacturing technology, enabling us to be the first company in the PLD industry to ship 45nm high-volume as well as 28nm and 20nm FPGA devices. Additionally, our investment in R&D has allowed us to ship the industry’s first 28nm with embedded ARM technology as well as the industry’s first 3D IC devices. Our R&D challenge is to continue to develop new products that create value-added solutions for customers. In fiscal 2014, 2013 and 2012, our R&D expenses were $492.4 million, $475.5 million and $435.3 million, respectively. We believe technical leadership and innovation are essential to our future success and are committed to maintaining a significant level of R&D investment. Sales and Distribution We sell our products to OEMs, EMSs and to electronic components distributors who resell these products to OEMs and EMSs. We use a dedicated global sales and marketing organization as well as independent sales representatives to generate sales. In general, we focus our direct demand creation efforts on a limited number of key accounts. Distributors and independent sales representatives create demand within the balance of our customer base in defined territories. Distributors also provide inventory, value-added services and logistics for a wide range of our OEM customers. Whether Xilinx, the independent sales representative, or the distributor identifies the sales opportunity, a local distributor will process and fulfill the majority of all customer orders. In such situations, distributors are the sellers of the products and as such they bear all legal and financial risks generally related to the sale of commercial goods, including such risks as credit loss, inventory shrinkage, theft and foreign currency fluctuations, but excluding indemnity and warranty liability. In accordance with our distribution agreements and industry practice, we have granted our authorized distributors the contractual right to return certain amounts of unsold product on a periodic basis and also receive price adjustments for unsold product in the case of a change in list prices subsequent to the initial sale. Revenue recognition on shipments to distributors worldwide is deferred until the products are sold to the distributors’ end customers. Avnet, Inc. (Avnet) distributes the substantial majority of our products worldwide. As of March 29, 2014 and March 30, 2013, Avnet accounted for 55% and 64%, respectively, of our total accounts receivable. Resale of product through Avnet accounted for 46%, 46% and 48% of our worldwide net revenues in fiscal 2014, 2013 and 2012, respectively. We also use other regional distributors throughout the world. We believe distributors provide a cost-effective means of reaching a broad range of customers while providing efficient logistics services. Since PLDs are standard products, they do not carry many of the inventory risks posed by ASICs, and they simplify the requirements for distributor technical support. From time to time, we may add or terminate distributors in specific geographies, or move customers to a direct fulfillment model as we deem appropriate given our strategies, the level of distributor business activity and distributor performance and financial condition. See "Note 2. Summary of Significant 9 Accounting Policies and Concentrations of Risk" to our consolidated financial statements, included in Item 8. "Financial Statements and Supplementary Data," for information about concentrations of credit risk and "Note 16. Segment Information" for information about our revenues from external customers and domestic and international operations. No end customer accounted for more than 10% of our net revenues in fiscal 2014, 2013 or 2012. Backlog As of March 29, 2014, our backlog from OEM customers and backlog from end customers reported by our distributors scheduled for delivery within the next three months was $322.0 million, compared to $253.0 million as of March 30, 2013. Orders from end customers to our distributors are subject to changes in delivery schedules or to cancellation without significant penalty. As a result, backlog from both OEM customers and end customers reported by our distributors as of any particular period may not be a reliable indicator of revenue for any future period. Wafer Fabrication As a fabless semiconductor company, we do not manufacture wafers used for our IC products or PROMs. Rather, we purchase our wafers from independent foundries including United Microelectronics Corporation (UMC), TSMC, and Samsung Electronics Co., Ltd. (Samsung). Currently, UMC manufactures the majority of our wafers and TSMC manufactures the wafers for our newest products. Precise terms with respect to the volume and timing of wafer production and the pricing of wafers produced by the semiconductor foundries are determined by periodic negotiations with each wafer foundry. Our strategy is to focus our resources on market development and creating new ICs and software design tools rather than on wafer fabrication. We continuously evaluate opportunities to enhance foundry relationships and/or obtain additional capacity from our main suppliers as well as other suppliers of wafers manufactured with leading-edge process technologies, and we adjust loadings at particular foundries to meet our business needs. Sort, Assembly and Test Wafers are sorted by the foundry or independent sort subcontractors. Sorted die are assembled by subcontractors. During the assembly process, the wafers are separated into individual die, which are then assembled into various package types. Following assembly, the packaged units are generally tested by independent test subcontractors or by Xilinx personnel. We purchase most of our assembly and some of our test services from Siliconware Precision Industries Ltd. in Taiwan and Amkor Technology, Inc. in Korea and the Philippines. Quality Certification Xilinx has achieved and currently maintains quality management systems certification to TL9000/ISO9001 for our facilities in San Jose, California; Longmont, Colorado; Singapore and Hyderabad, India. In addition, Xilinx achieved and currently maintains ISO 14001 and OHSAS 18001 environmental health and safety management system certifications in the San Jose and Singapore locations. Patents and Licenses While our various proprietary intellectual property rights are important to our success, we believe our business as a whole is not materially dependent on any particular patent or license, or any particular group of patents or licenses. As of March 29, 2014, we held over 3,200 issued United States (U.S.) patents, which vary in duration, and over 300 pending U.S. patent applications relating to our proprietary technology. We maintain an active program of filing for additional patents in the areas of, but not limited to, circuits, software, IC architecture, IP cores, system design, testing methodologies and other technologies relating to our products and business. We have licensed some parties to certain portions of our patent portfolio and obtained licenses to certain third-party patents as well. We have acquired various licenses from third parties to certain technologies that are implemented in IP cores or embedded in our PLDs, such as processors. Those licenses support our continuing ability to make and sell these PLDs to our customers. We also have acquired various licenses to certain third-party proprietary software, open-source software and related technologies, such as compilers, for our design tools. Continued use of such software and technology is important to the operation of the design tools upon which customers depend. 10 We maintain the Xilinx trade name and trademarks, including the following trademarks that are registered in the U.S. and other countries: Xilinx, the Xilinx logo, Artix, ISE, Kintex, Spartan, Virtex, Vivado and Zynq. Maintaining these trademarks, and the goodwill associated with them, is important to our business. We have also obtained the rights to use certain trademarks owned by consortiums and other trademark owners that are related to our products and business. We intend to continue to protect our IP rights (including, for example, patents, copyrights and trademarks) vigorously. We believe that failure to enforce our intellectual property rights or failure to protect our trade secrets effectively could have an adverse effect on our financial condition and results of operations. We incurred, and in the future we may continue to incur, litigation expenses to defend against claims of infringement and to enforce our intellectual property rights against third parties. However, any such litigation may or may not be successful. Corporate Responsibility Xilinx places a high level of importance on corporate responsibility. Through senior-level sponsorship, regular environmental, health and safety assessments and company-wide performance targets, we strive to achieve a culture that emphasizes contribution to local and global communities through a number of key initiatives: Company We strive to meet or exceed industry and regulatory standards for ethical business practices, product responsibility, and supplier management. All of Xilinx’s directors, officers and employees are required to comply not only with the letter of the laws, rules and regulations that govern the conduct of our business, but also with the spirit of those laws. Environment We monitor regulatory and resource trends and are committed to setting focused targets for key resources and emissions. These targets address several parameters, including product design; chemical, energy, and water use; waste recycling; and emissions. As a company, we focus on reducing natural resource use, the solid and chemical waste of our operations and minimizing our overall environmental impact with regards to the communities around us and consistent with global climate change efforts. Community We are committed to growing strategic relationships with a wide range of local organizations and programs that are designed to develop and strengthen communities located around the world. Xilinx develops local community relationships at key sites through funding and involvement that encourages active participation, teamwork, and volunteerism. Xilinx supports opportunities initiated by its employees and that involve participation and empowerment of its employees. We are committed to charitable giving programs that work toward systemic change and measurable results. Workplace We provide a safe and healthy work environment where employee diversity is embraced and opportunities for training, growth, and advancement are strongly encouraged. The Xilinx Code of Social Responsibility outlines standards to ensure that working conditions at Xilinx are safe and that workers are treated with respect, fairness and dignity. Employees As of March 29, 2014, we had 3,500 employees compared to 3,329 as of the end of the prior fiscal year. None of our employees are represented by a labor union. We have not experienced any work stoppages and believe we maintain good employee relations. Executive Officers of the Registrant Certain information regarding the executive officers of Xilinx as of May 16, 2014 is set forth below: 11 Name Moshe N. Gavrielov Steven L. Glaser Scott R. Hover-Smoot Jon A. Olson Victor Peng Raja G. Petrakian Krishna Rangasayee Vincent L. Tong Frank A. Tornaghi Age 59 52 59 60 54 49 45 52 59 Position President and Chief Executive Officer (CEO) Senior Vice President, Corporate Strategy and Marketing Senior Vice President, General Counsel and Secretary Executive Vice President, Finance and Chief Financial Officer (CFO) Executive Vice President and General Manager of Products Senior Vice President, Worldwide Operations Senior Vice President and General Manager, Market Segments and Communications Business Unit Senior Vice President, Worldwide Quality and New Product Introductions Senior Vice President, Worldwide Sales There are no family relationships among the executive officers of the Company or the Board of Directors. Moshe N. Gavrielov joined the Company in January 2008 as President and CEO and was appointed to the Board of Directors in February 2008. Prior to joining the Company, Mr. Gavrielov served at Cadence Design Systems, Inc., an electronic design automation company, as Executive Vice President and General Manager of the Verification Division from April 2005 through November 2007. Mr. Gavrielov served as CEO of Verisity Ltd., an electronic design automation company, from March 1998 to April 2005 before its acquisition by Cadence Design Systems, Inc. Prior to joining Verisity, Mr. Gavrielov spent nearly 10 years at LSI Corporation (formerly LSI Logic Corporation), a semiconductor manufacturer, in a variety of executive management positions, including Executive Vice President of the Products Group, Senior Vice President and General Manager of International Marketing and Sales and Senior Vice President and General Manager of LSI Logic Europe plc. Additionally, Mr. Gavrielov held various engineering and engineering management positions at Digital Equipment Corporation and National Semiconductor Corporation. Steven L. Glaser joined the Company in January 2011 as Corporate Vice President, Strategic Planning. In April 2012, Mr. Glaser was promoted to his current position of Senior Vice President, Corporate Strategy and Marketing. Prior to joining the Company, Mr. Glaser held various senior positions in Cadence Design Systems between April 2005 and January 2011, including Corporate Vice President of Strategic Development and Corporate Vice President of Marketing for the Verification Division. From June 2003 to April 2005, he served as Senior Vice President of Marketing at Verisity Ltd. Prior to that, Mr. Glaser held various senior business and technical positions at companies in the semiconductor and electronic design automation industries. Scott R. Hover-Smoot joined the Company in October 2007 and currently serves as Senior Vice President, General Counsel and Secretary, a position he has held since May 2014. From October 2007 to May 2014, Mr. Hover-Smoot served as Corporate Vice President, General Counsel and Secretary. From November 2001 to October 2007, Mr. Hover-Smoot served as Regional Counsel and Director of Legal Operations with TSMC, an independent semiconductor foundry. He served as Vice President and General Counsel of California Micro Devices Corporation, a provider of application-specific protection devices and display electronics devices from June 1994 to November 2001. Prior to joining California Micro Devices Corporation, Mr. Hover-Smoot spent over 20 years working in law firms including Berliner-Cohen, Flehr, Hohbach, Test, Albritton & Herbert and Lyon & Lyon. Jon A. Olson joined the Company in June 2005 and currently serves as Executive Vice President, Finance and CFO, a position he has held since May 2014. From August 2006 to May 2014, Mr. Olson served as Senior Vice President, Finance and CFO. From June 2005 to August 2006, he served as Vice President, Finance and CFO. Prior to joining the Company, Mr. Olson spent more than 25 years at Intel Corporation, a semiconductor chip maker, serving in a variety of positions, including Vice President, Finance and Enterprise Services, and Director of Finance. Victor Peng joined the Company in April 2008 and currently serves as Executive Vice President and General Manager of Products, a position he has held since May 2014. From October 2013 to May 2014, Mr. Peng served as Senior Vice President and General Manager of Products. From April 2012 to October 2013, he served as Senior Vice President, Programmable Platforms Development. From November 2008 to April 2012, he served as Senior Vice President, Silicon Engineering Group. Prior to joining the Company, Mr. Peng served as Corporate Vice President, Graphics Products Group at Advanced Micro Devices (AMD), a provider of processing solutions, from November 2005 to April 2008. Prior to joining AMD, Mr. Peng served in a variety of executive engineering positions at companies in the semiconductor and processor industries. 12 Raja G. Petrakian joined the Company in October 1995 and has served in a number of key roles within Operations, including Senior Director of Supply Chain Management and Vice President of Supply Chain Management. Dr. Petrakian assumed his current position of Senior Vice President, Worldwide Operations in March 2009. Prior to joining Xilinx, Dr. Petrakian spent more than three years at the IBM T.J. Research Center serving as a research staff member in the Manufacturing Research Department. Krishna Rangasayee joined the Company in July 1999 and currently serves as Senior Vice President, and General Manager, Market Segments and Communications Business Unit, a position he has held since October 2013. Prior to that, he served in a number of key roles, including as Senior Director of Vertical Markets and Partnerships from November 2005 through June 2008. He then served as the Vice President of Strategic Planning from July 2008 through September 2010 and was promoted to the rank of Corporate Vice President for the same function. Mr. Rangasayee assumed the position of Corporate Vice President and General Manager, Communications Business Unit in October 2010. Mr. Rangasayee was promoted to the position of Senior Vice President, and General Manager, Communications Business Unit in April 2012. Prior to joining Xilinx, Mr. Rangasayee held various positions at Altera, a provider of programmable logic solutions, and Cypress Semiconductor, a semiconductor company. Vincent L. Tong joined the Company in May 1990 and has served in a number of key roles, including Vice President of Product Technology and as Vice President, Worldwide Quality and Reliability. In April 2008, he assumed his current position of Senior Vice President, Worldwide Quality and New Product Introductions and assumed the additional role of Executive Leader, Asia Pacific in October 2011. Prior to joining the Company, Mr. Tong served in a variety of engineering positions at Monolithic Memories, a producer of logic devices, and AMD. Mr. Tong serves on the board of the Global Semiconductor Alliance, a non- profit semiconductor organization. Frank A. Tornaghi joined the Company in February 2008 as Vice President, Worldwide Sales and assumed his current position of Senior Vice President, Worldwide Sales in April 2008. Prior to joining the Company, Mr. Tornaghi spent 22 years at LSI Corporation. Mr. Tornaghi acted as an independent consultant from April 2006 until he joined the Company. He served as Executive Vice President, Worldwide Sales at LSI Corporation from July 2001 to April 2006 and as Vice President, North America Sales, from May 1993 to July 2001. From 1984 until May 1993, Mr. Tornaghi held various management positions in sales at LSI Corporation. Additional Information We make available, via a link through our investor relations website located at www.investor.xilinx.com, access to our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the U.S. Securities Exchange Act of 1934, as amended (Exchange Act) as soon as reasonably practicable after they are electronically filed with or furnished to the Securities and Exchange Commission (SEC). All such filings on our investor relations website are available free of charge. Printed copies of these documents are also available to stockholders without charge, upon written request directed to Xilinx, Inc., Attn: Investor Relations, 2100 Logic Drive, San Jose, CA 95124. Further, a copy of this Annual Report on Form 10-K is located at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Information on the operation of the Public Reference Room can be obtained by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding our filings at http://www.sec.gov. The content on any website referred to in this filing is not incorporated by reference into this filing unless expressly noted otherwise. Additional information required by this Item 1 is incorporated by reference to the section captioned "Net Revenues - Net Revenues by Geography" in Item 7. "Management’s Discussion and Analysis of Financial Condition and Results of Operations" and to "Note 16. Segment Information" to our consolidated financial statements, included in Item 8. "Financial Statements and Supplementary Data." This annual report includes trademarks and service marks of Xilinx and other companies that are unregistered and registered in the U.S. and other countries. ITEM 1A. RISK FACTORS The following risk factors and other information included in this Annual Report on Form 10-K should be carefully considered. The risks and uncertainties described below are not the only risks to the Company. Additional risks and uncertainties not presently known to the Company, or that the Company’s management currently deems immaterial, also may impair its business operations. If any of the risks described below were to occur, our business, financial condition, operating results and cash flows could be materially adversely affected. 13 Our success depends on our ability to develop and introduce new products and failure to do so would have a material adverse impact on our financial condition and results of operations. Our success depends in large part on our ability to develop and introduce new products that address customer requirements and compete effectively on the basis of price, density, functionality, power consumption and performance. The success of new product introductions is dependent upon several factors, including: (cid:127) (cid:127) (cid:127) timely completion of new product designs; ability to generate new design opportunities and design wins; availability of specialized field application engineering resources supporting demand creation and customer adoption of new products; ability to utilize advanced manufacturing process technologies on circuit geometries of 28nm and smaller; achieving acceptable yields; ability to obtain adequate production capacity from our wafer foundries and assembly and test subcontractors; ability to obtain advanced packaging; availability of supporting software design tools; utilization of predefined IP logic; customer acceptance of advanced features in our new products; and (cid:127) (cid:127) (cid:127) (cid:127) (cid:127) (cid:127) (cid:127) (cid:127) market acceptance of our customers’ products. Our product development efforts may not be successful, our new products may not achieve industry acceptance and we may not achieve the necessary volume of production that would lead to further per unit cost reductions. Revenues relating to our mature products are expected to decline in the future, which is normal for our product life cycles. As a result, we may be increasingly dependent on revenues derived from design wins for our newer products as well as anticipated cost reductions in the manufacture of our current products. We rely primarily on obtaining yield improvements and corresponding cost reductions in the manufacture of existing products, and on introducing new products that incorporate advanced features and other price/performance factors that enable us to increase revenues while maintaining consistent margins. To the extent that such cost reductions and new product introductions do not occur in a timely manner, or to the extent that our products do not achieve market acceptance at prices with higher margins, our financial condition and results of operations could be materially adversely affected. We rely on independent foundries for the manufacture of all of our products and a manufacturing problem or insufficient foundry capacity could adversely affect our operations. Most of our wafers are manufactured in Taiwan by UMC and by TSMC for our newest products. In addition, we also have wafers manufactured in South Korea by Samsung. Terms with respect to the volume and timing of wafer production and the pricing of wafers produced by the semiconductor foundries are determined by periodic negotiations between Xilinx and these wafer foundries, which usually result in short-term agreements that do not provide for long-term supply or allocation commitments. We are dependent on these foundries, especially UMC, which supplies the substantial majority of our wafers. We rely on UMC, TSMC and our other foundries to produce wafers with competitive performance attributes. Therefore, the foundries, particularly TSMC who manufactures our newest products, must be able to transition to advanced manufacturing process technologies and increased wafer sizes, produce wafers at acceptable yields and deliver them in a timely manner. Furthermore, we cannot guarantee that the foundries that supply our wafers will offer us competitive pricing terms or other commercial terms important to our business. We cannot guarantee that our foundries will not experience manufacturing problems, including delays in the realization of advanced manufacturing process technologies or difficulties due to limitations of new and existing process technologies. Furthermore, we cannot guarantee the foundries will be able to manufacture sufficient quantities of our products or that they will continue to manufacture a product for the full life of the product. In addition, weak economic conditions may adversely impact the financial health and viability of the foundries and result in their insolvency or their inability to meet their commitments to us. For example, we may experience supply shortages due to the difficulties foundries may encounter if they must rapidly increase their production capacities from low utilization levels to high utilization levels because of an unexpected increase in demand. We may also experience supply shortages due to very strong demand for our products and a surge in demand for semiconductors in general, which may lead to tightening of foundry capacity across the industry. The insolvency of a foundry or any significant manufacturing problem or insufficient foundry capacity would disrupt our operations and negatively impact our financial condition and results of operations. General economic conditions and any related deterioration in the global business environment could have a material adverse effect on our business, operating results and financial condition. During the past five years, global consumer confidence eroded amidst concerns over declining asset values, inflation, volatility in energy costs, geopolitical issues, the availability and cost of credit, rising unemployment, and the stability and solvency of financial institutions, financial markets, businesses and sovereign nations, among other concerns. These concerns slowed global economic growth and resulted in recessions in numerous countries, including many of those in North America, Europe and Asia. The financial condition of certain sovereign nations, particularly in Europe, is of continuing concern as the sovereign debt crisis 14 remains unresolved. These weak economic conditions resulted in reduced customer demand and had a negative impact on our results of operations for the second and third quarter of fiscal 2012 and the third quarter of fiscal 2013. If weak economic conditions return, there may be a number of negative effects on our business, including customers or potential customers reducing or delaying orders, the insolvency of key suppliers, potentially causing production delays, the inability of customers to obtain credit, and the insolvency of one or more customers. Any of these effects could impact our ability to effectively manage inventory levels and collect receivables and ultimately decrease our net revenues and profitability. The semiconductor industry is characterized by cyclical market patterns and a significant industry downturn could adversely affect our operating results. The semiconductor industry is highly cyclical and our financial performance has been affected by downturns in the industry. Down cycles are generally characterized by price erosion and weaker demand for our products. Weaker demand for our products resulting from economic conditions in the end markets we serve and reduced capital spending by our customers can result, and in the past has resulted, in excess and obsolete inventories and corresponding inventory write-downs. We attempt to identify changes in market conditions as soon as possible; however, the dynamics of the market in which we operate make prediction of and timely reaction to such events difficult. Due to these and other factors, our past results are not reliable predictors of our future results. The nature of our business makes our revenues difficult to predict which could have an adverse impact on our business. In addition to the challenging market conditions we may face, we have limited visibility into the demand for our products, particularly new products, because demand for our products depends upon our products being designed into our end customers’ products and those products achieving market acceptance. Due to the complexity of our customers’ designs, the design to volume production process for our customers requires a substantial amount of time, frequently longer than a year. In addition, we are dependent upon "turns," orders received and turned for shipment in the same quarter. These factors make it difficult for us to forecast future sales and project quarterly revenues. The difficulty in forecasting future sales impairs our ability to project our inventory requirements, which could result, and in the past has resulted, in inventory write-downs or failure to meet customer product demands in a timely manner. In addition, difficulty in forecasting revenues compromises our ability to provide forward- looking revenue and earnings guidance. If we are not able to compete successfully in our industry, our financial results and future prospects will be adversely affected. Our PLDs compete in the logic IC industry, an industry that is intensely competitive and characterized by rapid technological change, increasing levels of integration, product obsolescence and continuous price erosion. We expect increased competition from our primary PLD competitors, Altera, Lattice and Microsemi, and from new market entrants. In addition, competition from the ASIC market and from the ASSP market continues. We believe that important competitive factors in the logic IC industry include: (cid:127) (cid:127) (cid:127) (cid:127) (cid:127) (cid:127) (cid:127) (cid:127) (cid:127) (cid:127) (cid:127) product pricing; time-to-market; product performance, reliability, quality, power consumption and density; field upgradeability; adaptability of products to specific applications; ease of use and functionality of software design tools; availability and functionality of predefined IP logic; inventory and supply chain management; access to leading-edge process technology and assembly capacity; ability to provide timely customer service and support; and access to advanced packaging technology. Our strategy for expansion in the logic market includes continued introduction of new product architectures that address high- volume, low-cost and low-power applications as well as high-performance, high-density applications. However, we may not be successful in executing this strategy. In addition, we anticipate continued pressure from our customers to reduce prices, which may outpace our ability to lower the cost for established products. Other competitors include manufacturers of: high-density programmable logic products characterized by FPGA type architectures; high-volume and low-cost FPGAs as programmable replacements for ASICs and ASSPs; (cid:127) (cid:127) (cid:127) ASICs and ASSPs with incremental amounts of embedded programmable logic; (cid:127) (cid:127) (cid:127) (cid:127) high-speed, low-density complex programmable logic devices; high-performance digital signal processing devices; products with embedded processors; products with embedded multi-gigabit transceivers; and 15 (cid:127) other new or emerging programmable logic products. Several companies have introduced products that compete with ours or have announced their intention to sell PLD products. To the extent that our efforts to compete are not successful, our financial condition and results of operations could be materially adversely affected. The benefits of programmable logic have attracted a number of competitors to this segment. We recognize that different applications require different programmable technologies, and we are developing architectures, processes and products to meet these varying customer needs. Recognizing the increasing importance of standard software solutions, we have developed common software design tools that support the full range of our IC products. We believe that automation and ease of design are significant competitive factors in this segment. We could also face competition from our licensees. In the past we have granted limited rights to other companies with respect to certain aspects of our older technology, and we may do so in the future. Granting such rights may enable these companies to manufacture and market products that may be competitive with some of our older products. Increased costs of wafers and materials, or shortages in wafers and materials, could adversely impact our gross margins and lead to reduced revenues. If greater demand for wafers is not offset by an increase in foundry capacity, market demand for wafers or production and assembly materials increases, or if a supplier of our wafers ceases or suspends operations, our supply of wafers and other materials could become limited. Such shortages raise the likelihood of potential wafer price increases, wafer shortages or shortages in materials at production and test facilities, resulting in potential inability to address customer product demands in a timely manner. For example, when certain suppliers were forced to temporarily halt production as the result of a natural disaster, this resulted in a tightening of supply for those materials. Such shortages of wafers and materials as well as increases in wafer or materials prices could adversely affect our gross margins and would adversely affect our ability to meet customer demands and lead to reduced revenue. We depend on distributors, primarily Avnet, to generate a majority of our sales and complete order fulfillment. Resale of product through Avnet accounted for 46% of our worldwide net revenues in fiscal 2014 and as of March 29, 2014, Avnet accounted for 55% of our total net accounts receivable. Any adverse change to our relationship with Avnet or our remaining distributors could have a material impact on our business. Furthermore, if a key distributor materially defaults on a contract or otherwise fails to perform, our business and financial results would suffer. In addition, we are subject to concentrations of credit risk in our trade accounts receivable, which includes accounts of our distributors. A significant reduction of effort by a distributor to sell our products or a material change in our relationship with one or more distributors may reduce our access to certain end customers and adversely affect our ability to sell our products. In addition, the financial health of our distributors and our continuing relationships with them are important to our success. Unpredictable economic conditions may adversely impact the financial health of some of these distributors, particularly our smaller distributors. This could result in the insolvency of certain distributors, the inability of distributors to obtain credit to finance the purchase of our products, or cause distributors to delay payment of their obligations to us and increase our credit risk exposure. Our business could be harmed if the financial health of these distributors impairs their performance and we are unable to secure alternate distributors. We are dependent on independent subcontractors for most of our assembly and test services, and unavailability or disruption of these services could negatively impact our financial condition and results of operations. We are dependent on subcontractors to provide semiconductor assembly, substrate, test and shipment services. Any prolonged inability to obtain wafers with competitive performance and cost attributes, adequate yields or timely delivery, any disruption in assembly, test or shipment services, delays in stabilizing manufacturing processes and ramping up volume for new products, transitions to new service providers or any other circumstance that would require us to seek alternative sources of supply, could delay shipments and have a material adverse effect on our ability to meet customer demands. In addition, unpredictable economic conditions may adversely impact the financial health and viability of these subcontractors and result in their insolvency or their inability to meet their commitments to us. These factors would result in reduced net revenues and could negatively impact our financial condition and results of operations. A number of factors, including our inventory strategy, can impact our gross margins. A number of factors, including yield, wafer pricing, product mix, market acceptance of our new products, competitive pricing dynamics, geographic and/or market segment pricing strategies can cause our gross margins to fluctuate. In addition, forecasting our gross margins is difficult because a significant portion of our business is based on turns within the same quarter. Our current inventory levels are higher than historical norms due to our decision to build ahead of a previously planned closure of a particular foundry process line at one of our foundry partners, weaker than anticipated sales and a planned increase in safety 16 stock across newer technologies in anticipation of future revenue growth. In the event demand does not materialize, we may be subject to incremental obsolescence costs. In addition, future product cost reductions could have an increased impact on our inventory valuation, which would then impact our operating results. Reductions in the average selling prices of our products could have a negative impact on our gross margins. The average selling prices of our products generally decline as the products mature. We seek to offset the decrease in selling prices through yield improvement, manufacturing cost reductions and increased unit sales. We also continue to develop higher value products or product features that increase, or slow the decline of, the average selling price of our products. However, there is no guarantee that our ongoing efforts will be successful or that they will keep pace with the decline in selling prices of our products, which could ultimately lead to a decline in revenues and have a negative effect on our gross margins. Because of our international business and operations, we are vulnerable to the economic conditions of the countries in which we operate and currency fluctuations could have a material adverse effect on our business and negatively impact our financial condition and results of operations. In addition to our U.S. operations, we also have significant international operations, including foreign sales offices to support our international customers and distributors, our regional headquarters in Ireland and Singapore and an R&D site in India. Our international operations have grown because we have established certain operations and administrative functions outside the U.S. Sales and operations outside of the U.S. subject us to the risks associated with conducting business in foreign economic and regulatory environments. Our financial condition and results of operations could be adversely affected by unfavorable economic conditions in countries in which we do significant business or by changes in foreign currency exchange rates affecting those countries. We derive over one-half of our revenues from international sales, primarily in the Asia Pacific region, Europe and Japan. Past economic weaknesses in these markets adversely affected revenues. Sales to all direct OEMs and distributors are denominated in U.S. dollars. While the recent movements of the Euro and Yen exchange rates against the U.S. dollar had no material impact to our business, increased volatility could impact our European and Japanese customers. Currency instability and volatility and disruptions in the credit and capital markets may increase credit risks for some of our customers and may impair our customers’ ability to repay existing obligations. Increased currency volatility could also positively or negatively impact our foreign-currency- denominated costs, assets and liabilities. In addition, any devaluation of the U.S. dollar relative to other foreign currencies may increase the operating expenses of our foreign subsidiaries adversely affecting our results of operations. Furthermore, because we are increasingly dependent on the global economy, instability in worldwide economic environments occasioned, for example, directly or indirectly by political instability, terrorist activity, U.S. or other military actions, and international sanctions or other diplomatic actions (potentially including sanctions adopted or under consideration by the U.S. or European Union with respect to Russia or Russian individuals or businesses), could adversely impact economic activity and lead to a contraction of capital spending by our customers generally or in specific regions. Any or all of these factors could adversely affect our financial condition and results of operations in the future. We are subject to the risks associated with conducting business operations outside of the U.S. which could adversely affect our business. In addition to international sales and support operations and development activities, we purchase our wafers from foreign foundries, have our commercial products assembled, packaged and tested by subcontractors located outside the U.S. and utilize third party warehouse operators to store and manage inventory levels for certain of our products. All of these activities are subject to the uncertainties associated with international business operations, including tax laws and regulations, trade barriers, economic sanctions, import and export regulations, duties and tariffs and other trade restrictions, changes in trade policies, anti-corruption laws, foreign governmental regulations, potential vulnerability of and reduced protection for IP, longer receivable collection periods and disruptions or delays in production or shipments, any of which could have a material adverse effect on our business, financial condition and/or operating results. Additional factors that could adversely affect us due to our international operations include rising oil prices and increased costs of natural resources. Moreover, our financial condition and results of operations could be affected in the event of political conflicts or economic crises in countries where our main wafer providers, warehouses, end customers and contract manufacturers who provide assembly and test services worldwide, are located. Adverse change to the circumstances or conditions of our international business operations could have a material adverse effect on our business. We are exposed to fluctuations in interest rates and changes in credit rating and in the market values of our portfolio investments which could have a material adverse impact on our financial condition and results of operations. Our cash, short-term and long-term investments represent significant assets that may be subject to fluctuating or even negative returns depending upon interest rate movements, changes in credit rating and financial market conditions. Global credit market disruptions and economic slowdown and uncertainty have in the past negatively impacted the values of various types of investment and non-investment grade securities. The global credit and capital markets may again 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. 17 Therefore, there is a risk that we may incur other-than-temporary impairment charges for certain types of investments should credit market conditions deteriorate or the underlying assets fail to perform as anticipated. Our future investment income may fall short of expectations due to changes in interest rates or if the decline in fair values of our debt securities is judged to be other than temporary. Furthermore, we may suffer losses in principal if we are forced to sell securities that have declined in market value due to changes in interest rates or financial market conditions. Our failure to protect and defend our IP could impair our ability to compete effectively. We rely upon patent, copyright, trade secret, mask work and trademark laws to protect our IP. We cannot provide assurance that such IP rights can be successfully asserted in the future or will not be invalidated, violated, circumvented or challenged. From time to time, third parties, including our competitors, have asserted against us patent, copyright and other IP rights to technologies that are important to us. Third parties may attempt to misappropriate our IP through electronic or other means or assert infringement claims against our indemnitees or us in the future. Such assertions by third parties may result in costly litigation, indemnity claims or other legal actions, and we may not prevail in such matters or be able to license any valid and infringed patents from third parties on commercially reasonable terms. This could result in the loss of our ability to import and sell our products or require us to pay costly royalties to third parties in connection with sales of our products. Any infringement claim, indemnification claim, or impairment or loss of use of our IP could materially adversely affect our financial condition and results of operations. Our ability to design and introduce new products in a timely manner is dependent upon third-party IP. In the design and development of new products and product enhancements, we rely on third-party intellectual property such as software development tools and hardware testing tools. Furthermore, certain product features may rely on intellectual property acquired from third parties. The design requirements necessary to meet future consumer demands for more features and greater functionality from semiconductor products may exceed the capabilities of the third-party intellectual property or development tools that are available to us. If the third-party intellectual property that we use becomes unavailable or fails to produce designs that meet consumer demands, our business could be adversely affected. We rely on information technology systems, and failure of these systems to function properly or unauthorized access to our systems could result in business disruption. We rely in part on various information technology (IT) systems to manage our operations, including financial reporting, and we regularly evaluate these systems and make changes to improve them as necessary. Consequently, we periodically implement new, or upgrade or enhance existing, operational and IT systems, procedures and controls. For example, in the third quarter of fiscal 2012 we upgraded the IT systems we use to manage our operations and record and report financial information, and in the past we simplified our supply chain and were required to make certain changes to our IT systems. Any delay in the implementation of, or disruption in the transition to, new or enhanced systems, procedures or controls, could harm our ability to record and report financial and management information on a timely and accurate basis. These systems are also subject to power and telecommunication outages or other general system failures. Failure of our IT systems or difficulties in managing them could result in business disruption. We also may be subject to unauthorized access to our IT systems through a security breach or attack. In the past there have been attempts by third parties to penetrate and/or infect our network and systems with malicious software, in an effort to gain access to our network and systems. We seek to detect and investigate any security incidents and prevent their recurrence, but in some cases, we might be unaware of an incident or its magnitude and effects. Our business could be significantly harmed and we could be subject to third party claims in the event of such a security breach. Earthquakes and other natural disasters could disrupt our operations and have a material adverse effect on our financial condition and results of operations. The independent foundries upon which we rely to manufacture our products, as well as our California and Singapore facilities, are located in regions that are subject to earthquakes and other natural disasters. UMC’s and TSMC's foundries in Taiwan and our assembly and test partners in other regions as well as many of our operations in California are centered in areas that have been seismically active in the recent past and some areas have been affected by other natural disasters such as typhoons. Any catastrophic event in these locations will disrupt our operations, including our manufacturing activities and our insurance may not cover losses resulting from such disruptions of our operations. This type of disruption could result in our inability to manufacture or ship products, thereby materially adversely affecting our financial condition and results of operations. For example, as a result of the March 2011 earthquake in Japan, production at the Seiko foundry at Sakata was halted temporarily, impacting production of some of our older devices. In addition, suppliers of wafers and substrates were forced to halt production temporarily. Disruption of operations at these foundries for any reason, including other natural disasters such as typhoons, tsunamis, volcano eruptions, fires or floods, as well as disruptions in access to adequate supplies of electricity, natural gas or water could cause delays in shipments of our products, and could have a material adverse effect on our results of operations. Furthermore, natural disasters can also indirectly impact us. For example, our customers’ supply of other complimentary products may be disrupted by a natural disaster and may cause them to delay orders of our products. 18 If we are unable to maintain effective internal controls, our stock price could be adversely affected. We are subject to the ongoing internal control provisions of Section 404 of the Sarbanes-Oxley Act of 2002 (the Act). Our controls necessary for continued compliance with the Act may not operate effectively at all times and may result in a material weakness disclosure. The identification of material weaknesses in internal control, if any, could indicate a lack of proper controls to generate accurate financial statements and could cause investors to lose confidence and our stock price to drop. We compete with others to attract and retain key personnel, and any loss of, or inability to attract, such personnel would harm us. We depend on the efforts and abilities of certain key members of management and other technical personnel. Our future success depends, in part, upon our ability to retain such personnel and attract and retain other highly qualified personnel, particularly product engineers. Competition for such personnel is intense and we may not be successful in hiring or retaining new or existing qualified personnel. From time to time we have effected restructurings which eliminate a number of positions. Even if such personnel are not directly affected by the restructuring effort, such terminations can have a negative impact on morale and our ability to attract and hire new qualified personnel in the future. If we lose existing qualified personnel or are unable to hire new qualified personnel, as needed, our business, financial condition and results of operations could be seriously harmed. Unfavorable results of legal proceedings could adversely affect our financial condition and operating results. From time to time we are subject to various legal proceedings and claims that arise out of the ordinary conduct of our business. The amount of damages alleged in certain legal claims may be significant. For example, in December 2013, we entered into a Settlement and License Agreement with PACT in which the parties agreed to dismiss with prejudice all outstanding patent litigation among us, Avnet and PACT. As part of the settlement, we agreed to pay PACT a lump sum of $33.5 million. Certain other claims involving the Company are not yet resolved, including those that are discussed under Item 3. "Legal Proceedings," included in Part I of this Form 10-K, and additional claims may arise in the future. Results of legal proceedings cannot be predicted with certainty. Regardless of its merit, litigation may be both time-consuming and disruptive to our operations and cause significant expense and diversion of management attention and we may enter into material settlements to avoid these risks. Should we fail to prevail in certain matters, or should several of these matters be resolved against us in the same reporting period, we may be faced with significant monetary damages or injunctive relief against us that would materially and adversely affect a portion of our business and might materially and adversely affect our financial condition and operating results. Our products could have defects which could result in reduced revenues and claims against us. We develop complex and evolving products that include both hardware and software. Despite our testing efforts and those of our subcontractors, defects may be found in existing or new products. These defects may cause us to incur significant warranty, support and repair or replacement costs, divert the attention of our engineering personnel from our product development efforts and harm our relationships with customers. Subject to certain terms and conditions, we have agreed to compensate certain customers for limited specified costs they actually incur in the event our hardware products experience epidemic failure. As a result, epidemic failure and other performance problems could result in claims against us, the delay or loss of market acceptance of our products and would likely harm our business. Our customers could also seek damages from us for their losses. In addition, we could be subject to product liability claims. A product liability claim brought against us, even if unsuccessful, would likely be time-consuming and costly to defend. Product liability risks are particularly significant with respect to aerospace, automotive and medical applications because of the risk of serious harm to users of these products. Any product liability claim, whether or not determined in our favor, could result in significant expense, divert the efforts of our technical and management personnel, and harm our business. In preparing our financial statements, we make good faith estimates and judgments that may change or turn out to be erroneous. In preparing our financial statements in conformity with accounting principles generally accepted in the U.S., we must make estimates and judgments in applying our most critical accounting policies. Those estimates and judgments have a significant impact on the results we report in our consolidated financial statements. The most difficult estimates and subjective judgments that we make concern valuation of marketable and non-marketable securities, revenue recognition, inventories, long-lived assets including acquisition-related intangibles, goodwill, taxes and stock-based compensation. We base our estimates on historical experience, input from outside experts and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We also have other key accounting policies that are not as subjective, and therefore, their application would not require us to make estimates or judgments that are as difficult, but which nevertheless could significantly affect our financial reporting. Actual results may differ materially from these estimates. If these estimates or their related assumptions change, our operating results for the periods in which we revise our estimates or assumptions could be adversely and perhaps materially affected. 19 The conditional conversion features of our 2.625% Senior Convertible Debentures due June 15, 2017 (2017 Convertible Notes) were triggered and holders of the 2017 Convertible Notes may elect to convert such 2017 Convertible Notes which could have a material effect on our liquidity. The 2017 Convertible Notes have conditional conversion features which were triggered in fiscal 2013. Holders of the 2017 Convertible Notes are entitled to convert the 2017 Convertible Notes at any time during specified periods at their option. As a result of this, we were required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the 2017 Convertible Notes as a current rather than long-term liability. In addition, we were required to increase the number of shares used in our per share calculations to reflect the potentially dilutive impact of the conversion. If one or more holders elect to convert their 2017 Convertible Notes, we would be required to settle any converted principal through the payment of cash, which could adversely affect our liquidity. Our failure to comply with the requirements of the International Traffic and Arms Regulations could have a material adverse effect on our financial condition and results of operations. Certain Xilinx space-grade FPGAs and related technologies are subject to the International Traffic in Arms Regulations (ITAR), which are administered by the U.S. Department of State. The ITAR governs the export and re-export of these FPGAs, the transfer of related technical data and the provision of defense services, as well as offshore production, test and assembly. We are required to maintain an internal compliance program and security infrastructure to meet ITAR requirements. An inability to obtain the required export licenses, or to predict when they will be granted, increases the difficulties of forecasting shipments. In addition, security or compliance program failures that could result in penalties or a loss of export privileges, as well as stringent ITAR licensing restrictions that may make our products less attractive to overseas customers, could have a material adverse effect on our business, financial condition and/or operating results. Our inability to effectively control the sale of our products on the gray market could have a material adverse effect on us. We market and sell our products directly to OEMs and through authorized third-party distributors which helps to ensure that products delivered to our customers are authentic and properly handled. From time to time, customers may purchase products bearing our name from the unauthorized "gray market." These parts may be counterfeit, salvaged or re-marked parts, or parts that have been altered, mishandled, or damaged. Gray market products result in shadow inventory that is not visible to us, thus making it difficult to forecast supply or demand. Also, when gray market products enter the market, we and our authorized distributors may compete with brokers of these discounted products, which can adversely affect demand for our products and negatively impact our margins. In addition, our reputation with customers may be negatively impacted when gray market products bearing our name fail or are found to be substandard. The conflict minerals provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act could result in additional costs and liabilities. In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC established new disclosure and reporting requirements for those companies who use "conflict" minerals mined from the Democratic Republic of Congo and adjoining countries in their products, whether or not these products are manufactured by third parties. These new requirements could affect the sourcing and availability of minerals used in the manufacture of our semiconductor products. There will also be costs associated with complying with the disclosure requirements, including for due diligence in regard to the sources of any conflict minerals used in our products, in addition to the cost of remediation and other changes to products, processes, or sources of supply as a consequence of such verification activities. We may face reputational challenges if we are unable to sufficiently verify the origins for all minerals used in our products through the due diligence process we implement. Moreover, we may encounter challenges to satisfy those customers who require that all of the components of our products are certified as conflict free. Considerable amounts of our common shares are available for issuance under our equity incentive plans and 2017 Convertible Notes, and significant issuances in the future may adversely impact the market price of our common shares. As of March 29, 2014 we had 2.00 billion authorized common shares, of which 268.6 million shares were outstanding. In addition, 36.9 million common shares were reserved for issuance pursuant to our equity incentive plans and Employee Stock Purchase Plan, 20.0 million common shares were reserved for issuance upon conversion or repurchase of the 2017 Convertible Notes and 20.0 million common shares were reserved for issuance upon exercise of warrants. The availability of substantial amounts of our common shares resulting from the exercise or settlement of equity awards outstanding under our equity incentive plans or the 20 conversion or repurchase of convertible debentures using common shares, which would be dilutive to existing stockholders, could adversely affect the prevailing market price of our common shares and could impair our ability to raise additional capital through the sale of equity securities. We have indebtedness that could adversely affect our financial position and prevent us from fulfilling our debt obligations. The aggregate amount of our consolidated indebtedness as of March 29, 2014 was $1.60 billion (principal amount), which includes $500.0 million in aggregate principal amount of our 2.125% Notes due 2019 (2019 Notes), $500.0 million in aggregate principal amount of our 3.000% Notes due 2021 (2021 Notes) and $600.0 million in aggregate principal amount of our 2017 Convertible Notes. We also may incur additional indebtedness in the future. Our indebtedness may: (cid:127) make it difficult for us to satisfy our financial obligations, including making scheduled principal and interest payments on the debentures and our other indebtedness; limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions or other general corporate purposes; limit our ability to use our cash flow or obtain additional financing for future working capital, capital expenditures, acquisitions or other general business purposes; require us to use a portion of our cash flow from operations to make debt service payments; limit our flexibility to plan for, or react to, changes in our business and industry; place us at a competitive disadvantage compared to our less leveraged competitors; increase our vulnerability to the impact of adverse economic and industry conditions; and require us to repatriate off-shore cash to the U.S. at unfavorable tax rates. (cid:127) (cid:127) (cid:127) (cid:127) (cid:127) (cid:127) (cid:127) Our ability to meet our debt service obligations will depend on our future performance, which will be subject to financial, business and other factors affecting our operations, many of which are beyond our control. The agreements governing the 2019 Notes and 2021 Notes contain covenants that may adversely affect our ability to operate our business. The indentures governing the 2019 Notes and 2021 Notes contain various covenants limiting our and our subsidiaries’ ability to, among other things: (cid:127) (cid:127) (cid:127) create certain liens on principal property or the capital stock of certain subsidiaries; enter into certain sale and leaseback transactions with respect to principal property; consolidate or merge with, or convey, transfer or lease all or substantially all our assets, taken as a whole, to, another person. A failure to comply with these covenants and other provisions in these indentures could result in events of default under the indentures, which could permit acceleration of the 2019 Notes and the 2021 Notes. Any required repayment as a result of such acceleration could have a material adverse effect on our business, results of operations, financial condition or cash flows. The call options and warrant transactions related to our 2017 Convertible Notes may affect the value of the debentures and our common stock. To hedge against potential dilution upon conversion of the 2017 Convertible Notes, we purchased call options on our common stock from the hedge counterparties. We also sold warrants to the hedge counterparties, which could separately have a dilutive effect on our earnings per share to the extent that the market price per share of our common stock exceeds the applicable strike price of the warrants of $42.46 per share. As the hedge counterparties and their respective affiliates modify hedge positions, they may enter or unwind various derivatives with respect to our common stock and/or purchase or sell our common stock in secondary market transactions. This activity also could affect the market price of our common stock and/or debentures, which could affect the ability of the holders of the debentures to convert and the number of shares and value of the consideration that will be received by the holders of the debentures upon conversion. Acquisitions and strategic investments present risks, and we may not realize the goals that were contemplated at the time of a transaction. We recently acquired technology companies whose products complement our products, and in the past we have made a number of strategic investments in other technology companies. We may make similar acquisitions and strategic investments in the future. Acquisitions and strategic investments present risks, including: (cid:127) our ongoing business may be disrupted and our management’s attention may be diverted by investment, acquisition, transition or integration activities; 21 (cid:127) (cid:127) an acquisition or strategic investment may not further our business strategy as we expected, and we may not integrate an acquired company or technology as successfully as we expected; our operating results or financial condition may be adversely impacted by claims or liabilities that we assume from an acquired company or technology or that are otherwise related to an acquisition; (cid:127) we may have difficulty incorporating acquired technologies or products with our existing product lines; (cid:127) we may have higher than anticipated costs in continuing support and development of acquired products, and in general and administrative functions that support such products; our strategic investments may not perform as expected; and (cid:127) (cid:127) we may experience unexpected changes in how we are required to account for our acquisitions and strategic investments pursuant to U.S. GAAP. The occurrence of any of these risks could have a material adverse effect on our business, results of operations, financial condition or cash flows, particularly in the case of a larger acquisition or several concurrent acquisitions or strategic investments. ITEM 1B. UNRESOLVED STAFF COMMENTS Not applicable. ITEM 2. PROPERTIES Our corporate offices, which include the administrative, sales, customer support, marketing, R&D and manufacturing and testing groups, are located in San Jose, California. This main site consists of adjacent buildings providing 588,000 square feet of space, which we own. Excess space in this facility is leased to tenants under multi-year lease agreements. We also own two parcels of land totaling approximately 121 acres in South San Jose near our corporate facility. At present, we do not have any plans to develop the land. We own a 228,000 square foot facility in the metropolitan area of Dublin, Ireland, which serves as our regional headquarters in Europe. The Irish facility is primarily used for service and support for our customers in Europe, R&D, marketing and IT support. We own a 222,000 square foot facility in Singapore, which serves as our Asia Pacific regional headquarters. We own the building but the land is subject to a 30-year lease expiring in November 2035. The Singapore facility is primarily used for manufacturing support and testing of our products and services for our customers in Asia Pacific/Japan, coordination and management of certain third parties in our supply chain and R&D. We own a 130,000 square foot facility in Longmont, Colorado. The Longmont facility serves as the primary location for our software efforts in the areas of R&D, manufacturing and quality control. In addition, we own a 200,000 square foot facility and 40 acres of land adjacent to the Longmont facility for future expansion. The facility is partially leased to tenants under long-term lease agreements and partially used by us. We lease office facilities for our engineering design centers in Hyderabad, India; Portland, Oregon; Albuquerque, New Mexico; Edinburgh, Scotland; Ottawa, Canada; Beijing, China; Belfast, Northern Ireland; Cork, Ireland; Hazlet, New Jersey; Gothenberg, Sweden; Tallinn, Estonia and Brisbane, Australia. We also lease sales offices in various locations throughout North America, which include the metropolitan areas of Chicago, Dallas, Detroit, Montreal, Nashua, Phoenix, Raleigh, San Diego, Seattle and Toronto as well as international sales offices located in the metropolitan areas of Bangalore, Beijing, Chengdu, Brussels, Helsinki, Hong Kong, London, Milan, Munich, Nanjing, Osaka, Paris, Seoul, Shanghai, Shenzhen, Stockholm, Taichung, Taipei, Tel Aviv, Tokyo and Xi’an. ITEM 3. LEGAL PROCEEDINGS Patent Litigation On February 14, 2011, we filed a complaint for declaratory judgment of patent non-infringement and invalidity against Intellectual Ventures in the U.S. District Court for the Northern District of California. On September 30, 2011, we amended our complaint in this case to eliminate certain defendants and patents from the action (Xilinx, Inc. v. Intellectual Ventures I LLC and Intellectual Ventures II LLC, Case No CV11-0671) (California Case I). The lawsuit pertained to one patent and sought judgment of non- infringement by Xilinx and judgment that the patent is invalid and unenforceable, as well as costs and attorneys’ fees. On February 15, 2011, Intellectual Ventures added us as a defendant in its complaint for patent infringement previously filed against Altera, Microsemi and Lattice in the U.S. District Court for the District of Delaware (Intellectual Ventures I LLC and 22 Intellectual Ventures II LLC v. Altera Corporation, Microsemi Corporation, Lattice Semiconductor Corporation and Xilinx, Inc., Case No. 10-CV-1065) (Delaware Case). The lawsuit pertained to five patents, four of which we were alleged to be infringing. Intellectual Ventures sought unspecified damages, interest and attorneys’ fees. Altera, Microsemi and Lattice were previously dismissed from the case with prejudice. On October 17, 2011, we filed a complaint for patent non-infringement and invalidity and violation of California Business and Professions Code Section 17200 in the U.S. District Court for the Northern District of California against Intellectual Ventures and related entities as well as additional defendants (Xilinx, Inc. v. Intellectual Ventures, LLC. Intellectual Ventures Management, LLC, Detelle Relay KG, LLC, Roldan Block NY LLC, Latrosse Technologies LLC, TR Technologies Foundation LLC, Taichi Holdings, LLC, Noregin Assets N.V., LLC and Intellectual Venture Funding LLC Case No CV-04407) (California Case II). By order dated January 25, 2012, the Court granted with leave to amend defendants' motion to dismiss our claim for violation of California Business and Professions Code section 17200. We amended our complaint to remove the claim for violation of California Business and Professions Code section 17200. The remainder of the lawsuit pertained to two patents and sought judgments of non-infringement by us and judgments that the patents are invalid and unenforceable, as well as costs and attorneys’ fees. On May 1, 2014, we entered into a confidential settlement agreement with Intellectual Ventures. Under the terms of the settlement, Intellectual Ventures agreed to dismiss with prejudice all outstanding patent litigation against us. On May 2, 2014, the U.S. District Court for the Northern District of California dismissed California Case I and California Case II and the U.S. District Court for the District of Delaware dismissed the Delaware Case. On November 5, 2012, a patent infringement lawsuit was filed by Mosaid against us in the U.S. District Court for the Eastern District of Texas (Mosaid Technologies Inc. v. Xilinx, Inc., Case No. 6:12-CV-00847). The lawsuit pertains to five patents and Mosaid seeks unspecified damages, costs, fees, royalties and injunctive relief and the proceedings are in their early stages. We are unable to estimate our range of possible loss in this matter at this time. We intend to continue to protect and defend our IP vigorously. Other Matters From time to time, we are involved in various disputes and litigation matters that arise in the ordinary course of our 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, we review the status of each matter and assess 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, we accrue 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, we continue to reassess the potential liability related to pending claims and litigation and may revise estimates. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 23 PART II ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock trades on the NASDAQ Global Select Market under the symbol XLNX. As of May 7, 2014, there were approximately 550 stockholders of record. Since many holders’ shares are listed under their brokerage firms’ names, the actual number of stockholders is estimated by us to be over 135,000. The following table sets forth the high and low closing sale prices, for the periods indicated, for our common stock as reported by the NASDAQ Global Select Market: Fiscal 2014 Fiscal 2013 High Low High Low First Quarter Second Quarter Third Quarter Fourth Quarter $ 41.33 $ 35.51 $ 36.72 $ 47.99 47.45 55.07 39.65 42.99 45.02 35.31 36.30 39.14 Dividends Declared Per Common Share The following table presents the quarterly dividends declared on our common stock for the periods indicated: First Quarter Second Quarter Third Quarter Fourth Quarter $ $ Fiscal 2014 0.25 0.25 0.25 0.25 31.00 30.63 32.17 35.61 Fiscal 2013 0.22 0.22 0.22 0.22 On February 11, 2014, our Board of Directors declared a cash dividend of $0.29 per common share for the first quarter of fiscal 2015. The dividend is payable on June 4, 2014 to stockholders of record on May 14, 2014. Securities Authorized for Issuance Under Equity Compensation Plans See "Equity Compensation Plan Information," included in Item 12. "Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters" in Part III of this Form 10-K for information regarding our equity compensation plans. Issuer Purchases of Equity Securities The following table summarizes the Company's repurchase of its common stock during the fourth quarter of fiscal 2014. (In thousands, except per share amounts) Period December 29, 2013 to February 1, 2014 February 2 to March 1, 2014 March 2 to March 29, 2014 Total for Quarter Total Number of Shares Purchased Average Price Paid per Share — 51.26 — $ $ 487 923 1,410 $ $ 54.20 53.18 Total Number of Shares Purchased as Part of Publicly Announced Program (1) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program — $ $ 487 923 $ 1,410 572,321 547,344 497,348 (1) In August 2012, the Board authorized the repurchase of $750.0 million of the Company’s common stock (2012 Repurchase Program). The 2012 Repurchase Program has no stated expiration date. Through March 29, 2014, the Company had used $252.7 million of the $750.0 million authorized under the 2012 Repurchase 24 Program, leaving $497.3 million available for future repurchases. The Company’s current policy is to retire all repurchased shares, and consequently, no treasury shares were held as of March 29, 2014 and March 30, 2013. See "Note 14. Stockholders’ Equity" to our consolidated financial statements, included in Item 8. "Financial Statements and Supplementary Data" for information regarding our stock repurchase plans. Company Stock Price Performance The following graph shows a comparison of cumulative total return for our common stock, the Standard & Poor’s 500 Stock Index (S&P 500 Index), and the Standard & Poor’s 500 Semiconductors Index (S&P 500 Semiconductors Index). The graph covers the period from March 27, 2009, the last trading day before our fiscal 2009, to March 29, 2014, the last trading day of our fiscal 2014. The graph and table assume that $100 was invested on March 27, 2009 in our common stock, the S&P 500 Index and the S&P 500 Semiconductors Index and that all dividends were reinvested. Company / Index Xilinx, Inc. S&P 500 Index S&P 500 Semiconductors Index 03/27/09 04/01/10 04/01/11 03/30/12 03/28/13 03/28/14 100.00 100.00 100.00 135.47 147.54 152.49 173.50 170.21 165.73 201.34 183.82 195.10 216.27 209.49 176.36 312.16 253.26 226.95 Note: Stock price performance and indexed returns for our common stock are historical and are not indicators of future price performance or future investment returns. 25 ITEM 6. SELECTED FINANCIAL DATA Consolidated Statement of Income Data Five years ended March 29, 2014 (In thousands, except per share amounts) Net revenues Operating income Income before income taxes Provision for income taxes Net income Net income per common share: Basic Diluted Shares used in per share calculations: Basic Diluted Cash dividends per common share March 29, 2014 (1) $ 2,382,531 March 30, 2013 $ 2,168,652 March 31, 2012 (2) $ 2,240,736 April 2, 2011 (3) $ 2,369,445 April 3, 2010 (4) $ 1,833,554 748,927 709,526 79,138 630,388 580,732 547,006 59,470 487,536 627,773 597,051 66,972 530,079 795,399 771,080 129,205 641,875 432,149 421,765 64,281 357,484 $ $ $ 2.37 2.19 266,431 287,396 1.00 $ $ $ 1.86 1.79 261,652 272,753 0.88 $ $ $ 2.01 1.95 263,783 272,157 0.76 $ $ $ 2.43 2.39 264,094 268,061 0.64 $ $ $ 1.30 1.29 276,012 276,953 0.60 (1) Fiscal 2014 consolidated statement of income data included litigation charges of $9,410 and loss on extinguishment of convertible debentures of $9,848. (2) Fiscal 2012 consolidated statement of income data included restructuring and litigation charges of $3,369 and $15,400, respectively. (3) Fiscal 2011 consolidated statement of income data included restructuring charges of $10,346 and impairment loss on investments of $5,904. (4) Fiscal 2010 consolidated statement of income data included restructuring charges of $30,064 and impairment loss on investments of $3,805. Consolidated Balance Sheet Data Five years ended March 29, 2014 (In thousands) Working capital Total assets Long-term debt Other long-term liabilities Stockholders' equity 2014 $ 2,077,787 2013 $ 1,910,851 2012 $ 2,107,533 2011 $ 2,254,646 2010 $ 1,549,905 5,037,349 993,870 266,438 2,752,682 4,729,451 922,666 456,701 2,963,296 4,464,122 906,569 507,092 2,707,685 4,140,850 890,980 467,113 2,414,617 3,184,318 354,798 351,889 2,120,470 26 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This discussion and analysis of financial condition and results of operations should be read in conjunction with our consolidated financial statements and accompanying notes included in Item 8. "Financial Statements and Supplementary Data." Cautionary Statement The statements in this Management’s Discussion and Analysis that are forward-looking, within the meaning of the Private Securities Litigation Reform Act of 1995, involve numerous risks and uncertainties and are based on current expectations. The reader should not place undue reliance on these forward-looking statements. Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including those risks discussed under "Risk Factors" and elsewhere in this document. Often, forward-looking statements can be identified by the use of forward-looking words, such as "anticipates," "believes," "continue," "could," "estimates," "expects," "intends," "may," "plans," "projects," "should," "will," "would" and other similar terminology, or the negative of such terms. We disclaim any responsibility to update or revise any forward-looking statement provided in this Management’s Discussion and Analysis for any reason. Nature of Operations We design, develop and market 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 our programmable platforms, we provide design services, customer training, field engineering and technical support. Our PLDs include FPGAs, CPLDs and programmable SoCs. These devices are standard products that our customers program to perform desired logic functions. Our products are designed to provide high integration and quick time-to-market for electronic equipment manufacturers in end markets such as wired and wireless communications, industrial, scientific and medical, aerospace and defense, consumer and automotive, audio, video and broadcast, and data processing. We sell our products globally through independent domestic and foreign distributors and through direct sales to OEMs by a network of independent sales representative firms and by a direct sales management organization. Critical Accounting Policies and Estimates The methods, estimates and judgments we use in applying our most critical accounting policies have a significant impact on the results we report in our consolidated financial statements. The SEC has defined critical accounting policies as those that are most important to the portrayal of our financial condition and results of operations and require us to make our most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, our critical accounting policies include: valuation of marketable securities, which impacts losses on debt and equity securities when we record impairments; revenue recognition, which impacts the recording of revenues; and valuation of inventories, which impacts cost of revenues and gross margin. Our critical accounting policies also include: the assessment of impairment of long-lived assets including acquisition-related intangibles, which impacts their valuation; the assessment of the recoverability of goodwill, which impacts goodwill impairment; accounting for income taxes, which impacts the provision or benefit recognized for income taxes, as well as, the valuation of deferred tax assets recorded on our consolidated balance sheet; and valuation and recognition of stock- based compensation, which impacts gross margin, research and development (R&D) expenses, and selling, general and administrative (SG&A) expenses. Below, we discuss these policies further, as well as the estimates and judgments involved. We also have other key accounting policies that are not as subjective, and therefore, their application would not require us to make estimates or judgments that are as difficult, but which nevertheless could significantly affect our financial reporting. Valuation of Marketable Securities Our short-term and long-term investments include marketable debt securities. As of March 29, 2014, we had marketable debt securities with a fair value of $3.39 billion. We determine the fair values for marketable debt securities using industry standard pricing services, data providers and other third- party sources and by internally performing valuation testing and analyses. See "Note 3. Fair Value Measurements" to our consolidated financial statements, included in Item 8. "Financial Statements and Supplementary Data," for details of the valuation methodologies. In determining if and when a decline in value below 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. We did not record any other-than-temporary impairment for marketable debt or equity securities in fiscal 2014, 2013 or 2012. 27 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 2014, approximately 56% of our 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. We maintain 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 estimated amount of gross margin expected to be realized when distributors sell through product purchased from us. Accounts receivable from distributors are recognized and inventory is relieved when title to inventories transfers, typically upon shipment from Xilinx at which point we have a legally enforceable right to collection under normal payment terms. As of March 29, 2014, we had $75.2 million of deferred revenue and $20.1 million of deferred cost of revenues recognized as a net $55.1 million of deferred income on shipments to distributors. As of March 30, 2013, we had $71.3 million of deferred revenue and $17.9 million of deferred cost of revenues recognized as a net $53.4 million of deferred income on shipments to distributors. The deferred income on shipments to distributors that will ultimately be recognized in our 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 our direct customers is recognized upon shipment provided that persuasive evidence of a sales arrangement exists, the price is fixed, 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 formal acceptance provisions with our direct customers. Revenue from software licenses is deferred and recognized as revenue over the term of the licenses of one year. Revenue from 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. Valuation of Inventories Inventories are stated at the lower of actual cost (determined using the first-in, first-out method) or market (estimated net realizable value). The valuation of inventory requires us to estimate excess or obsolete inventory as well as inventory that is not of salable quality. We review and set standard costs quarterly to approximate current actual manufacturing costs. Our manufacturing overhead standards for product costs are calculated assuming full absorption of actual spending over actual volumes, adjusted for excess capacity. Given the cyclicality of the market, the obsolescence of technology and product lifecycles, we write down inventory based on forecasted demand and technological obsolescence. These forecasts are developed based on inputs from our 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 we use in the valuation of inventory are the basis for our published revenue forecasts, which are also consistent with our short-term manufacturing plans. The differences between our demand forecast and the actual demand in the recent past have not resulted in any material write down in our inventory. If our demand forecast for specific products is greater than actual demand and we fail to reduce manufacturing output accordingly, we could be required to write down additional inventory, which would have a negative impact on our gross margin. Impairment of Long-Lived Assets Including Acquisition-Related Intangibles Long-lived assets and certain identifiable intangible assets to be held and used are reviewed 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, we estimate 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. Factors affecting impairment of assets held for use include the ability of the specific assets to generate separately identifiable positive cash flows. 28 When assets are removed from operations and held for sale, we estimate impairment losses as the excess of the carrying value of the assets over their fair value. Market conditions are amongst the factors affecting impairment of assets held for sale. Changes in any of these factors could necessitate impairment recognition in future periods for assets held for use or assets held for sale. Long-lived assets such as other intangible assets and property, plant and equipment are considered non-financial assets, and are only measured at fair value when indicators of impairment exist. Goodwill Goodwill is not amortized but is subject to impairment tests on an annual basis, or more frequently if indicators of potential impairment exist, and goodwill is written down when it is determined to be impaired. We perform an annual impairment review in the fourth quarter of each fiscal year and compare the fair value of the reporting unit in which the goodwill resides to its carrying value. If the carrying value exceeds the fair value, the goodwill of the reporting unit is potentially impaired. For purposes of impairment testing, Xilinx operates as a single reporting unit. We use the quoted market price method to determine the fair value of the reporting unit. Based on the impairment review performed during the fourth quarter of fiscal 2014, there was no impairment of goodwill in fiscal 2014. Unless there are indicators of impairment, our next impairment review for goodwill will be performed and completed in the fourth quarter of fiscal 2015. To date, no impairment indicators have been identified. Accounting for Income Taxes Xilinx is a multinational corporation operating in multiple tax jurisdictions. We must determine the allocation of income to each of these jurisdictions based on estimates and assumptions and apply the appropriate tax rates for these jurisdictions. We undergo routine audits by taxing authorities regarding the timing and amount of deductions and the allocation of income among various tax jurisdictions. Tax audits often require an extended period of time to resolve and may result in income tax adjustments if changes to the allocation are required between jurisdictions with different tax rates. In determining income for financial statement purposes, we must make certain estimates and judgments. These estimates and judgments occur in the calculation of certain tax liabilities and in the determination of the recoverability of certain deferred tax assets, which arise from temporary differences between the tax and financial statement recognition of revenue and expense. Additionally, we must estimate the amount and likelihood of potential losses arising from audits or deficiency notices issued by taxing authorities. The taxing authorities’ positions and our assessment can change over time resulting in a material effect on the provision for income taxes in periods when these changes occur. We must also assess the likelihood that we will be able to recover our deferred tax assets. If recovery is not likely, we must increase our provision for taxes by recording a reserve in the form of a valuation allowance for the deferred tax assets that we estimate will not ultimately be recoverable. We perform a two-step approach to recognize and measure uncertain tax positions relating to accounting for income taxes. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being ultimately realized. See "Note 15. Income Taxes" to our consolidated financial statements included in Item 8. "Financial Statements and Supplementary Data." Stock-Based Compensation Determining the appropriate fair-value model and calculating the fair value of stock-based awards at the date of grant requires judgment. We use the Black-Scholes option-pricing model to estimate the fair value of employee stock options and rights to purchase shares under our Employee Stock Purchase Plan. Option pricing models, including the Black-Scholes model, also require the use of input assumptions, including expected stock price volatility, expected life, expected dividend rate, expected forfeiture rate and expected risk-free rate of return. We use implied volatility based on traded options in the open market as we believe implied volatility is more reflective of market conditions and a better indicator of expected volatility than historical volatility. In determining the appropriateness of implied volatility, we considered: the volume of market activity of traded options, and determined there was sufficient market activity; the ability to reasonably match the input variables of traded options to those of options granted by us, such as date of grant and the exercise price, and determined the input assumptions were comparable; and the length of term of traded options used to derive implied volatility, which is generally one to two years and which was extrapolated to match the expected term of the employee options granted by us, and determined the length of the option term was reasonable. The expected life of options granted is based on the historical exercise activity as well as the expected disposition of all options outstanding. We will continue to review our input assumptions and make changes as deemed appropriate depending on new 29 information that becomes available. Higher volatility and expected lives result in a proportional increase to stock-based compensation determined at the date of grant. The expected dividend rate and expected risk-free rate of return do not have as significant an effect on the calculation of fair value. In addition, we developed an estimate of the number of stock-based awards which will be forfeited due to employee turnover. Quarterly changes in the estimated forfeiture rate have an effect on reported stock-based compensation, as the effect of adjusting the rate for all expense amortization is recognized in the period the forfeiture estimate is changed. If the actual forfeiture rate is higher than the estimated forfeiture rate, then an adjustment is made to increase the estimated forfeiture rate, which will result in a decrease to the expense recognized in the financial statements. If the actual forfeiture rate is lower than the estimated forfeiture rate, then an adjustment is made to decrease the estimated forfeiture rate, which will result in an increase to the expense recognized in the financial statements. The impact of forfeiture true up was not material for all periods presented. The expense we recognize in future periods could also differ significantly from the current period and/or our forecasts due to adjustments in the assumed forfeiture rates. Results of Operations The following table sets forth statement of income data as a percentage of net revenues for the fiscal years indicated: Net revenues Cost of revenues Gross margin Operating expenses: Research and development Selling, general and administrative Amortization of acquisition-related intangibles Restructuring charges Litigation and contingencies Total operating expenses Operating income Loss on extinguishment of convertible debentures Interest and other expense, net Income before income taxes Provision for income taxes Net income Net Revenues (In millions) Net revenues 2014 2013 2012 100.0% 100.0% 100.0% 31.2 68.8 20.7 15.9 0.4 — 0.4 37.4 31.4 0.4 1.2 29.8 34.0 66.0 21.9 16.9 0.4 — — 39.2 26.8 — 1.6 25.2 35.1 64.9 19.4 16.3 0.3 0.2 0.7 36.9 28.0 — 1.4 26.6 3.3 26.5% 2.7 22.5% 2.9 23.7% 2014 Change 2013 Change 2012 $ 2,382.5 10% $ 2,168.7 (3)% $ 2,240.7 Net revenues in fiscal 2014 increased 10% to $2.38 billion from $2.17 billion in fiscal 2013. New Product revenues increased in fiscal 2014 but were offset by declines from our Mainstream, Base and Support Products. The increase in New Products was due to higher sales primarily in the Industrial, Aerospace & Defense and Communications end markets. Net revenues in fiscal 2013 decreased 3% compared to fiscal 2012. New Product revenues increased in fiscal 2013 but were offset by declines from our Mainstream, Base and Support Products. The declines were primarily due to lower sales in the Industrial, Aerospace & Defense and Other end markets. See also "Net Revenues by Product" and "Net Revenues by End Markets" below for more information on our product and end-market categories. No end customer accounted for more than 10% of net revenues for any of the periods presented. Net Revenues by Product We sell our products to global manufacturers of electronic products in end markets such as wired and wireless communications, aerospace and defense, industrial, scientific and medical and audio, video and broadcast. The vast majority of our net revenues 30 are generated by sales of our semiconductor products, but we also generate sales from support products. We classify our product offerings into four categories: New, Mainstream, Base and Support Products. The composition of each product category is as follows: (cid:127) New Products include our most recent product offerings and include the Kintex UltraScale, Virtex-7, Kintex-7, Artix-7, Zynq-7000, Virtex-6 and Spartan-6 product families. (cid:127) Mainstream Products include the Virtex-5, Spartan-3 and CoolRunner-II product families. (cid:127) Base Products consist of our older product families including the Virtex-4, Virtex-II, Virtex-E, Virtex, Spartan-II, Spartan, CoolRunner and XC9500 products. (cid:127) Support Products include configuration solutions, HardWire, software and support/services. These product categories, except for Support Products, are modified on a periodic basis to better reflect the maturity of the products and advances in technology. The most recent modification was made on April 1, 2012, which was the beginning of our fiscal 2013. The amounts for the prior periods presented have been reclassified to conform to the new categorization. New Products include our most recent product offerings and are typically designed into our customers’ latest generation of electronic systems. Mainstream Products are generally several years old and designed into customer programs that are currently shipping in full production. Base Products are older than Mainstream Products with demand generated generally by the customers’ oldest systems still in production. Support Products are generally products or services sold in conjunction with our semiconductor devices to aid customers in the design process. Net revenues by product categories for the fiscal years indicated were as follows: (In millions) New Products Mainstream Products Base Products Support Products Total net revenues 2014 874.7 810.4 614.4 83.0 2,382.5 $ $ % of Total 37 34 26 3 100 % Change 85 (14) (8) (3) 10 $ $ 2013 473.6 942.9 666.8 85.4 2,168.7 % of Total 22 43 31 4 100 % Change $ 81 (9) (21) (8) (3) $ 2012 261.3 1,039.7 847.2 92.5 2,240.7 Net revenues from New Products increased significantly in fiscal 2014 as a result of sales growth from our 28nm as well as 40 nm product families. Sales from our 28nm products exceeded $380.0 million during fiscal 2014. We expect sales of New Products to continue to grow as more customer programs enter into volume production with our 28nm products. In fiscal 2013, strong market acceptance of our 28nm, 40nm and 45nm product families contributed to the majority of the revenue growth versus the comparable prior year period. Net revenues from Mainstream Products decreased in both fiscal 2014 and fiscal 2013 from the comparable prior year periods. The decreases in both periods were largely due to the decline in sales of our Virtex-5 and Spartan-3 product families. Net revenues from Base Products decreased in fiscal 2014 and fiscal 2013 from the comparable prior year periods. The decreases in both periods were as expected due to a decline in sales from our Virtex-2 and Virtex-4 product families. Base Products are mature products and their sales are expected to decline over time. Net revenues from Support Products decreased in fiscal 2014 and 2013 compared to the prior year periods. The decreases in both periods were due to a decline in sales from our PROM products. Net Revenues by End Markets Our end market revenue data is derived from our understanding of our end customers’ primary markets. In the beginning of fiscal 2013, we modified our end market categories in two ways. First, Data Center customers were moved from the Data Processing category into the Communications category. Additionally, all end market categories were renamed to better reflect actual sales composition. Amounts for the prior periods presented have been reclassified to conform to the new categorization. Net revenues by end markets were reclassified into the following four categories: Communications & Data Center; Industrial, Aerospace & Defense; Broadcast, Consumer & Automotive; and Other. The percentage change calculation in the table below represents the year-to-year dollar change in each end market. 31 Net revenues by end markets for fiscal years indicated were as follows: (% of total net revenues) Communications & Data Center Industrial, Aerospace & Defense Broadcast, Consumer & Automotive Other Total net revenues 2014 % Change in Dollars 2013 % Change in Dollars 2012 45% 36 16 3 100% 8 16 8 (15) 10 46% 34 16 4 100% (1) (4) 2 (33) (3) 45% 35 15 5 100% Net revenues from Communications & Data Center, our largest end market, increased in fiscal 2014 in terms of absolute dollars, from the comparable prior year period. The increase in fiscal 2014 was primarily due to stronger sales from both wireline and wireless communications with wireless communication applications driving most of the growth. Net revenues from Communications & Data Center decreased slightly in fiscal 2013 from the comparable prior year period due to lower sales from wireline communications, which completely offset the increased sales from wireless communications. Net revenues from the Industrial, Aerospace & Defense end market increased in fiscal 2014 from the comparable prior year period. The increase in fiscal 2014 was primarily driven by higher sales in defense and industrial, scientific, and medical applications, as well as test and measurement applications. Net revenues from the Industrial, Aerospace & Defense end market decreased in fiscal 2013 compared to the prior year period. The decrease was due to a decline in sales from aerospace and defense and industrial, scientific and medical applications, which more than offset the increase in sales from test and measurement applications. Net revenues from the Broadcast, Consumer & Automotive end market increased in fiscal 2014 from the comparable prior year period. The increase in fiscal 2014 was due to an increase in sales from consumer, audio, video and broadcast, and automotive applications. Net revenues from the Broadcast, Consumer & Automotive end market increased in fiscal 2013 due to an increase in sales from audio, video and broadcast, and automotive applications. Net revenues from the Other end market decreased in fiscal 2014 and 2013 from the comparable prior year periods. The decreases in both periods were primarily due to weaker sales from storage and server applications. Net Revenues by Geography Geographic revenue information reflects the geographic location of the distributors, OEMs or contract manufacturers who purchased our products. This may differ from the geographic location of the end customers. Net revenues by geography for the fiscal years indicated were as follows: (In millions) North America Asia Pacific Europe Japan Total net revenues 2014 707.7 939.8 519.8 215.2 2,382.5 $ $ % of Total % Change 2013 30 39 22 9 100 8 25 (5) 2 10 $ $ 655.6 753.8 548.4 210.9 2,168.7 % of Total 30 35 25 10 100 % Change (4) $ 1 (7) (5) (3) $ 2012 684.4 744.5 589.8 222.0 2,240.7 Net revenues in North America increased in fiscal 2014 from the comparable prior year period. The increase was primarily due to stronger sales from Industrial and Aerospace & Defense end market, which more than offset lower sales from Communications & Data Center end market. Net revenues in North America decreased in fiscal 2013 from the comparable prior year period. The decrease was primarily due to a decline in sales across most of our end markets, including Communications & Data Center, Industrial and Aerospace & Defense, and Other. Net revenues in Asia Pacific increased significantly in fiscal 2014 from the comparable prior year period. The increase in fiscal 2014 was primarily due to an increase in sales across most of our end markets with particular strength from the Communications & Data Center end market, particularly wireless communication applications. Net revenues in Asia Pacific increased slightly in fiscal 2013 from the comparable prior year period. The increase was primarily due to an increase in sales from wireless communication applications, industrial, scientific, and medical, and test and measurement applications. Net revenues in Europe decreased in fiscal 2014 from the comparable prior year period. The decrease in fiscal 2014 was primarily due to weaker sales from Communications & Data Center, which partly offset the increased sales from aerospace and defense 32 applications. Net revenues in Europe decreased in fiscal 2013 from the comparable prior year period. The decrease was due to lower sales from the Communications & Data Center and Broadcast, Consumer, & Automotive end markets. Net revenues in Japan slightly increased in fiscal 2014 from the comparable prior year period. The increase in fiscal 2014 was primarily due to increased sales in wireline communication applications, which largely offset the decrease from test and measurement applications. The fiscal 2013 decrease in net revenues in Japan, as compared to the prior year period, was primarily driven by lower sales in industrial, scientific, and medical, and test and measurement applications. Gross Margin (In millions) Gross margin 2014 Change 2013 Change 2012 $ 1,639.3 15% $ 1,431.4 (2)% $ 1,454.7 Percentage of net revenues 68.8% 66.0% 64.9% Gross margin was 2.8 percentage points and 1.1 percentage points higher in fiscal 2014 and fiscal 2013 from their comparable prior year period, respectively. The improvement in gross margin was driven primarily by our continued focus on margin expansion and cost reduction across our product portfolio. This improvement was offset, in part, by the significant revenue growth of New Products, which generally have lower gross margins than Mainstream and Base Products as they are in the early stage of their product life cycle and have higher unit costs associated with relatively lower volumes and early manufacturing maturity. Gross margin may be affected in the future due to multiple factors, including but not limited to those set forth above in "Risk Factors," included in Part I of this Form 10-K", shifts in the mix of customers and products, competitive-pricing pressure, manufacturing-yield issues and wafer pricing. We expect to mitigate any adverse impacts from these factors by continuing to improve yields on our New Products, improve manufacturing efficiencies, and improve average selling price management. Sales of inventory previously written off were not material during all periods presented. In order to compete effectively, we pass manufacturing cost reductions to our customers in the form of reduced prices to the extent that we can maintain acceptable margins. Price erosion is common in the semiconductor industry, as advances in both product architecture and manufacturing process technology permit continual reductions in unit cost. We have historically been able to offset much of this revenue decline in our mature products with increased revenues from newer products. Research and Development (In millions) Research and development Percentage of net revenues 2014 Change 2013 Change 2012 $ 492.4 4% $ 475.5 9% $ 435.3 21% 22% 19% R&D spending increased $16.9 million, or 4%, during fiscal 2014 from the comparable prior year period. The increase was primarily attributable to higher employee compensation related to variable elements of compensation associated with higher operating margin, and higher stock-based compensation driven by a higher stock price and higher overall headcount. These increases were offset by lower mask and wafer expenses related to 28nm development as this product generation is now entirely in production and shipping at an accelerated rate. R&D for fiscal 2014 also included spending for next generation products, including our UltraScale product family. R&D spending increased $40.2 million, or 9%, during fiscal 2013 from the comparable prior year period. The increase was primarily attributable to higher employee-related expenses (including stock-based compensation expense), and mask and wafer expenses related to our 28nm development activities. We plan to continue to selectively invest in R&D efforts in areas such as new products and more advanced process development, IP cores and the development of new design and layout software. We may also consider acquisitions to complement our strategy for technology leadership and engineering resources in critical areas. 33 Selling, General and Administrative (In millions) 2014 Change 2013 Change 2012 Selling, general and administrative $ 378.6 4% $ 365.7 —% $ 365.3 Percentage of net revenues 16% 17% 16% SG&A expenses increased $12.9 million or 4% during fiscal 2014 from the comparable prior year period. We incurred higher employee-related expenses (including employee compensation related to variable spending associated with higher revenue and operating margin, and stock-based compensation expense) in fiscal 2014, but the increases were partially offset by lower legal expenses and continued efforts on controlling other discretionary spending. SG&A expenses were relatively flat during fiscal 2013 compared to the prior year as higher employee-related expenses (including stock-based compensation expense) were offset by lower sales commission due to lower revenues. Amortization of Acquisition-Related Intangibles (In millions) 2014 Change 2013 Change 2012 Amortization of acquisition-related intangibles $ Percentage of net revenues 9.9 —% 4% $ 9.5 —% 26% $ 7.6 —% Amortization expense for fiscal 2014 and 2013 increased from the comparable prior year periods. The increases were primarily due to the impact of amortization of intangible assets obtained from an acquisition during the second quarter of fiscal 2013. See "Note 18. Business Combination" to our consolidated financial statements, included in Item 8. "Financial Statements and Supplementary Data." Litigation and Contingencies On December 19, 2013, we entered into a Settlement and License Agreement with PACT XPP Technologies, AG (PACT). Under the settlement, the parties agreed to dismiss with prejudice all outstanding patent litigation between Xilinx, Avnet, Inc. and PACT and Xilinx agreed to pay PACT a lump sum of $33.5 million. In addition, we received license rights to all patents owned or controlled by PACT. On December 23, 2013, the trial court dismissed the suit and on December 27, 2013, the court of appeals dismissed the appeal. We previously recorded charges of $15.4 million in fiscal 2012. Due to the $33.5 million settlement, we recorded an additional $9.4 million in fiscal 2014 as a current period charge to the consolidated statements of income. The remainder of the settlement of $8.7 million will be amortized to cost of revenues in subsequent periods. Stock-Based Compensation (In millions) 2014 Change 2013 Change 2012 Stock-based compensation included in: Cost of revenues Research and development Selling, general and administrative $ $ 7.6 46.2 40.5 94.3 20% $ 22% 21% 21% $ 6.4 37.9 33.6 77.9 13% $ 17% 14% 15% $ 5.6 32.3 29.5 67.4 The $16.4 million and $10.5 million increases in stock-based compensation expense for fiscal 2014 and 2013, respectively, as compared to the prior year periods were primarily related to higher expenses associated with restricted stock units, as we granted more restricted stock units at a higher fair value in the recent years. The higher expense from restricted stock units was partially offset by lower expenses related to stock option grants as we granted lower number of stock options in the current fiscal year. 34 Loss on Extinguishment of Convertible Debentures On March 12, 2014, we paid $1.23 billion in cash to redeem all of the outstanding $689.6 million (principal amount) of our 3.125% Junior Convertible Debentures due March 15, 2037 (2037 Convertible Notes). In accordance with the authoritative guidance for convertible debentures issued by the Financial Accounting Standards Board (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, we recognized a loss on extinguishment of convertible debentures of $9.8 million. Interest and Other Expense, Net (In millions) Interest and other expense, net Percentage of net revenues 2014 Change 2013 Change 2012 $ 29.6 (12)% $ 33.7 10% $ 30.7 1% 2% 1% Our net interest and other expense decreased by $4.1 million in fiscal 2014 from the comparable prior year period. The decrease was primarily due to higher interest income from the investment portfolio. The increase in net interest and other expense in fiscal 2013 over the prior-year period was primarily due to an impairment of investments in non-marketable equity securities. Provision for Income Taxes (In millions) Provision for income taxes Percentage of net revenues Effective tax rate 2014 Change 2013 Change 2012 $ 79.1 33% $ 59.5 (11)% $ 67.0 3% 11% 3% 11% 3% 11% The difference between the U.S. federal statutory tax rate of 35% and our effective tax rate in all periods is primarily due to income earned in lower tax rate jurisdictions, for which no U.S. income tax has been provided, we intend to permanently reinvest these earnings outside of the U.S. The effective tax rate remained flat for fiscal 2014 as compared with fiscal 2013, with underlying increases and decreases that offset each other. Both periods included benefits relating to lapses of statutes of limitation; however, the fiscal 2014 benefit was $5.5 million, which was less than the comparable release in fiscal 2013 of $9.0 million. The fiscal 2014 effective tax rate included a shift in the geographic mix of earnings with proportionally more earnings subject to U.S. tax. These two items, which increased the effective tax rate, were offset by a decrease in the rate when the amount of permanently reinvested foreign earnings, for which no U.S. taxes were provided, was increased. The effective tax rate remained flat for fiscal 2013 as compared with fiscal 2012. While both periods included benefits related to the U.S. federal research credit, the credit was larger in fiscal 2013 than fiscal 2012 primarily due to the retroactive reinstatement of the research tax credit as part of the American Taxpayer Relief Act of 2012 enacted on January 2, 2013. The income tax provision for fiscal 2013 included five quarters of research tax credit as compared to the fiscal 2012 provision, which included three quarters. The net benefits relating to the federal research credit for fiscal 2013 and 2012 were $12.7 million and $9.1 million, respectively. Both periods also included benefits relating to lapses of statutes of limitation; however, the fiscal 2013 benefit was less than the comparable release in fiscal 2012. The benefits relating to lapses of statutes of limitation for fiscal 2013 and 2012 were $9.0 million and $15.9 million, respectively. Financial Condition, Liquidity and Capital Resources We have historically used a combination of cash flows from operations and equity and debt financing to support ongoing business activities, acquire or invest in critical or complementary technologies, purchase facilities and capital equipment, repurchase our common stock and debentures under our repurchase program, pay dividends and finance working capital. Additionally, our investments in debt securities are liquid and available for future business needs. Fiscal 2014 Compared to Fiscal 2013 Cash, Cash Equivalents and Short-term and Long-term Investments The combination of cash, cash equivalents and short-term and long-term investments as of March 29, 2014 and March 30, 2013 totaled $3.65 billion and $3.37 billion, respectively. As of March 29, 2014, we had cash, cash equivalents and short-term investments 35 of $2.46 billion and working capital of $2.08 billion. As of March 30, 2013, cash, cash equivalents and short-term investments were $1.71 billion and working capital was $1.91 billion. As of March 29, 2014, we had $1.84 billion of cash and cash equivalents and short-term investments held by our non-U.S. jurisdictions. From a financial statement perspective, approximately $752.6 million of the $1.84 billion held by our non-U.S. jurisdictions was available for use in the U.S. without incurring additional U.S. income taxes in excess of the amounts already accrued in our financial statements as of March 29, 2014. The remaining amount of non-U.S. cash and cash equivalents and short- term investments was permanently reinvested and, therefore, no U.S. current or deferred taxes accrued on this amount, which is intended for investment in our operations outside the U.S. We believe our U.S. sources of cash and liquidity are sufficient to meet our business needs in the U.S. and do not expect that we will need to repatriate the funds we have designated as permanently reinvested outside the U.S. Under current tax laws, should our plans change and we were to choose to repatriate some or all of the funds we have designated as permanently reinvested outside the U.S., such amounts would be subject to U.S. income taxes and applicable non-U.S. income and withholding taxes. During fiscal 2014, our operations generated net positive cash flow of $804.9 million, which was $148.4 million higher than the $656.5 million generated during fiscal 2013. The positive cash flow from operations generated during fiscal 2014 was primarily from net income as adjusted for non-cash related items and increases in accounts payable and accrued liabilities. These items were partially offset by decrease in income taxes payable as well as increases in accounts receivable, inventories and other assets. Net cash provided by investing activities was $28.6 million during fiscal 2014, as compared to net cash used in investing activities of $511.5 million in fiscal 2013. Net cash provided by investing activities during fiscal 2014 consisted of $57.5 million of net sales of available-for-sale securities and $16.0 million of other investing activities, which was partially offset by $44.9 million for purchases of property, plant and equipment (see further discussion below). Net cash used in financing activities was $483.4 million in fiscal 2014, as compared to $310.3 million in fiscal 2013. Net cash used in financing activities during fiscal 2014 consisted of $1.23 billion in redemption of the 2037 Convertible Notes, $267.3 million dividend payments to stockholders and $241.1 million of cash payment to repurchase common stocks, which was partially offset by $990.1 million of proceeds from issuance of the 2019 and 2021 Notes, $238.2 million of proceeds from issuance of common stock under employee stock plans and $30.8 million for the excess of the tax benefit from stock-based compensation. Accounts Receivable Accounts receivable increased by $38.7 million and days sales outstanding (DSO) increased slightly to 41 days at March 29, 2014 from 38 days at March 30, 2013. The increase was primarily due to timing of shipments and collections. Inventories Inventories increased to $234.0 million as of March 29, 2014 from $201.3 million as of March 30, 2013, with combined inventory days at Xilinx and distribution increasing to 125 days at March 29, 2014 from 108 days at March 30, 2013. During fiscal 2014 and 2013, our inventory levels were relatively higher than historical trends due to the build ahead of a number of legacy parts in response to the previously planned closure of a particular foundry process line and the build ahead of our 28nm products in anticipation of ramping sales. We expect to ship the vast majority of these parts over the next two years. We attempt to maintain sufficient levels of inventory in various product, package and speed configurations in order to keep lead times short and to meet forecasted customer demand as well as address potential supply constraints. Conversely, we also attempt to minimize the handling costs associated with maintaining higher inventory levels and to fully realize the opportunities for cost reductions associated with architecture and manufacturing process advancements. We continually strive to balance these two objectives to provide excellent customer response at a competitive cost. Property, Plant and Equipment During fiscal 2014, we invested $44.9 million in property, plant and equipment compared to $30.3 million in fiscal 2013. Primary investments in fiscal 2014 were for equipment and building improvements in order to support our New Products development and infrastructures. Current Liabilities Current liabilities increased to $989.4 million at the end of fiscal 2014 from $386.8 million at the end of fiscal 2013. The change was primarily due to the reclassification of our convertible debentures as a current liability on our consolidated balance sheet. See 36 "Note 13. Debt and Credit Facility" to our consolidated financial statements, included in Item 8. "Financial Statements and Supplementary Data" for information. Temporary and Stockholders’ Equity Temporary and stockholders’ equity decreased $175.6 million during fiscal 2014 from $2.96 billion in fiscal 2013 to $2.79 billion in fiscal 2014. The decrease was primarily due to $646.7 million convertible debt extinguishment, $267.3 million of payment of dividends to stockholders, $242.1 million of repurchase of common stock and $9.2 million of other comprehensive loss. These decreases were partially offset by $630.4 million in net income for fiscal 2014, $94.3 million of stock-based compensation, $238.2 million of issuance of common stock under employee stock plans and increase in temporary equity of $35.0 million (see "Note 13. Debt and Credit Facility" to our consolidated financial statements, included in Item 8. "Financial Statements and Supplementary Data" for more information on temporary equity). Fiscal 2013 Compared to Fiscal 2012 Cash, Cash Equivalents and Short-term and Long-term Investments The combination of cash, cash equivalents and short-term and long-term investments as of March 30, 2013 and March 31, 2012 totaled $3.37 billion and $3.13 billion, respectively. As of March 30, 2013, we had cash, cash equivalents and short-term investments of $1.71 billion and working capital of $1.91 billion. As of March 31, 2012, cash, cash equivalents and short-term investments were $1.92 billion and working capital was $2.11 billion. During fiscal 2013, our operations generated net positive cash flow of $656.5 million, which was $170.2 million lower than the $826.7 million generated during fiscal 2012. The positive cash flow from operations generated during fiscal 2013 was primarily from net income as adjusted for non-cash related items and increase in income taxes payable. These items were partially offset by increases in accounts receivable and other assets, as well as decreases in deferred income on shipments to distributors and accounts payable. Net cash used in investing activities was $511.5 million during fiscal 2013, as compared to $960.9 million in fiscal 2012. Net cash used in investing activities during fiscal 2013 consisted of $396.2 million of net purchases of available-for-sale securities, $85.1 million of other investing activities and $30.3 million for purchases of property, plant and equipment (see further discussion below). Net cash used in financing activities was $310.3 million in fiscal 2013, as compared to $299.4 million in fiscal 2012. Net cash used in financing activities during fiscal 2013 consisted of $230.5 million dividend payments to stockholders and $197.7 million of repurchase of common stocks, which was partially offset by $107.7 million of proceeds from issuance of common stock under employee stock plans and $10.2 million for the excess of the tax benefit from stock-based compensation. Accounts Receivable Accounts receivable increased by $14.2 million and DSOs increased to 38 days at March 30, 2013 from 35 days at March 31, 2012. The increase was primarily due to timing of shipments and collections. Inventories Inventories decreased to $201.3 million as of March 30, 2013 from $204.9 million as of March 31, 2012, but combined inventory days at Xilinx and distribution increased slightly to 108 days at March 30, 2013 from 106 days at March 31, 2012. While we were able to manage our inventory and reduce the balance in terms of absolute dollars at the end of fiscal 2013 from prior year, during fiscal 2013 and 2012 our inventory levels were still relatively higher than historical trends due to our decision to build ahead a number of legacy parts in response to the previously planned closure of a particular foundry process line. Property, Plant and Equipment During fiscal 2013, we invested $30.3 million in property, plant and equipment compared to $70.1 million in fiscal 2012. Primary investments in fiscal 2013 were for equipment, building improvements, testers, handlers, software in order to support our New Products development and infrastructures. Current Liabilities Current liabilities increased to $386.8 million at the end of fiscal 2013 from $342.8 million at the end of fiscal 2012. The change was primarily due to an increase in the U.S. federal income tax liability, partially offset by the decrease in deferred income on shipments to distributors. 37 Stockholders’ Equity Stockholders’ equity increased $255.6 million during fiscal 2013 from $2.71 billion in fiscal 2012 to $2.96 billion in fiscal 2013. The increase was primarily due to $487.5 million in net income for fiscal 2013, $77.9 million of stock-based compensation, $107.7 million of issuance of common stock under employee stock plans and $1.4 million of other comprehensive income. The increase was partially offset by $197.7 million of repurchase of common stock and $230.5 million of payment of dividends to stockholders. Liquidity and Capital Resources Cash generated from operations is used as our primary source of liquidity and capital resources. Our investment portfolio is also available for future cash requirements as is our $250.0 million revolving credit facility entered into in December 2011 (expiring in December 2016). We are not aware of any lack of access to the revolving credit facility; however, we can provide no assurance that access to the credit facility will not be impacted by adverse conditions in the financial markets. Our credit facility is not reliant upon a single bank. There have been no borrowings to date under our existing revolving credit facility. We repurchased 5.2 million shares of our common stock for $242.1 million during fiscal 2014. During fiscal 2013, we used $197.7 million of cash to repurchase 6.2 million shares of common stock. During fiscal 2014, we paid $267.3 million in cash dividends to stockholders, representing $1.00 per common share. During fiscal 2013, we paid $230.5 million in cash dividends to stockholders, representing $0.88 per common share. On February 11, 2014, our Board of Directors declared a cash dividend of $0.29 per common share for the first quarter of fiscal 2015. The dividend is payable on June 4, 2014 to stockholders of record on May 14, 2014. Our common stock and debentures repurchase program and dividend policy could be impacted by, among other items, our views on potential future capital requirements relating to R&D, investments and acquisitions, legal risks, principal and interest payments on our debentures and other strategic investments. We anticipate that existing sources of liquidity and cash flows from operations will be sufficient to satisfy our cash needs for the foreseeable future. We will continue to evaluate opportunities for investments to obtain additional wafer capacity, to procure additional capital equipment and facilities, to develop new products, and to potentially acquire technologies or businesses that could complement our business. However, the risk factors discussed in Item 1A and below could affect our cash positions adversely. In addition, certain types of investments such as auction rate securities may present risks arising from liquidity and/or credit concerns. In the event that our investments in auction rate securities become illiquid, we do not expect this will materially affect our liquidity and capital resources or results of operations. As of March 29, 2014, marketable securities measured at fair value using Level 3 inputs were comprised of $20.2 million of student loan auction rate securities. The amount of assets and liabilities measured using significant unobservable inputs (Level 3) as a percentage of the total assets and liabilities measured at fair value was less than 1% as of March 29, 2014. See "Note 3. Fair Value Measurements" to our consolidated financial statements, included in Item 8. "Financial Statements and Supplementary Data," for additional information. During fiscal 2014, we redeemed $10.3 million of student loan auction rate securities for cash at par value. Contractual Obligations The following table summarizes our significant contractual obligations as of March 29, 2014 and the effect such obligations are expected to have on our liquidity and cash flows in future periods. This table excludes amounts already recorded on our consolidated balance sheet as current liabilities as of March 29, 2014. Payments Due by Period Total Less than 1 year (In millions) Operating lease obligations (1) Inventory and other purchase obligations (2) Electronic design automation software licenses (3) Intellectual property license rights obligations (4) 2017 Convertible Notes-principal and interest (5) $ $ 19.0 143.8 24.5 5.0 650.6 1-3 years 6.1 $ — 12.5 — 3-5 years 3.5 $ — — — 31.5 51.3 603.3 550.8 5.9 143.8 12.0 — 15.8 25.6 More than 5 years $ 3.5 — — 5.0 — 529.4 537.9 2019 and 2021 Notes-principal and interest (5) 1,157.1 Total $ 2,000.0 $ 203.1 $ 101.4 $ 1,157.6 $ 38 (1) We lease some of our facilities, office buildings and land under non-cancelable operating leases that expire at various dates through November 2035. Rent expense, net of rental income, under all operating leases was approximately $3.1 million for fiscal 2014. See "Note 9. Commitments" to our consolidated financial statements, included in Item 8. "Financial Statements and Supplementary Data," for additional information about operating leases. (2) Due to the nature of our business, we depend entirely upon subcontractors to manufacture our silicon wafers and provide assembly and some test services. The lengthy subcontractor lead times require us to order the materials and services in advance, and we are obligated to pay for the materials and services when completed. We expect to receive and pay for these materials and services in the next three to six months, as the products meet delivery and quality specifications. (3) As of March 29, 2014, we had $24.5 million of non-cancelable license obligations to providers of electronic design automation software and hardware/ software maintenance expiring at various dates through December 2016. (4) We committed up to $5.0 million to acquire, in the future, rights to intellectual property until July 2023. License payments will be amortized over the useful life of the intellectual property acquired. (5) For purposes of this table we have assumed the principal of our debentures will be paid on maturity dates, which is June 15, 2017 for the 2017 Convertible Notes, March 15, 2019 for the 2019 Notes and March 15, 2021 for the 2021 Notes. See "Note 13. Debt and Credit Facility" to our consolidated financial statements, included in Item 8. "Financial Statements and Supplementary Data," for additional information about our debentures. As of March 29, 2014, $11.5 million of liabilities for uncertain tax positions and related interest and penalties were classified as long-term income taxes payable in the consolidated balance sheet. Due to the inherent uncertainty with respect to the timing of future cash outflows associated with such liabilities, we are unable to reliably estimate the timing of cash settlement with the respective taxing authorities. Therefore, liabilities for uncertain tax positions have been excluded from the contractual obligations table above. Off-Balance-Sheet Arrangements As of March 29, 2014, we did not have any significant off-balance-sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K. Recent Accounting Pronouncements See "Note 2. Summary of Significant Accounting Policies and Concentrations of Risk" to our consolidated financial statements, included in Item 8. "Financial Statements and Supplementary Data," for information about recent accounting pronouncements, including the expected dates of adoption and estimated effects, if any, on our consolidated financial statements. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk Our exposure to interest rate risk relates primarily to our investment portfolio, which consists of fixed income securities with a fair value of approximately $3.39 billion as of March 29, 2014. Our primary aim with our investment portfolio is to invest available cash while preserving principal and meeting liquidity needs. Our investment portfolio includes municipal bonds, mortgage-backed securities, financial institution securities, non-financial institution securities, student loan auction rate securities, U.S. and foreign government and agency securities and debt mutual funds. In accordance with our investment policy, we place investments with high credit quality issuers and limit the amount of credit exposure to any one issuer based upon the issuer’s credit rating. These securities are subject to interest rate risk and will decrease in value if market interest rates increase. A hypothetical 100 basis-point (one percentage point) increase or decrease in interest rates compared to rates at March 29, 2014 and March 30, 2013 would have affected the fair value of our investment portfolio by approximately $53.0 million and $51.0 million, respectively. Credit Market Risk 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" to our consolidated financial statements, included in Item 8. "Financial Statements and Supplementary Data." Foreign Currency Exchange Risk Sales to all direct OEMs and distributors are denominated in U.S. dollars. 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 39 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. We enter into forward currency exchange contracts to hedge our overseas operating expenses and other liabilities when deemed appropriate. As of March 29, 2014 and March 30, 2013, we had the following outstanding forward currency exchange contracts (in notional amount): (In thousands and U.S. dollars) March 29, 2014 March 30, 2013 Singapore Dollar Euro Indian Rupee British Pound Japanese Yen $ $ 60,551 $ 46,062 18,631 12,056 9,273 70,197 39,865 16,941 11,602 10,891 146,573 $ 149,496 As part of our strategy to reduce volatility of operating expenses due to foreign exchange rate fluctuations, we employ a hedging program with forward outlook of up to two years for major foreign-currency-denominated operating expenses. The outstanding forward currency exchange contracts expire at various dates through February 2016. The net unrealized losses, which approximate the fair market value of the forward currency exchange contracts, are expected to be realized into net income within the next two years. Our investments in several of our wholly-owned subsidiaries are recorded in currencies other than the U.S. dollar. As the financial statements of these subsidiaries are translated at each quarter end during consolidation, fluctuations of exchange rates between the foreign currency and the U.S. dollar increase or decrease the value of those investments. These fluctuations are recorded within stockholders’ equity as a component of accumulated other comprehensive income (loss). Other monetary foreign-denominated assets and liabilities are revalued on a monthly basis with gains and losses on revaluation reflected in net income. A hypothetical 10% favorable or unfavorable change in foreign currency exchange rates at March 29, 2014 and March 30, 2013 would have affected the annualized foreign-currency-denominated operating expenses of our foreign subsidiaries by less than $11.0 million for each year. In addition, a hypothetical 10% favorable or unfavorable change in foreign currency exchange rates compared to rates at March 29, 2014 and March 30, 2013 would have affected the value of foreign-currency-denominated cash and investments by less than $5.0 million as of each date. 40 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA XILINX, INC. CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) Net revenues Cost of revenues Gross margin Operating expenses: Research and development Selling, general and administrative Amortization of acquisition-related intangibles Restructuring charges Litigation and contingencies Total operating expenses Operating income Loss on extinguishment of convertible debentures Interest and other expense, net Income before income taxes Provision for income taxes Net income Net income per common share: Basic Diluted Shares used in per share calculations: Basic Diluted March 29, 2014 Years Ended March 30, 2013 March 31, 2012 $ 2,382,531 $ 2,168,652 $ 2,240,736 743,253 737,206 786,078 1,639,278 1,431,446 1,454,658 492,447 378,607 9,887 — 9,410 890,351 748,927 9,848 29,553 709,526 79,138 630,388 2.37 2.19 $ $ $ 475,522 365,684 9,508 — — 850,714 580,732 — 33,726 547,006 59,470 487,536 1.86 1.79 $ $ $ 435,276 365,272 7,568 3,369 15,400 826,885 627,773 — 30,722 597,051 66,972 530,079 2.01 1.95 266,431 287,396 261,652 272,573 263,783 272,157 $ $ $ See notes to consolidated financial statements. 41 XILINX, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands) Net income Other comprehensive income (loss), net of tax: Change in net unrealized gains (losses) on available-for-sale securities Reclassification adjustment for gains on available-for-sale securities Net change in unrealized gains (losses) on hedging transactions Reclassification adjustment for gains (losses) on hedging transactions Cumulative translation adjustment, net Other comprehensive income (loss) Total comprehensive income March 29, 2014 Years Ended March 30, 2013 March 31, 2012 $ 630,388 $ 487,536 $ 530,079 (11,241) (167) 459 1,707 34 (9,208) 621,180 $ 3,343 (1,740) (1,059) 2,792 (1,940) 1,396 $ 488,932 $ 7,159 (1,062) (3,665) (4,659) (1,026) (3,253) 526,826 See notes to consolidated financial statements. 42 XILINX, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except par value amounts) ASSETS Current assets: Cash and cash equivalents Short-term investments Accounts receivable, net of allowances for doubtful accounts and customer returns of $3,355 and $3,425 in 2014 and 2013, respectively Inventories Deferred tax assets Prepaid expenses and other current assets Total current assets Property, plant and equipment, at cost: Land Buildings Machinery and equipment Furniture and fixtures Accumulated depreciation and amortization Net property, plant and equipment Long-term investments Goodwill Acquisition-related intangibles, net Other assets Total Assets LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable Accrued payroll and related liabilities Income taxes payable Deferred income on shipments to distributors Other accrued liabilities Current portion of long-term debt Total current liabilities Long-term debt Deferred tax liabilities Long-term income taxes payable Other long-term liabilities Commitments and contingencies Temporary equity (Note 13) Stockholders' equity: Preferred stock, $.01 par value; 2,000 shares authorized; none issued and outstanding Common stock, $.01 par value; 2,000,000 shares authorized; 268,637 and 263,649 shares issued and outstanding in 2014 and 2013, respectively Additional paid-in capital Retained earnings Accumulated other comprehensive income (loss) Total stockholders’ equity Total Liabilities, Temporary Equity and Stockholders’ Equity See notes to consolidated financial statements. 43 March 29, 2014 March 30, 2013 $ 973,677 1,483,644 $ 623,558 1,091,187 267,833 233,999 56,166 51,828 3,067,147 93,701 311,411 358,193 46,725 810,030 (454,941) 355,089 1,190,775 159,296 28,867 236,175 5,037,349 149,695 157,373 12,936 55,099 49,256 565,001 989,360 993,870 253,433 11,470 1,535 34,999 — $ $ 229,175 201,250 60,709 91,760 2,297,639 93,701 303,958 340,402 46,735 784,796 (419,109) 365,687 1,651,033 158,990 36,054 220,048 4,729,451 72,766 124,195 60,632 53,358 75,837 — 386,788 922,666 415,442 37,579 3,680 — — $ $ 2,686 805,073 1,945,471 (548) 2,752,682 5,037,349 $ 2,636 1,276,278 1,675,722 8,660 2,963,296 4,729,451 $ XILINX, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation Amortization Stock-based compensation Loss on extinguishment of convertible debentures Net (gain) loss on sale of available-for-sale securities Amortization of debt discount on convertible debentures Provision (benefit) for deferred income taxes Excess tax benefit from stock-based compensation Others Changes in assets and liabilities: Accounts receivable, net Inventories Prepaid expenses and other current assets Other assets Accounts payable Accrued liabilities (including restructuring activities) Income taxes payable Deferred income on shipments to distributors Net cash provided by operating activities Cash flows from investing activities: Purchases of available-for-sale securities Proceeds from sale and maturity of available-for-sale securities Purchases of property, plant and equipment Other investing activities Net cash provided by (used in) investing activities Cash flows from financing activities: Repurchase of convertible debentures Repurchases of common stock Proceeds from issuance of common stock through various stock plans, net Payment of dividends to stockholders Proceeds from issuance of long-term debts, net Excess tax benefit from stock-based compensation Net cash used in financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period Supplemental disclosure of cash flow information: Interest paid Income taxes paid (refunded), net March 29, 2014 Years Ended March 30, 2013 March 31, 2012 $ 630,388 $ 487,536 $ 530,079 55,464 19,808 94,314 9,848 332 16,319 53,854 (30,754) (1,618) (38,658) (32,333) (4,754) (21,335) 76,929 19,659 (44,287) 1,741 804,917 56,327 17,233 77,862 — (2,815) 15,880 (44,100) (10,156) 2,779 (14,210) 3,889 5,000 (13,932) (5,846) (2,319) 97,053 (13,644) 656,537 55,658 16,690 67,418 — (2,515) 15,545 79,326 (11,957) 44 71,499 60,121 (7,401) 1,427 (20,640) 14,198 (9,992) (32,761) 826,739 (3,843,395) 3,900,858 (44,865) 16,048 28,646 (1,234,086) (241,076) 238,158 (267,343) 990,149 30,754 (483,444) 350,119 623,558 973,677 36,847 68,215 $ $ $ (3,910,398) 3,514,224 (30,265) (85,076) (511,515) (4,333,508) 3,481,501 (70,071) (38,819) (960,897) — (197,689) 107,716 (230,469) — 10,156 (310,286) (165,264) 788,822 623,558 37,301 6,975 — (219,638) 108,663 (200,361) — 11,957 (299,379) (433,537) 1,222,359 788,822 37,301 (2,447) $ $ $ $ $ $ See notes to consolidated financial statements. 44 XILINX, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In thousands, except per share amounts) Balance as of April 2, 2011 Components of comprehensive income: Net income Other comprehensive loss Total comprehensive income Issuance of common shares under employee stock plans Repurchase and retirement of common stock Stock-based compensation expense Stock-based compensation capitalized in inventory Cash dividends declared ($0.76 per common share) Tax benefit from stock-based compensation Balance as of March 31, 2012 Components of comprehensive income: Net income Other comprehensive income Total comprehensive income Issuance of common shares under employee stock plans Repurchase and retirement of common stock Stock-based compensation expense Stock-based compensation capitalized in inventory Cash dividends declared ($0.88 per common share) Tax benefit from stock-based compensation Balance as of March 30, 2013 Components of comprehensive income: Net income Other comprehensive loss Total comprehensive income Issuance of common shares under employee stock plans Repurchase and retirement of common stock Stock-based compensation expense Stock-based compensation capitalized in inventory Temporary equity reclassification Convertible Debt Extinguishment Cash dividends declared ($1.00 per common share) Tax benefit from stock-based compensation Balance as of March 29, 2014 Common Stock Outstanding Shares Amount Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity 264,602 $ 2,646 $ 1,163,410 $ 1,238,044 $ 10,517 $ 2,414,617 — — 6,040 (7,030) — — — — — — 61 (71) — — — — — — 530,079 — — (3,253) 108,602 (154,132) 67,418 242 — 9,918 — (65,435) — — (200,361) — — — — — — — 530,079 (3,253) 526,826 108,663 (219,638) 67,418 242 (200,361) 9,918 263,612 2,636 1,195,458 1,502,327 7,264 2,707,685 — — 6,191 (6,154) — — — — 263,649 — — 10,124 (5,136) — — — — — — — — 61 (61) — — — — 2,636 — — 101 (51) — — — — — — — — 487,536 — 107,655 (113,956) 77,862 275 — 8,984 1,276,278 — (83,672) — — (230,469) — 1,675,722 — 1,396 — — — — — — 8,660 — — 630,388 — — (9,208) 238,057 (148,747) 94,314 416 (34,999) (646,650) — (93,296) — — — — — (267,343) 26,404 — — — — — — — — — 487,536 1,396 488,932 107,716 (197,689) 77,862 275 (230,469) 8,984 2,963,296 630,388 (9,208) 621,180 238,158 (242,094) 94,314 416 (34,999) (646,650) (267,343) 26,404 268,637 $ 2,686 $ 805,073 $ 1,945,471 $ (548) $ 2,752,682 See notes to consolidated financial statements. 45 XILINX, INC. 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 2014, 2013 and 2012 were 52-week years ended on March 29, 2014, March 30, 2013 and March 31, 2012, respectively. Fiscal 2015 will be a 52-week year ending on March 28, 2015. 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 including acquisition-related intangible 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 non-financial institution securities, U.S. and foreign government and agency securities, money market funds, and financial institution securities. Short-term investments consist of U.S. and foreign government and agency securities, mortgage-backed securities, financial institution securities, non-financial institution securities, 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, non-financial institution securities, a debt mutual fund, U.S. government and agency securities, auction rate securities and municipal bonds 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 March 29, 2014 and March 30, 2013, long-term investments also included approximately $20.2 million and $28.7 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 (FFELP) 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 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, and mortgage-backed securities issued by U.S. government-sponsored enterprises and agencies. 46 Management classifies investments as available-for-sale or held-to-maturity at the time of purchase and re-evaluates such designation at each balance sheet date, although classification is not generally changed. Securities are classified as held-to-maturity when the Company has the positive intent and the ability to hold the securities until maturity. Held-to-maturity securities are carried at cost adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization, as well as any interest on the securities, is included in interest income. No investments were classified as held-to-maturity as of March 29, 2014 or March 30, 2013. 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. 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: (In thousands) Raw materials Work-in-process Finished goods March 29, 2014 March 30, 2013 $ $ 15,306 192,067 26,626 233,999 $ $ 12,484 165,034 23,732 201,250 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, adjusted for excess capacity. 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. 47 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 $55.5 million, $56.3 million and $55.7 million for fiscal 2014, 2013 and 2012, respectively. Impairment of Long-Lived Assets Including Acquisition-Related Intangibles 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. 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 2014, there was no impairment of goodwill in fiscal 2014. 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 2015. 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 2014, approximately 56% 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 March 29, 2014, the Company had $75.2 million of deferred revenue and $20.1 million of deferred cost of revenues recognized as a net $55.1 million of deferred income on shipments to distributors. As of March 30, 2013, the Company had $71.3 million of deferred revenue and $17.9 million of deferred cost of revenues recognized as a net $53.4 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, 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 formal 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. 48 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 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). In addition, the Company is required to record compensation expense (as previous awards continue to vest) for the unvested portion of previously granted awards that remain outstanding at the date of adoption. 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 employee stock purchase plan is deemed a compensatory plan under the authoritative guidance of accounting for share-based payment. Accordingly, the employee stock purchase plan 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. To calculate the excess tax benefits available for use in offsetting future tax shortfalls as of the date of implementation, the Company followed the alternative transition method. 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 2014 and 2013, the accrual balance of the product warranty liability was immaterial. 49 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, Inc. (Avnet), one of the Company’s distributors, distributes the Company’s products worldwide. As of March 29, 2014 and March 30, 2013, Avnet accounted for 55% and 64% of the Company’s total net accounts receivable, respectively. Resale of product through Avnet accounted for 46%, 46% and 48% of the Company’s worldwide net revenues in fiscal 2014, 2013 and 2012, respectively. The percentage of 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, 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 84% 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 March 29, 2014, approximately 34% 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 and capital markets have continued to experience adverse conditions that have negatively impacted the values of various types of investment and non-investment grade securities, and have experienced 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 the Company may incur other-than-temporary impairment charges for certain types of investments should credit market conditions deteriorate or the underlying assets fail to perform as anticipated. See "Note 4. Financial Instruments" for a table of the Company’s available-for-sale securities. Dependence on Independent Manufacturers and Subcontractors The Company does not directly manufacture the finished silicon wafers used to manufacture its products. Xilinx receives a majority of its finished wafers from independent wafer manufacturers located in Taiwan. The Company is also dependent on a limited number of subcontractors, primarily located in the Asia Pacific region, to provide semiconductor assembly, test and shipment services. Recent Accounting Pronouncements Beginning in its fiscal 2014, the Company adopted the authoritative guidance established by the FASB that sets requirements for presentation for significant items reclassified out of the accumulated other comprehensive income (loss) to net income in their entirety during the period, and for items not reclassified to net income in their entirety during the period. This guidance does not affect the underlying accounting for components of other comprehensive income (loss). 50 In January 2014, the FASB issued the authoritative guidance that permits reporting entities to make an accounting policy election to account for their investments in qualified affordable housing projects using the proportional amortization method if certain conditions are met. If the conditions are met, the guidance permits an entity to amortize the initial cost of the investment in proportion to the amount of tax credits and the other tax benefits received and recognize the net investment performance in the income statement as a component of income tax. The guidance will be effective for public companies for fiscal years and interim periods within those years beginning after December 15, 2014, which for Xilinx is for its first quarter of fiscal year 2016, and should be applied retrospectively for all periods presented. The Company does not expect this guidance to have significant impact on its consolidated financial statements. Note 3. Fair Value Measurements The guidance for fair value measurements established by the FASB defines fair value as the exchange price that would be received from selling an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which Xilinx would transact and also considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions and risk of nonperformance. The Company determines the fair value for marketable debt 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 2014 and the Company did not adjust or override any fair value measurements as of March 29, 2014. 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. agency securities, foreign government and agency securities, mortgage-backed securities and debt mutual funds. 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 and the embedded derivative related to the Company’s debentures. 51 Assets and Liabilities Measured at Fair Value on a Recurring Basis In instances where the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability. The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring basis as of March 29, 2014 and March 30, 2013: March 29, 2014 Quoted Prices in Active Markets for Identical Instruments (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Fair Value $ 213,988 $ — $ — $ — — 69,998 — — — — 349,023 — — — — — — 4,950 — — — 131,990 319,970 — 194,984 234,916 226,828 15,780 89,422 159,951 387,508 20,216 209,274 — 15,986 36,126 847,581 56,698 1,713 — — — — — — — — — — — — 20,160 — — — — — 213,988 131,990 319,970 69,998 194,984 234,916 226,828 15,780 438,445 159,951 387,508 20,216 209,274 20,160 15,986 41,076 847,581 56,698 1,713 $ 637,959 $ 2,948,943 $ 20,160 $ 3,607,062 (In thousands) Assets Cash and cash equivalents: Money market funds Financial institution securities Non-financial institution securities U.S. government and agency securities Foreign government and agency securities Short-term investments: 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 fund Long-term investments: Non-financial institution securities Auction rate securities Municipal bonds U.S. government and agency securities Mortgage-backed securities Debt mutual fund Derivative financial instruments, net Total assets measured at fair value 52 March 30, 2013 Quoted Prices in Active Markets for Identical Instruments (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Fair Value $ 108,311 $ — $ — $ — — 95,039 — — — — 416,887 — — — — — 55,142 — — 124,988 163,674 — 54,989 179,933 200,670 3,706 75,011 214,912 68 235,275 — 21,234 55,143 1,192,612 62,927 — — — — — — — — — — — 28,700 — — — — 108,311 124,988 163,674 95,039 54,989 179,933 200,670 3,706 491,898 214,912 68 235,275 28,700 21,234 110,285 1,192,612 62,927 $ $ $ $ 675,379 $ 2,585,142 — $ — 1,615 — — $ $ 675,379 1,615 2,583,527 $ $ $ $ 28,700 $ 3,289,221 — $ 1,090 1,090 27,610 $ $ 1,615 1,090 2,705 3,286,516 (In thousands) Assets Cash and cash equivalents: Money market funds Financial institution securities Non-financial institution securities U.S. government and agency securities Foreign government and agency securities Short-term investments: Financial institution securities Non-financial institution securities Municipal Bonds U.S. government and agency securities Foreign government and agency securities Mortgage-backed securities Long-term investments: Non-financial institution securities Auction rate securities Municipal bonds U.S. government and agency securities Mortgage-backed securities Debt mutual fund Total assets measured at fair value Liabilities Derivative financial instruments, net Convertible debentures — embedded derivative Total liabilities measured at fair value Net assets measured at fair value 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): (In thousands) Balance as of beginning of period Total realized and unrealized gains (losses): Included in interest and other expense, net Included in other comprehensive income (loss) Sales and settlements, net (1) Balance as of end of period 53 Years Ended March 29, 2014 March 30, 2013 $ 27,610 $ 27,998 1,090 1,760 (10,300) 20,160 $ (159) 471 (700) 27,610 $ (1) During fiscal 2014 and 2013, the Company redeemed $10.3 million and $700 thousand of student loan auction rate securities, respectively, for cash at par value. The amount of total gains or (losses) included in net income attributable to the change in unrealized gains or (losses) relating to assets and liabilities still held as of the end of the period are summarized as follows: (In thousands) Included in interest and other expense, net March 29, 2014 March 30, 2013 March 31, 2012 $ — $ (159) $ 14 As of March 29, 2014, marketable securities measured at fair value using Level 3 inputs were comprised of $20.2 million of student loan auction rate securities. Auction failures during the fourth quarter of fiscal 2008 and the lack of market activity and liquidity required that the Company’s student loan auction rate securities be measured using observable market data and Level 3 inputs. The fair values of the Company’s student loan auction rate securities were based on the Company’s assessment of the underlying collateral and the creditworthiness of the issuers of the securities. Substantially all of the underlying assets that secure the student loan auction rate securities are pools of student loans originated under FFELP, which are substantially guaranteed by the U.S. Department of Education. The fair values of the Company’s student loan auction rate securities were determined using a discounted cash flow pricing model that incorporated financial inputs such as projected cash flows, discount rates, expected interest rates to be paid to investors and an estimated liquidity discount. The most significant assumptions of the model are the weighted-average life over which cash flows were projected of eight years (given the collateral composition of the securities) and the discount rates ranging from 2.12% to 2.80% that were applied to the pricing model (based on market data and information for comparable- or similar-term student loan asset-backed securities). A hypothetical 20% increase or decrease of the weighted-average life over which cash flows were projected and 100 basis points (one percentage point) increase or decrease in the discount rates would not have a material effect on the fair values of the Company’s student loan auction rate securities. The Company does not intend to sell, nor does it believe it is more likely than not that it would be required to sell, the student loan auction rate securities before anticipated recovery, which could be at final maturity that ranges from June 2043 to May 2047. The 2037 Convertible Notes, which were redeemed on March 12, 2014 (see "Note 13. Debt and Credit Facility"), included embedded features that qualify as an embedded derivative, and was separately accounted for as a discount on the 2037 Convertible Notes. Its fair value was established at the inception of the 2037 Convertible Notes. Prior to the redemption, each quarter, the change in the fair value of the embedded derivative, if any, was recorded in the consolidated statements of income. The Company used a derivative valuation model to derive the value of the embedded derivative. Key inputs into this valuation model were the Company’s current stock price, risk-free interest rates, the stock dividend yield, the stock volatility and the 2037 Convertible Notes’ credit spread over London Interbank Offered Rate. The first three inputs were based on observable market data and were considered Level 2 inputs while the last two inputs required management judgment and were Level 3 inputs. 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 March 29, 2014 were approximately $1.12 billion, $498.3 million and $497.8 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). 54 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: (In thousands) March 29, 2014 Gross Unrealized Gains Gross Unrealized Losses Amortized Cost Estimated Fair Value Amortized Cost March 30, 2013 Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Money market funds $ 213,988 $ — $ — $ 213,988 $ 108,311 $ — $ — $ 108,311 Financial institution securities Non-financial institution securities Auction rate securities Municipal bonds U.S. government and 366,906 — — 366,906 304,921 — — 304,921 753,888 21,500 31,367 3,428 — 604 (1,244) (1,340) (205) 756,072 20,160 31,766 594,561 31,900 24,496 5,193 — 514 (135) 599,619 (3,200) (70) 28,700 24,940 agency securities 548,568 1,135 (184) 549,519 696,836 431 (45) 697,222 Foreign government and agency securities 354,935 — — 354,935 269,901 Mortgage-backed securities 1,234,237 11,380 (10,528) 1,235,089 1,180,156 Debt mutual funds 81,350 216 (4,652) 76,914 61,350 — 17,601 1,577 — 269,901 (5,077) 1,192,680 — 62,927 $ 3,606,739 $ 16,763 $ (18,153) $ 3,605,349 $ 3,272,432 $ 25,316 $ (8,527) $ 3,289,221 The following tables show the fair values and gross unrealized losses of the Company’s investments, aggregated by investment category, for individual securities that have been in a continuous unrealized loss position for the length of time specified, as of March 29, 2014 and March 30, 2013: (In thousands) Non-financial institution securities Auction rate securities Municipal bonds U.S. government and agency securities Mortgage-backed securities Debt mutual fund March 29, 2014 Less Than 12 Months Gross Unrealized Losses Fair Value 12 Months or Greater Gross Unrealized Losses Fair Value Total Gross Unrealized Losses Fair Value $ $ 112,470 — 5,917 118,125 457,903 56,698 751,113 $ $ (1,167) $ — (166) 4,488 20,160 1,743 $ (77) $ (1,340) (39) (184) (7,225) (4,652) (13,394) $ — 132,376 — 158,767 $ — (3,303) — (4,759) $ 116,958 20,160 7,660 118,125 590,279 56,698 909,880 $ $ (1,244) (1,340) (205) (184) (10,528) (4,652) (18,153) 55 Less Than 12 Months Gross Unrealized Losses March 30, 2013 12 Months or Greater Gross Unrealized Losses Fair Value Total Gross Unrealized Losses Fair Value (In thousands) Non-financial institution securities Fair Value 27,114 $ $ Auction rate securities Municipal bonds U.S. government and agency securities Mortgage-backed securities — 8,927 388,696 367,561 $ 792,298 $ (135) $ — (70) (45) (4,930) (5,180) $ — $ — $ 27,114 $ 28,701 60 — 11,029 39,790 $ (3,200) — 28,701 8,987 — (147) (3,347) $ 388,696 378,590 832,088 $ (135) (3,200) (70) (45) (5,077) (8,527) As of March 29, 2014, the gross unrealized losses that had been outstanding for less than twelve months were primarily related to mortgage-backed securities and a debt mutual fund 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 and the debt mutual fund was relatively insignificant. The gross unrealized losses that had been outstanding for more than twelve months were primarily related to mortgage- backed securities, which were primarily due to the general rising of the interest-rate environment, and failed auction rate securities, which were due to adverse conditions in the global credit markets during the past five years. The Company reviewed the investment portfolio and determined that the gross unrealized losses on these investments as of March 29, 2014 and March 30, 2013 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 March 29, 2014 and March 30, 2013. 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 and 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. (In thousands) Due in one year or less Due after one year through five years Due after five years through ten years Due after ten years March 29, 2014 Amortized Cost $ 1,614,563 437,854 231,266 1,027,718 $ 3,311,401 Estimated Fair Value $ 1,614,735 440,661 232,909 1,026,142 $ 3,314,447 As of March 29, 2014, $585.9 million 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: 56 (In thousands) Gross realized gains on sale of available-for-sale securities Gross realized losses on sale of available-for-sale securities Net realized gains (losses) on sale of available-for-sale securities Amortization of premiums on available-for-sale securities March 29, 2014 March 30, 2013 March 31, 2012 $ $ $ $ 2,080 (2,412) (332) $ $ 27,293 3,488 (673) 2,815 25,123 $ $ $ 2,916 (401) 2,515 13,302 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 March 29, 2014 and March 30, 2013, the Company had the following outstanding forward currency exchange contracts (in notional amount), which were derivative financial instruments: (In thousands and U.S. dollars) March 29, 2014 March 30, 2013 Singapore Dollar Euro Indian Rupee British Pound Japanese Yen $ $ 60,551 46,062 18,631 12,056 9,273 146,573 $ $ 70,197 39,865 16,941 11,602 10,891 149,496 As part of the Company’s strategy to reduce volatility of operating expenses due to foreign exchange rate fluctuations, the Company employs a hedging program with a forward outlook of up to two years for major foreign-currency-denominated operating expenses. The outstanding forward currency exchange contracts expire at various dates through February 2016. The net unrealized losses, which approximate the fair market value of the outstanding forward currency exchange contracts, are expected to be realized into net income within the next two years. As of March 29, 2014, all of the forward foreign currency exchange contracts were designated and qualified as cash flow hedges and the effective portion of the gain or loss on the forward contracts was reported as a component of other comprehensive income (loss) and reclassified into net income in the same period during which the hedged transaction affects earnings. The estimated amount of such gains or losses as of March 29, 2014 that is expected to be reclassified into earnings was not material. The ineffective portion of the gains or losses on the forward contracts was included in the net income for all periods presented. The Company may enter into forward foreign currency exchange contracts to hedge firm commitments such as acquisitions and capital expenditures. Gains and losses on foreign currency forward contracts that are designated as hedges of anticipated transactions, for which a firm commitment has been attained and the hedged relationship has been effective, are deferred and included in income or expenses in the same period that the underlying transaction is settled. Gains and losses on any instruments not meeting the above criteria are recognized in income or expenses in the consolidated statements of income as they are incurred. The Company had the following derivative instruments as of March 29, 2014 and March 30, 2013, located on the consolidated balance sheet, utilized for risk management purposes detailed above: 57 (In thousands) March 29, 2014 March 30, 2013 Foreign Exchange Contracts Asset Derivatives Liability Derivatives Balance Sheet Location Fair Value Balance Sheet Location Fair Value Prepaid expenses and other current assets Prepaid expenses and other current assets $ $ 2,648 1,179 Other accrued liabilities Other accrued liabilities $ $ 935 2,794 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 2014 and 2013: (In thousands) Amount of gains recognized in other comprehensive income on derivative (effective portion of cash flow hedging) Amount of losses reclassified from accumulated other comprehensive income into income (effective portion) * Amount of losses recorded (ineffective portion) * Foreign Exchange Contracts 2014 2013 $ $ $ 2,167 $ 1,734 (1,707) $ (2,793) (13) $ (5) * 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) Stock-based compensation included in: Cost of revenues Research and development Selling, general and administrative Stock-based compensation effect on income before taxes Income tax effect Net stock-based compensation effect on net income March 29, 2014 March 30, 2013 March 31, 2012 $ $ 7,602 46,197 40,515 94,314 (27,327) 66,987 $ $ 6,356 37,937 33,569 77,862 (22,137) 55,725 $ $ 5,630 32,310 29,478 67,418 (19,214) 48,204 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. 58 As of March 29, 2014 and March 30, 2013, the ending inventory balances included $2.4 million and $2.0 million of capitalized stock-based compensation, respectively. During fiscal 2014, 2013 and 2012, the tax benefit realized for the tax deduction from option exercises and other awards, including amounts credited to additional paid-in capital, totaled $67.0 million, $32.6 million and $31.2 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 for stock options 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 2014, 2013, and 2012 were not material. The weighted-average fair value per share of stock purchase rights granted under the ESPP during fiscal 2014, 2013 and 2012 were $11.11, $8.61 and $9.42, respectively. These fair values per share were estimated at the date of grant using the following weighted-average assumptions: Expected life of options (years) Expected stock price volatility Risk-free interest rate Dividend yield Employee Stock Purchase Plan 2014 2013 2012 1.3 0.24 0.2% 2.4% 1.3 0.26 0.2% 2.7% 1.3 0.29 0.2% 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 2014, 2013 and 2012 were $38.90, $31.58 and $33.69, respectively. The weighted average fair value of RSUs granted in fiscal 2013, 2012 and 2011 were calculated based on estimates at the date of grant using the following weighted-average assumptions: Risk-free interest rate Dividend yield 2014 2013 2012 0.7% 2.5% 0.4% 2.7% 0.7% 2.2% Options outstanding that have vested and are expected to vest in future periods as of March 29, 2014 are as follows: (Shares and intrinsic value in thousands) Vested (i.e., exercisable) Expected to vest Total vested and expected to vest Number of Shares Weighted-Average Exercise Price Per Share 4,935 326 5,261 $24.87 $30.36 $25.21 Weighted-Average Remaining Contractual Term (Years) 2.20 4.10 2.30 Total outstanding 5,280 $25.22 2.30 Aggregate Intrinsic Value (1) $ $ $ $ 142,968 7,648 150,616 151,139 (1) These amounts represent the difference between the exercise price and $53.84, the closing price per share of Xilinx’s stock on March 29, 2014, 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 $4.7 million completed vesting during fiscal 2014. As of March 29, 2014, total unrecognized stock-based compensation costs related to stock options and Employee Stock Purchase Plan were $2.4 million and $20.9 million, respectively. The total unrecognized stock-based compensation cost for stock options and Employee Stock Purchase Plan is expected to be recognized over a weighted-average period of 1.2 years and 1.1 years, respectively. 59 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 20.3 million shares as of March 29, 2014, including 15.0 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) April 2, 2011 Additional shares reserved Stocks options granted Stock options cancelled RSUs granted RSUs cancelled March 31, 2012 Additional shares reserved Stocks options granted Stock options cancelled RSUs granted RSUs cancelled March 30, 2013 Additional shares reserved Stocks options granted Stock options cancelled RSUs granted RSUs cancelled March 29, 2014 Shares Available for Grant 13,164 4,500 (207) 70 (2,977) 358 14,908 3,500 (92) 209 (3,018) 483 15,990 2,000 (8) 26 (3,297) 326 15,037 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. 60 A summary of the Company’s Option Plans activity and related information is as follows: (Shares in thousands) April 2, 2011 Granted Exercised Forfeited/cancelled/expired March 31, 2012 Granted Exercised Forfeited/cancelled/expired March 30, 2013 Granted Exercised Forfeited/cancelled/expired March 29, 2014 Options exercisable at: March 29, 2014 March 30, 2013 Options Outstanding Number of Shares Weighted- Average Exercise Price Per Share 24,969 $ $ 207 (3,622) $ (3,766) $ $ 17,788 92 $ (3,564) $ (1,563) $ $ 12,753 8 $ (7,421) $ (60) $ $ 5,280 4,935 11,639 $ $ 29.11 34.79 24.70 37.35 28.32 33.83 24.68 39.54 28.01 41.08 29.95 35.61 25.22 24.87 28.07 The total pre-tax intrinsic value of options exercised during fiscal 2014 and 2013 was $119.6 million and $38.9 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 March 29, 2014: (Shares in thousands) Range of Exercise Prices $15.95 - $19.79 $20.14 - $29.93 $30.04 - $38.56 $40.11 - $40.37 Options Outstanding Weighted- Average Remaining Contractual Term (Years) 1.97 2.21 4.14 0.11 2.30 Weighted- Average Exercise Price Per Share $18.15 $24.46 $33.54 $40.11 $25.22 Options Outstanding 78 4,766 355 81 5,280 Options Exercisable Weighted- Average Exercise Price Per Share $18.15 $24.41 $32.88 $40.11 $24.87 Options Exercisable 78 4,604 180 73 4,935 61 RSU Awards A summary of the Company’s RSU activity and related information is as follows: RSUs Outstanding (Shares and intrinsic value in thousands) April 2, 2011 Granted Vested (2) Cancelled March 31, 2012 Granted Vested (2) Cancelled March 30, 2013 Granted Vested (2) Cancelled March 29, 2014 Weighted -Average Grant- Date Fair Value Per Share Number of Shares $ 4,215 2,977 $ (1,543) $ (410) $ $ 5,239 $ 3,018 (1,778) $ (483) $ 5,996 $ $ 3,297 (2,066) $ (326) $ $ 6,901 23.19 33.69 23.11 25.18 29.01 31.58 27.01 29.69 30.83 38.90 29.25 32.28 35.08 Weighted Average Remaining Contractual Term (Years) Average Intrinsic Value (1) 2.38 $ 371,578 Expected to vest as of March 29, 2014 6,339 $ 35.22 3.38 $ 341,289 (1) Aggregate intrinsic value for RSUs represents the closing price per share of Xilinx’s stock on March 29, 2014 of $53.84, multiplied by the number of RSUs outstanding or expected to vest as of March 29, 2014. (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 $60.4 million were vested during fiscal 2014. As of March 29, 2014, total unrecognized stock-based compensation costs related to non-vested RSUs was $185.1 million. The total unrecognized stock-based compensation cost for RSUs is expected to be recognized over a weighted-average period of 2.6 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 78% 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 1.2 million shares for $37.9 million in fiscal 2014, 1.3 million shares for $34.5 million in fiscal 2013, and 1.2 million shares for $33.1 million in fiscal 2012. The next scheduled purchase under the ESPP is in the second quarter of fiscal 2015. As of March 29, 2014, 9.7 million shares were available for future issuance out of the 50.5 million shares authorized. 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." 62 (In thousands) Accrued payroll and related liabilities: Accrued compensation Deferred compensation plan liability Other Note 8. Restructuring Charges 2014 2013 $ $ 90,865 $ 59,569 6,939 66,967 50,412 6,816 157,373 $ 124,195 During the second quarter of fiscal 2012, the Company implemented restructuring measures designed to consolidate its research and development activities in the U.S. and to reduce its global workforce by 46 net positions, or less than 2%. The Company completed this restructuring plan and recorded total restructuring charges of $3.4 million in the second quarter of fiscal 2012, which was predominantly related to severance costs and benefits expenses. These charges have been shown separately as restructuring charges on the consolidated statements of income and were paid in full as of March 29, 2014. Note 9. Commitments 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 2015 2016 2017 2018 2019 Thereafter Total (In thousands) 5,904 3,922 2,214 1,931 1,555 3,500 19,026 $ $ Aggregate future rental income to be received, which includes rents from both owned and leased property, totaled $4.5 million as of March 29, 2014. Rent expense, net of rental income, under all operating leases was $3.1 million for fiscal 2014, $3.9 million for fiscal 2013, and $3.1 million for fiscal 2012. Rental income was not material for fiscal 2014, 2013 or 2012. Other commitments as of March 29, 2014 totaled $143.8 million and consisted of purchases of inventory and other non-cancelable purchase obligations related to subcontractors that manufacture silicon wafers and provide assembly and some 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 March 29, 2014, the Company also had $24.5 million of non-cancelable license obligations to providers of electronic design automation software and hardware/software maintenance expiring at various dates through December 2016. The Company committed up to $5.0 million to acquire, in the future, rights to intellectual property until July 2023. License payments will be amortized over the useful life of the intellectual property acquired. 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: 63 (In thousands, except per share amounts) 2014 2013 2012 Net income available to common stockholders $ 630,388 $ 487,536 $ Weighted average common shares outstanding-basic 266,431 261,652 Dilutive effect of employee equity incentive plans Dilutive effect of 2017 Convertible Notes and warrants Dilutive effect of 2037 Convertible Notes 4,508 8,544 7,913 4,146 2,924 3,851 530,079 263,783 4,493 1,708 2,173 Weighted average common shares outstanding-diluted 287,396 272,573 272,157 Basic earnings per common share Diluted earnings per common share $ $ 2.37 2.19 $ $ 1.86 1.79 $ $ 2.01 1.95 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 and warrants to purchase approximately 5.1 million, 27.9 million and 30.6 million shares, for fiscal 2014, 2013 or 2012 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, RSUs and warrants 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, RSUs and warrants. 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 20.0 million shares of its common stock at $29.97 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) Interest income Interest expense Other income (expense), net March 29, 2014 March 30, 2013 March 31, 2012 $ $ $ 28,079 (54,035) (3,597) (29,553) $ $ 25,574 (55,069) (4,231) (33,726) $ 23,697 (54,576) 157 (30,722) Note 12. Accumulated Other Comprehensive Income (Loss) Comprehensive income (loss) is defined as the change in equity of a company during a period from transactions and other events and circumstances from non-owner sources. The components of accumulated other comprehensive income (loss) are as follows: (In thousands) Accumulated unrealized gains (losses) on available-for-sale securities, net of tax Accumulated unrealized gains (losses) on hedging transactions, net of tax Accumulated cumulative translation adjustment, net of tax Accumulated other comprehensive income (loss) 2014 2013 $ $ (889) $ 798 (457) (548) $ 10,519 (1,368) (491) 8,660 The related tax effects of other comprehensive income (loss) were not material for all periods presented. Note 13. Debt and Credit Facility 2017 Convertible Notes 64 As of March 29, 2014, 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 33.3681 shares of common stock per $1 thousand principal amount of the 2017 Convertible Notes, representing an effective conversion price of approximately $29.97 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 March 29, 2014 and as a result, the 2017 Convertible Notes were convertible at the option of the holders. As of March 29, 2014, 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 in respect to the remainder of its conversion obligation in excess of the aggregate principal amount (conversion spread). Accordingly, there would be 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) Liability component: Principal amount of the 2017 Convertible Notes Unamortized discount of liability component Hedge accounting adjustment – sale of interest rate swap Net carrying value of the 2017 Convertible Notes Equity component (including temporary equity) – net carrying value 2014 2013 $ $ $ 600,000 (49,223) 14,224 565,001 66,415 $ $ $ 600,000 (64,767) 18,716 553,949 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 March 29, 2014, the remaining term of the 2017 Convertible Notes is 3.2 years. 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) Contractual coupon interest Amortization of debt issuance costs Amortization of debt discount, net Total interest expense related to the 2017 Convertible Notes March 29, 2014 March 30, 2013 March 31, 2012 $ $ 15,750 $ 15,750 $ 15,750 1,448 11,052 1,448 11,052 28,250 $ 28,250 $ 1,448 11,052 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 20.0 million shares of its common stock at $29.97 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 65 the Company sold warrants to the hedge counterparties, which give the hedge counterparties the right to purchase up to 20.0 million shares of the Company’s common stock at $42.46 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 as of March 29, 2014. (In thousands) Principal amount of the 2019 Notes Unamortized discount of the 2019 Notes Principal amount of the 2021 Notes Unamortized discount of the 2021 Notes Total senior notes March 29, 2014 $ $ 500,000 (2,574) 500,000 (3,556) 993,870 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) Contractual coupon interest Amortization of debt issuance costs Amortization of debt discount, net Total interest expense related to the 2019 and 2021 Notes 2037 Convertible Notes March 29, 2014 $ $ 1,210 52 80 1,342 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) Contractual coupon interest Amortization of debt issuance costs Amortization of embedded derivative Amortization of debt discount Fair value adjustment of embedded derivative Total interest expense related to the 2037 Convertible Notes 66 March 29, 2014 March 30, 2013 March 31, 2012 $ $ 20,065 223 58 5,187 (1,090) 24,443 $ $ 21,551 223 58 4,828 159 $ 26,819 $ 21,551 223 58 4,493 (14) 26,311 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 nonfinancial covenants. As of March 29, 2014, 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 March 29, 2014 and March 30, 2013, 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. The last approval was the 2012 Repurchase program, which was authorized by the Board in August 2012 to repurchase $750.0 million of the Company’s common stock. The 2012 Repurchase Program has no stated expiration date. Through March 29, 2014, the Company has used $252.7 million of the $750.0 million authorized under the 2012 Repurchase Program, leaving $497.3 million available for future repurchases. The Company’s current policy is to retire all repurchased shares, and consequently, no treasury shares were held as of March 29, 2014 and March 30, 2013. During fiscal 2014, the Company repurchased 5.2 million shares of common stock in the open market for a total of $242.1 million. During fiscal 2013, the Company repurchased 6.2 million shares of common stock in the open market for a total of $197.7 million. Note 15. Income Taxes The provision for income taxes consists of the following: (In thousands) Federal: Current Deferred State: Current Deferred Foreign: Current Deferred Total March 29, 2014 March 30, 2013 March 31, 2012 $ 97,108 (45,465) 51,643 (17,333) 74,911 57,578 $ 16,692 $ 48,021 64,713 1,333 5,954 7,287 1,007 1,742 2,749 (2,999) 6,591 3,592 7,978 (2,176) 5,802 66,972 7,264 (126) 7,138 79,138 $ 5,455 (377) 5,078 59,470 $ $ 67 The domestic and foreign components of income before income taxes were as follows: (In thousands) Domestic Foreign Income before income taxes March 29, 2014 March 30, 2013 March 31, 2012 $ $ 83,617 625,909 709,526 $ $ 45,617 501,389 547,006 $ $ 74,959 522,092 597,051 The tax benefits associated with stock-based compensation recorded in additional paid-in capital were $26.4 million, $9.0 million and $9.9 million, for fiscal 2014, 2013 and 2012, respectively. As of March 29, 2014, the Company had federal and state net operating loss carryforwards of approximately $21.7 million. If unused, these carryforwards will expire at various dates through 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 $136.0 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 $64.5 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 $2.40 billion as of March 29, 2014. The residual U.S. tax liability, if such amounts were remitted, would be approximately $800.3 million. 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) Income before provision for taxes Federal statutory tax rate Computed expected tax State taxes, net of federal benefit Foreign earnings at lower tax rates Tax credits Other Provision for income taxes March 29, 2014 $ 709,526 March 30, 2013 $ 547,006 March 31, 2012 $ 597,051 35% 35% 35% 248,334 4,664 (143,336) (23,389) (7,135) 79,138 $ 191,452 1,787 (107,730) (26,305) 266 208,968 2,162 (117,013) (29,633) 2,488 $ 59,470 $ 66,972 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. The benefits of Pioneer Status in Singapore for fiscal 2014, fiscal 2013 and fiscal 2012 were approximately $60.3 million ($0.21 per diluted share), $41.0 million ($0.15 per diluted share), and $43.5 million ($0.16 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. 68 The major components of deferred tax assets and liabilities consisted of the following as of March 29, 2014 and March 30, 2013: (In thousands) Deferred tax assets: Stock-based compensation Deferred income on shipments to distributors Accrued expenses Tax credit carryforwards Intangible and fixed assets Deferred compensation plan Other Subtotal Valuation allowance Total deferred tax assets Deferred tax liabilities: Unremitted foreign earnings Convertible debt Other Total deferred tax liabilities Total net deferred tax liabilities 2014 2013 (1) $ 21,142 $ 8,097 26,864 79,272 — 22,280 13,420 171,075 (43,004) 128,071 (253,231) (4,670) (5,493) (263,394) (135,323) $ $ 27,481 10,043 33,859 62,723 11,638 18,769 14,948 179,461 (26,401) 153,060 (244,341) (198,943) (8,181) (451,465) (298,405) (1) Reclassifications related to the federal impacts of state deferred tax assets and liabilities were made to conform to the current year presentation. There was no impact to net income or the balance sheet for the change in presentation in this prior-year period. Long-term deferred tax assets of $61.9 million and $56.4 million as of March 29, 2014 and March 30, 2013, respectively, were included in other assets on the consolidated balance sheet. As of March 29, 2014, gross deferred tax assets were offset by valuation allowances of $43.0 million, which were associated with state tax credit carryforwards and foreign net operating loss carryforwards. During the year ended March 29, 2014, there was a decrease in long-term deferred tax liabilities of $209.9 million related to the redemption of the Company's 2037 Convertible Notes. See "Loss on Extinguishment of Convertible Debentures" in Management's Discussion and Analysis for further disclosure of the underlying changes. The aggregate changes in the balance of gross unrecognized tax benefits for fiscal 2014 and 2013 were as follows: (In thousands) Balance as of beginning of fiscal year Increases in tax positions for prior years Decreases in tax positions for prior years Increases in tax positions for current year Settlements Lapses in statutes of limitation Balance as of end of fiscal year 2014 2013 69,957 163 (35,615) 3,687 (6,030) (5,764) 26,398 $ $ 65,038 2,208 (4,281) 17,660 (44) (10,624) 69,957 $ $ If the remaining balance of $26.4 million and $70.0 million of unrecognized tax benefits as of March 29, 2014 and March 30, 2013, respectively, were realized in a future period, it would result in a tax benefit of $11.0 million and $32.3 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. 69 The Company is no longer subject to U.S. federal audits by taxing authorities for years through fiscal 2010. The Company is no longer subject to U.S. state audits for years through fiscal 2004, except for fiscals 1996 through 2001 which are still open for audit purposes. The Company is no longer subject to tax audits in Ireland for years through fiscal 2009. It is reasonably possible that changes to our unrecognized tax benefits could be significant in the next twelve months due to tax audit settlements and lapses of statutes of limitation. As a result of uncertainties regarding tax audit settlements and their possible outcomes, an estimate of the range of increase or decrease that could occur in the next twelve months cannot be made. 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 2014, 2013 and 2012 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: March 29, 2014 March 30, 2013 March 31, 2012 $ 610,276 $ 558,309 $ 596,388 97,416 707,692 97,251 655,560 88,037 684,425 564,814 375,013 939,827 519,829 215,183 428,892 324,920 753,812 548,375 210,905 418,036 326,462 744,498 589,802 222,011 $ 2,382,531 $ 2,168,652 $ 2,240,736 2014 237,229 $ 2013 240,429 $ 2012 254,811 $ 48,043 51,569 18,248 117,860 355,089 $ 50,627 56,481 18,150 125,258 365,687 $ 53,255 66,806 20,110 140,171 394,982 $ (In thousands) North America: United States Other Total North America Asia Pacific: China Other Total Asia Pacific Europe Japan Worldwide total Net long-lived assets by country at fiscal year-ends were as follows: (In thousands) United States Foreign: Ireland Singapore Other Total foreign Worldwide total 70 Note 17. Litigation Settlements and Contingencies Patent Litigation On February 14, 2011, the Company filed a complaint for declaratory judgment of patent non-infringement and invalidity against Intellectual Ventures in the U.S. District Court for the Northern District of California. On September 30, 2011, the Company amended its complaint in this case to eliminate certain defendants and patents from the action (Xilinx, Inc. v. Intellectual Ventures I LLC and Intellectual Ventures II LLC, Case No CV11-0671) (California Case I). The lawsuit pertained to one patent and sought judgment of non-infringement by Xilinx and judgment that the patent is invalid and unenforceable, as well as costs and attorneys’ fees. On February 15, 2011, Intellectual Ventures added the Company as a defendant in its complaint for patent infringement previously filed against Altera, Microsemi and Lattice in the U.S. District Court for the District of Delaware (Intellectual Ventures I LLC and Intellectual Ventures II LLC v. Altera Corporation, Microsemi Corporation, Lattice Semiconductor Corporation and Xilinx, Inc., Case No. 10-CV-1065) (Delaware Case). The lawsuit pertained to five patents, four of which we were alleged to be infringing. Intellectual Ventures sought unspecified damages, interest and attorneys’ fees. Altera, Microsemi and Lattice were previously dismissed from the case with prejudice. On October 17, 2011, Xilinx filed a complaint for patent non-infringement and invalidity and violation of California Business and Professions Code Section 17200 in the U.S. District Court for the Northern District of California against Intellectual Ventures and related entities as well as additional defendants (Xilinx, Inc. v. Intellectual Ventures, LLC. Intellectual Ventures Management, LLC, Detelle Relay KG, LLC, Roldan Block NY LLC, Latrosse Technologies LLC, TR Technologies Foundation LLC, Taichi Holdings, LLC, Noregin Assets N.V., LLC and Intellectual Venture Funding LLC Case No CV-04407) (California Case II). By order dated January 25, 2012, the Court granted with leave to amend defendants' motion to dismiss our claim for violation of California Business and Professions Code section 17200. The Company amended its complaint to remove the claim for violation of California Business and Professions Code section 17200. The remainder of the lawsuit pertained to two patents and sought judgments of non-infringement by Xilinx and judgments that the patents are invalid and unenforceable, as well as costs and attorneys’ fees. On May 1, 2014, the Company entered into a confidential settlement agreement with Intellectual Ventures. Under the terms of the settlement, Intellectual Ventures agreed to dismiss with prejudice all outstanding patent litigation against Xilinx. On May 2, 2014, the U.S. District Court for the Northern District of California dismissed California Case I and California Case II and the U.S. District Court for the District of Delaware dismissed the Delaware Case. On November 5, 2012, a patent infringement lawsuit was filed by Mosaid against us in the U.S. District Court for the Eastern District of Texas (Mosaid Technologies Inc. v. Xilinx, Inc., Case No. 6:12-CV-00847). The lawsuit pertains to five patents and Mosaid seeks unspecified damages, costs, fees, royalties and injunctive relief and the proceedings are in their early stages. The Company is unable to estimate our range of possible loss in this matter at this time. Litigation Settlement On December 19, 2013, the Company entered into a Settlement and License Agreement with PACT XPP Technologies, AG (PACT). Under the settlement, the parties agreed to dismiss with prejudice all outstanding patent litigation between Xilinx, Avnet, Inc. and PACT and Xilinx agreed to pay PACT a lump sum of $33.5 million. In addition, the Company received license rights to all patents owned or controlled by PACT. On December 23, 2013, the trial court dismissed the suit and on December 27, 2013, the court of appeals dismissed the appeal. The Company previously recorded charges of $15.4 million in fiscal 2012. Due to the $33.5 million settlement, the Company recorded an additional $9.4 million in fiscal 2014 as a current period charge to the consolidated statements of income. The remainder of the settlement of $8.7 million will be amortized to cost of revenues in subsequent periods. Other Matters Except as stated above, there are no pending legal proceedings of a material nature to which the Company is a party or of which any of its property is the subject. 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, 71 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. Business Combination During the second quarter of fiscal 2013, the Company purchased substantially all of the assets and assumed certain liabilities of Modesat Communications, a wireless mobile backhaul solutions company that specializes in the development of microwave modem solutions for the mobile backhaul market. This acquisition aligns with the Company’s strategy to expand its new adjacent markets in communication infrastructure by delivering industry leading wireless backhaul solutions to the Company’s top tier customers. The acquisition was accounted for under the purchase method of accounting. The financial impact of this acquisition was not material to the Company. Note 19. Goodwill and Acquisition-Related Intangibles As of March 29, 2014 and March 30, 2013, the gross and net amounts of goodwill and of acquisition-related intangibles for all acquisitions were as follows: (In thousands) Goodwill In-process research and development Core technology, gross Less accumulated amortization Core technology, net Other intangibles, gross Less accumulated amortization Other intangibles, net Total acquisition-related intangibles, gross Less accumulated amortization Total acquisition-related intangibles, net 2014 2013 Weighted-Average Amortization Life $ $ $ 159,296 $ — $ 91,860 (63,267) 28,593 46,716 (46,442) 274 138,576 (109,709) 28,867 $ 158,990 — 89,360 (54,201) 35,159 46,516 (45,621) 895 135,876 (99,822) 36,054 5.7 years 2.7 years Amortization expense for acquisition-related intangibles for fiscal 2014, 2013 and 2012 were $9.9 million, $9.5 million and $7.6 million, respectively. Based on the carrying value of acquisition-related intangibles recorded as of March 29, 2014, and assuming no subsequent impairment of the underlying assets, the annual amortization expense for acquisition-related intangibles is expected to be as follows: Fiscal 2015 2016 2017 2018 2019 Total (In thousands) 9,537 8,936 7,131 2,660 603 28,867 $ $ 72 Note 20. Employee Benefit Plans Xilinx offers various retirement benefit plans for U.S. and non-U.S. employees. Total contributions to these plans were $13.2 million, $12.2 million and $12.0 million in fiscal 2014, 2013 and 2012, 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 March 29, 2014, there were more than 143 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 March 29, 2014, Plan assets were $50.6 million and obligations were $59.6 million. As of March 30, 2013, Plan assets were $43.3 million and obligations were $50.4 million. 73 REPORT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors and Stockholders Xilinx, Inc. We have audited the accompanying consolidated balance sheets of Xilinx, Inc. as of March 29, 2014 and March 30, 2013, and the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended March 29, 2014. Our audits also included the financial statement schedule listed in the Index at Part IV, Item 15 (a)(2). These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Xilinx, Inc. at March 29, 2014 and March 30, 2013, and the consolidated results of its operations and its cash flows for each of the three years in the period ended March 29, 2014, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Xilinx, Inc.’s internal control over financial reporting as of March 29, 2014, based on criteria established in Internal Control— Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992 Framework) and our report dated May 16, 2014 expressed an unqualified opinion thereon. /s/ ERNST & YOUNG LLP San Jose, California May 16, 2014 74 REPORT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors and Stockholders Xilinx, Inc. We have audited Xilinx, Inc.’s internal control over financial reporting as of March 29, 2014, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992 Framework) (the COSO criteria). Xilinx, Inc.’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In our opinion, Xilinx, Inc. maintained, in all material respects, effective internal control over financial reporting as of March 29, 2014, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Xilinx, Inc. as of March 29, 2014 and March 30, 2013, and the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended March 29, 2014 of Xilinx, Inc. and our report dated May 16, 2014 expressed an unqualified opinion thereon. /s/ ERNST & YOUNG LLP San Jose, California May 16, 2014 75 XILINX, INC. SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS (In thousands) Description For the year ended March 31, 2012: Allowance for doubtful accounts Allowance for deferred tax assets (b) For the year ended March 30, 2013: Allowance for doubtful accounts Allowance for deferred tax assets (b) For the year ended March 29, 2014: Allowance for doubtful accounts Allowance for deferred tax assets Beginning of Year Additions Deductions(a) End of Year $ $ $ $ $ $ 3,579 11,814 3,446 18,826 3,425 26,401 $ $ $ $ $ $ 180 7,635 $ $ — $ 7,575 2 19,771 $ $ $ 313 623 21 $ $ $ — $ 3,446 18,826 3,425 26,401 72 3,168 $ $ 3,355 43,004 (a) Represents amounts written off or released against the allowances accounts. (b) Adjustments for the federal impact of the state allowance for deferred tax assets have been made to conform to the current year presentation as in "Note 15. Income Taxes." There was no impact to net income or the balance sheet for the change in presentation for the prior-year periods. Supplementary Financial Data Quarterly Data (Unaudited) (In thousands, except per share amounts) Year ended March 29, 2014 (1) Net revenues Gross margin Income before income taxes (2) Net income Net income per common share: (3) Basic Diluted Shares used in per share calculations: Basic Diluted Cash dividends declared per common share First Quarter Second Quarter Third Quarter Fourth Quarter $ $ $ $ 578,955 399,255 182,979 157,023 0.59 0.56 264,153 280,291 0.25 $ $ $ $ 598,937 416,121 152,765 141,461 0.53 0.49 268,478 290,685 0.25 $ $ $ $ 586,816 406,024 197,932 175,877 0.66 0.61 267,780 288,195 0.25 $ $ $ $ 617,823 417,878 175,850 156,027 0.58 0.53 268,134 294,536 0.25 (1) Xilinx uses a 52- to 53-week fiscal year ending on the Saturday nearest March 31. Fiscal 2014 was a 52-week year and each quarter was a 13-week quarter. (2) Income before income taxes for the second quarter of fiscal 2014 included litigation and contingencies charge of $28,600, for the third quarter of fiscal 2014 included reversal of litigation and contingencies charge of$19,190 and for the fourth quarter of fiscal 2014 included loss on extinguishment of convertible debentures of $9,848. (3) Net income per common share is computed independently for each of the quarters presented. Therefore, the sum of the quarterly per common share information may not equal the annual net income per common share. 76 (In thousands, except per share amounts) Year ended March 30, 2013 (1) Net revenues Gross margin Income before income taxes Net income Net income per common share: (2) Basic Diluted Shares used in per share calculations: Basic Diluted Cash dividends declared per common share First Quarter Second Quarter Third Quarter Fourth Quarter $ 582,784 $ 543,933 $ 509,767 $ 532,168 384,373 154,905 129,831 356,220 138,083 123,437 339,274 115,693 103,648 351,579 138,325 130,620 $ $ $ 0.49 0.47 $ $ 0.47 0.46 $ $ 0.40 0.38 $ $ 0.50 0.47 263,055 273,820 260,605 270,265 260,690 271,174 263,035 277,090 0.22 $ 0.22 $ 0.22 $ 0.22 (1) Xilinx uses a 52- to 53-week fiscal year ending on the Saturday nearest March 31. Fiscal 2013 was a 52-week year and each quarter was a 13-week quarter. (2) Net income per common share is computed independently for each of the quarters presented. Therefore, the sum of the quarterly per common share information may not equal the annual net income per common share. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures An evaluation was carried out, under the supervision of and with the participation of the Company’s management, including our CEO and CFO, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15 (e) under the Exchange Act) as of the end of the period covered by this report. Based upon this evaluation, our CEO and CFO have concluded that, as of the end of the period covered by this Form 10-K, the Company’s disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. Changes in Internal Control Over Financial Reporting There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended March 29, 2014 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Management’s Report on Internal Control Over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. This system of internal control is designed to provide reasonable assurance that assets are safeguarded and transactions are properly recorded and executed in accordance with management’s authorization. The design, monitoring and revision of the system of internal control over financial reporting involve, among other things, management’s judgments with respect to the relative cost and expected benefits of specific control measures. The effectiveness of the system of internal control over financial reporting is supported by the selection, retention and training of qualified personnel and an organizational structure that provides an appropriate division of responsibility and formalized procedures. The system of internal control is periodically reviewed and modified in response to changing conditions. 77 Because of its inherent limitations, no matter how well designed, a system of internal control over financial reporting can provide only reasonable assurance and may not prevent or detect all misstatements or all fraud. Further, because of changes in conditions, the effectiveness of internal control over financial reporting may vary over time. Our system contains self-monitoring mechanisms, and actions are taken to correct deficiencies as they are identified. Management has used the criteria established in the Report "Internal Control — Integrated Framework" issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) (1992 Framework) to evaluate the effectiveness of our internal control over financial reporting. Based on this evaluation, management has concluded that the Company’s internal control over financial reporting was effective as of March 29, 2014. The effectiveness of the Company’s internal control over financial reporting as of March 29, 2014 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which is included in Part II, Item 8 of this Form 10-K. ITEM 9B. OTHER INFORMATION None. 78 PART III Certain information required by Part III is omitted from this Report in that the Registrant will file a definitive proxy statement pursuant to Regulation 14A under the Exchange Act (the Proxy Statement) not later than 120 days after the end of the fiscal year covered by this Report, and certain information included therein is incorporated herein by reference. Only those sections of the Proxy Statement that specifically address the items set forth herein are incorporated by reference. ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The information required by this item pursuant to Item 401(b), (d), (e) and (f) of Regulation S-K concerning the Company’s executive officers is incorporated herein by reference to Item 1. "Business — Executive Officers of the Registrant" within this Form 10-K. The information required by this item pursuant to Item 401(a), (d), (e), (f) and Items 406 and 407 of Regulation S-K concerning the Company’s directors, the code of ethics and corporate governance matters is incorporated herein by reference to the sections entitled "Proposal One-Election of Directors," "Board Matters" and "Corporate Governance Principles" in our Proxy Statement. The information required by this item regarding delinquent filers pursuant to Item 405 of Regulation S-K is incorporated herein by reference to the section entitled "Section 16(a) Beneficial Ownership Reporting Compliance" in our Proxy Statement. Our codes of conduct and ethics and significant corporate governance principles are available on the investor relations page of our website at www.investor.xilinx.com. Our code of conduct applies to our directors and employees, including our CEO, CFO and principal accounting personnel. In addition, our Board of Directors has adopted a code of ethics that pertains specifically to the Board of Directors. Printed copies of these documents are also available to stockholders without charge upon written request directed to Corporate Secretary, Xilinx, Inc., 2100 Logic Drive, San Jose CA 95124. ITEM 11. EXECUTIVE COMPENSATION The information required by this item pursuant to Item 402 of Regulation S-K concerning executive compensation is incorporated herein by reference to the sections entitled "Compensation of Directors" and "Executive Compensation" in our Proxy Statement. The information required by this item pursuant to Item 407(e)(4) of Regulation S-K is incorporated herein by reference to the section entitled "Compensation Committee Interlocks and Insider Participation" in our Proxy Statement. The information required by this item pursuant to Item 407(e)(5) of Regulation S-K is incorporated herein by reference to the section entitled "Compensation Committee Report" in our Proxy Statement. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information required by this item pursuant to Item 403 of Regulation S-K is incorporated herein by reference to the section entitled "Security Ownership of Certain Beneficial Owners and Management" in our Proxy Statement. The information required by Item 201(d) of Regulation S-K is set forth below. 79 Equity Compensation Plan Information The table below sets forth certain information as of fiscal year ended March 29, 2014 about the Company’s common stock that may be issued upon the exercise of options, RSUs, warrants and rights under all of our existing equity compensation plans including the ESPP: (Shares in thousands) A B Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights Weighted-average Exercise Price of Outstanding Options, Warrants and Rights Equity Compensation Plans Approved by Security Holders 2,573 (2) 9,631 N/A 12,204 $ $ $ 25.36 (3) 25.08 N/A 25.22 Plan Category 1997 Stock Plan 2007 Equity Plan Employee Stock Purchase Plan Total-Approved Plans Equity Compensation Plans NOT Approved by Security Holders Supplemental Stock Option Plan (5) Total-All Plans 1 12,205 $ $ 25.77 25.22 C Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (excluding securities reflected in Column A) — 15,037 (1) (4) 9,726 24,763 — 24,763 (1) The Company ceased issuing options under the 1997 Stock Plan as of April 1, 2007. The 1997 Stock Plan expired on May 8, 2007 and all available but unissued shares under this plan were cancelled. (2) Includes approximately 6.9 million shares issuable upon vesting of RSUs that the Company granted under the 2007 Equity Plan. (3) The weighted-average exercise price does not take into account shares issuable upon vesting of outstanding RSUs, which have no exercise price. (4) On July 26, 2006, the stockholders approved the adoption of the 2007 Equity Plan and authorized 10.0 million shares to be reserved for issuance thereunder. The 2007 Equity Plan, which became effective on January 1, 2007, replaced both the Company’s 1997 Stock Plan (which expired on May 8, 2007) and the Supplemental Stock Option Plan. On August 9, 2007, August 14, 2008, August 12, 2009, August 11, 2010, August 10, 2011, August 8, 2012, and August 14, 2013 our stockholders authorized the reserve of an additional 5.0 million shares, 4.0 million shares, 5.0 million shares, 4.5 million shares, 4.5 million shares, 3.5 million shares and 2.0 million shares, respectively. All of the shares reserved for issuance under the 2007 Equity Plan may be granted as stock options, stock appreciation rights, restricted stock or RSUs. (5) Under the Supplemental Stock Option Plan, options were granted to employees and consultants of the Company, however neither officers nor members of our Board were eligible for grants under the Supplemental Stock Option Plan. Only non-qualified stock options were granted under the Supplemental Stock Option Plan (that is, options that do not entitle the optionee to special U.S. income tax treatment) and such options generally expire not later than 12 months after the optionee ceases to be an employee or consultant. Upon a merger of the Company with or into another company, or the sale of substantially all of the Company’s assets, each option granted under the Supplemental Stock Option Plan may be assumed or substituted with a similar option by the acquiring company, or the outstanding options will become exercisable in connection with the merger or sale. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE The information required by this item concerning related party transactions pursuant to Item 404 of Regulation S-K is incorporated herein by reference to the section entitled "Related Transactions" in our Proxy Statement. The information required by this item concerning director independence pursuant to Item 407(a) of Regulation S-K is incorporated herein by reference to the section entitled "Board Matters" in our Proxy Statement. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES The information required by this Item is incorporated herein by reference to the sections entitled "Proposal Six - Ratification of Appointment of External Auditors" and "Fees Paid to Ernst & Young LLP" in our Proxy Statement. 80 PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) (1) The financial statements required by Item 15(a) are included in Item 8 of this Annual Report on Form 10-K. (2) The financial statement schedule required by Item 15(a) (Schedule II, Valuation and Qualifying Accounts) is included in Item 8 of this Annual Report on Form 10-K. Schedules not filed have been omitted because they are not applicable, are not required or the information required to be set forth therein is included in the financial statements or notes thereto. (3) The exhibits listed below in (b) are filed or incorporated by reference as part of this Annual report on Form 10-K. (b) Exhibits EXHIBIT LIST Exhibit No 3.1 3.2 4.1 4.2 4.3 10.1 * 10.2 * 10.3 * 10.4 * 10.5 * 10.6 * 10.7 * 10.8 * 10.9 * Exhibit Title Restated Certificate of Incorporation, as amended to date Bylaws of the Company, as amended and restated as of May 9, 2012 Indenture dated March 5, 2007 between the Company as Issuer and the Bank of New York Trust Company, N.A. as Trustee Indenture dated June 9, 2010 between the Company as Issuer and the Bank of New York Mellon Trust Company, N.A. as Trustee Supplemental Indenture, dated as of March 12, 2014, between the Company as Issuer and The Bank of New York Mellon Trust Company, N.A., as trustee Amended and Restated 1990 Employee Qualified Stock Purchase Plan 1997 Stock Plan and Form of Stock Option Agreement Form of Indemnification Agreement between the Company and its officers and directors Supplemental Stock Option Plan Letter Agreement dated June 2, 2005 between the Company and Jon A. Olson 2007 Equity Incentive Plan Form of Stock Option Agreement under 2007 Equity Incentive Plan Form of Restricted Stock Unit Agreement under 2007 Equity Incentive Plan Form of Performance-Based Restricted Stock Unit Agreement under 2007 Equity Incentive Plan Incorporated by Reference Form 10-K File No. 000-18548 Exhibit 3.1 Filing Date 5/30/2007 Filed Herewith 8-K 000-18548 3.2 5/15/2012 10-K 000-18548 4.1 5/30/2007 10-Q 000-18548 4.2 8/9/2010 8-K 000-18548 4.01 3/13/2014 DEF 14A S-8 000-18548 333-127318 Appendix A 4.2 5/29/2012 8/9/2005 S-1 333-34568 10.17 4/27/1990 10-K 10-Q/ A DEF 14A 10-K 000-18548 000-18548 000-18548 10.16 6/17/2002 10.1 8/12/2005 Appendix B 5/29/2012 000-18548 10.24 5/30/2007 10-K 000-18548 10.25 5/30/2007 8-K 000-18548 99.1 7/5/2007 81 Exhibit No 10.10 * 10.11 * Exhibit Title Letter Agreement dated January 4, 2008 between the Company and Moshe N. Gavrielov Amendment of Employment Agreement dated February 14, 2008 between the Company and Jon A. Olson Incorporated by Reference Form 8-K File No. 000-18548 Exhibit 99.2 Filing Date 1/7/2008 Filed Herewith 8-K 000-18548 99.1 2/20/2008 10.12 * Summary of Fiscal 2014 Executive Incentive Plan 8-K 000-18548 N/A 5/21/2013 10.13 * Restricted Stock Issuance Agreement 10-Q 000-18548 10.15 8/9/2011 10-Q 000-18548 10.16 8/9/2011 8-K 000-18548 10.17 6/19/2012 8-K 000-18548 10.18 6/19/2012 10-Q 000-18548 10.19 11/2/2012 10.14 * 10.15 * 10.16 * 10.17 * Performance Based Restricted Stock Issuance Agreement Amendment of Employment Agreement between the Company and Moshe N. Gavrielov Amendment of Employment Agreement between the Company and Jon A. Olson Retirement Agreement between the Company and Vincent Ratford 10.18 + Xilinx, Inc. Master Distributor Agreement with Avnet, Inc. 21.1 23.1 24.1 31.1 31.2 32.1 32.2 Subsidiaries of the Company Consent of Independent Registered Public Accounting Firm Power of Attorney (included in the signature page) Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 101.INS ** XBRL Instance Document 101.SCH ** XBRL Taxonomy Extension Schema Document 101.CAL ** XBRL Taxonomy Extension Calculation Linkbase Document 101.LAB ** XBRL Taxonomy Extension Label Linkbase Document 101.PRE ** XBRL Taxonomy Extension Presentation Linkbase Document X X X X X X X X X X X X X 82 + * ** Confidential treatment requested as to certain portions of this document. Management contract or compensatory plan or arrangement required to be filed as an exhibit to the Company’s Annual Report on Form 10-K pursuant to Item 15(b) herein. Pursuant to applicable securities laws and regulations, we are deemed to have complied with the reporting obligation relating to the submission of interactive data files in such exhibits and are not subject to liability under any anti-fraud provisions of the federal securities laws as long as we have made a good faith attempt to comply with the submission requirements and promptly amend the interactive data files after becoming aware that the interactive data files fail to comply with the submission requirements. Users of this data are advised that pursuant to Rule 406T, these interactive data files are deemed not filed and otherwise are not subject to liability. 83 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: May 16, 2014 XILINX, INC. By: /s/ Moshe N. Gavrielov Moshe N. Gavrielov, President and Chief Executive Officer POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Moshe N. Gavrielov and Jon A. Olson, jointly and severally, his/her attorneys-in-fact, each with the power of substitution, for him/her in any and all capacities, to sign any amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his/her substitute or substitutes, may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934 this Annual Report on Form 10-K has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated. Signature Title /s/ Moshe N. Gavrielov (Moshe N. Gavrielov) /s/ Jon A. Olson (Jon A. Olson) /s/ Philip T. Gianos (Philip T. Gianos) /s/ John L. Doyle (John L. Doyle) President and Chief Executive Officer (Principal Executive Officer) and Director Executive Vice President, Finance and Chief Financial Officer (Principal Accounting and Financial Officer) Chairman of the Board of Directors Director /s/ William G. Howard, Jr. Director (William G. Howard, Jr.) /s/ J. Michael Patterson (J. Michael Patterson) /s/ Albert A. Pimentel (Albert A. Pimentel) /s/ Marshall C. Turner (Marshall C. Turner) /s/ Elizabeth W. Vanderslice (Elizabeth W. Vanderslice) Director Director Director Director 84 Date May 16, 2014 May 16, 2014 May 16, 2014 May 16, 2014 May 16, 2014 May 16, 2014 May 16, 2014 May 16, 2014 May 16, 2014 XilinxAnnualReport2014_SectionPages_FINAL_060514.pdf 2 6/5/14 4:58 PM Delivering A Generation Ahead C M Y CM MY CY CMY K 2014 Proxy Statement This page intentionally left blank. Dear Xilinx Stockholder: June 30, 2014 You are cordially invited to attend the 2014 Annual Meeting of Stockholders to be held on Wednesday, August 13, 2014 at 11:00 a.m., Pacific Daylight Time, at the headquarters of Xilinx, Inc. (Xilinx, the Company, we or our) located at 2050 Logic Drive, San Jose, California 95124. We look forward to your attendance either in person or by proxy. At this meeting, the agenda includes: (cid:127) (cid:127) (cid:127) (cid:127) (cid:127) the annual election of directors; a proposal to approve an amendment to our 1990 Employee Qualified Stock Purchase Plan to increase the number of shares reserved for issuance thereunder by 2,000,000 shares; a proposal to approve an amendment to our 2007 Equity Incentive Plan to increase the number of shares reserved for issuance thereunder by 3,000,000 shares; an advisory vote on executive compensation as described in the attached proxy statement; and a proposal to ratify the appointment of the Company’s external auditors, Ernst & Young LLP. The foregoing matters are more fully described in the attached proxy statement. The agenda will also include any other business that may properly come before the meeting or any adjournment or postponement thereof. The Board of Directors recommends that you vote FOR the election of each of the director nominees nominated by the Board of Directors, FOR the increase in the number of shares available for issuance under our 1990 Employee Qualified Stock Purchase Plan, FOR the increase in the number of shares available for issuance under our 2007 Equity Incentive Plan, FOR the approval of the compensation of our named executive officers, and FOR the ratification of appointment of Ernst & Young LLP as external auditors of the Company for the fiscal year ending March 28, 2015. Please refer to the proxy statement for detailed information on each of the proposals. You may vote your shares in one of the following ways: (1) via the Internet, by visiting the website shown on the Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on August 13, 2014 (Internet Notice) or proxy card and following the instructions; (2) telephonically by calling the telephone number shown in the Internet Notice or proxy card; (3) by voting in person at the annual meeting; or (4) by requesting, completing and mailing in a paper proxy card, as outlined in the Internet Notice. The Xilinx 2014 Annual Meeting will be held solely to tabulate the votes cast and report the results of voting on the matters described in the attached proxy statement and any other business that may properly come before the meeting. Certain senior executives of Xilinx will be in attendance to answer questions following the Annual Meeting; however, there will be no formal presentation concerning the business of Xilinx. Whether or not you plan to attend, please take a few minutes now to vote online or via telephone or, alternatively, request a paper proxy card and mark, sign and date your proxy and return it by mail so that your shares will be represented. Thank you for your continuing interest in Xilinx. Very truly yours, /s/ Moshe N. Gavrielov Moshe N. Gavrielov President and Chief Executive Officer IMPORTANT: WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO VOTE YOUR PROXY ONLINE OR BY TELEPHONE, OR, IN THE ALTERNATIVE, REQUEST, COMPLETE AND MAIL IN A PAPER PROXY CARD. This page intentionally left blank. TABLE OF CONTENTS NOTICE OF ANNUAL MEETING OF STOCKHOLDERS PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS QUESTIONS AND ANSWERS ABOUT THIS PROXY MATERIAL AND VOTING PROPOSAL ONE - ELECTION OF DIRECTORS BOARD MATTERS CORPORATE GOVERNANCE PRINCIPLES COMPENSATION OF DIRECTORS PROPOSAL TWO - AMENDMENT TO THE 1990 EMPLOYEE QUALIFIED STOCK PURCHASE PLAN PROPOSAL THREE - AMENDMENT TO THE 2007 EQUITY INCENTIVE PLAN PROPOSAL FOUR - ADVISORY VOTE ON EXECUTIVE COMPENSATION PROPOSAL FIVE - RATIFICATION OF APPOINTMENT OF EXTERNAL AUDITORS REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT EXECUTIVE COMPENSATION - COMPENSATION DISCUSSION AND ANALYSIS COMPENSATION COMMITTEE REPORT COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE RELATED TRANSACTIONS OTHER MATTERS APPENDIX A: AMENDED AND RESTATED 1990 EMPLOYEE QUALIFIED STOCK PURCHASE PLAN APPENDIX B: 2007 EQUITY INCENTIVE PLAN 1 1 6 9 12 15 17 21 29 30 32 33 35 57 65 65 65 65 This page intentionally left blank. XILINX, INC. NOTICE OF ANNUAL MEETING OF STOCKHOLDERS Wednesday, August 13, 2014 TO OUR STOCKHOLDERS: NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Xilinx, Inc., a Delaware corporation (Xilinx, the Company, we or our), will be held on Wednesday, August 13, 2014 at 11:00 a.m., Pacific Daylight Time, at the Company’s headquarters located at 2050 Logic Drive, San Jose, California 95124 for the following purposes: 1. 2. 3. 4. 5. to elect the following eight nominees for director to serve on the Board of Directors for the ensuing year or until their successors are duly elected and qualified: Philip T. Gianos, Moshe N. Gavrielov, John L. Doyle, William G. Howard, Jr., J. Michael Patterson, Albert A. Pimentel, Marshall C. Turner and Elizabeth W. Vanderslice; to approve an amendment to our 1990 Employee Qualified Stock Purchase Plan to increase the number of shares reserved for issuance thereunder by 2,000,000 shares; to approve an amendment to our 2007 Equity Incentive Plan to increase the number of shares reserved for issuance thereunder by 3,000,000 shares; to hold an advisory vote on executive compensation as described in the attached proxy statement; to ratify the appointment of Ernst & Young LLP, an independent registered public accounting firm, as external auditors of Xilinx, for the fiscal year ending March 28, 2015; and 6. to transact such other business as may properly come before the meeting or any adjournment or postponement thereof. The foregoing items of business are more fully described in the proxy statement accompanying this notice. Only stockholders of record at the close of business on June 16, 2014 are entitled to notice of and to vote at the meeting. All stockholders are cordially invited to attend the meeting in person. Certain senior executives of Xilinx will be in attendance to answer questions following the Annual Meeting; however, there will be no formal presentation concerning the business of Xilinx. In order to ensure your representation at the meeting, you are urged to vote as soon as possible. You may vote your shares in one of the following ways: (1) via the Internet, by visiting the website shown on the Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on August 13, 2014 (Internet Notice) or proxy card and following the instructions; (2) telephonically by calling the telephone number shown in the Internet Notice or proxy card; (3) by voting in person at the annual meeting; or (4) by requesting, completing and mailing in a paper proxy card, as outlined in the Internet Notice. If you have Internet access, we encourage you to record your vote on the Internet. FOR THE BOARD OF DIRECTORS /s/ Scott R. Hover-Smoot Scott R. Hover-Smoot Secretary San Jose, California June 30, 2014 THIS PROXY STATEMENT AND THE ACCOMPANYING PROXY ARE BEING PROVIDED ON OR ABOUT JUNE 30, 2014 IN CONNECTION WITH THE SOLICITATION OF PROXIES ON BEHALF OF THE BOARD OF DIRECTORS OF XILINX, INC. IMPORTANT: WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO VOTE YOUR PROXY ONLINE OR BY TELEPHONE, OR, IN THE ALTERNATIVE, REQUEST, COMPLETE AND MAIL IN A PAPER PROXY CARD. This page intentionally left blank. PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS QUESTIONS AND ANSWERS ABOUT THIS PROXY MATERIAL AND VOTING XILINX, INC. Q: Why am I receiving these materials? A: This proxy statement, the enclosed proxy card and the Annual Report on Form 10-K for the fiscal year ended March 29, 2014 (Form 10-K) are being provided to stockholders of Xilinx, Inc., a Delaware corporation (Xilinx, the Company, we or our), on or about June 30, 2014 in connection with the solicitation by the Board of Directors (Board) of proxies to be used at the Annual Meeting of Stockholders of the Company (Annual Meeting) to be held on Wednesday, August 13, 2014 at 11:00 a.m., Pacific Daylight Time, at the Company’s headquarters, located at 2050 Logic Drive, San Jose, California 95124 and any adjournment or postponement thereof. Q: How much did this proxy solicitation cost and who will pay for the cost? A: The cost of preparing, assembling and delivery of the notice of Annual Meeting, proxy statement and form of proxy and the solicitation of proxies will be paid by Xilinx. We have retained the services of Alliance Advisors, LLC to assist in obtaining proxies from brokers and nominees of stockholders for the Annual Meeting. The estimated cost of such services is approximately $8,500 plus out-of-pocket expenses. Proxies may also be solicited in person, by telephone or electronically by Xilinx personnel who will not receive any additional compensation for such solicitation. We will pay brokers or other persons holding stock in their names or the names of their nominees for the expenses of forwarding soliciting material to their principals. Q: Why did I receive a one-page notice in the mail regarding Internet availability of proxy materials instead of a full set of proxy materials? A: In accordance with the rules of the Securities and Exchange Commission (SEC), instead of mailing a printed copy of our proxy materials to stockholders, we mailed an Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on August 13, 2014 (Internet Notice) to most of our stockholders to instruct you on how to access and review our proxy materials on the Internet. We believe that it is in the best interests of our stockholders to take advantage of these rules and reduce the expenses associated with printing and mailing proxy materials to all of our stockholders. In addition, as a corporate citizen, we want to reduce the use of natural resources and the environmental impact of printing and mailing the proxy materials. As a result, you will not receive paper copies of the proxy materials unless you specifically request them. The Internet Notice provides instructions on how you can: (1) access the proxy materials on the Internet, (2) access your proxy and (3) vote on the Internet. If you would like to receive paper copies of the proxy materials, please follow the instructions on the Internet Notice. If you share an address with another stockholder and received only one Internet Notice, you may write or call us to request a separate copy of the proxy materials at no cost to you. We anticipate that the Internet Notice will be mailed on or about June 30, 2014 to all stockholders entitled to vote at the meeting. Q: Who is entitled to vote? A: Only stockholders of record at the close of business (5:00 p.m., Eastern Daylight Time) on June 16, 2014 (the Record Date) are entitled to notice of and to vote at the Annual Meeting and at any adjournment or postponement thereof. Q: How many votes are allowed for each share of my Xilinx common stock? A: Each stockholder is entitled to one vote for each share of Xilinx common stock (Common Stock) held by such stockholder as of the Record Date with respect to all matters presented at the Annual Meeting. Stockholders do not have the right to cumulate their votes in the election of directors. Q: How many shares are outstanding? A: As of the close of business on May 9, 2014, there were 268,296,602 shares of Common Stock outstanding. The closing price of our Common Stock on May 9, 2014, as reported by the NASDAQ Global Select Market (NASDAQ), was $46.64 per share. Q: How will my shares be voted and what happens if I do not give specific voting instructions? A: Shares of Common Stock for which proxy cards are properly voted via the Internet or by telephone or are properly executed and returned, will be voted at the Annual Meeting in accordance with the directions given or, in the absence of directions, will -1- be voted “FOR” the election of each of the nominees to the Board named herein, “FOR” the approval of the amendment increasing the number of shares authorized under the Company’s 1990 Employee Qualified Stock Purchase Plan, “FOR” the approval of the amendment increasing the number of shares authorized under the Company’s 2007 Equity Incentive Plan, “FOR” the approval of the compensation of our named executive officers, and “FOR” the ratification of the appointment of Ernst & Young LLP, an independent registered public accounting firm, as the Company’s external auditors for fiscal 2015. It is not expected that any other matters will be brought before the Annual Meeting. If, however, other matters are properly presented, the persons named as proxies in the proxy card will vote in accordance with their discretion with respect to such matters. Q: What is the difference between a registered stockholder and a beneficial stockholder? A: Registered Stockholder or Stockholder of Record: Shares Registered in Your Name If on the Record Date, your shares were registered directly in your name with the Company’s transfer agent, Computershare Trust Company, N.A., then you are a registered stockholder or a stockholder of record. As a stockholder of record, you may vote in person at the Annual Meeting or vote by proxy. Shares held in a brokerage or bank account are not generally registered directly in your name. If you plan on attending the Annual Meeting, please see the question below titled “How do I gain admittance to the Annual Meeting?” Beneficial Stockholder: Shares Registered in the Name of a Broker or Bank If on the Record Date, your shares were held in an account at a brokerage firm, bank, dealer, or other similar organization, then you are the beneficial stockholder of shares held in “street name” and these proxy materials are being forwarded to you by that organization. The organization holding your account is considered the stockholder of record for purposes of voting at the Annual Meeting. As a beneficial stockholder, you have the right to direct your broker or other agent on how to vote the shares in your account. You are also invited to attend the Annual Meeting. However, since you are not the stockholder of record, you may not vote your shares in person at the Annual Meeting unless you request and obtain a valid proxy from your broker or other agent. If you plan on attending the Annual Meeting, please see the question below titled “How do I gain admittance to the Annual Meeting?” Q: How do I cast my vote? A: Whether you hold your shares directly as the stockholder of record or beneficially in “street name”, you may vote your shares by proxy without attending the Annual Meeting. Depending on how you hold your shares, you may vote your shares in one of the following ways: Stockholders of Record: If you are a stockholder of record, there are several ways for you to vote your shares. (cid:127) By telephone or over the Internet. You may vote your shares by telephone or via the Internet by following the instructions provided in the Internet Notice. If you vote by telephone or via the Internet, you do not need to return a proxy card by mail. If you have Internet access, we encourage you to record your vote on the Internet. It is convenient, reduces the use of natural resources and saves significant postage and processing costs. In addition, when you vote via the Internet or by phone prior to the meeting date, your vote is recorded immediately and there is no risk that postal delays will cause your vote to arrive late and therefore not be counted. (cid:127) By Mail. If you received printed proxy materials, you may submit your vote by completing, signing and dating each proxy card received and returning it in the prepaid envelope. Sign your name exactly as it appears on the proxy card. (cid:127) In person at the Annual Meeting. You may vote your shares in person at the Annual Meeting. Even if you plan to attend the Annual Meeting in person, we recommend that you also submit your proxy card or voting instructions or vote by telephone or via the Internet by the applicable deadline so that your vote will be counted if you later decide not to attend the meeting. For more information on the documentation necessary to attend the Annual Meeting in person, please see the question below titled “How do I gain admittance to the Annual Meeting?” Beneficial Stockholders: If you are a beneficial owner of your shares, you should have received an Internet Notice from the broker or other nominee holding your shares. You should follow the instructions in the Internet Notice or voting instructions provided by your broker or nominee in order to instruct your broker or other nominee on how to vote your shares. The availability of telephone and Internet voting will depend on the voting process of the broker or nominee. Shares held beneficially may be voted in person at the Annual Meeting only if you contact the broker or nominee giving you the right to vote the shares and obtain a legal proxy from such broker or nominee. -2- Q: How do I gain admittance to the Annual Meeting? A: Each stockholder must present valid picture identification such as a driver’s license or passport and proof of stock ownership as of the Record Date for entrance to the Annual General Meeting. Q: How many copies of the proxy materials will be delivered to stockholders sharing the same address? A: In an effort to conserve natural resources and reduce printing costs and postage fees, the Company has adopted a practice approved by the SEC called “householding.” Under this practice, stockholders who have the same address and last name and do not participate in electronic delivery of proxy materials will receive only one copy of the Internet Notice unless one or more of these stockholders notifies the Company that they wish to continue receiving individual copies. If you share an address with another stockholder and received only one Internet Notice and would like to request a copy of the proxy materials, please send your request to: Xilinx, Inc., 2100 Logic Drive, San Jose, CA 95124, Attn: Investor Relations; call Investor Relations at (408) 879-6911; or visit the Company’s website at www.investor.xilinx.com. Xilinx will deliver a separate copy of these materials promptly upon receipt of your written or verbal request. Similarly, you may also contact the Company if you received multiple copies of the proxy materials and would prefer to receive a single copy in the future. Q: What is the quorum requirement for the Annual Meeting? A: A quorum of stockholders is necessary to hold a valid meeting. The required quorum for the transaction of business at the Annual Meeting is a majority of the outstanding shares of Common Stock as of the Record Date. Shares of Common Stock entitled to vote and represented at the Annual Meeting by proxy or in person will be tabulated by the inspector of elections appointed for the Annual Meeting and counted towards the quorum. Abstentions and broker non-votes will also be counted towards the quorum requirement. If there is no quorum, a majority of the votes present at the meeting may adjourn the meeting to another date. Q: Who will count my votes? A: Votes will be counted by the inspector of elections appointed for the meeting, who will separately count “FOR” and “AGAINST” votes, abstentions and broker non-votes. Q: What is the effect of a “broker non-vote”? A: A “broker non-vote” occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that proposal and has not received instructions with respect to that proposal from the beneficial owner, despite voting on at least one other proposal for which it does have discretionary authority or for which it has received instructions. Broker non-votes have no effect and will not be counted towards the vote total for any proposal. Q: Which ballot measures are considered “routine” or “non-routine”? A: Brokers who do not receive voting instructions from their clients have the discretion to vote uninstructed shares on “routine” matters but have no discretion to vote them on “non-routine matters.” Proposal One (election of directors), Proposal Two (amendment to the 1990 Employee Qualified Stock Purchase Plan), Proposal Three (amendment to the 2007 Equity Incentive Plan), and Proposal Four (advisory vote on executive compensation) are “non-routine” matters. If you hold your shares in street name and you do not instruct your bank or broker how to vote on “non-routine” matters such as Proposals One, Two, Three, and Four, no votes will be cast on your behalf. Therefore, if you hold your shares in street name, it is critical that you cast your vote if you want it to count for “non-routine” matters. Proposal Five (ratification of external auditors) is a “routine” matter. Brokers or other nominees may generally vote on “routine” matters, and therefore no broker non-votes are expected to exist in connection with Proposal Five. Q: How are abstentions treated? A: Abstentions are counted for purposes of determining whether a quorum is present. For the purpose of determining whether the stockholders have approved a matter, abstentions are treated as represented and entitled to vote and, therefore, have the same effect on the outcome of a matter being voted on at the Annual Meeting as a vote “Against” or “Withheld” except in elections of directors where abstentions have no effect on the outcome. -3- Q: How many votes are needed to approve each proposal? A: The following table sets forth the voting requirement with respect to each of the proposals: PROPOSAL Proposal One – Election of eight (8) directors Proposal Two – Amendment to the 1990 Employee Qualified Stock Purchase Plan to increase the number of shares reserved for issuance thereunder by 2,000,000 shares Proposal Three – Amendment to the 2007 Equity Incentive Plan to increase the number of shares to be reserved for issuance thereunder by 3,000,000 shares Proposal Four – Annual advisory vote to approve the compensation of our named executive officers Proposal Five – The ratification of Ernst & Young LLP as our independent registered public accounting firm VOTE REQUIRED Majority of votes cast, except in contested elections, Directors will be elected by the plurality standard whereby those Directors with the highest number of votes cast are elected Majority of shares entitled to vote and present in person or represented by proxy Majority of shares entitled to vote and present in person or represented by proxy Advisory vote; Majority of shares entitled to vote and present in person or represented by proxy Majority of shares entitled to vote and present in person or represented by proxy BROKER DISCRETIONARY VOTE ALLOWED No No No No Yes In the absence of instructions, shares of Common Stock represented by valid proxies shall be voted in accordance with the recommendations of the Board as shown on the proxy. Q: What is the advisory vote to approve the compensation of our named executive officers? A: At our 2011 Annual Meeting, a majority of our stockholders approved holding an advisory vote on our executive compensation program (also known as “say-on-pay”) at each annual meeting of stockholders. Therefore, we have included Proposal Four in this proxy statement to allow our stockholders to provide us a non-binding advisory vote on the compensation of our named executive officers as disclosed in this proxy statement. Your vote on this item will provide insight into our stockholders’ view on our compensation practices pertaining to our named executive officers. Q: How can I change my vote or revoke my proxy? A: A stockholder of record giving a proxy may revoke it at any time before it is voted by delivering to the Secretary of the Company, at 2100 Logic Drive, San Jose, California 95124, a written notice of revocation or a duly executed proxy bearing a later date, or by appearing at the Annual Meeting and voting in person. Attendance at the Annual Meeting will not, by itself, be sufficient to revoke a proxy. Any beneficial stockholder wishing to revoke his or her voting instructions must contact the bank, brokerage firm or other custodian who holds his or her shares and obtain a legal proxy from such bank or brokerage firm to vote such shares in person at the Annual Meeting. Q: How and when may I submit proposals for consideration at next year’s Annual Meeting of stockholders? A: Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended (Exchange Act), to be eligible for inclusion in the Company’s proxy statement for the Company’s 2015 Annual Meeting of Stockholders, stockholder proposals must be received by the Secretary of the Company at our principal executive offices at 2100 Logic Drive, San Jose, California, 95124 no later than March 2, 2015. In order for stockholder proposals made outside of Rule 14a-8 under the Exchange Act to be considered timely within the meaning of Rule 14a-4(c) under the Exchange Act, such proposals must be received by the Secretary of the Company at our principal executive offices no later than May 16, 2015. In addition, the Company’s Prior Notice For Inclusion on Agenda Bylaw provision requires that stockholder proposals made outside of Rule 14a-8 under the Exchange Act must be submitted in accordance with the requirements of the Company’s Bylaws, not later than April 15, 2015 -4- and not earlier than March 16, 2015; provided however, that if the Company’s 2015 Annual Meeting of Stockholders is called for a date that is not within 25 days before or after the anniversary of the Annual Meeting, then to be considered timely, stockholder proposals must be received by the Secretary of the Company at our principal executive offices not later than the close of business on the tenth day following the day on which notice of the Company’s 2015 Annual Meeting of Stockholders was mailed or publicly disclosed, whichever occurs first. The full text of the Company’s Prior Notice for Inclusion on Agenda Bylaw provision described above may be obtained by writing to the Secretary of the Company. -5- PROPOSAL ONE ELECTION OF DIRECTORS Nominees The Board of Directors has nominated the eight (8) individuals named below, each of whom is currently serving as a director (Director) of the Company, to be elected as a Director at the Annual Meeting. The term of office of each person elected as a Director will continue until the next annual meeting of stockholders or until his or her successor has been elected and qualified. Unless otherwise instructed, the proxy holders will vote the proxies received by them for each of the Company’s eight (8) nominees named below. In the event that any nominee of the Company is unable or declines to serve as a Director at the time of the Annual Meeting, the proxies will be voted for any nominee who shall be designated by the Board to fill the vacancy. The Company is not aware of any nominee who will be unable to serve as a Director. Name of Nominee ________________________ Philip T. Gianos Moshe N. Gavrielov John L. Doyle William G. Howard, Jr. J. Michael Patterson Albert A. Pimentel Marshall C. Turner Elizabeth W. Vanderslice Age _____ 64 60 82 72 68 59 72 50 Director Since _________ 1985 2008 1994 1996 2005 2010 2007 2000 The Board seeks to have members with a variety of backgrounds and experiences. Set forth below is a brief description of the experience, qualifications, attributes or skills of each of our Director nominees that led the Board to conclude that the Director should serve on the Board. Mr. Gianos joined the Company’s Board in December 1985. Mr. Gianos has served as Chairman of the Board since February 2009. Mr. Gianos has been an investor with InterWest Partners, a venture capital firm focused on information technology and life sciences, since 1982 and a General Partner since 1984. Prior to joining InterWest Partners, from 1973 to 1980 inclusive, Mr. Gianos was with IBM Corporation, an information technology company, in engineering and engineering management roles. Mr. Gianos brings to the Board over 30 years of experience as an investor in multiple areas of information technology, including semiconductors, at a venture capital firm, as well as six years of experience in engineering management. Such experience has proved valuable to the Board in considering and evaluating strategic investments for the Company, as well as in overseeing the operational and R&D aspects of the Company’s business. Mr. Gavrielov joined the Company in January 2008 as President and CEO and was appointed to the Board in February 2008. Prior to joining the Company, Mr. Gavrielov served at Cadence Design Systems, Inc., an electronic design automation company, as Executive Vice President and General Manager of the Verification Division from April 2005 through November 2007. Mr. Gavrielov served as CEO of Verisity Ltd., an electronic design automation company, from March 1998 to April 2005 before its acquisition by Cadence Design Systems, Inc. Prior to joining Verisity, Mr. Gavrielov spent nearly 10 years at LSI Corporation (formerly LSI Logic Corporation), a semiconductor manufacturer, in a variety of executive management positions, including Executive Vice President of the Products Group, Senior Vice President and General Manager of International Marketing and Sales and Senior Vice President and General Manager of LSI Logic Europe plc. Additionally, Mr. Gavrielov held various engineering and engineering management positions at Digital Equipment Corporation and National Semiconductor Corporation. With extensive experience in executive management and engineering with semiconductor and software companies, Mr. Gavrielov understands the Company and its competitors, customers, operations and key business drivers. From this experience, Mr. Gavrielov has developed a broad array of skills, particularly in the areas of building and developing semiconductor and software businesses, and providing leadership and a clear vision to the Company’s employees. As the CEO of the Company, Mr. Gavrielov also brings his strategic vision for the Company to the Board and creates a critical link between the management and the Board, enabling the Board to perform its oversight function with the benefit of management’s perspective on the business. Mr. Doyle joined the Company’s Board in December 1994. Mr. Doyle held numerous technical and managerial positions at Hewlett-Packard Company from 1957 to 1991. Mr. Doyle is an independent consultant. Mr. Doyle has developed a wide breadth of experience since 1991 as an independent technical and business strategy consultant. Prior to that, Mr. Doyle spent nearly 35 years at Hewlett-Packard Company including time as VP of Personnel, VP of Research and -6- Development, Director of HP Labs and Executive VP of the Computer Systems, Networks and Peripherals businesses which included their integrated circuits operations. Mr. Doyle’s executive experience at Hewlett-Packard brings deep leadership and operational experience to our Board. In addition, Mr. Doyle has extensive knowledge of the Company’s business, in particular, gained from his service as a Director of the Company since 1994. Mr. Doyle has also served on the boards of directors of multiple public and private technology companies which provide him with insights into how boards of other companies have addressed issues similar to those faced by the Company. Dr. Howard joined the Company’s Board in September 1996. Dr. Howard has worked as an independent consultant for various semiconductor and microelectronics companies since December 1990. From October 1987 to December 1990, Dr. Howard was a senior fellow at the National Academy of Engineering conducting studies of technology management. Dr. Howard held various management positions at Motorola, Inc., a wireless and broadband communications company, between 1969 and 1987 including Senior Vice President and Director of Research and Development. Dr. Howard also served as Chairman of the Board of Ramtron International Corporation, a manufacturer of memory products, from 2003 to 2013. Dr. Howard’s more than 20 years of experience as an independent consultant for various semiconductor and microelectronics companies, including SEMATECH, the Semiconductor Industry Association and Dow Corning, provides the Board with valuable insights into the industry in which the Company competes. Dr. Howard’s 18 years of experience in various management positions at a leading wireless and broadband communications company, including as its Senior Vice President and Director of Research and Development, has also proved to be valuable as the Company evaluates its own development efforts. Through Dr. Howard’s involvement with several scientific and engineering organizations, including as a member of the National Academy of Engineering and a fellow of the Institute of Electrical Engineers and of the American Association for the Advancement of Science, he has also gained valuable knowledge of the most recent developments in engineering. Dr. Howard has also gained a broad range of skills from his service on multiple boards of directors of public and private technology companies. Mr. Patterson joined the Company’s Board in October 2005. Mr. Patterson was employed by PricewaterhouseCoopers (PWC), a public accounting firm, from 1970 until retirement in 2001. The positions he held during his 31-year career at PWC include chair of the national high tech practice, chair of the semiconductor tax practice, department chair for PWC’s Silicon Valley tax practice and managing partner of PWC’s Silicon Valley office. Mr. Patterson serves on a few boards of private companies and advises charitable organizations. Mr. Patterson’s qualifications to sit on our Board include his extensive experience with public and financial accounting matters for complex global organizations. Mr. Patterson’s extensive financial background, including specifically advising companies in the semiconductor industry, has enabled him to play a meaningful role in the oversight of our financial reporting and accounting practices and executive compensation practices. Mr. Pimentel joined the Company’s Board in August 2010. In October 2013, Mr. Pimentel was appointed President, Global Markets and Customers for Seagate Technology LLC, a manufacturer of hard drives and storage solutions, where he had previously served as their Executive Vice President, Chief Sales and Marketing Officer since April 2011. From May 2008 until August 2010, Mr. Pimentel served as COO and CFO of McAfee, Inc., a security technology company. Prior to that, Mr. Pimentel served as Executive Vice President and CFO of Glu Mobile, Inc., a publisher of mobile games, since 2004. Prior to joining Glu Mobile, Mr. Pimentel served as Executive Vice President and CFO of Zone Labs, Inc., an end-point security software company, from 2003 until it was acquired in 2004 by Checkpoint Software, Inc. From 2001 to 2003, he served as a partner of Redpoint Ventures. Prior to joining Redpoint, he served as CFO for WebTV Networks, Inc., a provider of set-top Internet access devices and services acquired by Microsoft Corporation, and LSI Logic Corporation, a semiconductor and storage systems developer. Mr. Pimentel also serves on the board of directors of Imperva, Inc., a security software company and Lifelock, Inc., an identity theft protection company. Mr. Pimentel’s strong financial background, particularly through his work as the CFO at three different publicly-traded companies, provides financial expertise to the Board, including an understanding of financial statements, corporate finance and accounting. As an executive of a publicly-traded company, Mr. Pimentel also brings deep leadership and operational experience to our Board. Mr. Turner joined the Company’s Board in March 2007. Mr. Turner chairs the board of directors of the Alliance Bernstein Funds, a family of mutual fund portfolios advised by AllianceBernstein LP, and is also a member of the board of directors of SunEdison, Inc., a solar power solutions provider and manufacturer of silicon wafers for semiconductor and solar power applications. Mr. Turner served as CEO of Dupont Photomasks, Inc., a manufacturer of photomasks for semiconductor chip fabricators between 2003 and 2006. He was appointed to the position of Chairman in 2003, a position he held until its acquisition in 2005. Prior to that Mr. Turner served as interim Chairman and CEO for 11 months in 1999-2000. Mr. Turner has been involved in the semiconductor and software industries, among others, for 39 years, in a variety of roles including as the CEO of two companies in the semiconductor industry, chairman of two software companies, and a venture capital investor. From these experiences, Mr. Turner has developed a broad range of skills that contribute to the Board’s oversight of the -7- operational, financial and risk management aspects of our business. Mr. Turner has also served on 24 corporate boards of directors and has chaired five of them, giving him meaningful perspective with respect to the various business issues faced by the Board. Ms. Vanderslice joined the Company’s Board in December 2000. Ms. Vanderslice served as a General Manager of Terra Lycos, Inc., an Internet access and interactive content provider, from July 1999 until July 2001. Prior to joining Terra Lycos, Ms. Vanderslice was a Vice President of Wired Digital, Inc., an online services company, beginning in 1995 and served as its President and CEO from 1996 through June 1999 when she led its acquisition by Terra Lycos. Prior to joining Wired Digital, Ms. Vanderslice served as a principal in the investment banking firm Sterling Payot Company and in 1994 became a Vice President at H. W. Jesse & Co., a San Francisco investment banking and business strategy-consulting firm spun off from Sterling Payot. Ms. Vanderslice holds an MBA from Harvard Business School. Ms. Vanderslice is also on the Board of Trustees of Boston College. Ms. Vanderslice brings a broad range of skills to the Board from her experience as a general manager of an internet access and interactive content provider, CEO of an online services company and as an investment banker at two investment banking firms. In particular, in addition to her computer science and systems engineer background, Ms. Vanderslice contributes to the Board’s understanding of the Company’s sales and marketing efforts and engineering management, and her experience in mergers and acquisitions is valuable to the Board in evaluating strategic transactions. There are no family relationships among the executive officers of the Company or the Board. Required Vote Each nominee receiving more votes “FOR” than “AGAINST” shall be elected as a Director. If you do not wish your shares to be voted with respect to a nominee, you may “ABSTAIN,” in which case your shares will have no effect on the election of that nominee. THE BOARD RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF THE DIRECTOR NOMINEES. -8- BOARD MATTERS Board Meetings and Committee Composition The Company’s Board held a total of four (4) meetings during the fiscal year ended March 29, 2014. All Directors are expected to attend each meeting of the Board and the Committees on which he or she serves and are also expected to attend the Annual Meeting. All Directors attended the 2013 annual meeting of stockholders. Each Director attended over 75% of the aggregate of all meetings of the Board or its Committees on which such Director served during the fiscal year. The Board holds four (4) pre- scheduled meetings per fiscal year. The following table reflects the current composition of the Company’s standing Audit Committee, Compensation Committee, Nominating and Governance Committee, and Committee of Independent Directors. Audit Committee ___________ Compensation Committee _____________ Nominating and Governance Committee ______________ Committee of Independent Directors _____________ Chair X X X Chair X X X X Chair X X X X X X X Non-Employee Directors: Philip T. Gianos (Chairman) John L. Doyle William G. Howard, Jr. J. Michael Patterson Albert A. Pimentel Marshall C. Turner Elizabeth W. Vanderslice Employee Director: Moshe N. Gavrielov Committees The Board has a standing Audit Committee, Compensation Committee, Nominating and Governance Committee and Committee of Independent Directors (the Committees). The Board has determined that each Director currently serving on these Committees and who served on the Committees in fiscal 2014 meets the applicable tests for independence under the applicable rules and regulations of the SEC, NASDAQ, and the Internal Revenue Service. The Board and its Committees have authority to engage independent advisors and consultants and have used such services. Each of the Audit Committee, the Compensation Committee and the Nominating and Governance Committee is subject to charters approved by the Board, which are posted on the investor relations page of the Company’s website at www.investor.xilinx.com under “Corporate Governance.” Audit Committee The members of the Audit Committee are John L. Doyle, J. Michael Patterson, Albert A. Pimentel, and Marshall C. Turner. During fiscal 2014, the Audit Committee held seven (7) meetings. The Audit Committee assists the Board in fulfilling its oversight responsibilities to the stockholders relating to the Company’s financial statements and the financial reporting process, the systems of internal accounting and financial controls, and the audit process. The Board has determined that each Audit Committee member meets the independence and financial knowledge requirements under the SEC rules and the corporate governance listing standards of NASDAQ. The Audit Committee operates in accordance with a written charter adopted by the Board, which complies with NASDAQ and SEC listing standards. The Board has further determined that each member of the Audit Committee qualifies as an “audit committee financial expert” as defined by SEC rules. Stockholders should understand that this designation is a disclosure requirement of the SEC related to the Audit Committee members’ individual experience and understanding with respect to certain accounting and auditing matters. The designation does not impose upon any of the Audit Committee members any duties, obligations or liabilities that are greater than those generally imposed on each of them as members of the Board nor does it alter the duties, obligations or liability of any other member of the Board. Compensation Committee The members of the Compensation Committee are J. Michael Patterson, Marshall C. Turner, and Elizabeth W. Vanderslice. During fiscal 2014, the Compensation Committee met eight (8) times during fiscal 2014. The Compensation Committee has responsibility for establishing the compensation policies of the Company. The Compensation Committee determines the compensation of the Company’s Board and executive officers and has exclusive authority to grant equity-based awards, including options and restricted -9- stock units (RSUs), to such executive officers under the 2007 Equity Incentive Plan. The Compensation Committee, together with the Board, evaluates the CEO’s performance and the Compensation Committee determines CEO compensation, including base salary, incentive pay and equity. The CEO is not present during the Compensation Committee’s or Board’s deliberations or Compensation Committee voting on CEO compensation, but may be present during voting and deliberations related to compensation of other executive officers. For further information about the processes and procedures for the consideration and determination of executive compensation, please refer to the section of this proxy statement entitled “EXECUTIVE COMPENSATION—COMPENSATION DISCSSION AND ANALYSIS.” Nominating and Governance Committee The members of the Nominating and Governance Committee are Elizabeth W. Vanderslice, Philip T. Gianos, and William G. Howard, Jr. During fiscal 2014, the Nominating and Governance Committee met four (4) times. The Nominating and Governance Committee has responsibility for identifying, evaluating and recommending to the Board individuals to serve as members of the Board, and to establish policies affecting corporate governance. The Nominating and Governance Committee, among other things, makes suggestions regarding the size and composition of the Company’s Board, ensures that the Board reviews the Company’s management organization, including the management succession plans, and the adequacy of the Company’s strategic planning process and recommends nominees for election as Directors. For further information about the director nomination criteria and process, please refer to the section of this proxy statement entitled “BOARD MATTERS—Nomination Criteria and Board Diversity.” Committee of Independent Directors All independent Directors are members of the Committee of Independent Directors. This Committee met four (4) times during fiscal 2014. The Committee’s principal focus is succession planning but it also addresses other topics as deemed necessary and appropriate. The Committee of Independent Directors typically meets outside the presence of management. Nomination Criteria and Board Diversity The Board believes in bringing a diversity of backgrounds and viewpoints to the Board and desires that its Directors and nominees possess critical skills and experience in the areas of semiconductor design and marketing, manufacturing, software and finance. These factors, and any other qualifications considered useful by the Board, are reviewed in the context of an assessment of the perceived needs of the Board at a particular point in time. As a result, the priorities and emphasis of the Nominating and Governance Committee may change from time to time to take into account changes in business and other trends, and the portfolio of skills and experience of current and prospective Board members. Therefore, while focused on the achievement and the ability of potential candidates to make a positive contribution with respect to such factors, the Nominating and Governance Committee has not established any specific minimum criteria or qualifications that a director or nominee must possess. The Board remains apprised of qualified individuals who may be considered as Board candidates in the future. As necessary and as part of its annual evaluation of current Board members, the Nominating and Governance Committee considers the skills, experience and viewpoints previously mentioned as desirable director qualifications, independence, any job changes, the amount of time each Director spends on Xilinx matters and to what extent, if any, other commitments the Directors may have outside of Xilinx that impact the Director’s service to Xilinx. In connection with its evaluation of Board composition, the Nominating and Governance Committee also considers rotating Directors’ positions on the Committees. Consideration of new Board candidates typically involves a series of internal discussions, review of information concerning candidates and interviews with selected candidates. In fiscal 2014, the Company did not employ a search firm or pay fees to other third parties in connection with seeking or evaluating Board nominee candidates. The Nominating and Governance Committee will consider candidates proposed by stockholders using the same process it uses for a candidate recommended by a member of the Board, an employee, or a search firm, should one be engaged. A stockholder seeking to recommend a prospective nominee for the Nominating and Governance Committee’s consideration should submit the candidate’s name and qualifications by mail addressed to the Corporate Secretary, Xilinx, Inc., 2100 Logic Drive, San Jose, CA 95124, by email to corporate.secretary@xilinx.com, or by fax to the Corporate Secretary at (408) 377-6137. Director Independence The NASDAQ listing standards require that a majority of the members of a listed company’s board of directors must qualify as “independent” as affirmatively determined by its board of directors. Our Board annually reviews information relating to the members of our Board to ensure that a majority of our Board is independent under the NASDAQ Marketplace Rules and the rules of the SEC. After review of all relevant transactions and relationships between each Director nominee, his or her family members and entities affiliated with each Director nominee and Xilinx, our senior management and our independent registered public accounting firm, our Board has determined that seven of our eight nominees for Director are independent directors as defined in -10- the NASDAQ Marketplace Rules and in Rule 10A-3 of the Exchange Act. Mr. Gavrielov, our President and CEO, is not an independent director within the meaning of the NASDAQ Marketplace Rules or the rules of the SEC because he is a current employee of Xilinx. In making a determination of the independence of the nominees for Director, the Board reviewed relationships and transactions occurring since the beginning of fiscal 2012 between each Director nominee, his or her family members and entities affiliated with each Director nominee and Xilinx, our senior management and our independent registered public accounting firm. In making its determination, the Board applied the standards for independence set forth by NASDAQ and the SEC. In each case, the Board determined that, because of the nature of the relationship or the amount involved in the transaction, the relationship did not impair the Director nominee’s independence. The transactions listed below were considered by the Board in its independence determinations. Mr. Pimentel serves as a Director of Xilinx and also is employed as an executive officer of Seagate Technology LLC (Seagate). During fiscal 2014, Seagate paid Xilinx $177,569 to purchase our products in the normal course of business. Our Audit Committee in the absence of Mr. Pimentel reviewed the relevant facts and circumstances of the transactions and approved the amounts spent in fiscal 2014. Each of Messrs. Doyle and Gianos is, or was during any of the previous three (3) fiscal years, a non-management director of one or more other companies that has done business with Xilinx. All of the transactions with these organizations occurred in the normal course of business in the purchase or supply of goods or services. In addition, Mr. Gianos serves as a non-management director of a private company in which Xilinx has made certain investments. Such investments were made by Xilinx in the ordinary course of its business pursuant to Xilinx investment policies. Board’s Role in Risk Oversight Our Board has overall responsibility for risk oversight at the Company and may delegate particular risk areas to the appropriate Committees of the Board. The Board’s role in risk oversight builds upon management’s risk management process. The Company conducts a formal annual risk assessment as well as coordinates on-going risk management activities throughout the year to identify, analyze, respond to, monitor and report on risks. Risks reviewed by the Company include operational risks, financial risks, legal and compliance risks, IT risks and strategic risks. The management team then reviews with the Board any significant risks identified during the process, together with plans to mitigate such risks. In response, the Board, or the relevant Committee, may request that management conduct additional review of or reporting on select enterprise risks. The process and risks are reviewed at least annually with the Board and additional review or reporting of significant enterprise risks will be conducted as needed or as requested by the Board or any of its Committees. -11- CORPORATE GOVERNANCE PRINCIPLES The Company and the Board, through its Nominating and Governance Committee, regularly review and evaluate the Company’s corporate governance principles and practices. The Significant Corporate Governance Principles, the Company’s Code of Conduct, the Director’s Code of Ethics, and charters for each of the following Board Committees are posted on our website at www.investor.xilinx.com: Audit Committee, Compensation Committee, and Nominating and Governance Committee. Printed copies of these documents are also available to stockholders upon written request addressed to the Corporate Secretary, Xilinx, Inc., 2100 Logic Drive, San Jose, CA 95124 or by email at corporate.secretary@xilinx.com. Board Leadership Structure and Independence The Board believes there should be a substantial majority of independent Directors on the Board. The Board also believes that it is useful and appropriate to have members of management as Directors, including the CEO. Independent Directors are given an opportunity to meet outside the presence of members of management, and hold such meetings regularly. It is the written policy of the Board that if the Chairman is not “independent” in accordance with NASDAQ Marketplace Rules and the Exchange Act, the Board will designate an independent Director to serve as Lead Independent Director. We believe that having an independent Chairman or a Lead Independent Director, either of whom is responsible for coordinating the activities of the independent Directors, as well as other duties, including chairing the meetings of the Committee of Independent Directors, allows the Company’s CEO to better focus on the day-to-day management and leadership of the Company, while better enabling the Board to advise and oversee the performance of the CEO. The Nominating and Governance Committee reviews the position of Lead Independent Director and identifies the Director who serves as Lead Independent Director in the absence of an independent Chairman. For fiscal 2014, Philip T. Gianos, an independent director, served as Chairman of the Board, so there was no Lead Independent Director. Majority Vote Standard All Directors are elected annually at the annual stockholder meeting. In response to a successful stockholder proposal for election of directors by majority vote standard, in May 2006, the Board amended the Company’s Bylaws to provide for the election of Directors in an uncontested election by the majority of votes cast regarding each nominee. In contested elections, Directors will be elected by the plurality standard whereby those Directors with the highest number of votes cast are elected. Any existing Director that receives more “AGAINST” votes than “FOR” votes will tender his or her resignation to the Board. The Board will announce its decision with regard to the resignation within 120 days following the certification of election results. Board Evaluation The Board conducts an annual evaluation of its performance. The process varies from year-to-year, including self-evaluations and/or one-on-one meetings with each Board member and the chairperson of the Nominating and Governance Committee. Results of the evaluation are formally presented to the Board. The Board has made changes in Board procedures based on feedback from the process. Board Service Limits and Terms The Board has set a limitation on the number of public boards on which a Director may serve to three (3) for any CEO and four (4) for all other Directors. This limitation is inclusive of service on the Xilinx Board. The Board believes that term limits on Directors’ service and a mandatory retirement age do not serve the best interests of the Company. While such policies could help ensure that fresh ideas and new viewpoints are addressed by the Board, such limits have the disadvantage of losing the contribution of Directors who over time have developed increased insight and knowledge into the Company’s operations and who remain active and contributing members of the Board. The Board evaluation process plays a significant role in determining our Nominating and Governance Committee’s recommendation regarding Board tenure. Change of Principal Occupation or Association When a Director’s principal occupation or business association changes substantially during his or her tenure as Director, that Director shall tender his or her resignation for consideration by the Nominating and Governance Committee. The Nominating and Governance Committee will recommend to the Board the action, if any, to be taken with respect to the resignation. Director Education The Company offers internal and external course selections for new-Director orientation as well as continuing education. On a rotating basis, Directors will attend director education programs and report back to the entire Board on key learnings. -12- Stock Ownership Requirements Directors The Board has established minimum stock ownership guidelines for Directors. Under these guidelines, Directors are required to own our Common Stock having a value equal to at least five (5) times their annual cash retainer. At the time these ownership guidelines were adopted, the annual cash retainer for Directors was $60,000, and therefore Directors are required to own our Common Stock with a value of at least $300,000. For example, based on $46.64, the closing price of our Common Stock on May 9, 2014, $300,000 would purchase 6,432 shares of our Common Stock. Previously, the stock ownership requirement for Directors was 4,000 shares. Directors are required to retain half of the shares of our Common Stock derived from awards of RSUs until this ownership requirement is met. Half of the RSUs that are vested but are not settled pursuant to a pre-arranged deferral program will count toward the ownership requirement. Based on $46.64, the closing price of our Common Stock on May 9, 2014, all of our Directors have met the stock ownership requirements. Executive Officers In August 2011, our Board approved amendments to the stock ownership guidelines shifting ownership requirement from a share- based model to a value-based model. Additionally in May 2014, our Board approved amendments to the guidelines to increase the ownership requirement for the CEO and to create a new ownership requirement for executive vice presidents. Under the revised guidelines, the CEO is required to own shares of our Common Stock having a value of at least $4.5 million. Executive vice presidents are required to own shares of our Common Stock having a value of at least $1.0 million. Senior vice presidents who are Section 16 officers are required to own shares of our Common Stock having a value of at least $750,000 and corporate vice presidents who are Section 16 officers are required to own shares of our Common Stock having a value of at least $500,000. In addition, until their stock ownership requirements are met, the CEO and all other Section 16 officers must retain half of the shares of our Common Stock derived from awards of time-based RSUs that were granted beginning in July 2011 and 45% of the shares of our Common Stock derived from awards of performance-based RSUs that were granted beginning in July 2013. Succession Planning The Board plans for succession to the position of the Chairman of the Board, the position of CEO, and other senior management positions. To assist the Board, the CEO annually provides the Board with an assessment of senior managers and of their potential to succeed him. He also provides the Board with an assessment of considered potential successors to certain senior management positions. Internal Audit The Company’s Internal Audit function reports to the Audit Committee of the Board and administratively to the Company’s CFO. Codes of Conduct and Ethics The Board adopted a Code of Conduct applicable to the Company’s Directors and employees, including the Company’s CEO, CFO and its principal accounting personnel. The Code of Conduct includes protections for employees who report violations of the Code of Conduct and other improprieties and includes an anonymous reporting process to provide employees with an additional channel to report any perceived violations. Independent Directors receive complaints and reports of violations regarding accounting, internal accounting controls, auditing, legal and other matters reported through the anonymous reporting process, if any. The Chief Compliance Officer provides a quarterly report to the Audit Committee of incident reports identified through the anonymous reporting process and otherwise. The Code of Conduct is available on the investor relations page of our website at www.investor.xilinx.com. Printed copies of these documents are also available to stockholders upon written request directed to Corporate Secretary, Xilinx, Inc., 2100 Logic Drive, San Jose, CA 95124. The Board has adopted a separate Code of Ethics pertaining particularly to the Board which covers topics including insider trading, conflicts of interests, financial reporting and compliance with other laws. A waiver of any violation of the Code of Conduct by an executive officer or Director and a waiver of any violation of the Directors’ Code of Ethics may only be made by the Board. The Company will post any such waivers on its website under the Corporate Governance page at www.investor.xilinx.com. Amendments to the Code of Conduct will also be posted on the Xilinx website under the Corporate Governance page at www.investor.xilinx.com. No waivers were requested or granted in the past year. The Code of Conduct was last amended in May 2012. -13- Anonymous Reporting and Whistleblower Protection The Company’s Code of Conduct includes protections for employees who report violations of the Code of Conduct, other policies, laws, rules and regulations. The Company has implemented an Internet-based anonymous reporting process for employees to report violations they do not otherwise bring directly to management. The site can be accessed from the Company’s intranet as well as from any Internet connection around the world. Stockholder Value The Board is cognizant of the interests of the stockholders and accordingly: (cid:127) (cid:127) (cid:127) All employee stock plans will be submitted to the stockholders for approval prior to adoption; The 2007 Equity Incentive Plan includes a provision that prohibits repricing of options whether by directly lowering the exercise price, through cancellation of the option or stock appreciation right (SAR) in exchange for a new option or SAR having a lower exercise price, or by the replacement of the option or SAR with a full value award (i.e., an award of restricted stock or RSUs); and The Company is committed to keeping dilution under its stock plans for employees under industry standards. Stockholder Communications to the Board Stockholders may initiate any communication with the Board in writing and send them addressed in care of the Company’s Corporate Secretary, at Xilinx, Inc., 2100 Logic Drive, San Jose, CA 95124, by e-mail to corporate.secretary@xilinx.com, or by fax to the Corporate Secretary at (408) 377-6137. The name of any specific intended recipient, group or committee should be noted in the communication. The Board has instructed the Corporate Secretary to forward such correspondence only to the intended recipients; however, the Board has also instructed the Corporate Secretary, prior to forwarding any correspondence, to review such correspondence and, in his discretion, not to forward certain items if they are deemed of a commercial or frivolous nature or otherwise inappropriate for the Board’s consideration. In such cases, and as necessary for follow up at the Board’s direction, correspondence may be forwarded elsewhere in the Company for review and possible response. This centralized process will assist the Board in reviewing and responding to stockholder communications in an appropriate manner. -14- COMPENSATION OF DIRECTORS Non-Employee Directors Cash Compensation In fiscal 2014, the Company paid each of its non-employee Directors serving on its Board a cash retainer of $60,000 per year for service as a Director, with the exception of the Chairman of the Board. The Chairman of the Board is entitled to an annual cash retainer equal to twice the amount paid to the other non-employee Directors, or $120,000. The chairperson of the Audit Committee received an additional $22,500 per year, the chairperson of the Compensation Committee received an additional $17,500 per year, and the chairperson of the Nominating and Governance Committee received an additional $12,500 per year. Other than the chairpersons, members of the Audit Committee received an additional $10,000 per year, members of the Compensation Committee received an additional $7,500 per year and members of the Nominating and Governance Committee received an additional $5,000 per year, except for Mr. Gianos who elected not to receive $5,000 for his service on the Nominating and Governance Committee in fiscal 2014. If applicable, the Lead Independent Director is also eligible to receive an additional $10,000 per year. All payments were made in installments on a quarterly basis. As noted above, for fiscal 2014, Mr. Gianos, an independent Director, served as Chairman of the Board, so there was no Lead Independent Director. In May 2014, after reviewing competitive market data, the Board approved increases to the annual cash compensation paid to each of its non-employee Directors who serve as a chairperson or member of a Board Committee. Beginning in fiscal 2015, the additional annual cash compensation for service as a chairperson or member on our Board Committees is as follows: Audit Committee (chairperson, $25,000; member $12,500); Compensation Committee (chairperson, $20,000; member, $10,000); and Nominating and Governance Committee (chairperson, $15,000; member, $7,500.). The Board did not make any changes to the annual cash retainer for serving solely as a non-employee Director or Chairman of the Board. As in fiscal 2014, all fiscal 2015 payments will be made in installments on a quarterly basis. Equity Compensation Non-employee Directors participate in an equity compensation program under the Company’s 2007 Equity Incentive Plan. Under this program, eligible non-employee Directors are eligible to receive automatic restricted stock unit awards (RSUs). The terms of those automatic RSU grants are as follows: Annual Grant Each eligible non-employee Director is eligible for an annual RSU award. For fiscal 2014, each eligible non-employee Director was automatically granted $165,000 worth of RSUs on the date of the 2013 Annual Meeting of Stockholders, or August 14, 2013, and such RSUs shall vest in full on the day immediately preceding the subsequent annual meeting of stockholders. Accordingly, on August 14, 2013, on which date the fair market value of our Common Stock was $45.08, each non-employee Director received a grant of 3,660 RSUs, which will vest in full on August 12, 2014, the day prior to the 2014 Annual Meeting of Stockholders. In May 2014, after its review of competitive market data, the Board amended the automatic equity compensation program for eligible non-employee Directors under our 2007 Equity Incentive Plan. Beginning with the 2014 Annual Meeting, each non- employee Director will be automatically awarded $185,000 worth of RSUs on the date of each annual meeting of stockholders. The vesting schedule will remain the same, with the RSU shares vesting in full on the day immediately preceding the subsequent annual meeting of stockholders. Initial Grant A non-employee Director joining the Board between annual meetings of stockholders will receive a pro-rated number of RSUs on or about the tenth day of the month following the Director’s initial appointment or election to the Board. The RSUs vest in full on the day immediately preceding the subsequent annual meeting of stockholders. Stock Ownership Guidelines Under the Company’s stock ownership guidelines, non-employee Directors are required to own shares of our Common Stock having a value equal to at least $300,000, which is equal to five (5) times their annual retainer in effect at the time the new equity compensation program for Directors was adopted. Non-employee Directors are required to retain half of the shares of our Common Stock derived from awards of RSUs until their ownership requirements are met. Half of the RSUs that are vested but are not settled pursuant to a pre-arranged deferral program will count toward the ownership requirement. For more information about stock ownership guidelines for Directors, please see “CORPORATE GOVERNANCE PRINCIPLES—Stock Ownership Requirements.” -15- Employee Directors Directors who are actively employed as executives by the Company receive no additional compensation for their service as Directors. Mr. Gavrielov is currently the only employee Director of the Company. Deferred Compensation We also maintain a nonqualified deferred compensation plan which allows each Director as well as eligible employees to voluntarily defer receipt of a portion or all of their cash compensation until the date or dates elected by the participant, thereby allowing the participating Director or employee to defer taxation on such amounts. For a discussion of this plan, see “EXECUTIVE COMPENSATION—Deferred Compensation Plan.” Director Compensation for Fiscal 2014 The following table provides information on Director compensation in fiscal 2014: Name ______________________________ Philip T. Gianos (Chairman) John L. Doyle William G. Howard, Jr. J. Michael Patterson Albert A. Pimentel Marshall C. Turner Elizabeth W. Vanderslice Fees Earned or Paid in Cash ($) ____________ 120,000 82,500 65,000 87,500 70,000 76,573 80,000 Stock Awards(1) ($) __________ 161,333 161,333 161,333 161,333 161,333 161,333 161,333 Option Awards(2) ($) _________ — — — — — — — Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) — (3) — — (3) — — — — (3) Non-Equity Incentive Plan Compensation ($) ______________ ______________ — — — — — — — All Other Compensation ($) ______________ — — — — — — — Total ($) _________ 281,333 243,833 226,333 248,833 231,333 237,906 241,333 (1) Amounts shown do not reflect compensation actually received by the Director. Instead, the amounts shown reflect the grant date fair value for stock awards granted in fiscal 2014 as determined pursuant to FASB ASC Topic 718. The assumptions used to calculate the value of the awards are set forth in Note 6 of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for fiscal 2014 filed with the SEC on May 16, 2014. (2) No option awards were granted to Directors during fiscal 2014. The following aggregate number of option awards was outstanding as of March 29, 2014 for each of the Directors: Mr. Gianos, 54,000; Mr. Doyle, 42,000; Dr. Howard, 54,000; Mr. Patterson, 31,000; Mr. Pimentel, 0; Mr. Turner, 26,000; and Ms. Vanderslice, 49,000. This Director participated in the Company’s nonqualified deferred compensation plan in fiscal 2014. For more information about this plan see the section entitled “EXECUTIVE COMPENSATION—Deferred Compensation Plan. (3) -16- PROPOSAL TWO AMENDMENT TO THE 1990 EMPLOYEE QUALIFIED STOCK PURCHASE PLAN The Company’s 1990 Employee Qualified Stock Purchase Plan (ESPP) provides eligible employees of the Company and its participating subsidiaries with the opportunity to purchase shares of Common Stock at a discounted price through payroll deductions. During the fiscal year ended March 29, 2014, the Company issued 1,165,678 shares of Common Stock under the ESPP. As of March 29, 2014, a total of 9,726,132 shares remained available for issuance under the ESPP, not including the 2,000,000 additional shares of Common Stock that would be authorized if the amendment described below is approved. Proposal At the Annual Meeting, the stockholders will be asked to approve an amendment to the ESPP to increase by 2,000,000 the maximum number of shares of Common Stock that may be issued under the ESPP. Unless a sufficient number of shares is authorized and reserved under the ESPP at the beginning of each offering period (August 1 and February 1) to cover the number of shares purchased throughout its entire 24-month term, the Company may incur additional compensation expense for financial statement purposes for each period in which the sale of shares is dependent on obtaining stockholder approval of an additional share authorization. The Board believes an additional 2,000,000 shares will be necessary to provide for offering periods commencing before the next annual meeting of stockholders. On May 14, 2014, subject to stockholder approval, the Board adopted an amendment to the ESPP to increase the number of shares authorized for issuance under the plan by 2,000,000. If the amendment is approved by the stockholders, the total number of shares available for issuance under the ESPP immediately following such approval will be 11,726,132. The Board believes that participation by the Company’s employees in the ESPP promotes the success of the Company’s business through broad-based equity ownership among the employees. The Board further believes that the ESPP is an integral component of the Company’s benefits program that is intended to provide employees with an incentive to exert maximum effort for the success of the Company and to participate in that success through acquisition of the Company’s Common Stock. As long as the ESPP remains in effect, the Company anticipates that it will ask the stockholders each year for the number of additional shares required to meet the Company’s projected share commitments for offering periods beginning before the next annual meeting of stockholders. Subject to the eligibility requirements described below, most of the Company’s 3,500 employees (as of March 29, 2014) are eligible to participate in the ESPP. As of March 29, 2014, approximately 78% of the Company’s employees were participating in the ESPP. Summary of the 1990 Employee Qualified Stock Purchase Plan, as Amended A summary of the material terms of the ESPP, as amended, is set forth below and is qualified, in its entirety, by the full text of the plan set forth in Appendix A to our 2014 proxy statement as filed with the SEC and available for viewing without charge at its website at www.sec.gov. A copy of the ESPP can be obtained from us at no charge upon request. Purpose The purpose of the ESPP is to provide employees of the Company and its designated subsidiaries with an opportunity to purchase Common Stock of the Company through accumulated payroll deductions. Administration The ESPP may be administered by the Board or a committee appointed by the Board. All questions of interpretation of the ESPP are determined by the Board or its committee, whose decisions are final and binding upon all participants. Currently, the Compensation Committee administers the ESPP. Authorized Shares As of March 29, 2014, a maximum of 50,540,000 shares of our Common Stock was authorized for issuance under the ESPP, of which 9,726,132 shares of our Common Stock remained available for future issuance, subject to appropriate adjustments in the event of any stock dividend, stock split, reverse stock split, recapitalization or similar change in the capital structure of the Company, or in the event of any merger, sale of assets or other reorganization of the Company. The Board has amended the ESPP, -17- subject to stockholder approval, to authorize an additional 2,000,000 shares for issuance under the ESPP, which would result in a total of 52,540,000 shares authorized for issuance, of which 11,726,132 shares of our Common Stock would be available for future purchases. Eligibility Subject to certain limitations imposed by Section 423(b) of the Tax Code, any person who is employed by the Company (or any designated subsidiary) as of the commencement of an offering period under the ESPP and is customarily employed for at least 20 hours per week and more than five months in a calendar year is eligible to participate in the offering period. Eligible employees may become participants in the ESPP by delivering to the Company a subscription agreement authorizing payroll deductions on or before the first day of the applicable offering period. As of March 29, 2014, most of the Company’s 3,500 employees, including nine (9) current executive officers, were eligible to participate in the ESPP. Offering Periods The ESPP is implemented by consecutive and overlapping 24-month offering periods, with a new offering period commencing on or about the first day of February and August of each year. The Board may generally change the duration of any offering period without stockholder approval, provided that no offering period may exceed 27 months in duration. In addition, the Board may establish separate, simultaneous or overlapping offering periods applicable to one or more subsidiaries of the Company and having different terms and conditions, for example, to comply with the laws of the applicable jurisdiction. Purchase Price Each 24-month offering period consists of four exercise periods of six months’ duration. The last day of each exercise period, which occurs on or about January 31 and July 31 of each year, is an exercise date on which each participant in the offering period acquires shares. The purchase price of the shares offered under the ESPP in a given exercise period is the lower of 85% of the fair market value of the Common Stock on the first date of the offering period containing that exercise period or 85% of the fair market value of the Common Stock on the exercise date. The fair market value of the Common Stock on a given date is the closing sale price of the Common Stock on such date as reported by NASDAQ. On March 28, 2014, the last trading day of the 2014 fiscal year, the closing price of our Common Stock as reported on NASDAQ was $53.84 per share. Payroll Deductions The purchase price for the shares is accumulated through payroll deductions during each offering period. Payroll deductions commence on the first payday following the commencement of an offering period and end on the last exercise date of the offering period, unless sooner terminated as provided in the ESPP. A participant may not authorize deductions of more than 15% or less than 2% of the participant’s eligible compensation, which is defined by the ESPP to include all regular straight time earnings and any payments for overtime, shift premiums, incentive compensation, bonuses, commissions or other compensation for a given offering period. The Company may limit a participant’s payroll deductions in any calendar year as necessary to avoid accumulating an amount in excess of the maximum amount the Tax Code permits to be applied toward the purchase of shares in any offering under the ESPP. A participant may discontinue participating in the ESPP, or may decrease the rate of payroll deductions during the offering period. Upon withdrawal from the ESPP, the Company will refund, without interest, the participant’s accumulated payroll deductions not previously applied to the purchase of shares. Grant and Exercise of Purchase Right In general, the maximum number of shares subject to purchase by a participant in an exercise period is that number determined by dividing the amount of the participant’s total payroll deductions accumulated prior to the relevant exercise date by 85% of the lower of the fair market value of the Common Stock at the beginning of the offering period or on the exercise date. However, the maximum number of shares a participant may purchase in any offering period is a number determined by dividing $50,000 by the fair market value of a share of Common Stock on the first day of the offering period. Unless a participant withdraws from the ESPP, the participant’s right to purchase shares is exercised automatically on each exercise date for the maximum number of whole shares that may be purchased at the applicable price. No employee will be permitted to subscribe for shares under the ESPP if, immediately after the grant of a purchase right, the employee would own and/or hold purchase rights to acquire 5% or more of the voting securities of the Company. Further, no employee may be granted a purchase right which would permit the employee to accrue a right to purchase more than $25,000 worth of stock (determined by the fair market value of the shares at the time the purchase right is granted) for each calendar year in which the purchase right is outstanding at any time. -18- Automatic Transfer to Low Price Offering Period In the event that the fair market value of the Company’s Common Stock on any exercise date (other than the last exercise date of an offering period) is less than on the first day of the offering period, all participants will be withdrawn from the offering period after the exercise of their purchase right on such exercise date and enrolled as participants in a new offering period commencing on or about the day following such exercise date. A participant may elect to remain in the previous offering period by filing a written statement declaring such election prior to the time of the automatic change to the new offering period. Withdrawal; Termination of Employment A participant may withdraw all, but not less than all, payroll deductions credited to his or her account but not yet used to exercise a purchase right under the ESPP at any time by signing and delivering to the Company a notice of withdrawal from the ESPP. Any withdrawal by the participant of accumulated payroll deductions for a given offering period automatically terminates the participant’s interest in that offering period. The failure of a participant to remain in the continuous employment of the Company for at least 20 hours per week during an offering period will be deemed to be a withdrawal from that offering period and accumulated payroll deductions will be returned to the participant. Transferability No rights or accumulated payroll deductions of a participant under the ESPP may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent and distribution or pursuant to the ESPP) and any attempt to so assign or transfer may be treated by the Company as an election to withdraw from the ESPP. Adjustments upon Changes in Capitalization In the event any change is made in the Company’s capitalization pursuant to a stock split or any other increase or decrease in the number of shares of Common Stock effected without receipt of consideration by the Company, proportionate adjustments will be made by the Board to the number of shares authorized for issuance under the ESPP and subject to each outstanding purchase right and in the purchase price per share. In the event of a sale of all or substantially all of the assets of the Company or a merger of the Company with another corporation, the acquiring or successor corporation or its parent may assume the purchase rights outstanding under the ESPP or substitute equivalent purchase rights for the acquiror’s stock, provided that the Board may instead shorten an offering period and accelerate the exercise date of all offering periods then in progress to a date prior to the transaction. Amendment or Termination The Board may at any time and for any reason amend or terminate the ESPP, except that (other than in limited circumstances set forth in the ESPP) termination will not affect purchase rights previously granted, and no amendment may make any change in any purchase right previously granted that adversely affects the participant’s rights. Stockholder approval must be obtained for any amendment to the extent necessary to comply with applicable law. Under its current terms, the ESPP will expire on January 26, 2030. Federal Tax Information The following summary of the effect of United States federal income taxation upon the participant and the Company with respect to the purchase of shares under the ESPP does not purport to be complete, and reference should be made to the applicable provisions of the Tax Code. In addition, this summary does not discuss the provisions of the income tax laws of any municipality, state or foreign country in which the participant may reside. The ESPP, and the right of participants to make purchases thereunder, is intended to qualify under the provisions of Sections 421 and 423 of the Tax Code. Under these provisions, no income will be taxable to a participant at the time of grant of the purchase right or purchase of shares. Upon disposition of the shares, the participant will generally be subject to tax, and the amount of the tax will depend upon the length of time the shares have been held by the participant. If the shares have been held by the participant for more than two years after the date of grant of the purchase right and more than one (1) year after the date on which the shares were purchased, then the purchaser will recognize ordinary income equal to the lesser of (a) the excess of the fair market value of the shares at the time of such disposition over the purchase price of such shares or (b) 15% of the fair market value of the shares on the first day of the offering period. Any further gain upon such disposition will be treated as long-term capital gain. If the shares are disposed of before the expiration of these holding periods, the participant will recognize ordinary income generally equal to the excess of the fair market value of the purchased shares on the date of the purchase over the purchase price. Any additional gain or loss on the sale will be a capital gain or loss, which will be either long-term or short-term depending on the actual period for which -19- the shares were held. The Company is entitled to a deduction for amounts taxed as ordinary income reported by participants upon disposition of shares within two years from date of grant or one year from the date of acquisition. New Plan Benefits The number of shares that may be purchased under the ESPP will depend on each participant’s voluntary election to participate and on the fair market value of the Common Stock of the Company on future purchase dates, and therefore the actual number of shares that may be purchased by any individual is not determinable. No purchase rights have been granted, and no shares of Common Stock of the Company have been issued with respect to the 2,000,000 additional shares for which stockholder approval is being sought. Number of Shares Purchased by Certain Individuals and Groups The following table sets forth for each of the listed persons and groups (i) the aggregate number of shares of Common Stock of the Company purchased under the ESPP during fiscal 2014, and (ii) the market value of those shares on the date of such purchase, minus the purchase price of such shares: Name and Position ____________________________________________________________________________________ Moshe N. Gavrielov President and Chief Executive Officer Jon A. Olson Executive Vice President, Finance and Chief Financial Officer Victor Peng Executive Vice President and General Manager of Products Vincent L. Tong Senior Vice President, Worldwide Quality and New Product Introductions Frank Tornaghi Senior Vice President, Worldwide Sales All current executive officers, as a group All current directors who are not executive officers, as a group (l) All employees who are not executive officers, as a group (1) Non-employee Directors are not eligible to participate in the ESPP. Required Vote Dollar Value ($) _____________ 3,690 3,746 14,121 3,690 3,690 Number of Shares _____________ 530 538 762 530 530 55,684 N/A 16,286,184 5,082 N/A 1,160,596 Affirmative votes constituting a majority of the shares present or represented by proxy and entitled to vote on this proposal will be required to approve this proposal. Abstentions will have the same effect as a negative vote, while broker non-votes will have no effect on the outcome of this proposal. THE BOARD RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE AMENDMENT TO THE COMPANY’S 1990 EMPLOYEE QUALIFIED STOCK PURCHASE PLAN TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK RESERVED FOR ISSUANCE THEREUNDER BY 2,000,000 SHARES. -20- PROPOSAL THREE AMENDMENT TO THE 2007 EQUITY INCENTIVE PLAN Proposal At the Annual Meeting, the stockholders are being requested to approve an amendment to the 2007 Equity Incentive Plan (2007 Equity Plan), to increase by 3,000,000 shares the number of shares of Common Stock authorized for issuance under the 2007 Equity Plan to a new total of 41,500,000 shares. We make stock grants in connection with new hires and promotions and in connection with our annual “Focal Review.” Our Focal Review is a process in which we evaluate the performance and compensation of each Company employee. Following this evaluation, we make appropriate adjustments to the compensation of a substantial number of Company employees, including through equity grants. These compensation adjustments are typically made in July and the majority of our annual stock budget is used during this period. Our fiscal 2015 Focal Review will occur in July 2014, and our fiscal 2016 Focal Review will occur in July 2015. This means that we would go through two Focal Review periods, with corresponding equity grants, before having the opportunity at our next annual meeting to obtain stockholder approval of additional shares under the 2007 Equity Plan. The 2007 Equity Plan was adopted by the Company’s Board on May 3, 2006, approved by stockholders at the annual stockholders meeting in July 2006, and became effective on January 1, 2007. Key Terms of the 2007 Equity Plan The following is a summary of the key provisions of the 2007 Equity Plan. Plan Term: January 1, 2007 to December 31, 2023. Eligible Participants: Employees, consultants and non-employee directors of Xilinx and its subsidiaries are eligible to receive awards under the 2007 Equity Plan. Shares Authorized: Currently, a total of 38,500,000 shares of Common Stock are authorized for issuance under the 2007 Equity Plan, of which approximately 15,037,378 shares remained available for future grant as of March 29, 2014, subject to adjustment to reflect stock splits and similar events. If the stockholders approve the proposed amendment, a total of 41,500,000 shares will be authorized for issuance under the 2007 Equity Plan, of which 18,037,378 shares will be available for future grants, subject to adjustment to reflect stock splits and similar events. Award Types: (cid:127) Non-qualified and incentive stock options (cid:127) Restricted stock awards (cid:127) Restricted stock units (RSUs) (cid:127) Stock appreciation rights (SARs) Award Limits: A participant may receive in any calendar year: (cid:127) No more than 4,000,000 shares subject to options or SARs, in the aggregate (cid:127) No more than 2,000,000 shares subject to awards other than options and SARs (cid:127) No more than $6,000,000 subject to awards that may be settled in cash Award Terms: Stock options and SARs must expire no more than seven years from the date of grant. Exercise Price: Repricing: The exercise price of stock options or SARs may not be less than 100% of the fair market value of our Common Stock on the date of grant. Repricing of out-of-money options or SARs, whether by directly lowering the exercise price, by canceling an option or SAR in exchange for a new option or SAR having a lower exercise price, or by substituting a full value award in place of the option or SAR is not permitted without stockholder approval. -21- The Board believes that participation in the 2007 Equity Plan by the employees, consultants, and non-employee directors of the Company and its designated subsidiaries worldwide promotes the success of the Company’s business by providing them with an incentive to exert their maximum effort toward achieving that success. Therefore, the Board unanimously adopted on May 14, 2014, subject to stockholder approval, an amendment to increase the maximum number of shares of Common Stock authorized under the 2007 Equity Plan by 3,000,000 shares to a total of 41,500,000 shares to ensure that the Company will continue to have available a reasonable number of shares for its equity award program. Key Equity Award Metrics Share Usage In the past two years, we have used an average of 3,208,000 shares during the course of each year. As of March 29, 2014 there were 15,037,378 shares available for grant. Given the timing of when we issue this proxy statement and when we hold our annual meetings, we are seeking stockholder approval of a 3,000,000 share increase in the number of shares authorized and thereby available under the 2007 Equity Plan at the 2014 Annual Meeting, resulting in 18,037,378 shares available for future grants, in order to ensure that we will have a sufficient number of shares available to meet the requirements of our equity compensation program over the next two years. Dilution We are committed to effectively managing the Company’s equity compensation program while minimizing stockholder dilution. For this reason, we carefully manage the Company’s use of shares of Common Stock available for equity-based compensation each year and aim to keep dilution from our stock plans for employees below industry standards. The requested share increase represents approximately 1.13% of the weighted average outstanding shares of the Company as of March 29, 2014. Because this share reserve increase does not contemplate the amount or timing of specific equity awards in the future, it is not possible to calculate with certainty the amount of subsequent dilution that may ultimately result from such awards. In evaluating the share reserve increase, the Company also considered the guidelines of a leading proxy advisory firm, as well as the guidelines of our major institutional shareholders. Grant Practices Beyond the annual automatic grants to eligible non-employee Directors of the Board described below, the Company did not review specific projections of stock grants to individuals in connection with its recommendation to increase the share reserve by 3,000,000 shares. Equity Utilization Rate Over the past three fiscal years, the Company has had an ISS average equity utilization rate, sometimes also referred to as a “burn rate,” of approximately 3.56%. The Company’s three-year average ISS adjusted burn rate was below the 2013 ISS allowable cap for the applicable ISS industry grouping. The following table shows key equity award metrics: Key Metrics __________________________________________________________________________________ Shares subject to awards granted(1) Gross burn rate(2) ISS adjusted burn rate(3) Dilution at Fiscal Year End(4) Overhang at Fiscal Year End(5) FY2014 ______________ 3.3 million 1.24% 3.72% 10.22% 4.57% 3-Year Average (FY2012-2014) ________________ 3.2 million 1.21% 3.56% 12.61% 6.81% (1) Reflects total number of shares subject to equity awards granted during fiscal 2014 and the average for the prior three fiscal years, including fiscal 2014. (2) Gross burn rate is calculated by dividing the total number of shares subject to equity awards granted during the applicable (3) fiscal period by the total weighted-average number of shares outstanding during the applicable fiscal period. ISS adjusted burn rate is calculated by dividing the total number of shares subject to equity awards granted during the applicable fiscal period, adjusted to address the dilutive effect of stock-based awards other than stock options and stock appreciation rights, by the total weighted-average number of shares outstanding during the applicable fiscal period. Assumes an ISS Full Value Multiplier of 3.0 for each of fiscal year 2012, fiscal year 2013 and fiscal year 2014 and also for the three year average. In our 2013 proxy statement, an ISS Full Value Multiplier of 2.5 was applied for each of fiscal year 2011, fiscal year 2012 and fiscal year 2013 and also for the three year average. -22- (4) Dilution is calculated by dividing the sum of (x) the number of shares subject to equity awards outstanding at the end of the applicable fiscal period and (y) the number of shares available for future equity awards under the 2007 Equity Plan as of the end of the applicable fiscal period, by the weighted-average number of shares outstanding during the applicable fiscal period. (5) Overhang is calculated by dividing the number of shares subject to equity awards outstanding at the end of the applicable fiscal period by the weighted-average number of shares outstanding during the applicable fiscal period. We believe that the proposed amendment to the 2007 Equity Plan is vital to our continued success. If we do not increase the shares of Common Stock available for issuance under the 2007 Equity Plan, then based on historical usage rates of shares under the 2007 Equity Plan, we would expect to significantly exhaust the number of shares available for issuance under the 2007 Equity Plan by the time of our next annual meeting, thereby potentially limiting our use of an important compensation tool aligned with stockholder interests to attract, motivate and retain highly qualified talent. Summary of the 2007 Equity Plan, as Amended A summary of the material terms of the 2007 Equity Plan, as amended, is set forth below and is qualified, in its entirety, by the full text of the 2007 Equity Plan set forth in Appendix B to our 2014 proxy statement as filed with the SEC and available for viewing without charge at its website at www.sec.gov. A copy of the 2007 Equity Plan can be obtained from us at no charge upon request. Purpose The purpose of the 2007 Equity Plan is to attract and retain the services of employees, consultants, and non-employee directors of the Company and its subsidiaries, and to provide such persons with a proprietary interest in the Company. Administration The Compensation Committee of the Board administers the 2007 Equity Plan, unless otherwise determined by the Board. The Compensation Committee consists of at least two directors of the Company who are both “outside directors” under Section 162(m) of the Tax Code, and “non-employee directors” under Rule 16b-3 promulgated under the Exchange Act. The Compensation Committee, in its sole discretion, will interpret the 2007 Equity Plan and prescribe, amend, and rescind any rules and regulations necessary or appropriate for the administration of the 2007 Equity Plan, including the creation of sub-plans to take advantage of favorable tax-treatment, comply with local law, or reduce administrative burdens for grants of awards in non-U.S. jurisdictions. Eligibility The Compensation Committee determines the employees, consultants, and non-employee directors of the Company or a subsidiary who are eligible to receive awards under the 2007 Equity Plan. As of March 29, 2014, there were 3,500 employees, including nine (9) current executive officers, ninety (90) consultants and seven (7) non-employee directors eligible to participate in the 2007 Equity Plan. Authorized Shares Subject to adjustment in the event of certain corporate events (as described below), the maximum number of shares of the Company’s Common Stock currently authorized under the 2007 Equity Plan is 38,500,000, of which 15,037,378 remained available for future issuance as of March 29, 2014, all of which may be granted under the terms of the 2007 Equity Plan as incentive stock options. However, the Board has amended the 2007 Equity Plan, subject to stockholder approval, to authorize an additional 3,000,000 shares for issuance under the plan, which would result in a total of 41,500,000 authorized shares, of which 18,037,378 shares would be available for future grants. If any award granted under the 2007 Equity Plan expires or otherwise terminates in whole or in part for any reason, or if shares issued pursuant to an award are forfeited or otherwise reacquired by the Company because of the participant’s failure to comply with the conditions of the award or for any other reason, any such shares subject to a terminated award or reacquired by the Company will again become available for issuance under the 2007 Equity Plan. Shares will not be treated as having been issued under the 2007 Equity Plan and will therefore not reduce the number of shares available for issuance to the extent an award is settled in cash. The Compensation Committee is authorized to adopt such procedures for counting shares against the maximum number of authorized shares as the Compensation Committee deems appropriate. Types of Awards The 2007 Equity Plan allows the Compensation Committee to grant incentive stock options, non-qualified stock options, RSUs, restricted stock and SARs. Subject to the limits set forth in the 2007 Equity Plan, the Compensation Committee has the discretionary authority to determine the amount and terms of awards granted under the 2007 Equity Plan. -23- Automatic Non-employee Director Awards The 2007 Equity Plan provides for the periodic automatic grant of RSU awards to non-employee directors. Each non-employee director continuing in office will automatically be granted on the day of each annual meeting of stockholders an award consisting of a number of RSUs determined by dividing $185,000 by the closing price of the Company’s Common Stock on the grant date. These awards vest in full on the day immediately preceding the subsequent annual meeting. A non-employee director joining the Board between annual meetings of stockholders will receive a prorated RSU award on or about the tenth day of the month following the director’s initial appointment or election to the Board. Limitations on Awards Awards under the 2007 Equity Plan are subject to the following limitations: An option’s exercise price cannot be less than 100% of the fair market value of each share underlying the option on the date of option grant. A SAR’s base level price cannot be less than 100% of the fair market value of each share underlying the SAR on the date of grant of such SAR. Section 162(m) of the Tax Code requires, among other things, that the maximum number of shares for which an award may be granted or the maximum amount of compensation that could be paid to an individual during a specified period must be set forth in the plan and approved by stockholders in order for the awards to be eligible for treatment as performance-based compensation that will not be subject to the $1,000,000 limitation on tax deductibility for compensation paid to each “covered employee.” Covered employees are the Company’s chief executive officer and its three highest compensated executive officers (excluding the chief executive and chief financial officers) holding office on the last day of the Company’s taxable year. Accordingly, the 2007 Equity Plan limits awards granted to an individual participant in any calendar year. The aggregate awards granted under the 2007 Equity Plan to any participant during any calendar year may not exceed (i) 4,000,000 shares of the Company’s Common Stock subject to stock options or SARs and (ii) 2,000,000 shares of the Company’s Common Stock subject to awards other than stock options and SARs. In addition, no participant may receive during any calendar year an award under the 2007 Equity Plan settled in cash exceeding $6,000,000 in the aggregate. Without stockholder approval, the Company cannot reprice options or SARs, whether by directly lowering the exercise price, through cancellation of the option or SAR in exchange for a new option or SAR having a lower exercise price, or by the replacement of the option or SAR with a full value award (i.e., an award of restricted stock or RSUs). Performance Goals The Compensation Committee has the sole discretion to condition awards granted to those employees subject to Section 162(m) of the Tax Code on the attainment of objective performance goals. The Compensation Committee will establish the performance goals in writing. Such performance goals shall be based on one or more or on a combination of the following criteria in either absolute or relative terms: (i) increased revenue; (ii) net income measures (including, but not limited to, income after capital costs and income before or after any one or more of the share-based compensation expense, interest, taxes, appreciation or amortization); (iii) stock price measures (including, but not limited to, growth measures and total stockholder return); (iv) market segment share; (v) earnings per share (actual or targeted growth); (vi) cash flow measures (including, but not limited to, net cash flow and net cash flow before financing activities); (vii) return measures (including, but not limited to, return on equity, return on average assets, return on capital, risk-adjusted return on capital, return on investors’ capital and return on average equity); (viii) operating measures (including operating income, gross margin, operating margin, funds from operations, cash from operations, after-tax operating income, sales volumes, production volumes and production efficiency); (ix) expense measures (including, but not limited to, overhead cost, research and development expense and general and administrative expense); (x) product technology leadership metrics; and (xi) product quality leadership metrics. Transferability Awards granted under the 2007 Equity Plan may not be transferred other than by will or the laws of descent and distribution, and may be exercised during the lifetime of a participant only by the participant or the participant’s legally authorized representative. However, the Compensation Committee, in its sole discretion, may allow for the transfer or assignment of a participant’s award pursuant to a divorce decree or domestic relations order, but only if such participant is a U.S. resident. Adjustments upon Changes in Capitalization In the event any change is made in the Company’s capitalization pursuant to a stock split, stock dividend, recapitalization or any other increase or decrease in the Company’s shares effected without receipt of consideration by the Company, equitable adjustments will -24- be made to the number of shares of Common Stock available for grant under the 2007 Equity Plan, the exercise price of options, the SAR base level price, and the number of shares underlying outstanding awards, including restricted stock and RSU awards. Merger or Change of Control In the event of a merger, consolidation, or share exchange pursuant to which the Company is not the surviving or resulting corporation: (i) the shares or equivalent cash or property of the surviving or resulting corporation shall be substituted for any unexercised portions of outstanding awards under the 2007 Equity Plan; or (ii) all awards may be canceled by the Company immediately prior to the effective date of such event and each stockholder may be permitted to purchase all or any portion of the shares of Common Stock underlying his or her vested and unvested award(s) within 30 days before such effective date. In the event of a change in control of the Company, among other actions, the Compensation Committee may provide that the vesting and exercisability of all or any portion of the outstanding awards will be accelerated and exercisable in full and all restriction periods, if any, will expire. Amendment or Termination The Board may at any time and for any reason amend, alter, revise, suspend or terminate the 2007 Equity Plan, subject to the written consent of any participant whose rights would be adversely affected. Unless sooner terminated by the Board, the 2007 Equity Plan will terminate on December 31, 2023. Without stockholder approval, the Board may not amend the 2007 Equity Plan in any manner that would require stockholder approval under applicable law. Federal Tax Information The following summary of the effect of United States federal income taxation upon the participant with respect to the 2007 Equity Plan does not purport to be complete and reference should be made to the applicable provisions of the Tax Code. In addition, this summary does not discuss the provisions of the income tax laws of any municipality, state or foreign country in which the participant may reside. Incentive Stock Options An individual residing in the U.S. who is granted an incentive stock option is not taxed on the date of grant or vesting of such option. If the shares underlying the option are held for at least two years from the date of grant, and at least one year from the date of option exercise (the “holding periods”), then upon the sale of the shares, the individual will generally recognize a long-term capital gain or loss on the difference between the exercise price of the option and the fair market value of the Common Stock underlying the option on the date of sale. If either of the holding periods is not satisfied, the individual will generally recognize as ordinary income on the date of the disposition (a “disqualifying disposition”) of the shares an amount equal to the difference between the option’s exercise price and the fair market value of the Common Stock underlying the option determined as of the date of exercise (not to exceed the gain realized upon the disposition if the disposition is a transaction with respect to which a loss, if sustained, would be recognized). Any further gain or loss upon the disqualifying disposition of the shares constitutes a capital gain or loss. In general, the difference between the option exercise price and the fair market value of the shares on the date of exercise of an incentive stock option is treated as an adjustment in computing the participant’s alternative minimum taxable income and may be subject to an alternative minimum tax which is paid if such tax exceeds the regular tax for the year. Special rules may apply with respect to certain subsequent sales of the shares in a disqualifying disposition, certain basis adjustments for purposes of computing the alternative minimum taxable income on a subsequent sale of the shares and certain tax credits which may arise with respect to participants subject to the alternative minimum tax. Non-Qualified Stock Options An individual who is granted a non-qualified stock option generally is not taxed on the date of grant or vesting of such option. Rather, the individual will generally recognize as ordinary income on the date of option exercise an amount equal to the difference between the option’s exercise price and the fair market value of the stock underlying the option on the date of option exercise. Any further gain or loss upon the subsequent sale or disposition of the shares underlying the option constitutes a capital gain or loss. Stock Appreciation Rights An individual who is granted a SAR will generally recognize ordinary income on the date the SAR is exercised in an amount equal to the difference between the SAR’s exercise price and the fair market value of the shares underlying the SAR on the date of exercise. -25- Restricted Stock Unless an individual makes a timely election under Section 83(b) of the Tax Code (as described below), an individual will recognize ordinary income in an amount equal to the excess of the fair market value of the restricted stock on the date of vesting of the shares over the purchase price, if any, paid for the shares. Any further gain or loss from the subsequent sale of such restricted stock constitutes capital gain or loss. If the individual makes a timely election under Section 83(b), the individual is taxed, at ordinary income rates, on the excess of the fair market value of the restricted stock on the date of grant over the purchase price, if any, paid for the shares, and any further gain or loss on the subsequent sale of the stock constitutes a capital gain or loss. Restricted Stock Units An individual generally will recognize no income upon the receipt of an award of RSUs. Upon the settlement of RSUs, the participant generally will recognize ordinary income in the year of receipt in an amount equal to the cash received and/or the fair market value of any substantially vested shares received in respect of vested RSUs. If the participant receives shares of restricted stock, the participant generally will be taxed in the same manner as described above under “Restricted Stock.” Any further gain or loss on a subsequent sale of any shares received will be taxed as capital gain or loss. In general, the Company is entitled to a deduction in an amount equal to the ordinary income recognized by the individual. Plan Benefits The number, amount and type of awards to be granted in the future to eligible persons under the 2007 Equity Plan cannot be determined at this time. With the exception of the RSUs to be automatically granted to non-employee Directors, awards under the 2007 Equity Plan will be granted at the discretion of the Compensation Committee or the Board of Directors, and accordingly cannot be determined at this time. See the above section “Automatic Non-employee Director Awards” for a discussion of the automatic grant of RSU awards to our non-employee directors under the 2007 Equity Plan. The table below sets forth the RSUs awards that will be granted under the “Automatic Non-employee Director Awards” component of the 2007 Equity Plan on the date of the Annual Meeting to certain individuals and groups. This table is furnished pursuant to the rules of the SEC. Only non-employee directors are eligible to receive automatic non-employee Director awards. Name and Position ___________________________________________________________________________________ Moshe N. Gavrielov President and Chief Executive Officer Jon A. Olson Executive Vice President, Finance and Chief Financial Officer Victor Peng Executive Vice President and General Manager of Products Vincent L. Tong Senior Vice President, Worldwide Quality and New Product Introductions Frank A. Tornaghi Senior Vice President, Worldwide Sales All current executive officers, as a group All current directors who are not executive officers, as a group All employees who are not executive officers, as a group Dollar Value ($) ___________ — Number of Units ___________ — — — — — — —(1) — — — — — — —(1) — (1) On the date of the 2014 Annual Meeting, each non-employee Director continuing in office following the meeting automatically will be granted a number of RSUs determined by dividing $185,000 by the closing price of the Company’s Common Stock on that date. -26- Options Granted to Certain Persons The aggregate number of shares of Common Stock subject to options granted to certain persons under the 2007 Equity Plan since its inception is reflected in the table below. Since its inception, no option has been granted under the 2007 Equity Plan to any other nominee for election as a Director, or any associate of any such director, nominee or executive officer, and no other person has been granted 5% or more of the total amount of options granted under the 2007 Equity Plan. Name and Position ___________________________________________________________________________________ Moshe N. Gavrielov President and Chief Executive Officer Jon A. Olson Executive Vice President, Finance and Chief Financial Officer Victor Peng Executive Vice President and General Manager of Products Vincent L. Tong Senior Vice President, Worldwide Quality and New Product Introductions Frank A. Tornaghi Senior Vice President, Worldwide Sales All current executive officers, as a group All current Directors who are not executive officers, as a group All employees who are not executive officers, as a group Required Vote Amount of Options ____________ 1,450,000 326,250 355,000 246,250 271,000 3,256,550 108,000 6,990,029 Affirmative votes constituting a majority of the shares present or represented by proxy and entitled to vote on this proposal will be required to approve this proposal. Abstentions will have the same effect as a negative vote, while broker non-votes will have no effect on the outcome of this proposal. THE BOARD RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE AMENDMENT TO THE COMPANY’S 2007 EQUITY INCENTIVE PLAN TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK TO BE RESERVED FOR ISSUANCE THEREUNDER BY 3,000,000 SHARES. -27- Equity Compensation Plan Information The table below sets forth certain information as of fiscal year ended March 29, 2014 about the Company’s common stock that may be issued upon the exercise of options, RSUs, warrants and rights under all of our existing equity compensation plans including the ESPP: Plan Category ______________________________________ A ___________________ B ____________________ Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights ___________________ Weighted-average Exercise Price of Outstanding Options, Warrants and Rights ____________________ C _________________________ Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (excluding securities reflected in Column A) _________________________ Equity Compensation Plans Approved by Security Holders 1997 Stock Plan 2007 Equity Plan Employee Stock Purchase Plan Total-Approved Plans 2,573,178 9,630,726 (2) N/A 12,203,904 $ $ $ 25.36 25.08 (3) N/A 25.22 Supplemental Stock Option Plan (5) Total-All Plans 1,000 12,204,904 $ $ 25.77 25.22 Equity Compensation Plans NOT Approved by Security Holders — (1) 15,037,487 (4) 9,726,132 24,763,619 — 24,763,619 (1) (2) (3) The Company ceased issuing options under the 1997 Stock Plan as of April 1, 2007. The 1997 Stock Plan expired on May 8, 2007 and all available but unissued shares under this plan were cancelled. Includes approximately 6,901,528 shares issuable upon vesting of RSUs that the Company granted under the 2007 Equity Plan, and assumes 100% performance achievement for performance-based RSUs granted in fiscal 2014. In May 2014, the Compensation Committee determined the actual number of RSUs earned based on performance achievement for performance-based RSUs awarded in fiscal 2014. For more information on the number of RSUs at 100% performance achievement and the actual performance achievement for performance-based RSUs awarded in fiscal 2014, see the table under “EXECUTIVE COMPENSATION—-Compensation Components—Long-Term Equity Incentive Compensation.” The weighted-average exercise price does not take into account shares issuable upon vesting of outstanding RSUs, which have no exercise price. (4) On July 26, 2006, the stockholders approved the adoption of the 2007 Equity Plan and authorized 10,000,000 shares to be reserved for issuance thereunder. The 2007 Equity Plan, which became effective on January 1, 2007, replaced both the Company’s 1997 Stock Plan (which expired on May 8, 2007) and the Supplemental Stock Option Plan. On August 9, 2007, August 14, 2008, August 12, 2009, August 11, 2010, August 10, 2011, August 8, 2012, and August 14, 2013, our stockholders authorized the reserve of an additional 5,000,000 shares, 4,000,000 shares, 5,000,000 shares, 4,500,000 shares, 4,500,000 shares, 3,500,000 shares, and 2,000,000 respectively. All of the shares reserved for issuance under the 2007 Equity Plan may be granted as stock options, stock appreciation rights, restricted stock or RSUs. (5) Under the Supplemental Stock Option Plan, options were granted to employees and consultants of the Company, however neither officers nor members of our Board were eligible for grants under the Supplemental Stock Option Plan. Only non- qualified stock options were granted under the Supplemental Stock Option Plan (that is, options that do not entitle the optionee to special U.S. income tax treatment) and such options generally expire not later than 12 months after the optionee ceases to be an employee or consultant. Upon a merger of the Company with or into another company, or the sale of substantially all of the Company’s assets, each option granted under the Supplemental Stock Option Plan may be assumed or substituted with a similar option by the acquiring company, or the outstanding options will become exercisable in connection with the merger or sale. -28- PROPOSAL FOUR ADVISORY VOTE ON EXECUTIVE COMPENSATION The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) enables our stockholders to vote to approve, on an advisory (non-binding) basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with SEC rules. Our executive officer compensation program is designed to attract and retain talented and qualified senior executives to manage and lead our Company and to motivate them to pursue and meet our corporate objectives. Under this program, our named executive officers are rewarded for individual and collective contributions to our success consistent with our “pay for performance” orientation. Furthermore, the executive officer total compensation program is aligned with the nature and dynamics of our business, which focuses management on achieving the Company’s annual and long-term business strategies and objectives. Additional details about our executive compensation programs are described under the section titled “EXECUTIVE COMPENSATION— COMPENSATION DISCUSSION AND ANALYSIS.” Our Compensation Committee regularly reviews the executive officer compensation program to ensure that it achieves the desired goals of emphasizing long-term value creation and aligning the interests of management and stockholders through the use of equity-based awards. We are asking our stockholders to indicate their support for our named executive officer compensation as described in this proxy statement. This proposal, commonly known as a “say-on-pay” proposal, gives our stockholders the opportunity to express their views on our named executive officers’ compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies and practices described in this proxy statement. Accordingly, we ask our stockholders to vote “FOR” the following resolution at the Annual Meeting: “RESOLVED, that the Company’s stockholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in the Company’s proxy statement for the 2014 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the Summary Compensation Table and the other related tables and disclosure.” Required Vote The “say-on-pay” vote is advisory, and therefore not binding on the Company, the Compensation Committee or our Board of Directors. However, the affirmative vote of holders of a majority of the votes cast in person or by proxy for this Proposal would indicate stockholder approval of the resolution. Our Board of Directors and our Compensation Committee value the opinions of our stockholders and to the extent there is any significant vote against the named executive officer compensation as disclosed in this proxy statement, we will consider our stockholders’ concerns and the Compensation Committee will evaluate whether any actions are necessary to address those concerns. THE BOARD RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AS DESCRIBED IN THIS PROXY STATEMENT PURSUANT TO THE COMPENSATION DISCLOSURE RULES OF THE SEC. -29- RATIFICATION OF APPOINTMENT OF EXTERNAL AUDITORS PROPOSAL FIVE The Audit Committee has selected Ernst & Young LLP, an independent registered public accounting firm, to audit the consolidated financial statements of Xilinx for the fiscal year ending March 28, 2015 and recommends that stockholders vote for ratification of such appointment. Although we are not required to submit to a vote of the stockholders the ratification of the appointment of Ernst & Young LLP, the Company, the Board and the Audit Committee, as a matter of good corporate governance, have determined to ask the stockholders to ratify the appointment. If the appointment of Ernst & Young LLP is not ratified, the Audit Committee will take the vote under advisement in evaluating whether to retain Ernst & Young LLP. Representatives of Ernst & Young LLP attend meetings of the Audit Committee of the Board including executive sessions of the Audit Committee at which no members of Xilinx management are present. Ernst & Young LLP has audited the Company’s financial statements for each fiscal year since the fiscal year ended March 31, 1984. Representatives of Ernst & Young LLP are expected to be present at the Annual Meeting. In addition, they will have an opportunity to make a statement if they desire to do so, and are expected to be available to respond to appropriate questions from stockholders. Fees Paid to Ernst & Young LLP The following table shows the fees billed or to be billed for audit and other services provided by Ernst & Young LLP for fiscal 2014 and 2013. Audit Fees Audit-Related Fees Tax Fees All Other Fees Total _________________ $ 2014 2,870,800 — 296,000 — 3,166,800 _________________ $ _________________ _________________ 2013 _________________ 2,610,000(1) $ — 170,000 — 2,780,000 _________________ $ _________________ _________________ (1) Includes $8,000 and $57,000 previously included under Audit-Related Fees and All Other Fees, respectively. Audit Fees This category includes fees for the audit of the Company’s annual financial statements and internal control over financial reporting, review of the Company’s interim financial statements on Form 10-Q and services that are typically provided by the independent registered public accounting firm in connection with statutory and regulatory filings or engagements for those fiscal years. This category also includes, but is not limited to, statutory audits required by non-U.S. jurisdictions, consultation and advice on new accounting pronouncements, technical advice on various accounting matters related to the consolidated financial statements or statutory financial statements that are required to be filed by non-U.S. jurisdictions and comfort letters and consents issued in connection with SEC filings. Audit-Related Fees This category consists of assurance and related services that are reasonably related to the performance of the annual audit or interim financial statement review and are not reported under “Audit Fees.” No such services were provided by Ernst & Young LLP during fiscal 2014 and fiscal 2013. Tax Fees This category consists of fees for tax compliance, tax advice and tax planning services, including preparation of tax returns and assistance and representation in connection with tax audits and appeals. All Other Fees This category consists of services that are not included in the category descriptions defined above under “Audit Fees,” “Audit- Related Fees,” or “Tax Fees.” No such services were provided by Ernst & Young LLP during fiscal 2014 and fiscal 2013. Audit Committee’s Pre-approval Policy and Procedures The Audit Committee has adopted policies and procedures for approval of financial audit (and audit-related), non-financial audit, tax consulting and other work performed by Ernst & Young LLP. Pursuant to its charter and those policies, the policy of the Audit Committee is that any and all services to be provided to the Company by Ernst & Young LLP are subject to pre-approval by the Audit Committee. The Audit Committee pre-approves annual audit fees, quarterly reviews and tax compliance fees at the beginning -30- of the fiscal year. In its review of non-financial audit, tax consulting and other services, the Audit Committee considers whether the provision of such services are consistent with SEC guidance, and whether the service facilitates the performance of the financial audit, improves the Company’s financial reporting process, and is otherwise in the Company’s best interests and compatible with maintaining Ernst & Young LLP’s independence. The Audit Committee did not waive its pre-approval policies and procedures during the fiscal year ended March 29, 2014. All of the services described in the fee table above were approved pursuant to the Audit Committee’s pre-approval policy. Required Vote Approval of this proposal requires the affirmative vote of a majority of the shares present and entitled to vote either in person or by proxy. Abstentions and broker non-votes will each be counted as present for purposes of determining the presence of a quorum. Abstentions will be counted as “AGAINST” votes with respect to the proposal, but broker non-votes will have no effect on the outcome of this proposal. THE BOARD RECOMMENDS A VOTE “FOR” THE RATIFICATION OF ERNST & YOUNG LLP AS THE COMPANY’S EXTERNAL AUDITORS FOR FISCAL 2015. -31- REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS The Audit Committee oversees the Company’s financial reporting process on behalf of the Board. It assists the Board in fulfilling its oversight responsibilities to the stockholders relating to the Company’s financial statements and the financial reporting process, the systems of internal accounting and financial controls, and the audit process. While the Audit Committee sets the overall corporate tone for quality financial reporting, management has the primary responsibility for the preparation, presentation and integrity of the Company’s financial statements and implementation of the reporting process including the systems of internal controls and procedures designed to reasonably assure compliance with accounting standards, applicable laws and regulations. In accordance with the law, the Audit Committee has ultimate authority and responsibility to select, compensate, evaluate and, when appropriate, replace the Company’s independent auditors. The Charter of the Audit Committee can be found at www.investor.xilinx.com under “Corporate Governance.” The Company’s external auditors, Ernst & Young LLP, are responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with generally accepted auditing standards and expressing opinions on the conformity of the Company’s audited financial statements to generally accepted accounting principles in the United States and the effectiveness of the Company’s internal control over financial reporting. In carrying out its responsibilities, the Audit Committee has the power to retain outside counsel or other experts and is empowered to investigate any matter with full access to all books, records, facilities and personnel of the Company. The Audit Committee members are not professional accountants or auditors, and their functions are not intended to duplicate or certify the activities of management and the independent auditors. In fulfilling its oversight responsibilities, the Audit Committee reviewed the audited consolidated financial statements for the fiscal year ended March 29, 2014 with management and Ernst & Young LLP, including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements. The Audit Committee also discussed with Ernst & Young LLP, matters required to be discussed under standards published by the Public Company Accounting Oversight Board (PCAOB), including, among other things, matters related to the conduct of the audit of the Company’s consolidated financial statements and other required communications with audit committees. In addition, the Audit Committee has received and reviewed the written disclosures and the letter from Ernst & Young LLP required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the audit committee concerning independence, and has discussed with them their independence from the Company and its management. The Audit Committee reviewed and discussed with management its assessment and report on the effectiveness of the Company’s internal control over financial reporting as of March 29, 2014. The Audit Committee has also reviewed and discussed with Ernst & Young LLP its audit of and report on the Company’s internal control over financial reporting. The Company published these reports in its Annual Report on Form 10-K for the fiscal year ended March 29, 2014. Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 29, 2014 for filing with the SEC. The Audit Committee of the Board of Directors —John L. Doyle, Chairman —J. Michael Patterson —Albert A. Pimentel —Marshall C. Turner The foregoing Report of the Audit Committee of the Board of Directors is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference in any filing of Xilinx under the Securities Act or under the Exchange Act, whether made before or after the date of this proxy statement and irrespective of any general incorporation language in any such filing. -32- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth the beneficial ownership of Common Stock of the Company as of May 9, 2014, including the right to acquire beneficial ownership within 60 days of May 9, 2014, except as noted below, by: (i) each stockholder known to the Company to be a beneficial owner of more than 5% of the Company’s Common Stock, (ii) each of the Company’s Directors and Director nominees, (iii) each of the named executive officers identified in the section entitled “Executive Compensation” and (iv) all current Directors and executive officers as a group. The Company believes that each of the beneficial owners of the Common Stock listed below, based on information furnished by such beneficial owners, has sole voting power and sole investment power with respect to such shares, except as otherwise set forth in the footnotes below and subject to applicable community property laws. Beneficial Owners ________________________________________________________________________________ Greater than 5% Stockholders Blackrock, Inc. 40 East 52nd Street New York, NY 10022 JPMorgan Chase & Co. 270 Park Ave. New York NY 10017 The Vanguard Group, Inc. 100 Vanguard Blvd. Malvern, PA 19355 Directors Philip T. Gianos Moshe N. Gavrielov John L. Doyle William G. Howard, Jr. J. Michael Patterson Albert A. Pimentel Marshall C. Turner Elizabeth W. Vanderslice Named Executive Officers Jon A. Olson Victor Peng Vincent L. Tong Frank. A. Tornaghi All current Directors and executive officers as a group (16 persons) Amount and Nature of Beneficial Ownership _________________________ Percent of Class(1) _____________ 15,268,347 (2) 17,660,086 (3) 18,355,802 (4) 150,400 (5) 332,065 (6) 57,124 (7) 71,945 (8) 39,400 (9) 14,890 (10) 51,995 (11) 62,399 (12) 474,179 (13) 328,559 (14) 213,004 (15) 134,308 (16) 2,296,534 (17) 5.6 6.6 6.8 * * * * * * * * * * * * * (1) Less than 1% The beneficial ownership percentage of each stockholder is calculated on the basis of 268,296,602 shares of common stock outstanding as of May 9, 2014. Any additional shares of common stock that a stockholder has the right to acquire within 60 days after May 9, 2014 that are not already outstanding at such time are deemed to be outstanding and beneficially owned for the purpose of calculating that stockholder’s percentage beneficial ownership. They are not, however, deemed to be outstanding and beneficially owned for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, the address of each of the individuals and entities named below is c/o Xilinx, Inc., 2100 Logic Drive, San Jose, California 95124. (2) Based on information contained in a Schedule 13G/A, reflecting stock ownership information as of December 31, 2013, which was filed by this stockholder pursuant to Section 13(d) of the Exchange Act (Section 13(d)), on February 10, 2014 reporting beneficial ownership of 15,268,347 shares of Common Stock consisting of 12,593,838 shares as to which it has sole voting power. Blackrock, Inc. has sole dispositive power as to all 15,268,347 shares. (3) Based on information contained in a Schedule 13G/A, reflecting stock ownership information as of December 31, 2013, which was filed by this stockholder pursuant to Section 13, on February 4, 2014 reporting beneficial ownership of 17,660,086 shares of Common Stock consisting of 15,963,942 shares as to which it has sole voting power, 563,463 shares as to which it has shared voting power, 17,073,788 shares as to which it has sole dispositive power and 586,297 shares as to which it has shared dispositive power. (4) Based on information contained in a Schedule 13G/A, reflecting stock ownership information as of December 31, 2013, which was filed by this stockholder pursuant to Section 13(d), on February 12, 2014 reporting beneficial ownership of 18,355,802 shares of Common Stock consisting of 437,184 shares as to which it has sole voting power, no shares as to which -33- it has shared voting power, 17,954,001 shares as to which it has sole dispositive power and 401,801 shares as to which it has shared dispositive power. (5) Consists of 78,060 shares held directly, 18,320 shares held in a family trust, 20 shares held by Mr. Gianos’ son and 54,000 shares issuable upon exercise of options. Does not include 7,625 shares that are vested but not settled pursuant to a pre-arranged deferral program. (6) Consists of 96,380 shares held directly, 87,500 shares issuable upon exercise of options and 148,185 shares issuable upon settlement of RSUs, which represents 63,661 shares, 24,399 shares, and 60,125 shares issuable upon settlement of RSUs granted in fiscal years 2012, 2013, and 2014, respectively. The 60,125 shares included for the fiscal 2014 grant represents the pro-rata vesting as a result of actual (not target) performance achievement under an RSU granted in fiscal 2014. (7) Consists of 15,124 shares held in a family trust and 42,000 shares issuable upon exercise of options. (8) Consists of 17,945 shares held in a family trust and 54,000 shares issuable upon exercise of options. (9) Consists of 8,400 shares held directly and 31,000 shares issuable upon exercise of options. Does not include 7,625 shares that are vested but not settled pursuant to a pre-arranged deferral program. (10) Consists of 14,890 shares held in a family trust. (11) Consists of 25,245 shares held directly, 750 shares held by Mr. Turner’s spouse and 26,000 shares issuable upon exercise of options. (12) Consists of 10,413 shares held directly, 2,986 shares held in joint tenancy and 49,000 shares issuable upon exercise of options. Does not include 7,625 shares that are vested but not settled pursuant to a pre-arranged deferral program. (13) Consists of 52,914 shares held in a family trust, 370,000 shares issuable upon exercise of options and 51,263 shares issuable upon settlement of RSUs, which represents 24,265 shares, 9,123 shares, and 17,875 shares issuable upon settlement of RSUs granted in fiscal years 2012, 2013, and 2014, respectively. The 17,875 shares for the fiscal 2014 grant represents the pro-rata vesting as a result of actual (not target) performance achievement under that RSU. (14) Consists of 32,296 shares held directly, 245,000 shares issuable upon exercise of options and 51,263 shares issuable upon settlement of RSUs, which represents 24,265 shares, 9,123 shares, and 17875 shares issuable upon settlement of RSUs granted in fiscal years 2012, 2013, and 2014, respectively. The 17,875 shares for the fiscal 2014 grant represents the pro-rata vesting as a result of actual (not target) performance achievement under that RSU. (15) Consists of 38,578 shares held directly, 140,000 shares issuable upon exercise of options and 34,426 shares issuable upon settlement of RSUs, which represents which represents 16,086 shares, 6,153 shares, and 12,187 shares issuable upon settlement of RSUs granted in fiscal years 2012, 2013, and 2014, respectively. The 12,187 shares for the fiscal 2014 grant represents the pro-rata vesting as a result of actual (not target) performance achievement under that RSU. (16) Consists of 4,882 shares held directly, 95,000 shares issuable upon exercise of options and 34,426 shares issuable upon settlement of RSUs, which represents which represents 16,086 shares, 6,153 shares, and 12,187 shares issuable upon settlement of RSUs granted in fiscal years 2012, 2013, and 2014, respectively. The 12,187 shares for the fiscal 2014 grant represents the pro-rata vesting as a result of actual (not target) performance achievement under that RSU. Includes an aggregate of 1,831,851 shares issuable upon exercise of options or settlement of RSUs. (17) For certain information concerning our Executive Officers, see “Executive Officers of the Registrant” in Item 1 of Part I of our Form 10-K. -34- EXECUTIVE COMPENSATION COMPENSATION DISCUSSION AND ANALYSIS This section of the proxy statement explains our compensation programs in general, and how they operate with respect to our named executive officers in particular. This year, our “named executive officers” are our CEO, CFO and the three most highly compensated executive officers serving at the end of fiscal 2014, as follows: (cid:127) (cid:127) (cid:127) (cid:127) (cid:127) Moshe N. Gavrielov, President and Chief Executive Officer Jon A. Olson, Executive Vice President, Finance and Chief Financial Officer Victor Peng, Executive Vice President and General Manager of Products Vincent L. Tong, Senior Vice President, Worldwide Quality and New Product Introductions Frank A. Tornaghi, Senior Vice President, Worldwide Sales Executive Summary Financial Performance for Fiscal 2014 Xilinx achieved record revenue in fiscal 2014 coupled with record gross margin. The Company’s results were driven by the continued success of its 28nm product portfolio. Following are some major product and financial highlights in fiscal 2014: (cid:127) (cid:127) (cid:127) (cid:127) (cid:127) (cid:127) (cid:127) (cid:127) (cid:127) Overall net revenues were $2.38 billion, compared to $2.17 billion in the prior fiscal year Net income increased 29% to $630 million, compared to $488 million in the prior fiscal year Gross margin for the full fiscal year reached a record 68.8%, compared to 66% in the prior fiscal year Net revenues from our new products increased 85% in fiscal 2014, compared to the prior fiscal year. Products in this category are our KintexTM Ultrascale, Virtex®-7, Kintex-7, ArtixTM-7, ZynqTM-7000, Virtex-6 and SpartanTM-6 products Sales from our 28nm product portfolio, which includes the 7 series FPGAs and the Zynq-7000 family, surpassed $380 million in fiscal 2014, compared to surpassing $100 million for the first time in fiscal 2013 We increased our dividend by $0.04 per share, bringing our quarterly dividend to $0.29 per share, paying a record $267 million in dividends in fiscal 2014 We returned $242 million to our stockholders through our stock buyback program Our total stockholder return on an annualized basis over the prior 1-, 3-, and 5-year periods was 44%, 22% and 26%, respectively We, in close partnership with TSMC, shipped the industry’s first 20nm device, Kintex UltraScale Key Elements of Our Compensation Strategy and Program Our executive compensation program is designed to motivate, engage and retain a talented leadership team and to appropriately reward them for their contributions to our business. Our performance measurement framework consists of a combination of financial, operational, and strategic/individual performance metrics that provide a balance between short-term results and drivers of long-term value. We provide our named executive officers with three primary elements of pay: base salary, cash incentive compensation and long- term equity compensation. The performance-based incentives, consisting of cash incentive compensation and equity compensation, together constitute the largest portion of potential compensation for the named executive officers. Our long-term equity awards are 100% performance-based. The following charts show the pay mix for (i) our CEO, and (ii) all other named executive officers, for fiscal 2014: -35- The percentages above were calculated using salary, cash incentive compensation, grant date fair value of equity awards, and all other compensation as reported in the Summary Compensation Table. Fiscal 2014 Performance Measurement Framework Our annual and long-term incentives together provide a balanced and comprehensive view of performance and drive the Compensation Committee’s executive compensation decisions. The components of our executive compensation program are illustrated in the chart below and more fully discussed throughout this Compensation Discussion and Analysis section: Fiscal 2014 Performance Measurement Framework -36- As noted above, the Revenue Growth Component is determined and paid annually. The Operating Profit Component, which is operating profit as a percentage of revenue, excluding expenses related to bonus payments under our non-sales incentive compensation plans and other non-recurring adjustments or expenses that are not associated with currently planned or on-going business operations such as litigation and restructuring expenses, is determined and paid semi-annually. The Individual Performance Component is determined and paid semi-annually for all named executive officers, except for the CEO, whose Individual Performance Component is determined and paid annually. The Individual Performance Component weighting for all named executive officers is 40%; however, the weighting for the underlying product, sales/marketing, operational and organizational objectives varies among executives. Fiscal 2014 Key Compensation Actions (cid:127) (cid:127) (cid:127) Base salary: None of our named executive officers received a base salary increase in fiscal 2014, except for Mr. Peng, whose salary increased by $10,000, to $480,000 from $470,000. Annual incentive target: In fiscal 2014, the Compensation Committee increased the annual cash incentive target as a percent of salary for Mr. Gavrielov, our CEO, to 140% from 125%, and for our other named executive officers to 80% from 75%. This increase both maintained the competitiveness of our target pay levels and increased the proportion of total pay that is performance-based. Annual incentive payout: We paid cash incentive compensation consistent with our financial results and strategic/individual performance goals set for each named executive officer. As indicated in the framework chart above, our cash incentive compensation program is designed around three components: two corporate financial components of revenue growth and operating profit, and individual performance. The achievement of these components for fiscal 2014 was as follows: ° ° ° We exceeded our Revenue Growth Component annual target, resulting a 160% payout for this measure. We exceeded our Operating Profit Component target in the first and second halves of the fiscal year, resulting in 180% payout for the first half of fiscal 2014, and 150% for the second half of the year. The payouts under the Individual Performance Component for our named executive officers (other than our CEO) in the first half of the year ranged from 100% to 105% of target, and in the second half of the year ranged from 95% to 120% of target. The payout for Mr. Gavrielov, our CEO, under the individual performance component as a percent of target for the year was 115%. As a result of these performance outcomes, annual cash incentive compensation paid to our named executive officers for fiscal 2014 exceeded each executive’s annual target cash incentive opportunity. (cid:127) Long-term equity incentive payout: In fiscal 2014, the equity grants to our named executive officers consisted of only performance-based restricted stock units (RSUs) that require achievement of specific company performance objectives, as well as continued employment to become earned and vested, as compared to a mix of time-based and performance-based RSUs in prior fiscal years. In fiscal 2014, the Company exceeded the payout thresholds of all four performance measures indicated on the framework chart above. As a result, each named executive officer earned 162.5% of the target number of shares granted, and one third of such earned shares will vest in each of July 2014, July 2015, and July 2016. -37- The following table summarizes these key fiscal 2014 decisions for our named executive officers: Compensation Elements for Named Executive Officers for Fiscal 2014 Performance-Based Incentive Compensation _____________________________ ______________________________ Cash Incentive Award Long-term Equity Incentive Award ____________________ Name Moshe N. Gavrielov Jon A. Olson Victor Peng Vincent L. Tong Frank A. Tornaghi 2014 Salary(1) ________ ($) 750,000 480,000 480,000 370,000 385,000 Actual Award as a Percent of Target ________ __________ _________ ________ __________ ________ _________ (%) 143.5 138.5 138.5 142.5 136.5 Salary Increase From Prior Year(1) (%) — — 2.1 — — Target Award(2) ($) 1,050,000 384,000 382,000 296,000 308,000 Actual Award ($) 1,506,750 531,840 528,960 421,800 420,420 Actual RSU Award (Shares) 180,375 53,625 53,625 36,562 36,562 Target RSU Award (Shares) 111,000 33,000 33,000 22,500 22,500 Actual RSUs Earned as a Percent of Target (%) 162.5 162.5 162.5 162.5 162.5 (1) (2) Salary represents the amount approved by the Compensation Committee for the applicable fiscal year, which may be different than the actual salary paid in a given fiscal year due to various factors, including timing of a salary increase. Target awards are determined by multiplying the named executive officer’s actual salary earned during fiscal 2014 by the executive’s target bonus percentage, which was 140% for Mr. Gavrielov, our CEO, and 80% for all of the other named executive officers. Mr. Peng’s actual salary earned for fiscal 2014 was $477,500, which is less than the salary rate approved by the Compensation Committee, because his salary increase was effective after the beginning of the fiscal year. CEO Performance and Pay Alignment Each year, the Compensation Committee assesses our CEO’s actual compensation relative to the Company’s performance. The following graphs show a five-year history of our financial results and the CEO’s annual cash incentive compensation as a percent of his target cash incentive compensation for the applicable fiscal year: (1) Operating profit as a percent of revenue and revenue are based on Generally Accepted Accounting Principles (GAAP). The charts above show that as our GAAP operating profit and revenue have fluctuated, our CEO’s cash incentive award has correspondingly changed. -38- Governance Practices We maintain several practices to help ensure our overall program reflects sound governance standards. These practices include the following: (cid:127) (cid:127) (cid:127) (cid:127) (cid:127) (cid:127) (cid:127) We have executive stock ownership guidelines and holding requirements that cover our Section 16 executive officers. In the event of a change in control, we have double trigger severance requirements, meaning severance benefits are not triggered solely by a change in control. Our CEO also has severance provisions outside of a change in control. We do not provide any excise tax gross-ups related to a change in control of the Company. We do not provide a Supplemental Executive Retirement Plan (SERP) or a defined benefit plan. We have a claw-back, or recoupment, policy that covers all elements of the Company’s incentive compensation program. We have anti-hedging and pledging policies. We engage the services of an independent compensation consultant that is retained solely by our Compensation Committee. Impact of 2013 Stockholder Advisory Vote on Compensation At our Annual Meeting of Stockholders in August 2013, we conducted a non-binding advisory vote on compensation of our named executive officers, commonly referred to as a “say on pay” vote. Our stockholders overwhelmingly approved the compensation of the named executive officers, with approximately 94% of stockholder votes cast in favor of our executive compensation program. The Compensation Committee was mindful of this strong stockholder support of our compensation philosophy and objectives when evaluating our executive compensation policies and practices throughout fiscal 2014. Accordingly, and as a result of the favorable say-on-pay vote, the Company continued its general approach to executive compensation, emphasizing performance-based compensation. In fiscal 2014, the Committee awarded only performance-based RSUs to our executive officers, including our named executive officers, in order to tie all of the executive’s equity compensation to Company performance and increase the executive’s focus on key long-term drivers of value. The Board of Directors has adopted a policy providing for an annual advisory vote on the compensation of our named executive officers. This policy is consistent with our stockholders’ preference in August 2011 on the frequency of future advisory votes on compensation for our named executive officers. Role of the Compensation Committee The Compensation Committee, in consultation with the CEO, is responsible for establishing our compensation and benefits philosophy and strategy. The Compensation Committee also oversees our general compensation policies and sets specific compensation levels for corporate officers, including the named executive officers. The Compensation Committee, together with the independent Directors, evaluates the CEO’s performance, and the Compensation Committee determines CEO compensation. In determining compensation strategy, the Compensation Committee reviews market competitive data to ensure that we are able to attract, motivate, reward and retain quality employees, including the named executive officers. The Compensation Committee has the authority to engage its own independent advisors to assist in carrying out its responsibility and has done so, but may not delegate its authority to such advisors. Compensation Consultant In fiscal 2014, the Compensation Committee continued to retain the services of Semler Brossy Consulting Group LLC (Semler Brossy) to act as its independent compensation consultant. Semler Brossy reported directly to the Compensation Committee and not to management. Semler Brossy provided the Compensation Committee with general advice on compensation matters, including reviewing the composition of the peer group, providing compensation data related to executives at the selected companies in the peer group and providing advice on our executive officers’ compensation generally. Based on the above and its review of the factors set forth under Rule 10C-1 of the Exchange Act and in the NASDAQ listing requirements, the Compensation Committee assessed the independence of Semler Brossy and concluded that no conflict of interest exists that would prevent Semler Brossy from independently representing the Compensation Committee. In fiscal 2014, the Compensation Committee met regularly in executive session with its independent compensation consultant without management present. Semler Brossy did not provide any additional -39- services to the Company other than the services for which it was retained by the Compensation Committee, and the Compensation Committee is not aware of any conflict of interest that exists that would otherwise prevent Semler Brossy from being independently engaged. The Company pays the cost for Semler Brossy’s services. Compensation Philosophy and Objectives The primary objectives of the Compensation Committee with respect to determining executive compensation are to attract, motivate and retain talented employees and to align executives’ interests with those of stockholders, with the ultimate objective of improving stockholder value. It is the philosophy of the Compensation Committee that the best way to achieve this is to align executives’ compensation with their level of performance, thereby compensating executives on a “pay for performance” basis. To achieve these objectives, the Compensation Committee has implemented compensation plans that tie a significant portion of executives’ overall compensation to our financial and product-related performance, including operating profit, revenue growth, share of revenue, technology leadership and quality leadership. Overall, the total compensation opportunity is intended to create an executive compensation program that is competitive with comparable companies. The comparable companies considered by the Compensation Committee are described more fully below. For fiscal 2014, the Compensation Committee approved the 2014 Incentive Plan, which is described in greater detail below. Bonus payments to executives varied with the Company’s performance during the fiscal year, as well as with their individual performance. This design was intended to accomplish the Company’s goal of aligning executives’ interests with those of stockholders by encouraging the executives to work diligently toward the success of the Company, and to reward, as appropriate, achievement of semi-annual and annual objectives. The Company also advances its objectives of aligning executives’ interests with the interests of stockholders through its 2007 Equity Incentive Plan (2007 Equity Plan). In May 2014, the Compensation Committee approved an amendment to the 2007 Equity Plan to increase the number of shares reserved for issuance by 3,000,000 shares, as further discussed under Proposal Three. The purpose of the 2007 Equity Plan is to promote the success of our business by encouraging equity ownership in the Company. In particular, the 2007 Equity Plan provides officers with incentive to exert maximum effort toward the success of the Company and to participate in such success through acquisition and retention of our Common Stock. Procedural Approaches to Accomplish Compensation Objectives The Compensation Committee believes that the compensation provided to our executives, including the named executive officers, should include both cash and stock-based compensation that rewards performance as measured against established goals. Peer Group Data The Compensation Committee instructed Semler Brossy to prepare a report of peer companies for purposes of examining, determining and setting compensation for our executives. In preparing its report, Semler Brossy reviewed data from Radford Surveys + Consulting (Radford), specifically the Radford Global Technology Survey, as well as the proxy statements for each of the peer group companies. The criteria for determining which companies to include in the peer group included all or some of the following criteria: (i) they operate in a similar industry as the Company; (ii) they are of roughly similar size (as measured by revenues and aggregate market capitalization) as the Company; (iii) they have growth expectations similar to those of the Company; and (iv) they are companies against whom the Company competes for talent. For fiscal 2014, the Compensation Committee considered the following peer group companies: (cid:127) (cid:127) (cid:127) (cid:127) (cid:127) (cid:127) (cid:127) (cid:127) Advanced Micro Devices, Inc. Altera Corporation Analog Devices, Inc. Applied Materials, Inc. Atmel Corporation Autodesk, Inc. Avago Technologies Limited Broadcom Corporation (cid:127) (cid:127) (cid:127) (cid:127) (cid:127) (cid:127) (cid:127) (cid:127) Brocade Communications Systems Inc. (cid:127) Marvell Technology Group Ltd. Cadence Design Systems, Inc. (cid:127) Maxim Integrated Products Inc. Cypress Semiconductor Corporation (cid:127) Microchip Technology Inc. Fairchild Semiconductor International Inc. KLA-Tencor Corporation LAM Research Corporation Linear Technology Corporation LSI Corporation -40- (cid:127) (cid:127) (cid:127) (cid:127) (cid:127) Nvidia Corporation ON Semiconductor Corporation Sandisk Corporation Skyworks Solutions, Inc. Synopsys, Inc. A summary of the four quarter trailing revenue by quartile and market capitalization of peer group companies at the time the Compensation Committee finalized the peer group of companies in the third quarter of fiscal 2013 for its fiscal 2014 compensation decisions, is as follows: Peer Group Four-Quarter Revenue and Market Capitalization for Fiscal 2014 Compensation Decisions ________________________________________________ Quartile 75th Percentile 50th Percentile 25th Percentile Xilinx, Inc. Peer Group Financials(1) Four Quarter Trailing Revenue _____________________ ($ in millions) 3,193 Market Capitalization _____________________ ($ in millions) 8,506 2,380 1,579 2,208 6,367 3,771 8,849 (1) Data is based on available market information in October 2012. Based on the chart above, our revenue approximated the 50th percentile of the peer group companies and our market capitalization was above the 75th percentile of the peer group companies at the time the peer group was selected for fiscal 2014 compensation decisions. After receiving and discussing Semler Brossy’s report, the Compensation Committee approved the addition of two new companies to the peer group in 2014 to ensure the peer group remained relevant. Avago Technologies Limited and Skyworks Solutions, Inc. were added to the peer group, because these comparator companies met the criteria enumerated above. Data on the compensation practices of the above-mentioned peer group is generally gathered through searches of publicly available information, including publicly available databases. Peer group data is gathered with respect to base salary, bonus targets and equity awards. The Radford survey reflects more current information than the information found through publicly available sources. In fiscal 2014, all of the peer group companies identified above participated in the Radford survey. As noted above, the Compensation Committee retains the services of Semler Brossy to provide independent compensation advice and analysis. In addition, the Compensation Committee reviews the Radford survey and publicly available information of compensation offered by the applicable market comparables. The Compensation Committee took the results of the Radford report and Semler Brossy’s analysis into account, along with other relevant considerations as described in this Compensation Discussion and Analysis, in determining adjustments to executive compensation. The Compensation Committee ensures that our compensation policies for the named executive officers are designed to attract, motivate, and retain talented executive officers and are aligned with the long-term interests of our stockholders. While the Compensation Committee reviews the external market data (both the Radford survey data and peer company data), it does not target any specific pay percentile within those companies for purposes of setting cash and equity compensation levels nor does the Compensation Committee consider the total stockholder return of any company in the peer group in making compensation decisions. Rather, the Compensation Committee uses the peer group information merely as a guide to determine whether we are generally competitive in the market. CEO Evaluation and Compensation Determination The Compensation Committee, together with the independent Directors, annually reviews the performance of the CEO in light of the goals and objectives of our executive compensation plans, and approves CEO compensation. The review of the performance and compensation of the CEO and all other named executive officers is conducted annually during the period commencing around the middle of May which is called our “Focal Review Period.” The Compensation Committee uses both objective data from peer group companies, including comparing compensation paid to CEOs in the peer group, and subjective policies and practices, including assessment of the CEO’s achievements, to determine compensation of the CEO. In determining the long-term incentive component of the CEO’s compensation, the Compensation Committee considers all relevant factors, including the Company’s performance and relative stockholder return, the value of similar awards to CEOs of the peer group companies, the awards given to the CEO in prior years, and formal feedback from the independent directors. To provide further assurance of independence, the Compensation Committee’s independent compensation consultant, Semler Brossy, provides its recommendation for CEO compensation. The compensation consultant prepares analysis showing competitive CEO compensation among the peer group for the individual elements of compensation and total direct compensation. Then, it provides the Compensation Committee with a range of recommendations for any change in the CEO’s base salary, annual incentive target, and equity grant value. The recommendations take into account the peer group competitive pay analysis, expected future pay trends, and importantly, the -41- position of the CEO in relation to other senior executives and proposed pay actions for all key employees of the Company. The range allows the Compensation Committee to exercise its discretion based on the CEO’s individual performance and other factors. Evaluation of Other Named Executive Officers and Compensation Determination The CEO works with the Compensation Committee in establishing the compensation and benefits philosophy and strategy for our executives and also makes specific recommendations to the Compensation Committee with respect to the individual compensation for each of the executive officers, including the named executive officers other than himself. With respect to the named executive officers, the Compensation Committee annually reviews, with the CEO, the executives’ performance in light of the Company’s goals and objectives, and approves their compensation. The Compensation Committee also considers other relevant factors in approving the level of such compensation, including each executive officer’s performance during the year, specifically an officer’s accomplishments, areas of strength and areas of development, the executive’s scope of responsibility and contributions to the Company, and the executive’s experience and tenure in the position. During the Focal Review Period, the CEO and members of our human resources department evaluate each named executive officer’s performance during the year based on the CEO’s knowledge of each named executive officer’s performance, individual self-assessment and feedback provided by the named executive officer’s peers and direct reports. The CEO also reviews compensation data gathered from Radford as well as from publicly available information such as SEC filings and identifies trends and competitive factors to consider in adjusting compensation levels of the named executive officers. The CEO then makes a recommendation to the Compensation Committee as to each element of each named executive officer’s compensation. -42- Compensation Components Our executive compensation is divided into three components: base salary, incentive cash compensation, and long-term equity compensation. The following table summarizes these elements of compensation: Compensation __________________ Element Base Salary _________________________________________ Objectives Provides a fixed, baseline level of compensation for services rendered during the fiscal year. __________________________________________ Key Features Fixed cash compensation is based on scope of responsibility, breadth of knowledge, experience and tenure in the position and individual performance. In addition, in determining base salaries for executive officers, we review the base salaries being paid to executive officers in comparable positions in our peer group companies and conduct an internal review of the executive’s compensation, both individually and relative to other executive officers. Performance-Based Incentive Cash Compensation Rewards participants for achieving or exceeding corporate and individual performance objectives and serves to compensate, attract and retain highly qualified executives. The incentive cash bonus is calculated as a percentage of the named executive officer’s annual base earnings. Cash incentive awards are payable based on the achievement of the pre- established corporate objectives, including revenue growth, operating profit, and individual performance goals. The operating profit component performance component are paid on a semi-annual basis for all named executive officers except the CEO whose operating profit component is paid on a semi- annual basis but whose individual performance is paid on an annual basis. The revenue growth component is paid on an annual basis for all named executive officers. individual and Long-Term Equity Incentive Compensation Establishes a corporate culture that supports strong long-term corporate performance by encouraging our named executive officers to take a long-term outlook. Provides an important retention tool for named executive officers to the extent that equity awards are subject to vesting over an extended period of time. The performance-based RSUs have several performance-based components, including share of programmable logic device (PLD) revenue, share of 28nm revenue, technology leadership and quality leadership. The number of performance- based RSUs earned is dependent on the level of achievement under these performance metrics, aligning pay with performance. Following determination of the number of performance- based RSUs earned, the RSUs will be subject to further time-based vesting. The performance- based RSUs will vest in three equal annual installments, starting one year from the date of grant. Base Salary In May 2013, as part of the annual Focal Review Period, the Compensation Committee reviewed the base salaries of our named executive officers focusing on the competitiveness of salaries. Based on comparing current salaries to the base salary levels at the companies in our peer group, as well as considering the roles and responsibilities and potential performance of the named executive officers, the Compensation Committee did not increase the base salaries of any of the named executive officers, except for Mr. Peng, whose base salary increased to $480,000 from $470,000. -43- The following table is a summary of the changes to base salary for our named executive officers in fiscal 2014: __________________ Named Executive Officer Moshe N. Gavrielov Jon A. Olson Victor Peng Vincent L. Tong Frank A. Tornaghi Named Executive Officer Salary Adjustments Fiscal 2013 Salary(1) _________________ ($) 750,000 480,000 470,000 370,000 385,000 Fiscal 2014 Salary(1) _________________ ($) 750,000 480,000 480,000 370,000 385,000 Percent Change _____________ (%) — — 2.1 — — (1) These amounts reflect the base salaries approved for a particular fiscal year, and not the actual earnings for the respective named executive officer, which earnings may be different due to certain factors, such as the timing of the approved salary increase. Incentive Cash Compensation In fiscal 2014, the Compensation Committee adopted the 2014 Incentive Plan. The cash incentive target for our CEO was increased to 140% of his annual base earnings, up from 125% in fiscal 2013. The cash incentive target for all other named executive officers was increased to 80% of their annual base earnings, up from 75% in fiscal 2013. These cash incentive target increases maintained the competitiveness of our target pay levels and increased the proportion of total pay that is performance-based. Under the 2014 Incentive Plan, the cash bonuses for the named executive officers were based on each executive’s earnings and then determined using three different components, each with a different weighting: (1) our operating profit as a percentage of revenue determined in accordance with U.S. Generally Accepted Accounting Principles, or GAAP, but excluding payments under our non-sales incentive plans and other unusual charges, (OP Component), weighted at 30%; (2) our annual revenue growth (Growth Component), weighted at 30%; and (3) the individual performance component (Individual Performance Component) based on individual performance goals pertaining to such officer’s position and responsibilities, weighted at 40%. For fiscal 2014, the three components and weighting of those components were the same as for fiscal 2013. The OP Component is paid on a semi-annual basis, the Growth Component is paid on an annual basis, and the Individual Performance Component is paid on a semi-annual basis for all named executive officers, except our CEO, whose Individual Performance Component is paid on an annual basis. We exceeded the operating profit objective in the first and second halves of the year, resulting in an 180% payout for the first half of the year and 150% payout for the second half of the year under the OP Component. Payouts to the named executive officers (other than the CEO) under the Individual Performance Component for the first half of the fiscal year ranged from 100% to 105% of target. In the second half of the fiscal year, the payouts to the named executive offices (other than our CEO) under the Individual Performance Component ranged from 95% to 120% of target. The payout to Mr. Gavrielov, our CEO, under the Individual Performance Component was 115% of target, which was measured annually rather than semi-annually. The Company also exceeded the revenue growth objective for fiscal 2014 resulting in a 160% payout for the Growth Component. The following table shows the annual performance achievement as a percentage of target by our named executive officers under the 2014 Incentive Plan: Named Executive Officer Actual Incentive Cash Compensation as a Percent of Target _____ Name Moshe N. Gavrielov Jon A. Olson Victor Peng Vincent L. Tong Frank A. Tornaghi Target Incentive Award _______________ ($) 1,050,000 384,000 382,000 296,000 308,000 Actual Incentive Award _______________ ($) 1,506,750 531,840 528,960 421,800 420,420 Actual Incentive Award as a Percent of Target __________________ (%) 143.5 138.5 138.5 142.5 136.5 Each component is described in more detail under the sections entitled “Operating Profit Component,” “Revenue Growth Component,” and “Individual Performance Component.” -44- Operating Profit Component The OP Component is defined as our operating profit as a percent of revenue, excluding expenses related to bonus payments made under our non-sales incentive compensation plans and other non-recurring adjustments or expenses that are not associated with currently planned or on-going business operations, such as litigation and restructuring expenses. The goal in the OP Component is to continually manage and reduce costs and enhance profitability. For purposes of the 2014 Incentive Plan, the OP Component is calculated on a semi-annual basis using the financial results for the fiscal six-month period, and is weighted 30%. In connection with the calculation of the OP Component for the first half of fiscal 2014, the Compensation Committee exercised its discretion to exclude up to $30 million of a judgment against the Company resulting from a patent infringement lawsuit filed by PACT XPP Technologies AG. The OP Component is subject to a threshold range for any payout and contains a multiplier that increases payout under this component depending on Company performance. For fiscal 2014, the maximum multiplier was 2.0. The maximum multiplier and operating margin percentage targets for the OP Component remained unchanged from fiscal 2013. The table below outlines the general progression of the OP Component Multiplier for fiscal 2014: OP Component Scale (Abbreviated) Operating Profit % (FY2013) _________________ <13 13 - 19 20 27 - 29 30 34 39 OP Component Multiplier _____________ 0.0 0.2 0.3 1.0 1.1 1.5 2.0 The chart above indicates that once the Company reached 13% operating profit, then the OP Component Multiplier equaled 0.2. The OP Component Multiplier remained at 0.2 for each percentage point increase in operating profit until the Company achieved 20% operating profit. Once the Company’s operating profit reached 20%, then the OP Component Multiplier increased by 0.1 for each full percentage point increase over 20% operating profit until the Company reaches 27% operating profit. The Company would then pay 100% of the OP Component of the target bonus for operating profit between 27% and 29%. Thereafter, the OP Component Multiplier increased by 0.1 for each full percentage point increase of operating profit over 29% until a total operating profit of 39%, at which the multiplier is capped at 2.0. In fiscal 2014, we exceeded our OP Component target in the first half of the year, resulting in a 1.8 multiplier, and we also exceeded the target for the second half of the year, resulting in 1.5 multiplier as follows: OP Component Multipliers for Fiscal 2014 Period ______ First Half Second Half Revenue Growth Component Actual OP Component (%) ________________ 37 34 OP Component Multiplier ________________ 1.8 1.5 The Growth Component measures increases in the Company’s revenue growth year-over-year and rewards increases over a certain minimum threshold. The Growth Component is measured and paid on an annual basis and is weighted 40%. In fiscal 2014, the minimum increase in year-over-year revenue growth for payment was 1%. Once the Company achieved a full 1% year-over-year revenue growth, then the Growth Component multiplier (Growth Component Multiplier) equaled 0.16. At 6% year-over-year revenue growth, the Growth Component Multiplier equaled 1.0. Then, for every full percentage point increase above 6%, the Growth Component Multiplier increased by 0.2, until reaching 11% year-over-year revenue growth, at which point the multiplier was capped at 2.0. The table below outlines the general progression of the Growth Component multiplier for fiscal 2014: -45- Growth Component Scale Revenue Growth (Year-over-Year in FY2014) ________________________ 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% Growth Component Multiplier ____________ 0.00 0.16 0.33 0.50 0.67 0.83 1.00 1.20 1.40 1.60 1.80 2.00 The actual revenue growth percentage and corresponding Growth Component Multiplier for fiscal 2014 was as follows: Revenue Growth Component Multiplier for Fiscal 2014 __________ Period Fiscal 2014 Actual Revenue Growth _____________________ (%) 9.9 __________________________ Growth Component Multiplier 1.6 Individual Performance Component Under the Individual Performance Component, each named executive officer received up to a maximum of ten individual goals for each performance period, each goal with a weighting depending on the value of the goal. The performance period for the named executive officers, except the CEO, is each semi-annual period, and for the CEO, the performance period is the full fiscal year. The threshold for any payout under the Individual Performance Component is 50% overall achievement and the maximum performance is capped at 150% (Individual Performance Multiplier). Each individual goal under the Individual Performance Component (1) was directly related to the Company’s business objectives and (2) corresponded to such executive’s position and responsibilities. The management goals for the named executive officers related to the broader corporate goals within the following categories: (cid:127) (cid:127) (cid:127) (cid:127) Product objectives. Goals related to product innovation and development, product quality and product schedules fell within this category. Sales and marketing objectives. Goals related to design wins, marketing strategies and product launches fell within this category. Operational objectives. Goals related to fiscal discipline, cost reductions, business efficiencies and profitability fell within this category. Organizational objectives. Goals related to the implementation of employee performance and compensation programs, succession planning and compliance fell within this category. For the named executive officers other than the CEO, the CEO, in consultation with each executive, assigned a weight to each goal which was measured in proportion to how that goal corresponded to the importance of the business objective involved. At the end of each semi-annual period, the CEO reviewed his determination of the executive’s performance for each goal along with the executive’s self- assessment on a scale of 0% to 150%. Based on the CEO’s determination of the executive’s level of goal achievement, the CEO then recommended to the Compensation Committee an Individual Performance Multiplier, on a scale of 0.0 to 1.5, for each named executive officer. After reviewing the CEO’s semi-annual assessment and recommendation, the Compensation Committee determined and approved the multiplier and semi-annual payout for each named executive officer. For the CEO, the Compensation Committee, in consultation with the CEO, set forth each of the CEO’s goals, which were measured in proportion to the importance of that goal to the business. At the end of the annual period, the CEO self-assessed his achievement of each goal on the same 0% to 150% scale and submitted the self-assessment to the Compensation Committee. After reviewing the CEO’s self-assessment and making its own evaluation of the CEO’s performance, the Compensation Committee discussed its recommendation of the CEO’s multiplier and annual payout with the Board of Directors outside the presence of the CEO. The -46- Compensation Committee determined and then approved the CEO’s payout amount. In assessing the CEO’s achievements and approving his compensation, the Compensation Committee and independent Directors considered his achievements within a broader set of expectations including strategic leadership, organizational quality and effectiveness, management abilities and responsiveness to economic conditions. The table below reflects a hypothetical example of how particular goals would be weighted based on their achievement level, resulting in the calculation of the Individual Performance Multiplier for an individual executive participating in the 2014 Incentive Plan. Individual Performance Component Multiplier (Example Only) Goal _____ #1 #2 #3 #4 Individual Performance Multiplier Weighting (%) _________ 20 30 30 20 Achievement Level (%) ________________ 100 50 100 150 Multiplier _________ 0.20 0.15 0.30 0.30_____ 0.95 The Individual Performance Component, which was weighted 40%, was paid semi-annually for all named executive officers, except the CEO, in fiscal 2014. The Individual Performance Component was paid annually for the CEO in fiscal 2014. A summary of each named executive officer’s individual performance goals is set forth in the footnotes in the table below titled “Named Executive Officer Incentive Cash Bonus Awards for Fiscal 2014.” Calculations of Payouts for Named Executive Officers The cash incentive bonus payouts are calculated slightly differently for our CEO compared to our other named executive officers, because the Individual Performance Component is determined on an annual basis for our CEO, but is determined on a semi-annual basis for all other named executive officers. Cash Incentive Payout for Named Executive Officers, except our CEO The calculation to determine the cash incentive bonus payout for our named executive officers, except our CEO, is shown below: Named Executive Officer (Other than CEO) Cash Incentive Bonus Calculation As shown in the chart above, the cash incentive bonus payout for our named executive officers, except our CEO, for the first half of the fiscal year was determined by multiplying the multipliers for the OP Component and the Individual Performance Component by their weights, 30% and 40%, respectively, and then by the named executive officer’s target bonus percentage, then by the named executive officer’s salary earned in the first half of the year. -47- As also shown in the chart above, the cash incentive bonus for the second half of the year was calculated the similar to the first half of the year for our named executive officers (other than our CEO), except in the second half of the Growth Component, which is measured and paid on an annual basis, was added to the overall second half calculation, as follows: [OP Component Weighting (30%) x OP Component Multiplier x Target Bonus % x Second Half Fiscal Year Earnings] + [Individual Performance Component Weighting (40%) x Individual Performance Component Multiplier x Target Bonus % x Second Half Fiscal Year Earnings] + [Growth Component Weighting (30%) x Growth Component Multiplier x Target Bonus % x Annual Earnings] = Second Half Payout for Non-CEO Named Executive Officers Cash Incentive Payout for our CEO The calculation to determine the cash incentive bonus payout for our CEO is shown below: CEO Cash Incentive Bonus Calculation Unlike the other named executive officers and as shown in the chart above, our CEO’s cash incentive bonus calculation in the first half of the year did not include his Individual Performance Component, which, for the CEO, is calculated on an annual basis. The CEO’s first half incentive bonus included only the OP Component and was calculated by multiplying the OP Component multiplier by the weighting (30%), by the CEO’s target bonus percentage and then by the CEO’s earnings in the first half of the fiscal year. The CEO’s cash incentive bonus for the first half of the fiscal year was paid shortly after the end of the first half of the fiscal year. Because the Growth Component and the CEO’s Individual Performance are determined on an annual, rather than on a semi-annual, basis, the CEO’s payout for the second half of the fiscal year was calculated similar to the first half of the year, except in the second half of the year, the Growth Component and the CEO’s Individual Performance Component were added to the overall second half of the year calculation, as follows: [OP Component Weighting (30%) x OP Component Multiplier x Target Bonus % x Semi-Annual Earnings] + [Individual Performance Component Weighting (40%) x Individual Performance Component Multiplier x Target Bonus % x Annual Earnings] + [Growth Component Weighting (30%) x Growth Component Multiplier x Target Bonus % x Annual Earnings] = CEO Second Half Payout -48- Incentive Cash Bonus Amounts for Fiscal 2014 The target and actual incentive bonus amounts for fiscal 2014 for our named executive officers, based on the achievement against financial goals (discussed above) and achievement against the individual performance goals (as discussed in the footnotes below) were as follows: Named Executive Officer Incentive Cash Bonus Awards for Fiscal 2014 Target Incentive Bonus as a Percentage of Base Salary (%) __________ Base Salary ($) __________ Target Incentive Bonus ($) __________ First Half Financial Metrics ($) __________ First Half Individual Performance ($) __________ Second Half (Annual for CEO) Individual Performance ($) __________ Total Incentive Bonus Actually Paid ($) __________ Second Half Financial Metrics ($) __________ Bonus Actually Paid as Percentage of Target Incentive Bonus (%) __________ Bonus Actually Paid ($) 750,000 140 1,050,000 384,000 382,000 283,500 103,680 102,600 — 80,640(2) 79,800(4) 740,250 270,720 269,760 483,000 (1) 1,506,750 76,800 (3) 76,800 (5) 531,840 528,960 143.5 138.5 138.5 296,000 79,920 62,160(6) 208,680 71,040 (7) 421,800 142.5 308,000 83,160 61,600(8) 217,140 58,520 (9) 420,420 136.5 Named Executive Officer __________ Moshe N. Gavrielov Jon A. Olson 480,000 Victor Peng 477,500 Vincent L. Tong Frank A. Tornaghi 370,000 385,000 80 80 80 80 (1) Represents the actual bonus paid to Mr. Gavrielov for fiscal 2014 based on achievement against his specific individual performance goals. For fiscal 2014, Mr. Gavrielov earned 115% of his target bonus attributable to the Individual Performance Component by successfully: (1) meeting certain organizational goals, including product development, product delivery, product mix, and gross margin goals; (2) achieving strategic product and portfolio goals; and (3) attaining leadership effectiveness goals, including responsiveness to market demands (external leadership) and creating a performance-based culture (internal leadership). (2) Represents the actual bonus paid to Mr. Olson for the first half of fiscal 2014 based on achievement against his specific individual performance goals. For the first half of fiscal 2014, Mr. Olson earned 105% of his target bonus attributable to the Individual Performance Component by successfully: (1) driving the Company’s efforts on gross margin improvements; (2) implementing various programs to improve the Company’s profitability and financial decision making process; (3) implementing programs to maintain and improve Company controls and processes; and (4) implementing an action plan based on employee survey results. (3) Represents the actual bonus paid to Mr. Olson for the second half of fiscal 2014 based on achievement against his specific individual performance goals. For the second half of fiscal 2014, Mr. Olson earned 100% of his target bonus attributable to the Individual Performance Component by successfully: (1) driving the Company’s efforts on gross margin improvements; (2) implementing various programs to improve the Company’s profitability and financial decision making processes; (3) implementing programs to maintain and improve Company controls and processes; and (4) implementing and encouraging participation in career development programs. (4) Represents the actual bonus paid to Victor Peng for the first half of fiscal 2014 based on achievement against his specific individual performance goals. For the first half of fiscal 2014, Mr. Peng earned 105% of his target bonus attributable to the Individual Performance Component by successfully: (1) meeting product delivery and production goals; (2) meeting certain design scheduling goals; (3) achieving certain business marketing goals; (4) achieving gross margin goals; and (5) implementing an action plan based on employee survey results. (5) Represents the actual bonus paid to Victor Peng for the second half of fiscal 2014 based on achievement against his specific individual performance goals. For the second half of fiscal 2014, Mr. Peng earned 100% of his target bonus attributable to the Individual Performance Component by successfully: (1) attaining certain product development goals; (2) achieving certain design and product deliverables on time; (3) attaining certain marketing goals; (4) achieving gross margin goals; and (5) implementing and encouraging participation in career development programs. (6) Represents the actual bonus paid to Vincent L. Tong for the first half of fiscal 2014 based on achievement against his specific individual performance goals. For the first half of fiscal 2014, Mr. Tong earned 105% of his target bonus attributable to the Individual Performance Component by successfully: (1) attaining certain product pricing goals; (2) achieving certain manufacturing goals; (3) achieving certain product deliverables on time; (4) achieving certain quality production goals; and (5) implementing an action plan based on employee survey results. (7) Represents the actual bonus paid to Vincent L. Tong for the second half of fiscal 2014 based on achievement against his specific individual performance goals. For the second half of fiscal 2014, Mr. Tong earned 120% of his target bonus attributable to the Individual Performance Component by successfully: (1) achieving certain gross margin goals; (2) attaining -49- certain product supply goals; (3) attaining certain product readiness and assessment goals; (4) achieving certain product revenue goals; (5) achieving certain product quality goals; and (6) implementing and encouraging participation in career development programs. (8) Represents the actual bonus paid to Frank A. Tornaghi for the first half of fiscal 2014 based on achievement against his specific individual performance goals. For the first half of fiscal 2014, Mr. Tornaghi earned 100% of his target bonus attributable to the Individual Performance Component by successfully: (1) achieving certain gross margin goals; (2) attaining certain design win goals; (3) achieving certain revenue goals; and (4) implementing an action plan based on employee survey results. (9) Represents the actual bonus paid to Frank A. Tornaghi for the second half of fiscal 2014 based on achievement against his specific individual performance goals. For the second half of fiscal 2014, Mr. Tornaghi earned 95% of his target bonus attributable to the Individual Performance Component by successfully: (1) achieving certain design goals; (2) achieving certain product revenue goals; (3) meeting certain product pricing goals; and (4) implementing and encouraging participation in career development programs. Long-Term Equity Incentive Compensation The Compensation Committee regularly monitors the environment in which we operate and reviews and makes changes to our equity program as necessary to help us meet our goals, including achieving long-term stockholder value and attracting, motivating and retaining talent. In fiscal 2014, the Compensation Committee granted long-term equity incentive compensation in the form of performance-based restricted stock units (RSUs) to the named executive officers. The Compensation Committee believes that performance-based RSUs align the executives’ interests with the stockholders’ interests, focus attention on key drivers of long-term value and provide a stronger retention tool for our executives as compared to stock options that maybe unpredictable during turbulent economic times. Additionally, because of their intrinsic value, RSUs allow us to issue fewer shares of Common Stock thereby reducing dilution to our stockholders. For fiscal 2014, the Compensation Committee granted only performance-based RSUs to our named executive officers, and not a mix of performance-based and time-based RSUs to these executives as it had in fiscal 2013. Time-based RSUs had been granted to our named executive officers in fiscal 2013 primarily as a retention tool. The Compensation Committee believes that performance-based RSUs are better aligned with our business strategy to pay for performance, and serve as a sufficient retention tool because of the three-year vesting schedule tied to performance-based RSUs. In connection with the change to awarding only performance-based RSUs to our executive officers in fiscal 2014, the Compensation Committee revised our stock ownership guidelines, requiring named executive officers, as well as all other Section 16 officers, to retain the following shares until their stock ownership requirements are met: (1) 50% of the shares of Company stock derived from awards of time-based RSUs made beginning in July 2011, and (2) 45% of the shares of Company stock derived from awards of performance-based RSUs made beginning in July 2013. Prior to this change, executive officers were required to retain half of the shares of Common Stock derived from only time-based RSUs until meeting their respective stock ownership requirements and we did not have any holding requirements attached to performance-based RSUs. The number of performance-based RSUs granted (viewed in the aggregate by value) was based on individual performance, peer group data, the pay mix between cash compensation and equity compensation, the equity mix between options and RSUs, and the Compensation Committee’s assessment of the retention value of existing and new equity grants. Additionally, further differentiation was made between the named executive officers based on competitive market data for the peer group for their respective positions and the Compensation Committee’s assessment of each executive’s potential future contributions to the Company. The amount of performance-based RSUs that become earned is based on achievement of certain goals at the end of a one-year performance cycle that corresponds with our fiscal year. Following the end of the fiscal year, the performance goals are evaluated and the degree of achievement, between 0%-162.5%, is determined. The number of earned performance-based RSUs may increase with overachievement of the applicable performance goals, including up to a maximum of 162.5% of the target number of performance-based RSUs. The number of RSUs earned may also decrease for underachievement of the performance goals, including no performance-based RSUs being earned. Once the number of earned RSUs is determined, the shares will vest in three equal annual installments, commencing with the first anniversary of the date of grant. The four performance components applicable to the 2014 performance-based RSUs, which are more fully described below, are: (1) share of PLD revenue, weighted at 25% (SOR-PLD Component), (2) share of 28nm revenue, weighted at 25% (SOR-28nm Component), (3) technology leadership weighted at 35% (Technology Component), and (4) quality leadership, weighted at 15% (Quality Component). In May 2013, the Compensation Committee determined the target number of performance-based RSUs that can be earned by our named executive officers for fiscal 2014. The target number of RSUs was determined for each named executive officer based on -50- a tentative total grant value, which was then divided by the average closing price of our Common Stock during the three-month period from April 1, 2013 to July 1, 2013, and then rounded up to the closest 500 underlying RSUs. The tentative total value of the RSUs granted effective July 1, 2013 for each of our named executive officers was as follows: Mr. Gavrielov, $4,250,000; Mr. Olson, $1,250,000; Mr. Peng, $1,250,000; Mr. Tong, $850,000; and Mr. Tornaghi, $850,000. The average closing price of our Common Stock from April 1, 2013 to July 1, 2013, was $38.44. In May 2014, the data on achievement of the four (4) fiscal 2014 performance goals was presented to the Compensation Committee. After analyzing and reviewing the results, the Committee certified both the degree of goal accomplishment for each of the four (4) performance-based components for fiscal 2014 and the total number of RSUs earned and to be issued pursuant to each award based on the degree of goal achievement. The RSUs earned under each performance-based RSU awarded pursuant to the grant on July 1, 2013 will vest in three equal annual installments, beginning on the anniversary of the date of grant, which is July 1 of each of 2014, 2015, and 2016. The following table sets forth the number of targeted and actual RSUs awarded to each of our named executive officers in fiscal 2014, based on the considerations described above: Named Executive Officer RSU Awards for Fiscal 2014 Name _____________________ Moshe N. Gavrielov Jon A. Olson Victor Peng Vincent L. Tong Frank A. Tornaghi Performance-Based RSUs (Target)(1) ____________________________________ 111,000 33,000 33,000 22,500 22,500 Performance-Based RSUs (Actual)(2) _________________________________ 180,375 53,625 53,625 36,562 36,562 (1) Only performance-based RSUs were granted in fiscal 2014. This column represents the number of RSUs for fiscal 2014 based on achievement of the performance goals at 100% of target. Actual earned RSUs for 2014 may range from 0% to 162.5% of target depending on the level of performance. This column represents the actual number of RSUs earned based on performance achievement for fiscal 2014. The Compensation Committee determined the RSU multiplier was 1.625 for fiscal 2014. This RSU multiplier was based on the following multipliers: Share of PLD Revenue Component (1.5); Share of 28nm Revenue Component (2.0); Technology Component (1.5); and Quality Component (1.5). (2) Performance Components The performance-based RSUs, which are granted subject to terms and conditions of the 2007 Equity Plan and applicable RSU agreement, include the following four performance components: Share of PLD Revenue Component (SOR-PLD Component) The SOR-PLD Component was designed to measure and reward increases in our share of revenue as compared to certain benchmark PLD companies identified by the Compensation Committee, which for fiscal 2014 were Altera Corporation and Lattice Semiconductor (collectively the SOR-PLD Comparator Companies). The SOR-PLD Component was selected as a goal because we sought to improve our market position relative to our chief PLD competitors in fiscal 2014, and the Compensation Committee identified the SOR-PLD Comparator Companies as such chief competitors. The SOR-PLD Component was weighted 25% of the four performance components for performance-based RSUs. To determine our share of revenue as compared to the SOR-PLD Comparator Companies, we measured our actual revenue and the revenue of the SOR-PLD Comparator Companies on an annual basis. Our share of revenue (the Company SOR-PLD) was determined by dividing our total annual revenue by the total revenue generated by the Company and the SOR-PLD Comparator Companies during our fiscal year. The SOR-PLD Component was subject to a percent of revenue threshold and a multiplier of up to 1.5 that increased depending on our share of revenue above the threshold. In fiscal 2014, the Company SOR-PLD revenue threshold was 51%, and any revenue percentage below this threshold resulted in no shares being earned. At the threshold of 51%, the SOR-PLD Component payout multiplier was 0.2. For each 0.1 percentage point increase in our share of revenue above 51%, the multiplier increased by 0.2, until the Company SOR-PLD reached 51.4%, at which point the multiplier was 1.0. Thereafter, for each 0.05 percentage point increase in our revenue share, the multiplier increased by 0.1, until the Company SOR-PLD reached 51.65%, at which point the multiplier was capped at 1.5. Our share of PLD revenue in fiscal 2014 was 52.7%, resulting in a multiplier of 1.5 for this component. -51- Share of 28nm Revenue Component (SOR-28nm Component) The SOR-28nm Component was designed to measure and reward increases in our share of 28nm revenue as compared to a benchmark 28nm company identified by the Compensation Committee, which for fiscal 2014 was Altera Corporation (the SOR- 28nm Comparator Company). The SOR-28nm Component was selected as a goal because of its importance to our technology and product strategy and our objective to improve our market position relative to Altera Corporation, our chief 28nm competitor in fiscal 2014. The SOR-28nm Component was weighted 25% of the four performance components for performance-based RSUs. To determine our share of 28nm revenue as compared to 28nm revenues for Altera Corporation, we measured our actual revenue and Altera’s revenue for its reported 28nm products on an annual basis. Our share of revenue (the Company SOR-28nm) was determined by dividing our total 28nm annual revenue by the total 28nm revenue generated by the Company and Altera Corporation during our fiscal year. The SOR-28nm Component was subject to a percent of revenue threshold and a multiplier of up to 2.0 that increased depending on our share of revenue above the threshold. In fiscal 2014, the Company SOR-28nm revenue threshold was 51%, and any revenue percentage below this threshold resulted in no shares being earned. At the threshold of 51%, the SOR-28nm Component payout multiplier was 0.1. For each full percentage point increase in our share of revenue above 51%, the multiplier increased by 0.1, until reaching a maximum of 70%, at which point the multiplier was capped at 2.0. For fiscal 2014, the SOR- 28nm Component resulted in a multiplier of 2.0. Technology Component The Technology Component was designed to measure and reward significant achievements in our technology roadmap. The Technology Component measures a number of factors in assessing our competitiveness and status of leadership across our entire portfolio of products. Such factors include, but are not limited to, use of power, process node achievements, integration, performance of high speed transceiver technology and ease of use of software. The Technology Component score is subject to a minimum threshold, at which the multiplier is 0.3 up to a maximum multiplier of 1.5 of the target number of shares. If the performance score is below the minimum, no shares will be earned. The Technology Component was weighted 35% of the four performance components for performance-based RSUs. In fiscal 2014, the Technology Component resulted in a multiplier of 1.5. Quality Component The Quality Component was designed to measure and reward significant achievements in the quality of our products. The Quality Component is measured by both customer experience and internal quality systems monitoring. The Quality Component score is subject to a minimum threshold, at which the multiplier is 0.2 up to a maximum multiplier of 1.5 of the target number of shares. If the performance score is below the minimum, no shares will be earned. The Quality Component was weighted 15% of the four performance components for performance-based RSUs. For fiscal 2014, the Quality Component resulted in a multiplier of 1.5. Generally Available Benefit Programs We also maintain generally available benefit programs in which our executives may participate. Under our ESPP, generally all employees are able to purchase our Common Stock through payroll deductions at a discounted price. We also maintain a tax- qualified 401(k) Plan for employees in the U.S., which provides for broad-based employee participation. Under the 401(k) Plan, we match up to 50% of an employee’s first 8% of compensation that the employee contributes to his or her 401(k) account, up to a maximum per calendar year of $4,500 per employee. We also provide a “true-up” for participants who did not receive their maximum matching contribution during a 401(k) plan year as a result of meeting their contribution limits early in the year. We make matching contributions to help attract and retain employees, and to provide an additional incentive for our employees to save for their retirement in a tax-favored manner. The Company also offers a number of other benefits to the named executive officers pursuant to benefits programs that provide for broad-based employee participation which includes medical, dental and vision insurance, disability insurance, various other insurance programs, health and dependent care flexible spending accounts, educational assistance, employee assistance and certain other benefits. The terms of these benefits are essentially the same for all eligible employees. We also maintain an unfunded, nonqualified deferred compensation plan which allows eligible participants, including executive officers and members of the Board, to voluntarily defer receipt of a portion or all of their salary, cash bonus payment or directorship fees, as the case may be, until the date or dates elected by the participants, thereby allowing the participating employees and directors to defer taxation on such amounts. Refer to the section below entitled “Deferred Compensation Plan” for more information about this benefit plan. We do not maintain a “SERP” or similar defined benefit deferred compensation plan for any of our employees. Consistent with our compensation philosophy, we intend to continue to maintain market-competitive benefits for all employees, including our named executive officers; provided, however, that the Compensation Committee may revise, amend, or add to the -52- officer’s executive benefits and perquisites if it deems advisable in order to remain competitive with comparable companies and/or retain individuals who are critical to the Company. We believe the benefits and perquisites we offer are currently at competitive levels with comparable companies. We do not provide any other perequisites to our named executive officers that are not made available to other employees. Fiscal 2015 Compensation Actions On May 14, 2014, the Compensation Committee approved an executive incentive plan effective for fiscal 2015 (2015 Incentive Plan). Similar to the 2014 Incentive Plan, the 2015 Incentive Plan provides for a cash bonus calculated as a percentage of the executive officer’s base salary. The 2015 Incentive Plan has the same three (3) performance components with the same weightings as the 2014 Incentive Plan, as follows: the operating profit component, weighted at 30%, the revenue growth component, weighted at 30%, and the individual performance component, weighted at 40%. For all the named executive officers, the operating profit component is paid on a semi-annual basis and the revenue growth component is paid on an annual basis. The individual performance component is paid on a semi-annual basis for all named executive officers, except the CEO, whose individual performance component is paid on an annual basis. For fiscal 2015, based on comparing base salary levels at the companies in our peer group, as well as considering the roles and responsibilities and potential performance of the named executive officers, the Compensation Committee increased the base salary for Mr. Gavrielov to $800,000 from $750,000, for Mr. Tong to $380,000 from $370,000 and for Mr. Tornaghi to $390,000 from $385,000. The bonus percentages remained the same for each of the named executive officers, except for Messrs. Olson and Peng whose target bonus percentage increased to 100% from 80% of their respective annual base salary earned in fiscal 2015. In May 2014, the Compensation Committee also determined the target number of RSUs for our named executive officers for fiscal 2015. The target number of RSUs is based on a tentative total grant value, which is then divided by the average closing price of our Common Stock during the three-month period from April 1, 2014 to July 1, 2014. The tentative total value for RSUs granted to each of our named executive officers that will be granted effective July 1, 2014 is as follows: Mr. Gavrielov, $4,500,000; Mr. Olson, $1,250,000; Mr. Peng, $1,250,000; Mr. Tong, $900,000; and Mr. Tornaghi, $900,000. The number of RSUs that are ultimately earned, as determined by the Compensation Committee based on the achievement of the performance components, will vest in three (3) equal annual installments, beginning on the anniversary of the date of grant, which is July 1 of each of 2015, 2016 and 2017. Employment Agreements with Named Executive Officers Employment Letter Agreements with Moshe N. Gavrielov and Jon A. Olson The Company maintains employment letter agreements with Messrs. Gavrielov and Olson. Mr. Gavrielov’s employment letter agreement, entered into with Mr. Gavrielov on January 4, 2008, and amended on June 13, 2012, entitles him to certain payments and benefits in the event his employment is terminated at any time due to disability or other than for cause, or if Mr. Gavrielov voluntarily terminates his employment for good reason. Mr. Gavrielov’s agreement was entered into with him as part of an arm’s length negotiation with the Compensation Committee when he joined the Company. The employment letter agreement that we entered into with Mr. Olson on June 2, 2005, and amended on February 14, 2008, and June 13, 2012, provides Mr. Olson with certain payments and benefits in the event he is terminated without cause within one year following a change in control of the Company. This arrangement was entered into with Mr. Olson to retain Mr. Olson and ensure his cooperation with and continued commitment to the success of the Company. A description of the terms of Messrs. Gavrielov’s and Olson’s employment agreements, as amended, and a quantification of the potential payments and benefits under these agreements, are provided below in the section entitled “Potential Payments Upon Termination or Change in Control.” Equity Grant Procedures and Guidelines We have conducted an internal review of our equity granting procedures to ensure that our procedures satisfy both our objectives and all applicable compliance requirements. To this end, we have adopted written procedures for the grant of equity awards. With respect to grants to employees and officers, including named executive officers, the Compensation Committee reserves the authority to make grants at such time and with such terms as it deems appropriate in its discretion, subject to the terms of the 2007 Equity Plan. Generally, grants of equity awards are made to officers based on and in connection with the annual review during the Focal Review Period. The Compensation Committee determines individual grants to each named executive officer based on a variety of factors that the Compensation Committee determines to be relevant and appropriate at the time of grant. These factors typically have included the size and value of unvested equity awards held by the named executive officer, the named executive officer’s job performance, skill set, prior experience, and time in the position, as well as external market data, internal equity, -53- pressures to attract and retain talent, dilutive effect of grant size and business conditions. The Compensation Committee also periodically grants equity awards at its scheduled meetings or by unanimous written consent for new hires and promotions. Grants approved during scheduled meetings become effective and are priced as of the date of approval or a pre-determined future date. Grants approved by unanimous written consent become effective and are priced as of the date the last signature is obtained or a predetermined future date. The Compensation Committee has made certain exceptions to these procedures in order to grant an equity award on an executive’s start date, as it did in the case of the initial option grant to Mr. Gavrielov. We have not granted, nor do we intend in the future to grant, equity awards to executives in anticipation of the release of material nonpublic information that is likely to result in changes to the price of our Common Stock, such as a significant positive or negative earnings announcement. Similarly, the Compensation Committee has not timed, nor does it intend in the future to time, the release of material non-public information based on equity grant dates. In any event, because equity compensation awards typically vest over three or four-year periods, the effect of any immediate increase in the price of our Common Stock following grant is minimal. The Board has delegated to the CEO and CFO limited authority to approve equity award grants to non-officer employees pursuant to the terms of the 2007 Equity Plan, and subject to the provisions of pre-determined guidelines. Specifically, with respect to non- officer employees, our annual focal awards will be granted on or about the first business day of our second fiscal quarter of each year, and other equity awards will generally be granted on the 10th day of the month, or if on such date our stock is not traded, the first business day thereafter that our stock is traded. The Compensation Committee is responsible for determining and granting all equity awards to executive officers. Under the 2007 Equity Plan, the exercise price of options and stock appreciation rights may not be less than 100% of the closing price of the shares underlying such options and stock appreciation rights on the date of grant. Claw-Back Policy The Board has adopted a policy for seeking the return (claw-back) from executive officers of compensation to the extent such amounts were paid due to financial results that later had to be restated, subject to the terms described below. The policy provides that to the extent the Board, or any Committee thereof, and the Company, in their discretion, determine appropriate, the Company may require reimbursement of all or a portion of any bonus, incentive payment, commission, equity-based award or other compensation granted to and received by or for an executive officer beginning in fiscal 2009, where: (1) the compensation was predicated upon achieving certain financial results that were subsequently the subject of a substantial restatement of our financial statements filed with the SEC; (2) the Board (or a Committee thereof), in its sole discretion, determines the executive officer engaged in intentional misconduct that was directly responsible for the substantial restatement; and (3) a reduced amount of compensation would have been paid to the executive officer based upon the restated financial results. Stock Ownership Guidelines We have adopted stock ownership guidelines for our officers, to align more closely the interests of our officers with those of our stockholders. Under these guidelines, our CEO is required to own Company stock having a value of at least $4.5 million. Executive vice presidents are required to own Company stock having a value of at least $1.0 million. Senior vice presidents who are Section 16 officers are required to own Company stock having a value of at least $750,000 and corporate vice presidents who are Section 16 officers are required to own Company stock having a value of at least $500,000. In addition, the CEO and all other Section 16 officers must retain the following shares until their respective stock ownership requirements are met: (cid:127) (cid:127) 50% of shares of Company stock delivered from awards of time-based RSUs made beginning in July 2011. 45% of shares of Company stock delivered from awards of performance-based RSUs made beginning in July 2013 (prior to fiscal 2014, we did not have any holding requirements on performance-based RSUs; we only had holding requirements on time-based RSUs that vested 100% after three years). Policy Against Short Sales, Other Put-Equivalent Investment and Margin Accounts All employees, including the named executive officers, are subject to our Insider Trading Policy. Our Insider Trading Policy prohibits any employee from hedging, engaging in short sales or entering into any transaction, investment or arrangement that is intended or may be expected to increase in value on the basis of any decrease in value of any of our shares of Common Stock (such as buying “put” options). In addition, the policy prohibits any employee from holding shares of our Common Stock in a margin account or pledging shares of our Common Stock. We have a corporate policy regarding 10b5-1 trading plans, and pursuant to such policy, key terms of the 10b5-1 trading plans of Directors and executive officers are disclosed on our website at www.investor.xilinx.com. -54- Tax and Accounting Treatment of Compensation In our review and establishment of compensation programs and payments, we consider, but do not place great emphasis on, the anticipated accounting and tax treatment of our compensation programs. While we do consider the accounting and tax treatment, these factors alone are not dispositive. Among other factors that receive greater consideration are the net costs to the Company and our ability to effectively administer executive compensation arrangements which are in the short and long-term interests of stockholders. The Compensation Committee seeks to maintain flexibility and judgment in compensating executive officers in a manner designed to promote varying corporate goals and therefore has not adopted a policy with respect to the tax or accounting treatment of compensation. It is our policy generally to qualify compensation paid to the named executive officers for deductibility under Section 162(m) of the Tax Code. Section 162(m) of the Tax Code places a limit of $1,000,000 on the amount of compensation that the Company may deduct in any one year with respect to each of its CEO and the next three most highly paid executive officers (other than its CFO, referred to in the Tax Code as “covered persons”). Our stockholder-approved equity plan is qualified so that the awards of stock options and performance-based RSUs under this plan may constitute performance-based compensation not subject to the limit under Section 162(m) of the Tax Code, provided they otherwise satisfied the requirements under Section 162(m) of the Tax Code. A portion of the cash payments we make under the 2014 Incentive Plan may not be deductible under Section 162(m) of the Tax Code. The Compensation Committee intends to continue to evaluate the effects of the Tax Code and related U.S. Treasury regulations and the advisability of qualifying its executive compensation for deductibility of such compensation. To maintain flexibility in compensating executive officers in a manner designed to promote varying corporate goals, however, the Compensation Committee has not adopted a policy that all compensation payable to a covered person must be deductible on the Company’s federal income tax returns. We account for equity compensation paid to our employees and non-employee directors in accordance with FASB ASC Topic 718, which requires us to estimate and record expense for each award of equity compensation over the service period of the award. Risk Analysis of Compensation Programs The Compensation Committee considers potential risks when reviewing and approving compensation programs. The Compensation Committee, in cooperation with management, reviewed our existing compensation programs and believes that the mix and design of the elements of such programs does not encourage management to assume excessive risks and accordingly are not reasonably likely to have a material adverse effect on the Company. Our programs have been balanced to focus on both short-term and long- term financial and operational performance through prudent business judgment and appropriate, measured risk-taking. Our incentive cash compensation program is designed to reward financial and management performance in areas considered critical to short- and long-term success of the Company. The cash incentive plan for our named executive officers is based on a combination of corporate financial metrics and individualized strategic goals. The financial metric component is based on multiple financial metrics which counterbalance each other, decreasing the likelihood that executives will pursue any one metric to the detriment of overall financial performance. The OP Component is designed to reward improvements in our operating profit and the Growth Component is designed to measure and reward increases in our revenue growth year over year. These metrics limit the ability of an executive to be rewarded for taking excessive risk on behalf of the Company by, for example, seeking revenue enhancing opportunities at the expense of profitability. In addition, there are caps on bonus payments in all the components of the cash incentive plan. The OP Component and Growth Component multipliers are each capped at 2.0 and the Individual Performance Component multiplier is capped at 1.5. These limitations and caps eliminate the risk of uncapped cash bonus opportunities and unjustified bonus payments. Finally, the Board has also adopted a claw-back policy (as discussed above) whereby the Company would seek a return (claw-back) from executive officers of compensation to the extent such amounts were paid due to financial results that later had to be restated. The individual strategic goals established at the beginning of the fiscal year for the CEO are reviewed and discussed with the Board and approved by the Compensation Committee; the individual strategic goals established at the beginning of the fiscal year for each of the named executive officers are reviewed and discussed with the Compensation Committee and approved by the CEO. Furthermore, payment for the cash incentive bonus for our named executive officers is approved by the Compensation Committee. This multi-layer approval process in the goal-setting and payment approval process reduces the risk of improper awards. Our equity incentive program is designed to promote long-term performance. During fiscal 2014, our equity incentive program contained a mix of time-based RSUs and performance-based RSUs, except for executive officers who only received performance- based RSUs. Time-based RSUs for employees vest annually over a four-year vesting schedule. Performance-based RSUs for executive officers vest in three equal annual installments, beginning on the first anniversary of the grant date. Because restricted stock retains its value even in a depressed market, employees are usually incentivized to enhance its value. -55- In prior years, our equity incentive program also included awards of stock options that vest monthly over a period of four years. Some of these stock options remain outstanding. Since options generate value if stock price appreciates from the date of grant, these awards also provide incentives to promote behavior that is aligned with stockholder interests over the long term. As previously discussed, the Company has also adopted stock ownership guidelines that further align executives with stockholder interests and promote long-term focus on Company growth. Therefore, the Compensation Committee believes that these equity awards do not encourage unnecessary or excessive risk taking since equity awards are subject to long-term vesting schedules and the ultimate value of the awards is tied to the appreciation of the Company’s stock price. The stock ownership guidelines combined with our long-term vesting schedule help ensure that executives have significant value tied to long-term stock price performance. The Company has also adopted corporate policies to encourage diligence, prudent decision-making and oversight during the goal- setting and review process. The processes that are in place to manage and control risk include: (cid:127) (cid:127) (cid:127) (cid:127) The Compensation Committee approves the payout scale for the OP Component and Growth Component. The Compensation Committee sets the financial metrics at reasonable levels in light of past performance and market conditions. Payments under the incentive cash compensation program for executives are subject to approval of the Compensation Committee. The Compensation Committee retains discretion in administering all awards and in determining performance achievement. The Company has implemented a number of effective controls such as the Code of Conduct, a claw-back policy and quarterly sub- certification process for all executives in order to mitigate the risk of any unethical behavior. -56- COMPENSATION COMMITTEE REPORT The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with the management of the Company and, based on such review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and, through incorporation by reference from this proxy statement, the Company’s Annual Report on Form 10-K for the fiscal year ended March 29, 2014. The following non-employee members of the Board participated in the review, discussions and recommendations with respect to the compensation of the CEO. The Compensation Committee —J. Michael Patterson, Chairman —Marshall C. Turner —Elizabeth W. Vanderslice —Philip T. Gianos —John L. Doyle —William G. Howard, Jr. —J. Michael Patterson —Albert A. Pimentel —Marshall C. Turner —Elizabeth W. Vanderslice The foregoing Report of the Compensation Committee of the Board of Directors is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference in any filing of Xilinx under the Securities Act of 1933, as amended (the “Securities Act,”) or under the Exchange Act, whether made before or after the date of this proxy statement and irrespective of any general incorporation language in any such filing. -57- Summary Compensation Table The following table provides compensation information for the named executive officers. Name and Position ________________ Moshe N. Gavrielov President and Chief Executive Officer Year _______ 2014 2013 2012 Jon A. Olson 2014 Executive Vice President, 2013 Finance and Chief 2012 Financial Officer Victor Peng(3) Executive Vice President and General Manger of Products Vincent L. Tong(4) Senior Vice President, Worldwide Quality and New Product Introductions Option Awards(2) ($) Non-Equity Incentive Plan Stock Awards(2) Compensation ($) ($) _________ __________ ____________ 1,506,750 732,656 750,750 — — — — 4,210,230 — 3,019,200 — 3,319,785 Bonus ($) Salary(1) ($) ________ ________ 750,000 737,500 700,000 480,000 477,500 467,500 — 1,251,690 1,132,200 — 1,264,680 2014 2013 2012 477,500 455,000 407,500 — 1,251,690 1,132,200 — 1,264,680 2014 2013 370,000 365,000 — — — — — 853,425 770,525 853,425 770,525 843,120 — — — — — — — — — — — 531,840 276,079 337,472 528,960 270,900 278,972 421,800 220,275 420,420 213,010 234,253 Frank A. Tornaghi Senior Vice President, Worldwide Sales 2014 2013 2012 385,000 381,250 367,500 Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) _______________ — — — — — — — — — — — — — All Other Compensation ($) ____________ 4,500 4,437 8,000 Total ($) _________ 6,471,480 4,493,793 4,778,535 4,500 3,783 5,350 2,268,030 1,889,562 2,075,002 3,979 4,725 2,788 2,262,129 1,862,825 1,953,940 291,989 139,303 1,937,214 1,495,103 4,500 4,625 5,183 1,663,345 1,369,410 1,450,056 (1) Amounts shown reflect salary earned in fiscal 2014. In fiscal 2014, none of the named executive officer salaries were increased, except for Mr. Peng, whose salary was increased by the Compensation Committee to $480,000, effective July 1, 2013. (2) Amounts shown do not reflect compensation actually received by the named executive officer. Instead, the amounts shown reflect the grant date fair value for stock awards as determined pursuant to FASB ASC Topic 718. The assumptions used to calculate the value of the awards are set forth in Note 6 of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for fiscal 2014 filed with the SEC on May 16, 2014. These compensation costs as they relate to stock awards reflect costs associated with stock awards granted in fiscal 2014. For fiscal 2014, this includes the following number of performance-based RSUs based on achievement at 100% of target level performance: Mr. Gavrielov, 111,000 shares; Mr. Olson, 33,000 shares; Mr. Peng, 33,000 shares; Mr. Tong, 22,500 shares; and Mr. Tornaghi, 22,500 shares. The maximum number of performance-based RSUs that could be earned by our named executive officers based on achievement at 162.5% of target level performance is as follows: Mr. Gavrielov, 180,375 shares; Mr. Olson, 53,625 shares; Mr. Peng, 53,625 shares; Mr. Tong, 36,562 shares; Mr. Tornaghi, 36,562 shares. In May 2014, the Compensation Committee determined that the Company achieved 162.5% of target performance, which resulted in each of our named executive officers earning the maximum number of RSU shares. (3) Named executive officer participates in the Company’s non-qualified deferred compensation plan. For more information about this plan see the section below entitled “Deferred Compensation Plan.” (4) Mr. Tong became a named executive officer in fiscal 2013. As a result, information for fiscal 2012 has been omitted. In addition to Mr. Tong’s role as Senior Vice President, Worldwide Quality and New Product Introductions, Mr. Tong currently serves as the Company’s executive leader for the Asia Pacific region. In this role, Mr. Tong’s charter is to expand the Company’s presence and accelerate business development in a region that is experiencing tremendous growth. In connection with his service in this role, the Company leases an apartment and automobile for Mr. Tong, and reimburses certain costs incurred by Mr. Tong as a direct result of his work in the Asia Pacific region. Specifically, in connection with Mr. Tong’s Asia Pacific assignment, in fiscal year 2014 the Company paid $54,914 for the lease of an apartment and other housing-related expenses; $36,167 for the lease of an automobile and other transportation-related expenses; $40,613 for a cost of living allowance; $8,416 for home leave expenses, such as airfare and transportation; and $134,077 for foreign tax payments and tax-related services associated with his service abroad. Mr. Tong also received a payment of $17,802 to cash out accrued but unused vacation. -58- Grants of Plan-Based Awards for Fiscal 2014 The following table provides information on equity and non-equity awards granted to our named executive officers during fiscal 2014. Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) _____________________________ Estimated Future Payouts Under Equity Incentive Plan Awards(2) _____________________________ Grant Approval Threshold Date _______ _________ _________ _________ _________ Date ($) ($) ($) Target Maximum Threshold Target Maximum (#) _________ ________ _________ (#) (#) Exercise Incremental Fair Value or Base of Stock Price of Number of Number of Shares of Securities Stock or Underlying Option and Option Awards Awards(3) Options ($/Sh) (#) ________ _________ _________ Units (#) ________ ($) All Other All Other Stock Awards: Option Awards: Grant Date Fair Value/ 7/1/2013 5/15/2013 — 5/15/2013 — — — 1,050,000 — 1,890,000 — 111,000 — — 180,375 — 7/1/2013 5/15/2013 — 5/15/2013 — — — 384,000 — 691,200 7/1/2013 5/15/2012 — 5/15/2013 — — — 382,000 — 687,600 7/1/2013 5/15/2013 — 5/15/2013 — — — 296,000 — 532,800 7/1/2013 5/15/2013 — 5/15/2013 — — — 308,000 — 554,400 — — — — — — — — 33,000 — 33,000 — 22,500 — 22,500 — 53,625 — 53,625 — 36,562 — 36,562 — — — — — — — — — — — — — — — — — — 4,210,230 — — — 1,251,690 — — — 1,251,690 — — — — — — 853,425 — 853,425 — Name _________________ Type ____ Moshe N. Gavrielov Jon A. Olson Victor Peng Vincent L. Tong Frank A. Tornaghi RSU EIP RSU EIP RSU EIP RSU EIP RSU EIP (1) Actual payouts have been made under the fiscal 2014 Incentive Plan, as disclosed in the Summary Compensation Table in the column entitled “Non-Equity Incentive Plan Compensation.” (2) Represents performance-based RSU awards granted in fiscal 2014, which become earned based on performance in fiscal 2014. These columns show the number of performance-based RSU awards that may become earned at threshold, target and maximum levels of performance. In May 2014, the Compensation Committee determined the actual number of RSUs earned based on performance for fiscal 2014 was the maximum number of RSUs as listed for each named executive officer. These RSUs are subject to further time-based vesting, as described above under “EXECUTIVE COMPENSATION- COMPENSATION DISCUSSION AND ANALYSIS—Long-Term Equity Incentive Compensation — Performance-Based RSUs.” The awards were granted under our 2007 Equity Plan. (3) Amounts in this column represent the grant date fair value of RSUs granted in fiscal 2014 calculated in accordance with FASB ASC Topic 718. The assumptions used to calculate the value of the awards are set forth in Note 6 of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for fiscal 2014 filed with the SEC on May 16, 2014. -59- Outstanding Equity Awards at Fiscal Year-End 2014 The following table provides information on outstanding stock options and RSUs held by the named executive officers as of March 29, 2014. _________________________________________________________________ Option Awards Stock Awards ____________________________________________ Equity Incentive Plan Awards: Number of Number of Number of Securities Securities Securities Underlying Underlying Underlying Unexercised Unexercised Unexercised Option Exercise Price ($) Unearned Options (#) Exercisable Unexercisable Options (#) Options (#) Name _________________ __________ ___________ __________ ________ Grant Date _________ Moshe N. Gavrielov Jon A. Olson Victor Peng Vincent L. Tong Frank A. Tornaghi 58,333 — — — — — 110,000 80,000 60,000 100,000 100,833 — — — — — 60,000 90,000 87,083 — — — — — 60,000 73,333 — — — — — 15,000 73,333 — — — — — 29,167 — — — — — — — — — 9,167 — — — — — — — 7,917 — — — — — — 6,667 — — — — — — 6,667 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 25.39 7/6/2010 — 7/5/2011 — 7/5/2011 — 7/2/2012 — 7/2/2012 — 7/1/2013 25.66 22.80 24.29 20.57 25.39 6/27/2005 7/3/2006 7/1/2008 7/1/2009 7/6/2010 — 7/5/2011 — 7/5/2011 — 7/2/2012 — 7/2/2012 — 7/1/2013 26.34 20.57 25.39 5/12/2008 7/1/2009 7/6/2010 — 7/5/2011 — 7/5/2011 — 7/2/2012 — 7/2/2012 — 7/1/2013 20.57 25.39 7/1/2009 7/6/2010 — 7/5/2011 — 7/5/2011 — 7/2/2012 — 7/2/2012 — 7/1/2013 20.57 25.39 7/1/2009 7/6/2010 — 7/5/2011 — 7/5/2011 — 7/2/2012 — 7/2/2012 — 7/1/2013 Equity Incentive Plan Equity Incentive Plan Awards: Awards: Market or Payout Number of Value of Unearned Unearned Shares, Shares, Units Units or or Other Other Rights Rights That That Have Have Not Not Vested(2) Vested(3) (#) (#) _________ __________ — — 25,661 — 48,799 111,000 — — — — — — 9,765 — 18,247 33,000 — — — — 9,765 — 18,247 33,000 — — — 6,586 — 12,307 22,500 — — — 6,586 — 12,307 22,500 — — 1,381,588 — 2,627,338 5,976,240 — — — — — — 525,748 — 982,418 1,776,720 — — — — 525,748 — 982,418 1,776,720 — — — 354,590 — 662,609 1,211,400 — — — 354,590 — 662,609 1,211,400 Market Value of Shares or Units of Stock That Have Not Vested(2) ($) _________ — 2,045,920 — 2,072,840 — — — — — — — 780,680 — 780,680 — — — — — 780,680 — 780,680 — — — — 511,480 — 538,400 — — — — 511,480 — 538,400 — — Number of Shares or Units of Stock That Have Not Vested(1) (#) __________ — 38,000 — 38,500 — — — — — — — 14,500 — 14,500 — — — — — 14,500 — 14,500 — — — — 9,500 — 10,000 — — — — 9,500 — 10,000 — — Option Expiration Date ________ 7/6/2017(5) — — — — — 6/27/2015(4) 7/3/2016(5) 7/1/2015(5) 7/1/2016(5) 7/6/2017(5) — — — — — 5/12/2015(4) 7/1/2016(5) 7/6/2017(5) — — — — — 7/1/2016(5) 7/6/2017(5) — — — — — 7/1/2016(5) 7/6/2017(5) — — — — — (1) Time-based RSUs vest 100% on the third anniversary of the date of grant, subject to continued employment with the Company. (2) Market value is computed by multiplying the closing price of the Company’s stock on the last trading day of the fiscal year by the number of shares reported in the adjacent column. The closing price of the Company’s stock on March 28, 2014 was $53.84. -60- (3) (4) (5) Performance-based RSUs vest 33.3% on the first anniversary of the date of grant, and then 33.3% on each anniversary date thereafter, subject to continued employment with the Company. The number of shares subject to RSUs in this column are based on the number of performance-based RSUs that were earned based on actual performance achievement, except for those awarded in fiscal 2014. For the performance-based RSUs awarded in fiscal 2014, this column represents the number of RSU shares assuming achievement at 100% of target level performance. In May 2014, the Compensation Committee determined that the following number of performance-based RSUs were earned based on actual performance achievement: Mr. Gavrielov, 180,375 shares; Mr. Olson, 53,625 shares; Mr. Peng, 53,625 shares; Mr. Tong, 36,562 shares; Mr. Tornaghi, 36,562 shares. The stock option vests and becomes exercisable over a period of four years, with 25% of the shares vesting on the first anniversary of the date of grant, and the remainder of the shares vesting in equal monthly installments for the following three years, subject to continued employment with the Company. The stock option vests and becomes exercisable over a period of four years in equal monthly installments beginning on the first monthly anniversary of the date of grant, subject to continued employment with the Company. Option Exercises and Stock Vested for Fiscal 2014 The following table provides information on stock option exercises and the value realized upon exercise, and all stock awards vested and the value realized upon vesting, by the named executive officers during fiscal 2014. Name ______ Moshe N. Gavrielov Jon A. Olson Victor Peng Vincent L. Tong Frank A. Tornaghi Option Awards _____________________________________ Number of Shares Acquired on Exercise (#) ________________ 999,025 127,500 110,000 204,250 156,000 Value Realized on Exercise(1) ($) ________________ 24,663,983 2,352,628 2,136,297 4,151,825 3,908,470 Stock Awards ____________________________________ Number of Shares Acquired on Vesting (#) ________________ 50,059 18,888 18,888 12,737 12,737 Value Realized on Vesting(2) ($) ________________ 2,006,394 757,112 757,112 510,553 510,553 (1) (2) The value realized upon exercise is the product realized by multiplying the number of shares of stock by the difference between the market value of the underlying shares on the exercise date and the exercise price applicable to the stock options. The value realized upon vesting is the product realized by multiplying the number of shares of stock by the market value of the underlying shares on the vesting date. Deferred Compensation Plan The Company maintains an unfunded, nonqualified deferred compensation plan which allows our employees in director-level and above positions, including our named executive officers, as well as our Directors, to voluntarily defer receipt of a portion or all of their salary, cash bonus payment and/or sales incentive payment or directorship fees, as the case may be, until the earliest “distribution event” (e.g., specific date, termination of employment, death or change of control) elected by the participants or provided for by the plan, thereby allowing the participating employees and Directors to defer taxation on such amounts. Distributions may be made in a lump sum payment or in installments (not to exceed 15 years). This deferred compensation plan is offered in order to allow participants to defer more compensation than they would otherwise be permitted to defer under a tax- qualified retirement plan, such as our 401(k) Plan. Further, the Company offers the deferred compensation plan as a competitive practice to enable it to attract and retain top talent by providing employees with an opportunity to save in a tax efficient manner. Amounts credited to the deferred compensation plan consist only of cash compensation that has been earned and payment of which has been timely and properly deferred by the participant. Under the deferred compensation plan, the Company is obligated to deliver on a future date the deferred compensation credited to the relevant participant’s account, adjusted for any positive or negative notional investment results from hypothetical investment alternatives selected by the participant under the deferred compensation plan (Obligations). The Obligations are unsecured general obligations of the Company and rank in parity with other unsecured and subordinated indebtedness of the Company. In addition, the Company, acting through the Board, may make discretionary contributions to the accounts of one or more deferred compensation plan participants. In fiscal 2014, there were no discretionary contributions made by the Company to the deferred compensation plan accounts, and we do not guarantee minimum returns to any participant in the deferred compensation plan. We incur only limited administration expenses to maintain the deferred compensation plan. The deferred compensation plan is evaluated for competitiveness in the marketplace from time to time, but the level of benefits provided is not typically taken into account in determining an executive’s overall compensation package for a particular year. -61- Nonqualified Deferred Compensation for Fiscal 2014 The following table provides information on non-qualified deferred compensation for the named executive officers during fiscal 2014. Name ______ Moshe N. Gavrielov Jon A. Olson Victor Peng Vincent Tong Frank A. Tornaghi Executive Contributions in Last FY(1) ($) _______________ Registrant Contributions in Last FY ($) _______________ — — 159,090 — — — — — — — Aggregate Earnings in Last FY ($) _______________ — — — — Aggregate Withdrawals/ Distributions ($) _______________ — — — — — Aggregate Balance at Last FYE ($) _______________ — — — — (1) Mr. Peng’s contributions consists of $30,000 of salary earned during fiscal 2014 and $129,090 of non-equity incentive plan compensation earned during fiscal 2013, amounts which are also reported in the Summary Compensation Table for the applicable fiscal year. Potential Payments upon Termination or Change in Control The 2007 Equity Plan does not provide for automatic acceleration of vesting upon termination or a change in control. However, as described above in the section entitled “EXECUTIVE COMPENSATION—COMPENSATION DISCUSSION AND ANALYSIS—Employment Agreements with Named Executive Officers,” the Company maintains employment letter agreements with certain of our named executive officers that provide for acceleration under certain conditions, such as certain employment terminations or a change in control. The narrative and tables that follow describe potential payments and benefits to such executives under their existing employment letter agreements, including payments and benefits that would be due to them in connection with the occurrence of a change in control, assuming their employment terminated on March 29, 2014, the last day of the Company’s fiscal year. Employment Letter Agreement with Moshe N. Gavrielov Under an employment letter agreement that we entered into with Mr. Gavrielov on January 4, 2008, and amended on June 13, 2012, if the Company terminates Mr. Gavrielov’s employment at any time due to disability or other than for Cause or if Mr. Gavrielov voluntarily terminates his employment for Good Reason (in each case, as defined in his agreement and described below in the section entitled “Definitions of Good Reason, Cause and Change in Control”) then, subject to Mr. Gavrielov’s execution of a release of claims in favor of the Company, he will be eligible for: (i) one year of his base salary, (ii) one year of his target bonus, (iii) a lump sum payment equal to, or payment of, one year of COBRA premiums for medical and dental insurance, (iv) a pro rata portion of his bonus for the fiscal year during which his employment was terminated based on (a) his termination date, (b) the determination by the Compensation Committee whether Company performance objectives have been met and (c) an assumption that any individual performance objectives have been achieved at target, and (v) 24 months accelerated vesting of all equity grants received from the Company prior to his termination of employment; for determining the 24 months of accelerated vesting of (a) performance-based RSUs, the number of accelerated shares will be the actual number of RSUs earned for actual performance achievement as determined by the Compensation Committee that would have vested in the 24 months following termination of employment, had the original vesting schedule been based on a monthly rather than an annual basis, unless his employment is terminated within one year of a Change in Control, in which case the 24 months of accelerated vesting of the performance-based RSUs will be based on the target number of RSUs determined at the time of grant, had the original vesting schedule had been based on a monthly rather than an annual basis, and (b) time-based RSUs, the number of shares that will accelerate will be the number of RSUs that otherwise would have vested in the 24 months following termination of employment, had the original vesting schedule been based on a monthly rather than an annual basis. Mr. Gavrielov’s employment agreement was amended on June 13, 2012 to clarify this treatment relating to the accelerated vesting of RSUs and the intent to comply, to the extent applicable, with Section 409A of the Tax Code. Potential Payments upon Termination of Mr. Gavrielov’s Employment Under his employment agreement, Mr. Gavrielov will receive certain compensation in the event we terminate his employment, as set forth above. Assuming Mr. Gavrielov’s employment was terminated without Cause or Good Reason on March 29, 2014, Mr. Gavrielov would have received the following severance benefits under his employment agreement: (i) a lump sum payment of $750,000, consisting of his annual base salary for fiscal 2014; (ii) a lump sum payment of $1,050,000, consisting of his target bonus -62- under the 2014 Incentive Plan; (iii) Company paid COBRA coverage for 12 months valued at $28,588; (iv) a lump sum payment of $1,160,250, consisting of a pro rata portion of his bonus for fiscal 2014; (v) accelerated vesting of stock options to purchase an aggregate of 29,167 shares of our Common Stock that were in-the-money as of March 29, 2014; and (vi) accelerated vesting of 311,293 shares of Common Stock subject to RSUs, which includes 76,500 shares under time-based RSUs, and 234,793 shares under performance-based RSUs. Based on the difference between the weighted average exercise price of the options and $53.84, the closing price of our Common Stock on March 28, 2014 (the last trading day of the fiscal year), the net value of the accelerated options would be $829,801 and the value of his RSUs would be $16,760,033. The table below calculates all payments to be made to Mr. Gavrielov in connection with such termination: Annual Base Salary ($) __________________ 750,000 Annual Target Bonus ($) ______________ 1,050,000 Pro Rata Portion of Target Bonus ($) _______________ 1,160,250 Medical and Dental Insurance ($) ______________ 28,588 Value of Options ($) _____________ 829,801 Value of RSUs(1) ($) _____________ 16,760,033 Total ($) _____________ 20,578,672 (1) Includes 24-months’ acceleration of time-based RSUs and performance-based RSUs (based on actual performance of the applicable performance metrics), and assuming monthly vesting from the date of grant. In May 2014, the Compensation Committee determined Mr. Gavrielov earned 180,375 shares under his fiscal 2014 performance-based RSUs based on actual performance achievement, of which 160,333 shares would have accelerated upon his termination of employment. If Mr. Gavrielov’s employment had been terminated within one year of a Change in Control, then the number of shares that would have accelerated under his fiscal 2014 performance-based RSUs would have been based on the target number, which was 111,000 shares, of which 98,667 shares would have accelerated, reducing the total in the chart above by approximately $3,320,134. Employment Letter Agreement with Jon A. Olson Under an employment letter agreement that we entered into with Mr. Olson on June 2, 2005, and amended on February 14, 2008, and June 13, 2012, in the event Mr. Olson is terminated without Cause (in each case, as defined in his agreement and described below in the section entitled “Definitions of Good Reason, Cause and Change in Control”) within one year of such Change in Control, and subject to Mr. Olson’s execution of a release of claims in favor of the Company, he will be eligible for: (i) one year of his base salary, (ii) one year of his target bonus, (iii) payment of one year of COBRA premium for medical and dental insurance and (iv) 12 months accelerated vesting of all equity grants received from the Company prior to such termination of employment; for determining the 12 months of accelerated vesting of (a) performance-based RSUs, the number of accelerated shares will be based on the target number of RSUs determined at the time of grant that would have vested in the 12 months following his termination of employment, had the original vesting schedule been based on a monthly rather than an annual basis, and (b) time- based RSUs, the number of shares that accelerate will be the number of RSUs that otherwise would have vested in the 12 months following termination of employment, had the original vesting schedule been based on a monthly rather than an annual basis. Mr. Olson’s employment agreement was amended on June 13, 2012 to clarify this treatment relating to the accelerated vesting of RSUs and the intent to comply, to the extent applicable, with Section 409A of the Tax Code. Potential Payments upon Change in Control and Termination of Mr. Olson’s Employment Under his employment agreement, Mr. Olson will receive certain compensation as set forth above. Assuming Mr. Olson’s employment had been terminated without Cause within one year of a Change in Control on March 29, 2014, Mr. Olson would have received the following severance benefits under his employment agreement: (i) a lump sum payment of $480,000, consisting of his annual base salary for fiscal 2014; (ii) a lump sum payment of approximately $384,000, consisting of his target bonus 2014 Incentive Plan; (iii) Company paid COBRA coverage for 12 months valued at $28,588; (iv) accelerated vesting of stock options to purchase an aggregate of 9,167 shares of Common Stock that were in-the-money as of March 29, 2014; and (v) accelerated vesting of 79,816 shares of Common Stock subject to RSUs, which includes 27,389 shares under time-based RSUs, and 52,427 shares under performance-based RSUs. Based on the difference between the weighted average exercise price of the options and $53.84, the closing price of our Common Stock on March 28, 2014 (the last trading day of the fiscal year), the net value of the accelerated stock options would be $260,801 and the value of the accelerated performance-based RSUs would be $4,297,299. -63- The table below calculates all payments to be made to Mr. Olson in connection with such termination: Annual Base Salary ($) _________________ 480,000 Annual Target Bonus ($) ______________ 384,000 Medical and Dental Insurance ($) ____________ 28,588 Value of Options ($) _________ 260,801 Value of RSUs(1) ($) __________ 4,297,299 Total ($) ___________ 5,450,688 (1) Includes 12-months’ acceleration of time-based RSUs and performance-based RSUs based on the target number of RSUs determined at the time of grant. Definitions of Good Reason, Cause and Change in Control Under Mr. Gavrielov’s employment letter agreement, the following events would constitute “Good Reason”: (i) a reduction of 10% or more in his base compensation, target bonus opportunity or guaranteed bonus; (ii) a material reduction in his authority, duties or responsibilities; (iii) his no longer being CEO; or (iv) a relocation of the Company’s headquarters outside of the San Francisco Bay Area; provided that Mr. Gavrielov has given the Company notice of, and the Company has failed to cure, the event giving rise to Good Reason and Mr. Gavrielov’s employment terminates within six months of the occurrence of such event. “Cause” under Mr. Gavrielov’s employment letter agreement includes: (i) continued neglect of, or willful failure or misconduct in the performance of, his duties; (ii) a material breach of the Company’s Proprietary Information and Inventions Agreement, Code of Conduct or other policies; (iii) fraud, embezzlement or material misappropriation; (iv) conviction of, or entry of a plea of no contest or nolo contendere, to a felony; or (v) any continued willful and wrongful act or omission that materially injures the financial condition or business reputation of the Company and its subsidiaries; subject in certain of the above cases to applicable notice and cure periods. The Company will have “Cause” to terminate Mr. Olson’s employment if he: (i) engages in financial fraud or embezzles property of the Company or any of its subsidiaries; (ii) fails to pay an obligation owed to the Company; (iii) breaches a fiduciary duty or deliberately disregards Company policies, which results in loss to the Company; (iv) engages in any activity for any competitor of the Company or any of its subsidiaries; (v) discloses any confidential information or trade secret, or engages in the theft of any trade secret, of the Company or any of its subsidiaries; or (vi) violates securities, antitrust, unfair competition or other laws or otherwise engages in conduct that puts the Company or any of its subsidiaries at substantial risk of violating such laws. A “Change in Control” will generally be deemed to have occurred under Messrs. Gavrielov’s and Olson’s agreements in the event: (i) any person or group acquires more than 50% of the fair market value or voting power of the Company’s shares (however, if any one person or more than one person acting as a group, is considered to own more than 50% of the total fair market value or total voting power of the shares of Common Stock of the Company, then the acquisition of additional shares by that person or persons will not be considered to cause a “Change in Control”); (ii) a change in the majority of the members of the board of directors during any 12-month period unless such change is endorsed by a majority of the board members serving prior to the change; or (iii) any person or group acquires all or substantially all of the assets of the Company. Other than those described above, none of the other named executive officers have severance or change in control agreements with the Company. The Company has not provided any named executive officer with a gross-up or other reimbursement for tax amounts the named executive officer might be required to pay pursuant to Section 280G, or any related section, of the Tax Code. Indemnification Agreements The Company has entered into an indemnification agreement with each of our directors and officers. The indemnification agreements and our bylaws requires us to indemnify our directors and officers to the fullest extent permitted by Delaware law. -64- COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The members of the Compensation Committee are J. Michael Patterson, Marshall C. Turner and Elizabeth W. Vanderslice. No member of the Compensation Committee is, or was during fiscal 2014, an officer or employee of the Company or any of its subsidiaries or was formerly an officer of the Company or any of its subsidiaries. No member of the Compensation Committee is, or was during fiscal 2014, an executive officer of another company whose board of directors has a comparable committee on which one of the Company’s executive officers serves. For further discussion regarding transactions with related parties, see the section above entitled “BOARD MATTERS-Director Independence.” SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Exchange Act requires the Company’s officers and Directors, and persons who own more than 10% of a registered class of the Company’s equity securities, to file reports of ownership and changes in ownership of such securities with the SEC. Officers, Directors and greater than 10% beneficial owners are required by applicable regulations to furnish the Company with copies of all Section 16(a) forms they file. To the Company’s knowledge, based solely upon a review of the copies of such reports furnished to the Company, and written representations from certain reporting persons that no other reports were required, the Company believes that its officers, Directors and greater-than-10% stockholders complied with all Section 16(a) filing requirements during the 2014 fiscal year, except for one Form 4 with respect to three (3) transactions for Dr. Howard filed one day late. RELATED TRANSACTIONS Our Audit Committee is responsible for reviewing and approving all related party transactions. Related parties include any of our Directors or executive officers, certain of our stockholders and their immediate family members. This obligation is set forth in writing in the Audit Committee charter. The Audit Committee reviews related party transactions due to the potential for a conflict of interest. A conflict of interest arises when an individual’s personal interest interferes with the Company’s interests. All transactions identified through our disclosure controls and procedures as potential related party transactions, or transactions that may create a conflict of interest or the appearance of a conflict of interest, are brought to the attention of the Audit Committee for its review. In reviewing related party transactions, the Audit Committee applies the standards set forth in the Company’s Code of Conduct and the Directors’ Code of Ethics which provide that Directors, officers and employees are to avoid any activity, investment or association that would cause or even appear to cause a conflict of interest. Copies of the Audit Committee Charter, the Code of Conduct and the Directors’ Code of Ethics are available on our website at http://www.investor.xilinx.com under “Corporate Governance.” For further discussion regarding transactions with related parties, see the section above entitled “BOARD MATTERS-Director Independence.” In fiscal 2011, our Audit Committee pre-approved our engagement of BlackRock, Inc. (BlackRock) as an investment manager. At the time we entered into this engagement, BlackRock was the beneficial owner of more than five percent of our outstanding common stock and is currently a beneficial owner of more than five percent of our outstanding common stock. Xilinx paid BlackRock $386,595 in management fees during fiscal 2014. In fiscal 2012, our Audit Committee pre-approved our engagement of JPMorgan Chase Bank, N.A. (JPMorgan) as our sole bookrunner and lead arranger for our $250 million credit facility (Credit Facility). In fiscal 2014, our Audit Committee pre- approved our engagement of JPMorgan as our sole book-running manager for our public offering of $1.0 billion aggregate principal amount of senior unsecured notes (Offering). At the time we entered into both engagements, JPMorgan was the beneficial owner of more than five percent of our outstanding common stock and is currently a beneficial owner of more than five percent of our outstanding stock. During fiscal 2014, Xilinx paid JPMorgan $277,083 in administrative agent fees and $2,000,0000 in underwriting fees in connection with the Credit Facility and the Offering, respectively. The Company knows of no other matters to be submitted to the meeting. If any other matters properly come before the meeting, it is the intention of the persons named in the enclosed proxy card to vote the shares they represent as the Board may recommend. OTHER MATTERS THE BOARD OF DIRECTORS Dated: June 30, 2014 -65- This page intentionally left blank. BOARD OF DIRECTORS CORPORATE OFFICERS CORPORATE INFORMATION Philip T. Gianos Chairman of the Board Moshe N. Gavrielov Common Stock President and Chief Executive Officer Xilinx’s common stock trades on the NASDAQ Global Select Market under the symbol XLNX. Moshe N. Gavrielov Ivo Bolsens President and Chief Executive Officer John L. Doyle William G. Howard, Jr. J. Michael Patterson Albert A. Pimentel Marshall C. Turner Elizabeth W. Vanderslice Senior Vice President and Chief Technology Officer Kevin J. Cooney Corporate Vice President and Chief Information Officer Steven L. Glaser Senior Vice President, Corporate Strategy and Marketing Scott R. Hover-Smoot Senior Vice President, General Counsel and Secretary Marilyn Stiborek Meyer Senior Vice President, Worldwide Human Resources Jon A. Olson Executive Vice President, Finance and Chief Financial Officer Victor Peng Executive Vice President and General Manager of Products Raja G. Petrakian Senior Vice President, Worldwide Operations Krishna Rangasayee Senior Vice President and General Manager Market Segments and Communications Business Unit Vincent L. Tong Senior Vice President, Worldwide Quality and New Product Introductions Executive Leader, Asia Pacific Frank A. Tornaghi Senior Vice President, Worldwide Sales As of May 7, 2014, there are approximately 550 stockholders of record. Since many holders’ shares are listed under their brokerage firms’ names, the actual number of stockholders is estimated to be over 135,000. Dividend Information Xilinx currently pays a quarterly common stock dividend. Please refer to the Dividend FAQ page on www.investor.xilinx.com for more information regarding our stock dividend program. Xilinx does not currently offer a Dividend Reinvestment or Direct Purchase Program. Twelve Month Closing Stock Price Range: April 2013 to March 2014: $35.51 - $55.07 Transfer Agent and Registrar Please send change of address and other correspondence to: Shareholder Correspondence: Computershare Trust Company, N.A. P.O. BOX 30170 College Station, TX 77842-3170 Overnight Correspondence: Computershare Trust Company, N.A. 211 Quality Circle, Suite 210 College Station, TX 77845 Shareholder Website: www.computershare.com/investor Shareholder Online Inquiries: www-us.computershare.com/investor/Contact Telephone: +1 (781) 575 2879 or Toll Free: 877 373 6374 Inquiries Concerning the Company If you have questions regarding Xilinx’s operations, recent results or historical performance, please contact: Xilinx, Inc. Investor Relations 2100 Logic Drive, San Jose, CA 95124 www.investor.xilinx.com Email: ir@xilinx.com Copies of the Xilinx Annual Report, Form 10-K and Proxy Statement are available to all stockholders without charge. Independent Auditors Ernst & Young LLP San Jose, CA Annual Meeting The 2014 Xilinx Annual Meeting of stockholders will be held on August 13, 2014 at 11 a.m. Pacific Daylight Time at Xilinx, Inc., 2050 Logic Drive, San Jose, CA 95124. CS1390_AnnualReport2014_InsideBackCvr_FINAL.indd 1 6/10/14 4:06 PM Corporate Headquarters Europe Japan Asia Pacific Xilinx, Inc. 2100 Logic Drive San Jose, CA 95124 USA Tel: +1-408-559-7778 www.xilinx.com Xilinx Ireland 2020 Bianconi Avenue Citywest Business Campus Saggart, County Dublin Ireland Tel: +353-1-464-0311 www.xilinx.com Xilinx K.K. Art Village Osaki Central Tower 4F 1-2-2, Osaki Shinagawa-ku, Tokyo, 141-0032 Japan Tel: +81-3-6744-7777 japan.xilinx.com Xilinx Asia Pacific Pte. Ltd. 5 Changi Business Park Vista Singapore 486040 Tel: +65-6407-3000 www.xilinx.com © Copyright 2014 Xilinx, Inc. Xilinx, the Xilinx logo, Artix, ISE, Kintex, Spartan, Virtex, Vivado, Zynq, and other designated brands included herein are trademarks of Xilinx in the United States and other countries. ARM, AMBA, Cortex, and MPCore are trademarks of ARM in the EU and other countries. PCIe is a trademark of PCI-SIG and used under license. All other trademarks are the property of their respective owners. 4 1 / 6 0 0 1 5 1 S C . A S U n i d e t n i r P . d e v r e s e r s t h g i r l l A . c n I x n i l i X 4 1 0 2 © Xilinx2014AnnualReport_Covers_FINAL_060514.indd 3 6/5/14 4:56 PM 

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