Delivering
Delivering
A Generation Ahead
A Generation Ahead
2014 Form 10-K & Proxy Statement
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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%
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XilinxAnnualReport2014_SectionPages_FINAL_060514.pdf 1 6/5/14 4:58 PM
Delivering
A Generation Ahead
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2014 Form 10-K
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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;
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(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)
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(cid:127)
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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:
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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
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(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:
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(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
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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;
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(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
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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.
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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
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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.
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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
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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
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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
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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
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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
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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.
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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.
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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.
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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.
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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 $300,000, which is equal to five (5) times their annual retainer in effect at the time the new equity
compensation program for Directors was adopted. Non-employee Directors are required to retain half of the shares of our Common
Stock derived from awards of RSUs until their ownership requirements are met. Half of the RSUs that are vested but are not settled
pursuant to a pre-arranged deferral program will count toward the ownership requirement. For more information about stock
ownership guidelines for Directors, please see “CORPORATE GOVERNANCE PRINCIPLES—Stock Ownership Requirements.”
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Employee Directors
Directors who are actively employed as executives by the Company receive no additional compensation for their service as
Directors. Mr. Gavrielov is currently the only employee Director of the Company.
Deferred Compensation
We also maintain a nonqualified deferred compensation plan which allows each Director as well as eligible employees to
voluntarily defer receipt of a portion or all of their cash compensation until the date or dates elected by the participant, thereby
allowing the participating Director or employee to defer taxation on such amounts. For a discussion of this plan, see “EXECUTIVE
COMPENSATION—Deferred Compensation Plan.”
Director Compensation for Fiscal 2014
The following table provides information on Director compensation in fiscal 2014:
Name
______________________________
Philip T. Gianos (Chairman)
John L. Doyle
William G. Howard, Jr.
J. Michael Patterson
Albert A. Pimentel
Marshall C. Turner
Elizabeth W. Vanderslice
Fees Earned
or Paid
in Cash
($)
____________
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)
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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,
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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.
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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
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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.
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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
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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.
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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.
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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
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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 $470,000.
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The following table is a summary of the changes to base salary for our named executive officers in fiscal 2014:
__________________
Named Executive Officer
Moshe N. Gavrielov
Jon A. Olson
Victor Peng
Vincent L. Tong
Frank A. Tornaghi
Named Executive Officer Salary Adjustments
Fiscal 2013 Salary(1)
_________________
($)
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.”
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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.
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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
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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
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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
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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.
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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
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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,
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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.
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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.
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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
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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
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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.
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