UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549

                                   FORM 10-K
(Mark  One)
[  X  ]    Annual  report  pursuant  to  Section 13 or 15(d) of the Securities
Exchange  Act  of  1934  for  the  fiscal  year  ended  March  28,  1998  or
[     ]    Transition report pursuant to section 13 or 15(d) of the Securities
Exchange  Act  of  1934

                       COMMISSION FILE NUMBER   0-18548

                                 XILINX, INC.
            (Exact name of registrant as specified in its charter)

                                   DELAWARE
         (State or other jurisdiction of incorporation or organization)

                                  77-0188631
                     (I.R.S. Employer Identification No.)

                  2100 LOGIC DRIVE, SAN JOSE, CA       95124
             (Address of principal executive offices)   (Zip Code)

                                (408) 559-7778
             (Registrant's telephone number, including area code)

          SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
                                     None

          SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
                      COMMON STOCK,       $.01 PAR VALUE
                             (Title of Class)

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  requirements  for  the  past  90  days.

YES      [  X  ]                          NO      [     ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of  Regulation  S-K 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.    [  X  ]

The  aggregate  market value of the voting stock held by non-affiliates of the
registrant,  based  upon the closing sale price of the Common Stock on June 9,
1998  as  reported  on  the  NASDAQ  National  Market  was  approximately
$2,181,991,000.    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.

At  June  9,  1998,  the  registrant  had  72,490,000  shares  of Common Stock
outstanding.


                      DOCUMENTS INCORPORATED BY REFERENCE


Parts  of  the  Proxy  Statement  for  the Registrant's 1998 Annual Meeting of
Stockholders  are  incorporated  by  reference  in this Form 10-K Report (Part
III).


                                    PART I
                                    ------


ITEM  1.          BUSINESS

Items  1  and 3 of this 10-K contain forward-looking statements concerning the
Company's  development  efforts,  strategy, new product introductions, backlog
and  litigation.    These  statements involve numerous risks and uncertainties
including  those  discussed throughout this document as well as under "Factors
Affecting  Future  Operating  Results"  in  Item  7.

GENERAL

Xilinx,  Inc.  (Xilinx  or the Company) designs, develops and markets complete
programmable  logic  solutions,  including advanced integrated circuits (ICs),
software design tools, predefined system functions delivered as cores of logic
and  field  engineering  support.    The  Company's programmable logic devices
(PLDs) include field programmable gate arrays (FPGAs) and complex programmable
logic  devices  (CPLDs).    These  components  are  standard ICs programmed by
Xilinx's  customers  to  perform desired logic operations. Xilinx also markets
HardWire  devices,  which are specifically configured during the manufacturing
process  and  functionally  equivalent  to  programmed  FPGAs.   The Company's
products are designed to provide high integration and quick time-to-market for
electronic equipment manufacturers in the data processing, telecommunications,
networking, industrial control, instrumentation, high-reliability/military and
consumer  markets.

Competitive  pressures  require  manufacturers  of electronic systems to bring
increasingly  complex  products  to market rapidly.  Customer requirements for
improved  functionality,  performance,  reliability  and  lower cost are often
addressed  through the use of components that integrate ever larger numbers of
logic  gates  onto  a single integrated circuit because such integration often
results  in  faster  speed,  smaller  size,  lower power consumption and lower
costs.    However,  while global competition is increasing the demand for more
complex products, it is also shortening product life cycles and requiring more
frequent  product  enhancements.

Xilinx  provides  programmable  logic  solutions, which combine the high logic
density  typically  associated with custom gate arrays with the time to market
advantages  of  programmable logic and the availability of a standard product.
The Company offers a broad product line of PLDs, which serve a wide variety of
applications  requiring  high  levels  of  integration,  competitive speed and
acceptable  pricing.    In  many of these applications where time to market is
important,  customer demand unpredictable and/or frequent design modifications
are  necessary  to  adapt  a  product to new markets, the flexibility achieved
through  the products' programmability features is instrumental.  Xilinx CPLDs
complement the Company's FPGA products and contribute to the Company's efforts
to  offer  comprehensive programmable logic solutions.  With FPGAs, which have
the advantages of higher density and lower power consumption, and CPLDs, which
are  typically  faster and have lower densities, the Company's products enable
electronic equipment manufacturers to rapidly bring complex products to market
in  volume.

The Xilinx software strategy is to deliver an integrated design solution for a
broad customer base ranging from customers who are not familiar with designing
systems using PLDs to the most sophisticated customers accustomed to designing
high  density,  specifically  configured  gate  arrays.    The objective is to
deliver  strategic  software  advantages  that combine ease of use with design
flexibility,  effective  silicon  utilization  and  competitive  performance.

System  designers  use  Xilinx proprietary software design tools together with
industry  standard  electronic  design  automation  (EDA) tools and predefined
system  functions delivered as cores of logic to design, develop and implement
Xilinx  programmable logic applications.  Designers define the logic functions
of the circuit and revise such functions as necessary.  Programmable logic can
often  be  designed and verified in a few days, as opposed to several weeks or
months  for  gate arrays, which are customized devices that are defined during
the  manufacturing  process.  Moreover,  programmable logic design changes can
typically  be  implemented in as little as a few hours, as compared to several
weeks  for  a custom gate array.  In addition, significant savings result from
the  elimination  of  non-recurring  engineering  costs  and  the reduction of
expenses  associated  with the redesign and testing of custom gate arrays.  By
reducing  the  cost  and  scheduling  risks  of  design iterations, PLDs allow
greater  designer  creativity,  including  the  consideration  of  design
alternatives that often lead to product improvements.  Further, since PLDs are
standard  products  and production quantities are readily available, exposures
to  obsolete  inventory  can  be  significantly  reduced.

Xilinx  was  organized in California in February 1984 and in November 1985 was
reorganized  to  incorporate its research and development limited partnership.
In  April  1990,  the  Company  reincorporated  in  Delaware.    The Company's
corporate  facilities  and  executive offices are located at 2100 Logic Drive,
San  Jose,  California  95124.

PRODUCTS

The  timely  introduction  of new products which address customer requirements
and  compete  effectively on the basis of price, functionality and performance
is  a  significant  factor  in  the  future success of the Company's business.
Delays  in  developing new products with anticipated technological advances or
delays  in  commencing  volume shipments of new products could have an adverse
effect  on  the  Company's  financial condition and results of operations.  In
addition,  there  can  be no assurance that such products, if introduced, will
gain  market acceptance or respond effectively to new technological changes or
new  product  introductions  by  other  companies.

     Programmable  Logic  Devices

The Company's PLD products include both FPGA and CPLD product lines.  The FPGA
products include the XC2000, XC3000 and XC3100 families, which represent first
generation  products,  as  well  as  the  XC4000,  XC4000X, XC5000 and Spartan
families,  which  represent  second generation products.  The Company's XC4000
product  family  includes  both the XC4000 and XC4000E.  The Company's XC4000X
product  family  includes  the  XC4000EX, XC4000XL and XC4000XV.  The XC4000EX
family  utilizes  the  benefits  of  the  XC4000E  architecture  and  provides
additional  routing  resources  aimed  to meet the design requirements for ICs
with  high  gate  densities.   The XC4000XL family is the industry's first 3.3
volt  FPGA  family  manufactured on 0.35 micron technology.  The family has 11
members  shipping  in  volume  ranging in density from 2,000 to 180,000 system
gates.    The  XC4000XV  utilizes  0.25  micron technology.  The Company began
sampling  one  device  in  the  XC4000XV  family  during  fiscal  1998.

The  Company's  two  newest  FPGA  product families are the Spartan and Virtex
product  lines.  The Spartan Series of FPGAs began revenue shipments in fiscal
1998  and  is  the Company's first product line that is price competitive with
high  volume  application-specific  integrated circuits (ASICs).  Derived from
the  XC4000  architecture  and spanning up to 40,000 system gates, the Spartan
Series  combines  high  performance,  on-chip  RAM,  software cores, and lower
prices.

The  Virtex  series  of  FPGAs  presently  features  leading-edge  0.25 micron
technology.   Xilinx plans to deliver a 1,000,000 system-gate Virtex device by
the  end of fiscal 1999, with first sampling to begin in the same fiscal year.
Virtex  is  intended  to  address  the  demand  for  higher  density,  higher
performance  products  in  the  telecommunication,  networking, and multimedia
market  segments.  With the Virtex family, Xilinx will deliver its first fully
programmable  alternative  to  high  density  system-level  ASIC  design.

The  two  preceding  paragraphs  contain  forward-looking statements which are
subject  to  risks  and  uncertainties  including those discussed in Item 7 in
"Management's  Discussion  and  Analysis of Financial Condition and Results of
Operation  -  Factors  Affecting  Future  Results."

The  Company's  CPLD  products  include  the  XC7000 and XC9500 families.  The
XC9500  family  utilizes  a Flash-based CPLD architecture and offers in-system
programmability.    This  family  delivers  high  speeds,  while  giving  the
flexibility  of  an  enhanced,  customer-proven  pin-locking  architecture and
direct  interface  to  both  3.3  and  5  volt  systems.

PLDs  are  available  in  a wide variety of plastic and ceramic package types,
including  pin-grid  array,  surface  mount and quad flat pack configurations.
These  devices  meet  the  industry  standard  operating temperature ranges of
commercial,  industrial  and  military  users.

The  Company's  HardWire  ASICs offer a low cost migration path from FPGAs for
high  volume  applications.    Once  a programmable logic design is finalized,
customers  can  take  advantage  of  HardWire products, which are specifically
configured  during  the  manufacturing  process.  The Company's HardWire ASICs
offer  a  complete turn-key conversion solution, which reduces the engineering
and  risk  burden  normally  associated  with  conventional gate arrays.  Each
Hardwire  ASIC is completely interchangeable with its FPGA counterpart and for
each  current  Xilinx  FPGA  family,  there  is a corresponding HardWire ASIC;
except  for  the  Spartan  family,  which  would  not  benefit  from  HardWire
conversion.

In  order  to  minimize  the  printed circuit board area required for external
storage  of  the  FPGA configuration program, the Company provides a family of
erasable  programmable read-only memories (EPROMs).  These devices are sold by
the  Company  in  conjunction  with  its  FPGAs.

     Software  design  tools

Xilinx  offers  complete  software  design  tool  solutions,  which enable the
implementation of designs in Xilinx PLDs.  These software design tools combine
powerful  technology  with a flexible, easy to use graphical interface to help
achieve  the  best  possible  designs within each customer's project schedule,
regardless  of  the  designer's  experience  level.

The  Company  offers  two  complementary  software design tool solutions.  The
Foundation  Series  provides  designers  with  a complete, ready-to-use design
solution  based on industry-standard hardware description languages (HDLs) and
is  easy  to learn and use.  For those customers new to designing with PLDs or
desiring  a  low  cost  approach,  the  Company  offers  this fully integrated
software  solution.    The  Alliance  Series is for designers who want maximum
flexibility  to  integrate  programmable  logic design into their existing EDA
environment  and  methodology.    With interfaces to over 50 EDA vendors, this
product allows users to select tools with which they are most familiar thereby
shortening  their  design  cycle.

The  Company also offers more than 75 pre-implemented, fully verified, drop-in
cores  of  logic  for  commonly  used complex functions such as digital signal
processing (DSP), bus interfaces, processors and peripheral interfaces.  Using
logic cores, available from the Company and third party AllianceCORE partners,
customers can shorten development time, reduce design risk and obtain superior
performance  for  their  designs.  Additionally, the Company's CORE Generator,
announced  during  the  fourth  quarter of fiscal 1998, is an easy to use tool
that  delivers  parameter-based  cores  optimized  for the Company's FPGAs and
features  an interface to third-party system level DSP design tools.  The CORE
Generator  is  shipped  with  the  Company's  software  design  tools.

Xilinx's  software  design  tools  operate  on  desktop  computer  platforms,
including  personal computers using Windows 95 and Windows NT and workstations
from  IBM,  HP, DEC and Sun Microsystems.  Through March 31, 1998, the Company
had  sold  over  42,000  software  design  systems  worldwide.

RESEARCH AND DEVELOPMENT

Xilinx's  research  and  development activities are primarily directed towards
the  design  of  new  integrated  circuits,  the  development  of  advanced
semiconductor  manufacturing processes, the development of new software design
tools  and  cores  of  logic  and  ongoing  cost  reductions  and  performance
improvements  in  existing  products.    The Company's recent primary areas of
focus  have  been:  to  increase  the Company's CPLD market share; to maintain
density/performance  leadership  with its newest FPGA product lines, including
the  XC4000X,  Spartan  and  Virtex families; to give its customers a low-cost
migration  path  for high-volume applications with its specifically configured
HardWire ASICs and to support all its product families with easy-to-use, fully
automated  software design tools and cores of logic.  However, there can be no
assurance  that  any  of the Company's development efforts will be successful,
timely  or  cost-effective.

Xilinx  believes  that  software  design  tools  and logic cores are important
factors  in  expanding  the  use of programmable logic devices.  The Company's
research and development challenge is to continue to develop new products that
create  cost-effective  solutions  for  customers.   In fiscal 1998, 1997, and
1996,  the  Company's  research  and  development expenses were $80.5 million,
$71.1  million  and  $64.6 million, respectively.  The Company expects that it
will  continue  to  spend  substantial funds on research and development.  The
Company  believes that technical leadership is essential to its future success
and is committed to continuing a significant level of research and development
effort.

MARKETING AND SALES

Xilinx  sells  its  products  through several channels of distribution: direct
sales  to  manufacturers  by  independent  sales  representative  firms, sales
through  franchised  domestic  distributors,  and  sales  through  foreign
distributors.  Xilinx also utilizes a direct sales management organization and
field  applications engineers (FAEs) as well as manufacturer's representatives
and  distributors to reach a broad base of potential customers.  The Company's
independent  representatives generally address larger OEM customers and act as
a  direct  sales  force, while distributors serve the balance of the Company's
customer base.  The Company's sales and customer support personnel support all
channels and consult with customers about their plans, ensuring that the right
software  and  devices  are selected at the beginning of a customer's project.

In  North  America,  Hamilton-Hallmark,  Marshall  Industries,  and  Insight
Electronics,  Inc.  distribute  the  Company's  products  nationwide,  and  Nu
Horizons Electronics provides additional regional sales coverage.  The Company
believes  that distributors provide a cost-effective means of reaching certain
customers.    Since  the  Company's  PLDs  are  standard products, they do not
present many of the inventory risks to distributors as compared to custom gate
arrays,  and they simplify the requirements for distributor technical support.

Revenue  from  product  sales  direct to customers and foreign distributors is
generally  recognized  upon  shipment.    However,  the  Company  defers  the
recognition  of  revenue  and  the  related  cost  of  revenue on shipments to
domestic  distributors that have certain rights of return and price protection
privileges  on  unsold  product  until  the  distributor  sells  the  product.

BACKLOG AND CUSTOMERS

As  of  March 28, 1998, the Company's backlog of purchase orders scheduled for
delivery  within  the  next  three  months  was  $97.2 million.  Because of an
overall  slowdown  in  the semiconductor market and a widespread perception by
customers  that  product is readily available, many of the Company's customers
are  currently placing orders for near-term delivery and providing the Company
relatively  limited  visibility  to demand for products further out than three
months.    Backlog  as  of March 29, 1997 was $84.4.  Backlog amounts for both
years include orders to distributors, which may receive price adjustments upon
sale  to  end  customers.    Also,  orders  constituting the Company's current
backlog  are subject to changes in delivery schedule or to cancellation at the
option  of  the  purchaser without significant penalty.  Accordingly, although
useful for scheduling production, backlog as of any particular date may not be
a  reliable  measure  of  revenues  for  any  future  period.

No  single  end customer accounted for more than 5% of revenues in fiscal 1998
or  1997  or  6%  in  1996.    See  Note 10 of Notes to Consolidated Financial
Statements  in  Item  8  for  Industry  and  Geographic  Information.

WAFER FABRICATION

The  Company  does not manufacture the wafers used for its products.  Over the
last  two  years,  the  majority  of  wafers  purchased  by  the  Company were
manufactured  by  Seiko  Epson  Corporation  (Seiko  Epson)  and  United
Microelectronics Corporation, (UMC).  Precise terms with respect to the volume
and  timing  of  wafer  production and the pricing of wafers produced by Seiko
Epson  and UMC are determined by periodic negotiations between the Company and
these  wafer  foundry  partners.

Xilinx's  strategy  is  to  focus  its  resources  on  creating new integrated
circuits  and  software  design tools and on market development rather than on
wafer  fabrication.    The  Company  continuously  evaluates  opportunities to
enhance  foundry relationships and/or obtain additional capacity from both its
main  suppliers  as  well  as  other  suppliers  of  leading-edge  process
technologies.    As a result, the Company has entered into agreements with UMC
and  Seiko  Epson  as  discussed  below.

The  Company,  UMC  and  other  parties  have  entered into a joint venture to
construct a wafer fabrication facility in Taiwan, known as United Silicon Inc.
(USIC).    See  Notes 4 and 6 of Notes to Consolidated Financial Statements in
Item  8.    The Company invested an additional $67.4 million in fiscal 1998 to
bring  the  total  cumulative  investment  to  $101.7  million.    The Company
currently  holds a 25% equity ownership and the right to receive 31.25% of the
wafer  capacity  from  this  facility.   Under the terms of the agreement, the
Company  may  be  required  to  make  a  third  equity installment of up to an
additional  $30  million  in  the USIC joint venture if warranted based on the
capital  and operational requirements of the joint venture.  UMC has committed
to  and  is  supplying  the  Company  with  wafers  manufactured  in  existing
facilities  until  capacity  is  available  in  the  new  facility.

In  fiscal 1997, the Company signed an agreement with Seiko Epson.  See Note 2
of  Notes  to Consolidated Financial Statements in Item 8.  This agreement was
amended  in  fiscal  1998 and provides for an advance to Seiko Epson of $150.0
million.   In conjunction with the agreement, $60.0 million was paid in fiscal
1997  and  an  additional $90.0 million was paid in fiscal 1998.  Repayment of
this advance is in the form of wafer deliveries, which began during the fourth
quarter  of fiscal 1998.  Specific wafer pricing is in US dollars and is based
upon  the  prices  of  similar  wafers  manufactured  by  other,  specifically
identified,  leading-edge  foundry  suppliers.   The advance payment provision
also  provides  for  interest  to  be  paid to the Company in the form of free
wafers.

SORT, ASSEMBLY AND TEST

Wafers  purchased  by the Company are sorted by the wafer foundry, independent
sort  subcontractors  or  by  the  Company.    Sorted  wafers are assembled by
subcontractors  in  facilities  in Pacific Rim countries.  During the assembly
process,  the  wafers are separated into individual integrated circuits, which
are  then  assembled  into  various  package  types.   Following assembly, the
packaged  units  are  tested  by  independent test subcontractors or by Xilinx
personnel  at  the  Company's  San  Jose  or  Ireland  facilities.

PATENTS AND LICENSES

Through  March  28,  1998, the Company held over 200 United States patents and
maintains  an  active program of filing for additional patents in the areas of
software,  IC  architecture  and  design.    The Company intends to vigorously
protect  its  intellectual  property.    The  Company believes that failure to
enforce  its patents or to effectively protect its trade secrets could have an
adverse effect on the Company's financial condition and results of operations.
See Legal Proceedings in Item 3 and Note 11 of Notes to Consolidated Financial
Statements  in  Item  8.

Xilinx has acquired various software licenses that permit the Company to grant
object  code  sublicenses  to  its  customers for certain third party software
programs  licensed  with the Company's software design tools. In addition, the
Company  has  licensed  certain  software  for internal use in product design.

EMPLOYEES

Xilinx's  employee  population  has  grown  by 9% during the past year.  As of
March 28, 1998, Xilinx had 1,391 employees compared to 1,277 at the end of the
prior year.  None of the Company's employees are represented by a labor union.
The  Company  has  not experienced any work stoppages and believes it has good
relations  with  its  employees.

COMPETITION

The  Company's  FPGAs and CPLDs compete in the programmable logic marketplace,
with  a  substantial  majority of the Company's revenues derived from its FPGA
product  families.  The industries in which the Company competes are intensely
competitive and are characterized by rapid technological change, rapid product
obsolescence  and continuous price erosion.  The Company expects significantly
increased  competition  both  from  existing  competitors and from a number of
companies  that  may  enter  its  market.

Xilinx  believes  that important competitive factors in the programmable logic
market  include  price,  product  performance and reliability, adaptability of
products  to  specific applications, ease of use and functionality of software
design  tools,  functionality  of predefined cores of logic and the ability to
provide  timely  customer  service  and  support.   The Company's strategy for
expansion  in the programmable logic market includes continued introduction of
new product architectures, which address high volume, low cost applications as
well  as  high  performance,  leading-edge  density applications and continued
price  reductions  proportionate  with  the  ability  to  lower  the  cost  of
manufacture for established products.  However, there can be no assurance that
the  Company  will  be  successful  in  achieving  these  strategies.

The  Company's major sources of competition are comprised of several elements:
the  manufacturers  of  custom  CMOS  gate  arrays,  providers of high density
programmable  logic  products  characterized  by  FPGA-type  architectures,
providers  of high speed, low density CPLDs devices and other providers of new
or  emerging  programmable  logic  products.  The Company competes with custom
gate  array  manufacturers  on  the  basis  of  lower  design  costs,  shorter
development  schedules and reduced inventory risks.  The primary attributes of
custom  gate  arrays  are high density, high speed and low production costs in
high  volumes.    The  Company  continues  to develop lower cost architectures
intended  to narrow the gap between current custom gate array production costs
(in  high  volumes)  and PLD production costs.  The Company competes with high
density  programmable logic suppliers on the basis of performance, the ability
to  deliver  complete  solutions  to  customers, voltage and customer support,
taking  advantage  of  the  primary  characteristics  of  flexible, high speed
implementation  and  quick  time-to-market  capabilities  of the Company's PLD
product  offerings.    Competition  among CPLD suppliers is based primarily on
price,  performance,  design,  software  utility  and  the  ability to deliver
complete  solutions  to  customers.    In  addition, the Company competes with
manufacturers  of  new or emerging programmable logic products on the basis of
price,  performance,  customer  support,  software  utility and the ability to
deliver  complete  solutions  to  customers.  Some of the Company's current or
potential  competitors  have  substantially  greater financial, manufacturing,
marketing  and  technical  resources  than  Xilinx.    To the extent that such
efforts  to  compete are not successful, the Company's financial condition and
results  of  operations  could  be  materially  adversely  affected.

The  benefits  of  programmable  logic have attracted a number of companies to
this  market,  competing primarily on the basis of speed, performance, design,
price,  software  utility  or  cost.    Xilinx  recognizes  that  different
applications  require  different programmable technologies, and the Company is
developing  architectures,  processes  and  products  to  meet  these  varying
customer  needs.    Recognizing the increasing importance of standard software
solutions, Xilinx has developed common software design tools that supports the
full  range  of  integrated circuit products.  Xilinx believes that automation
and  ease  of  design  are significant competitive factors in the programmable
logic  market.

Several  companies, both large and small, have introduced products competitive
with  those  of  the  Company  or have announced their intention to enter this
market.   Some of the Company's competitors may possess innovative technology,
which  could  prove  superior to Xilinx's technology in some applications.  In
addition,  the  Company  anticipates  potential  competition from suppliers of
logic  products  based  on new technologies.  Some of the Company's current or
potential  competitors  have  substantially  greater financial, manufacturing,
marketing  and  technical  resources  than Xilinx. This additional competition
could  adversely  affect  the  Company's  financial  condition  and results of
operations.

Xilinx  also  faces  competition from its licensees.  Under a license from the
Company,  Lucent  Technologies  is  manufacturing  and marketing the Company's
non-proprietary  XC3000  FPGA  products  and  is  employing that technology to
provide  additional  FPGA  products  offering higher density.  Seiko Epson has
rights  to  manufacture  the  Company's  products and market them in Japan and
Europe  but  is not currently doing so.  Advanced Micro Devices is licensed to
use  certain of the Company's patents to manufacture and market products other
than  SRAM-based  FPGAs.

EXECUTIVE OFFICERS OF THE REGISTRANT

Certain information regarding each of Xilinx's executive officers is set forth
below:



Name Age Position Officer Since Willem P. Roelandts 53 President and Chief Executive Officer 1996 R. Scott Brown 57 Senior Vice President, Worldwide Sales 1985 Robert C. Hinckley 50 Vice President, Strategic Plans and Programs 1991 Richard W. Sevcik 50 Senior Vice President and General Manager, Software 1997 Gordon M. Steel 53 Senior Vice President, Finance and Chief Financial Officer 1987
There is no family relationship between any director or executive officer of the Company. Willem P. "Wim" Roelandts joined the Company in January 1996 as Chief Executive Officer and a member of the Company's Board of Directors. In April 1996, he was appointed to the additional position as President of the Company. Prior to joining the Company, he served at Hewlett-Packard Company, a computer manufacturer, as Senior Vice President and General Manager of Computer Systems Organizations from August 1992 through January 1996 and as Vice President and General Manager of the Network Systems Group from December 1990 through August 1992. R. Scott Brown joined the Company in 1985 as Vice President of Sales and was promoted to Senior Vice President, Worldwide Sales in 1995. Mr. Brown has announced that he plans to retire from the Company. A retirement date has not been determined. Robert C. Hinckley joined the Company in 1991 as Vice President, Strategic Plans and Programs and as the Company's General Counsel. He was appointed Secretary in 1993. He acted as interim Chief Operating Officer from March through August 1994. Richard W. Sevcik joined the Company in April 1997 as Senior Vice President and General Manager, Software. He was at Hewlett-Packard Company for 10 years where, from 1994 through 1996, he served as Group General Manager of the company's Systems Technology Group and oversaw five divisions involved with product development for servers, workstations, operating systems, microprocessors, networking and security. In 1995 he was named Vice President. From 1992 to 1994, he served as Group General Manager of Computer Systems and Servers and was responsible for four divisions. Gordon M. Steel joined the Company in 1987 as Vice President, Finance and Chief Financial Officer and was promoted to Senior Vice President, Finance and Chief Financial Officer in 1995. Mr. Steel has announced that he plans to retire from the Company. A retirement date has not been determined. ITEM 2. PROPERTIES Xilinx's corporate offices, which include the administrative, sales, customer support, marketing, research and development and final testing groups are located in San Jose, California. The site includes adjacent buildings providing 335,000 square feet of available space, which are leased through 1999. The Company has entered into lease agreements relating to these facilities which would allow the Company to purchase these facilities on or before the lease expiration dates in December 1999. The Company has also entered into an agreement whereby an 180,000 square foot facility is being constructed on property adjacent to the Company's corporate facilities. The Company will have the option to purchase the building after an initial lease term. See Note 6 of Notes to Consolidated Financial Statements in Item 8. In addition, the Company has a 100,000 square foot administrative, research and development and final testing facility in the metropolitan area of Dublin, Ireland and a 60,000 square foot facility in Boulder, Colorado. The Irish facility is being used to service the Company's customer base outside of North America, while the Boulder facility is the primary location for the Company's software efforts in the areas of research and development, manufacturing and quality control. Additionally, the Company purchased a 59-acre parcel of land located in Longmont, Colorado, near the Company's current Boulder, Colorado facility. Plans for infrastructure and the future development of the new property have not been finalized. The Company also maintains domestic sales offices in twenty-two locations which include the metropolitan areas of Atlanta, Boston, Chicago, Denver, Dallas, Los Angeles, Minneapolis, Philadelphia, Raleigh and San Jose as well as nine international sales offices located in the metropolitan areas of London, Munich, Paris, Stockholm, Milan, Tokyo, Taipei, Seoul and Hong Kong. ITEM 3. LEGAL PROCEEDINGS On June 7, 1993, the Company filed suit against Altera Corporation (Altera) in the United States District Court for the Northern District of California for infringement of certain of the Company's patents. Subsequently, Altera filed suit against the Company alleging that certain of the Company's products infringe certain Altera patents. Fact and expert discovery have been completed in both cases, which have been consolidated. In October 1997, the Court held a hearing with respect to construction of the claims of the various patents in suit. On April 20, 1995, Altera filed an additional suit against the Company in Federal District Court in Delaware alleging that the Company's XC5200 family infringes an Altera patent. The Company answered the Delaware suit denying that the XC5200 family infringes the patent in suit, asserting certain affirmative defenses and counterclaiming that the Altera Max 9000 family infringes certain of the Company's patents. The Delaware suit was transferred to the United States District Court for the Northern District of California. Discovery has not begun. The ultimate outcome of these matters cannot be determined at this time. Management believes that it has meritorious defenses to such claims and is defending them vigorously, and has not recorded a provision for the ultimate outcome of these matters in its financial statements. The foregoing is a forward looking statement subject to risks and uncertainties, and the future outcome could differ materially due to the uncertain nature of the litigation with Altera and because the lawsuits are still in the pre-trial stage. There are no other pending legal proceedings of a material nature to which the Company is a party or of which any of its property is the subject. The Company knows of no legal proceedings contemplated by any governmental authority or agency. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to a vote of security holders during the fourth quarter of the fiscal year covered by this report. PART II ------- ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Xilinx's Common Stock is listed on the NASDAQ National Market System under the symbol XLNX. As of March 31, 1998, there were approximately 650 shareholders of record. Since many holders' shares are listed under their brokerage firms' names, the actual number of shareholders is estimated by the Company to be over 29,000.
Fiscal Year 1998 Fiscal Year 1997 High Low High Low ------ ------ ------ ------ First Quarter $57.50 $45.25 $37.88 $29.88 Second Quarter 56.38 45.19 39.75 26.63 Third Quarter 51.25 29.69 44.50 31.63 Fourth Quarter 46.63 34.06 50.88 36.00
ITEM 6. SELECTED FINANCIAL DATA CONSOLIDATED STATEMENT OF INCOME DATA
(In thousands except per share amounts) Years ended March 31, 1998 1997 1996 1995 1994 -------- -------- -------- -------- -------- Net revenues $613,593 $568,143 $560,802 $355,130 $256,448 Operating income 173,868 159,061 * 165,756 + 92,048 & 65,168 Income before taxes and joint venture 180,596 165,758 * 170,902 + 94,845 & 67,436 Provision for income taxes 56,728 55,382 69,448 35,567 26,157 Net income 126,587 110,376 * 101,454 + 59,278 & 41,279 Net income per share: Basic 1.72 1.52 * 1.43 + 0.85 & 0.61 Diluted $ 1.58 $ 1.39 * $ 1.28 + $ 0.80 & $ 0.57 Shares used in per share calculations: Basic 73,741 72,816 71,092 69,414 67,963 Diluted 80,010 79,675 78,955 74,109 72,237 -------- -------- -------- -------- -------- * After write-off of discontinued product family of $5 million, $0.05 per basic share and $0.04 per diluted share net of tax. + After non-recurring charge for in-process technology related to the acquisition of NeoCAD of $19,366, $0.27 per basic share and $0.25 per diluted share. & After non-recurring charge for the write-off of a minority investment of $2,500, $0.02 per basic and diluted shares net of tax.
CONSOLIDATED BALANCE SHEET DATA
(In thousands) Years ended March 31, 1998 1997 1996 1995 1994 -------- -------- -------- -------- -------- Working capital $474,567 $504,302 $436,070 $180,064 $143,103 Total assets 941,238 847,693 720,880 320,940 226,156 Long-term debt 250,000 250,000 250,000 867 2,195 Stockholders' equity 550,175 490,680 368,244 243,971 172,878 -------- -------- -------- -------- --------
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CAUTIONARY STATEMENT The statements in this Management's Discussion and Analysis that are forward looking involve numerous risks and uncertainties and are based on current expectations. Actual results may differ materially. Certain of these risks and uncertainties are discussed under "Factors Affecting Future Operating Results". Forward looking statements can often be identified by the use of forward looking words, such as "may," "will," "could," "should," "expect," "believe," "anticipate," "estimate," "continue," "plan," "intend," "project," or other similar words. NATURE OF OPERATIONS Xilinx, Inc. (Xilinx or the Company) designs, develops and markets complete programmable logic solutions, including advanced integrated circuits (ICs), software design tools, predefined system functions delivered as cores of logic and field engineering support. The Company's programmable logic ICs include field programmable gate arrays (FPGAs) and complex programmable logic devices (CPLDs). These components are standard ICs programmed by Xilinx's customers to perform desired logic operations. Xilinx also markets HardWire devices, which are mask-programmed ICs functionally equivalent to programmed FPGAs. The Company's products are designed to provide high integration and quick time-to-market for electronic equipment manufacturers in the data processing, telecommunications, networking, industrial control, instrumentation, high-reliability/military and consumer markets. The Company markets its products throughout the world through a direct sales organization, direct sales to manufacturers by independent sales representative firms, sales through franchised domestic distributors and sales through foreign distributors. Xilinx's products have provided effective solutions to a wide range of customer logic requirements. RESULTS OF OPERATIONS REVENUE
(In thousands) 1998 Change 1997 Change 1996 - -------------- -------- ------- -------- ------- -------- Revenues $613,593 8.0% $568,143 1.3% $560,802
The Company's 8.0% revenue increase in 1998 was primarily attributable to the revenue growth of the XC4000X product family, which includes the XC4000EX and XC4000XL devices, as well as revenue growth from the XC5200 and XC9500 product families. The revenue growth from these products was offset by decreased revenues from the Company's first generation products, including the Company's XC3000 product family and the Company's XC4000 family, a mature second generation product line. New products, which include the XC4000X, Spartan and XC9500 families, contributed nearly $70 million in revenue in fiscal 1998 compared to approximately $7 million in fiscal 1997. Despite the significant growth in new product revenues, fiscal 1998 revenues increased only 8.0% over fiscal 1997 as revenues were impacted by an overall slowdown in the semiconductor market, increased price competition, inventory reductions at end customers and a general economic downturn in the Asia Pacific region. Fiscal 1997 revenues, as compared to fiscal 1996, were significantly impacted by price competition as well as a semiconductor industry inventory correction, which reduced customer demand. Revenue contribution by programmable logic product line reflected a mix between increased customer demand for low cost, medium range density programmable logic devices (PLDs) and the functionality and performance provided by the Company's higher density and higher speed programmable logic devices. Revenues from proprietary products, for which there is no second source competitor, increased from 91.0% of aggregate revenues in 1997 to a record 94.1% in 1998. Deriving revenues from leading-edge programmable logic solutions has been emphasized by the Company. The Company's corporate pricing strategy aims to expand the market for its products by reducing sales prices proportional to cost reductions achieved in the manufacturing of these products. The Company intends to continue to actively pursue a strategy of broadening the markets it serves through the enhancement of software design tools, availability of pre-defined cores of logic, the introduction of architectures offering new functionality, and the reduction of IC prices through continuous advancements in the silicon manufacturing process. Revenues for the Company's first generation products, which include the XC2000, XC3000 and XC3100 families, represented 25.5% of total revenues in fiscal 1998, as compared to 32.2% in fiscal 1997. The Company's second generation products, including the XC4000, XC4000X and XC5200 families, represented 58.3% of total revenues in fiscal 1998, as compared to 53.2% in fiscal 1997. Combined revenues from the Company's XC4000 and XC4000X product lines represented 49.0% of total revenues in fiscal 1998 compared to 46.5% in fiscal 1997, a dollar increase of 13.7% to $300.7 million. Revenues from other programmable logic products, which include the XC7000 and XC9500 CPLD families, HardWire and serial proms, increased from 11.6% to 13.5% of total revenues in fiscal 1998 as compared to the prior year, mostly due to the increased revenue from the XC9500 family. Revenue from the XC9500 family increased from $2.3 million in 1997 to $13.9 million in 1998. No single end customer accounted for more than 5% of revenues in fiscal years 1998 or 1997 or 6% of revenues in 1996. During fiscal 1998, the Company's total PLD unit sales increased 28%, as compared to fiscal 1997.The average selling price for the highest volume PLD products decreased over 30% from fiscal 1997 prices while individual products within certain families experienced price decreases in excess of 50% during the year. The Company believes that price decreases are instrumental in expanding market share to the extent that the Company can maintain acceptable returns. Price erosion has been common in the semiconductor industry, as advances in both architecture and manufacturing process technology have permitted continual reductions in cost. The Company relies upon introducing new products, which incorporate advanced features and other price/performance factors such that higher average selling prices and higher margins are achievable despite the price erosion on mature product lines. Xilinx's software design tools are used by the Company's customers to implement designs in the Company's programmable logic devices. Cumulative licenses for proprietary software design tools sold to customers through the end of 1998 totaled approximately 42,000 units, as compared to approximately 30,000 and 24,000 units at the end of 1997 and 1996, respectively. The increase in software revenue seats resulted primarily from increased demand for the Company's lower cost, easier to use Foundation Series software introduced in fiscal 1997. Software revenues decreased from $17.1 million in both fiscal 1996 and 1997 to $16.5 million in fiscal 1998. Although software seats increased, software revenue decreased 3.4% due to the change in the sales mix towards lower priced products as well as price reductions for specific products. Software sales as a percentage of total revenues represented approximately 3% of revenues in all years presented. International revenues represented approximately 38%, 36% and 35% of total revenues for 1998, 1997 and 1996, respectively. International revenues are derived from customers in Europe, Japan and Asia Pacific/Rest of World which represented approximately 23%, 10% and 5% of the Company's worldwide sales, respectively, in fiscal 1998. Revenue growth in Europe and Asia Pacific/Rest of World over the past year was 11.9% and 26.6%, respectively. Revenues from Japan were adversely impacted by the weakening yen, as yen denominated revenues increased approximately 16% year-to-year but grew approximately 6% when translated into US dollars at the then prevailing exchange rates. GROSS MARGIN
(In thousands) 1998 Change 1997 Change 1996 - -------------------------- --------- ------ --------- ------- --------- Gross margin $382,903 9.8%* $348,806* (2.5%) $357,610 Percentage of revenue 62.4% 61.4%* 63.8% * Includes write-off of discontinued product family of $5 million. Gross margin as a percentage of revenues was 62.3% excluding this charge.
The gross margin percentage remained consistent from fiscal 1997 to 1998, excluding the impact of a $5.0 million write-off of the discontinued product family, as the selling price reductions were offset by the favorable impact of lower wafer prices from wafer suppliers, manufacturing process technology improvements, the impact of the strengthened US dollar exchange rate against the yen, and improved yields. The increase in the cost of revenues as a percentage of revenues in 1997 as compared to 1996 was primarily attributable to selling price reductions and increased inventory reserves relating to an expanded level of inventory, partially offset by the favorable impact of lower wafer costs and improved yields. Over the past three years, Xilinx has also been able to offset much of the erosion in gross margin percentages on more mature integrated circuits with increased volumes of newer, proprietary, higher margin products, although no assurance can be given that the Company will do so in the future. The Company recognizes that ongoing price reductions for its integrated circuits are a significant element in expanding the market for its products. Company management believes that gross margin objectives in the range of 60% to 62% of revenues are consistent with expanding market share while realizing acceptable returns, although there can be no assurance that future gross margins will be in this range. During fiscal 1997, the Company discontinued the XC8100 family of one-time programmable antifuse devices. As a result, the Company recorded a pretax charge against earnings of $5.0 million. This charge primarily related to the write-off of inventory and for termination charges related to purchase commitments to foundry partners for work-in-process wafers which had not completed the manufacturing process. RESEARCH AND DEVELOPMENT
(In thousands) 1998 Change 1997 Change 1996 - -------------------------- -------- ------- -------- ------- -------- Research and development $80,456 13.2% $71,075 10.0% $64,600 Percentage of revenue 13.1% 12.5% 11.5%
The Company continued to increase the amount spent on research and development, as it has done in each year of its fourteen-year history. During fiscal 1998, the increase in research and development expenses was primarily attributable to the increased costs associated with designing and developing new product architectures of complex, high density devices as well as labor-related expenses. The increase in research and development expenses from fiscal 1996 to 1997 was primarily attributable to increased headcount and labor expenses, increased purchases of engineering wafers and increased facility and support costs associated with an expanded scope of operations. The Company remains committed to a significant level of research and development effort in order to continue to compete aggressively in the programmable logic marketplace. Through March 31, 1998, the Company has received more than 200 US patents and maintains an active program of filing for additional patents in the areas of software, IC architecture and design. As of March 31, 1998, research and development personnel were split approximately 45% for software development and 55% for IC design and process development. Xilinx has not capitalized any of the costs associated with its software development. MARKETING, GENERAL AND ADMINISTRATIVE
(In thousands) 1998 Change 1997 Change 1996 - -------------------------- --------- ------- --------- ------- --------- Marketing, general and administrative $128,579 8.4% $118,670 10.0% $107,888 Percentage of revenue 21.0% 20.9% 19.2%
The 8.4% increase in marketing, general and administrative expenses in fiscal 1998 was primarily attributable to increases in headcount and related employee expenses and to a lessor extent an increase in legal expenses. Sales and support expenses have increased each year due to increasing personnel and labor costs and greater commission expenses associated with higher revenues. Sales and support expenses increased in fiscal 1997 over 1996 due to increased personnel and labor costs and increased commissions due to changes in the revenue channel mix. The Company remains committed to controlling administrative expenses. However, the timing and extent of future legal costs associated with the ongoing enforcement of the Company's intellectual property rights are not readily predictable and may significantly increase the level of general and administrative expenses in the future. NON-RECURRING CHARGES During fiscal 1996, the Company incurred a $19.4 million non-recurring write-off of in-process technology relating to the acquisition of NeoCAD, Inc. See Note 3 of Notes to Consolidated Financial Statements. OPERATING INCOME
(In thousands) 1998 Change 1997 Change 1996 - ------------------------------- --------- ------- --------- ------- --------- Operating income, as reported $173,868 9.3% $159,061 (4.0%) $165,756 Percentage of revenue 28.3% 28.0% 29.6% Operating income before write- off and non-recurring charge $173,868 6.0% $164,061 (11.4%) $185,122 Percentage of revenue 28.3% 28.9% 33.0%
The decrease in operating income as a percentage of revenues in 1998 from 1997, before consideration of the write-off, is primarily a result of the 8.0% revenue growth in 1998 in comparison to a 13.2% increase year-to-year in research and development spending, and an 8.4% increase in marketing, general and administrative spending. The decrease in operating income in fiscal 1997 from 1996 was primarily a result of the 1.3% revenue growth in 1997 in comparison to 10% increases year-to-year in both research and development spending and marketing, general and administrative spending. Operating income as a percentage of revenues could be adversely impacted in future years by the factors discussed throughout this document, particularly those noted in "Factors Affecting Future Operating Results". INTEREST AND OTHER, NET
(In thousands) 1998 Change 1997 Change 1996 - -------------------------- ------- ------- ------- ------- ------- Interest income and other $6,728 0.5% $6,697 30.1% $5,146 Percentage of revenue 1.1% 1.2% 0.9%
The Company earns interest income on its cash, cash equivalents, short-term investments and restricted investments. The amount of interest earned is a function of the balance of cash invested as well as prevailing interest rates. The Company incurs interest expense on the $250 million 5 1/4% convertible subordinated notes issued in November 1995. The Company's investment portfolio contains tax-advantaged municipal securities, which have pretax yields that are less than the interest rate on the convertible subordinated notes. For financial reporting purposes, the Company effectively records the difference between the pretax and tax-equivalent yields as a reduction in provision for taxes on income. Interest and other income for 1998 remained consistent with the amount in 1997. In 1998, average cash and investment balances and average interest rates remained fairly consistent with the prior year, resulting in comparable net interest and other income over both years. The increase in interest income in fiscal 1997 over the prior year was primarily attributable to higher investment portfolio balances and joint venture equity income. As a result of the difference in interest income and expense yields and future uses of the Company's investment portfolio, levels of net interest and other income could decrease in the future. PROVISION FOR INCOME TAXES
(In thousands) 1998 Change 1997 Change 1996 - ------------------------------ -------- ------- -------- ------- -------- Provision for taxes on income $56,728 2.4% $55,382 (20.3%)* $69,448* Effective tax rate 31.4% 33.4% 40.6%* * Includes non-recurring write-off of in-process technology relating to the acquisition of NeoCAD. Excluding the write-off of in-process technology, in fiscal 1996 the Company's effective tax rate was 36.5%.
The tax rate for fiscal 1998 as compared to fiscal 1997, as well as the tax rate for fiscal 1997 as compared to fiscal 1996, was favorably impacted by legislation reinstating the R&D Tax Credit as well as increased profits in foreign operations where the tax rate is lower that the US rate. JOINT VENTURE EQUITY INCOME The Company records its 25% proportional ownership of the net income of United Silicon Inc. (USIC), a wafer fabrication joint venture located in Taiwan, as joint venture equity income. To date, USIC's net income has resulted primarily from favorable foreign currency exchange gains as well as interest earned on its investment portfolio. Through the second quarter of fiscal 1998, equity income was immaterial and remains classified in "Interest income and other". The Company expects to incur joint venture equity losses during most of fiscal 1999 as the USIC wafer fabrication facility begins to ramp up production. Many of the expenses associated with full foundry operation will be incurred in the early stages of limited production, and the Company expects that profitability of the joint venture will occur, if at all, only after a sufficient volume of wafer production is obtained. INFLATION To date, the effects of inflation upon the Company's financial results have not been significant. FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES The Company's financial condition at March 31, 1998 remained strong. Total current assets exceeded total current liabilities by 4.8 times, compared to 6.2 times at March 31, 1997. Since its inception, the Company has used a combination of equity and debt financing and cash flow from operations to support on-going business activities, make acquisitions and investments in complementary technologies, obtain facilities and capital equipment and finance inventory and accounts receivable. CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS Xilinx's cash, cash equivalents and short-term investments decreased by $63.7 million in 1998 as cash was used to fund investing and financing activities. Cash, cash equivalents and short-term investments represented 38.5% of total assets at March 31, 1998. The Company generated cash flow of $218.4 million from operating activities in 1998, offset by $200.8 million of cash used for investing activities and $66.6 million used in financing activities. Investing activities during fiscal 1998 included expenditures for property, plant and equipment together with a deposit for a facility under construction on the San Jose corporate campus, an additional investment in the USIC joint venture and additional advances to Seiko Epson for wafer purchases. Investment proceeds were received from the net maturity of short-term investments. Financing activities during 1998 included $93.8 million to acquire treasury stock offset by $27.2 million in proceeds from sales of common stock under employee option and stock purchase plans. RECEIVABLES Receivables decreased 15.7% from $72.2 million at the end of 1997 to $60.9 million at the end of 1998. In addition, days sales outstanding at the end of each year decreased from 43 days in 1997 to 36 days in 1998. In fiscal 1998 receivables decreased as the Company increased collection efforts relating to international sales as well as increased allowances for pricing adjustments and customer returns. INVENTORIES Inventories decreased 11.3% from $62.4 million at March 1997 to $55.3 million at March 1998. Inventory levels at March 31, 1998 represent 86 days of inventory, which is in line with the Company's objective of 70 to 90 days, compared to 96 days at March 31, 1997. Inventory levels decreased during fiscal 1998 as both architecture and manufacturing process technology improvements have permitted continued cost reductions as well as continued improvement of inventory management. The Company seeks to balance two contradictory objectives with regard to inventory management. On the one hand, the Company believes that its standard, off-the-shelf products should be available for prompt shipment to customers. Accordingly, it attempts to maintain sufficient levels of inventory in various product, package and speed configurations to meet estimates of customer demand. At the same time, the Company also wishes to minimize the handling costs associated with maintaining higher inventory levels and to realize fully the opportunities for cost reductions associated with architecture and manufacturing process advancements. The Company continually strives to balance these two objectives so as to provide excellent customer response at a competitive cost. ADVANCES FOR WAFER PURCHASES In fiscal 1997, the Company signed an agreement with Seiko Epson, a primary wafer supplier. This agreement was amended in fiscal 1998 and now provides for an advance to Seiko Epson of $150.0 million. In conjunction with the agreement, $60.0 million was paid in fiscal 1997 and an additional $90.0 million was paid in fiscal 1998. Repayment of this advance is in the form of wafer deliveries, which began during the fourth quarter of fiscal 1998. Specific wafer pricing is based upon the prices of similar wafers manufactured by other, specifically identified, leading-edge foundry suppliers. The advance payment provision also provides for interest to be paid to the Company in the form of free wafers. PROPERTY, PLANT AND EQUIPMENT During 1998, Xilinx invested $29.7 million in property and equipment, as compared to $26.8 million in 1997. During 1998, the Company purchased land in Longmont, Colorado for approximately $7 million and continued to invest in software development tools and semiconductor design, test and manufacturing equipment at each of its manufacturing locations. CURRENT LIABILITIES Current liabilities increased from $97.3 million in fiscal 1997 to $125.7 million at the end of 1998. The increase was primarily attributable to an increase in deferred income on shipments to distributors due to increased sales through distribution as well as distributor demand for new product lines. LONG-TERM DEBT AND LINES OF CREDIT In November 1995, the Company issued $250 million in convertible subordinated notes. The Company has credit line facilities for up to $46.2 million of which $6.2 million is intended to meet occasional working capital requirements for the Company's Ireland manufacturing facility. At March 31, 1998 and 1997, no borrowings were outstanding under the lines of credit. See Note 5 of Notes to Consolidated Financial Statements. STOCKHOLDERS' EQUITY Stockholders' equity grew by 12.1% in 1998 to $550.2 million. The increase of $59.5 million was primarily attributable to $126.6 million in net income and $43.3 million related to the issuance of common stock and the tax benefit from stock options, partially offset by the $93.8 million used to acquire treasury stock. Subsequent to March 31, 1998, the Company began an additional treasury stock program to purchase up to approximately 3 million shares as market and business conditions warrant. Stockholders' equity as a percentage of total assets was 58.5% for 1998 and 57.9% for 1997. COMMITMENTS The Company invested an additional $67.4 million in the USIC joint venture in fiscal 1998 to bring the total investment in USIC at the end of fiscal 1998 to $101.7 million. The Company currently holds a 25% equity ownership in USIC and the right to receive 31.25% of the wafer capacity from this facility. Under the terms of the agreement entered into between the Company and USIC, the Company may be required to make a third equity installment of up to an additional $30.0 million in the joint venture during fiscal 1999, if warranted based on the capital and operational requirements of the joint venture. United Microelectronics Corporation (UMC) has committed to and is supplying the Company with wafers manufactured in an existing facility until capacity is available in the USIC facility. The Company is accounting for this investment using the equity method. See further discussion in Notes 4 and 6 of Notes to Consolidated Financial Statements. As the US dollar increased in value relative to the New Taiwan dollar during fiscal 1998, adjustments were made to the carrying value of the investment of approximately $17 million since its inception. Offsetting amounts were recorded to the cumulative translation adjustment account within stockholders' equity. EMPLOYEES During 1998, Xilinx experienced a 9% increase in the number of its employees. The Company had 1,391 employees at the end of fiscal 1998 as compared to 1,277 at the end of the prior year. The Company anticipates that existing sources of liquidity and cash flow from operations will be sufficient to satisfy the Company's cash needs for the foreseeable future. The Company will continue to evaluate opportunities for investments to obtain additional wafer supply capacity, procurement of additional capital equipment and facilities, development of new products, and potential acquisitions of businesses, products or technologies that would complement the Company's businesses and may use available cash or other sources of funding for such purposes. FACTORS AFFECTING FUTURE OPERATING RESULTS The semiconductor industry is characterized by rapid technological change, intense competitive pressure and cyclical market patterns characterized by diminished product demand, limited visibility to demand for products further out than three to nine months, accelerated erosion of average selling prices and overcapacity. The Company's results of operations are affected by a wide variety of factors, including general economic conditions, conditions relating to technology companies, conditions specific to the semiconductor industry, decreases in average selling prices over the life of any particular product, the timing of new product introductions (by the Company, its competitors and others), the ability to manufacture sufficient quantities of a given product in a timely manner, the timely implementation of new manufacturing technologies, the ability to safeguard patents and intellectual property from competitors, and the impact of new technologies resulting in rapid escalation of demand for some products in the face of equally steep decline in demand for others. Market demand for the Company's products, particularly for those most recently introduced, can be difficult to predict, especially in light of customers' demands to shorten product lead times and minimize inventory levels. Unpredictable market demand could lead to revenue volatility if the Company were unable to provide sufficient quantities of specified products in a given quarter. In addition, any difficulty in achieving targeted wafer production yields could adversely impact the Company's financial condition and results of operations. The Company attempts to identify changes in market conditions as soon as possible; however, the dynamics of the market make prediction of and timely reaction to such events difficult. Due to the foregoing and other factors, past results, including those described in this report, are much less reliable predictors of the future than is the case in many older, more stable and less dynamic industries. Based on the factors noted herein, the Company may experience substantial period-to-period fluctuations in future operating results. The Company's future success depends in large part on the continued service of its key technical, sales, marketing and management personnel and on its ability to continue to attract and retain qualified employees. Particularly important are those highly skilled design, process, software and test engineers involved in the manufacture of existing products and the development of new products and processes. The competition for such personnel is intense, and the loss of key employees could have a material adverse effect on the Company's financial condition and results of operations. Sales and operations outside of the United States subject the Company to risks associated with conducting business in foreign economic and regulatory environments. The Company's financial condition and results of operations could be adversely impacted by unfavorable economic conditions in countries in which it does significant business and by changes in foreign currency exchange rates affecting those countries. Specifically, the Company has sales and operations in the Asian markets. The recent instability in the Asian financial markets has adversely impacted sales and may continue to adversely impact sales in those markets in several ways, including reduced access to sources of capital needed by customers to make purchases and increased exchange rate differentials that may adversely effect the customer's ability to purchase or the Company's ability to sell at competitive prices. In addition, the instability may increase credit risks as the recent weakening of certain Asian currencies may impair customers' ability to repay existing obligations. Depending on the situation in Asia in coming quarters, any or all of these factors could adversely impact the Company's financial condition and results of operations in the near future. Additionally, risks include government regulation of exports, tariffs and other potential trade barriers, reduced protection for intellectual property rights in some countries, and generally longer receivable collection periods. The Company's business is also subject to the risks associated with the imposition of legislation and regulations relating specifically to the import or export of semiconductor products. The Company cannot predict whether quotas, duties, taxes or other charges or restrictions will be imposed by the United States or other countries upon the importation or exportation of the Company's products in the future or what, if any, effect such actions would have on the Company's financial condition and results of operations. In order to expand international sales and service, the Company will need to maintain and expand existing foreign operations or establish new foreign operations. This entails hiring additional personnel and maintaining or expanding existing relationships with international distributors and sales representatives. This will require significant management attention and financial resources and could adversely affect the Company's financial condition and results of operations. There can be no assurance that the Company will be successful in its maintenance or expansion of existing foreign operations, in its establishment of new foreign operations or in its efforts to maintain or expand its relationships with international distributors or sales representatives. Many of the Company's operations are centered in an area of California that has been seismically active. Should there be a major earthquake in this area, the Company's operations may be disrupted resulting in the inability of the Company to manufacture or ship products in a timely manner, thereby materially adversely affecting the Company's financial condition and results of operations. In addition, the securities of many high technology companies have historically been subject to extreme price and volume fluctuations, which may adversely affect the market price of the Company's common stock. DEPENDENCE UPON INDEPENDENT MANUFACTURERS AND SUBCONTRACTORS The Company does not manufacture the wafers used for its products. During the past two years, most of the Company's wafers have been manufactured by Seiko Epson Corporation (Seiko Epson) and UMC. The Company has depended upon these suppliers and others to produce wafers with competitive performance and cost attributes, including transitioning to advanced manufacturing process technologies, producing wafers at acceptable yields, and delivering them to the Company in a timely manner. While the timeliness, yield and quality of wafer deliveries have met the Company's requirements to date, there can be no assurance that the Company's wafer suppliers will not experience future manufacturing problems, including delays in the realization of advanced manufacturing process technologies. Additionally, disruption of operations at these foundries for any reason, including natural disasters such as fires or earthquakes as well as disrupted access to adequate supplies of electricity, natural gas or water would cause delays in shipments of the Company's products, and could have a material adverse effect on the Company's results of operations. The Company is also dependent on subcontractors to provide semiconductor assembly services. Any prolonged inability to obtain wafers or assembly services with competitive performance and cost attributes, adequate yields or timely deliveries from these manufacturers and subcontractors, or any other circumstance that would require the Company to seek alternative sources of supply, could delay shipments, and have a material adverse effect on the Company's financial condition and results of operations. The Company's growth will depend in large part on the Company's ability to obtain increased wafer fabrication capacity and assembly services from suppliers which are cost effective. In order to secure additional wafer capacity, the Company from time to time considers alternatives, including, without limitation, equity investments in, or loans, deposits, or other financial commitments to, independent wafer manufacturers to secure production capacity, or the use of contracts which commit the Company to purchase specified quantities of wafers over extended periods. Although the Company is currently able to obtain wafers from existing suppliers in a timely manner, the Company has at times been unable, and may in the future be unable, to fully satisfy customer demand because of production constraints, including the ability of suppliers and subcontractors to provide materials and services in satisfaction of customer delivery dates, as well as the ability of the Company to process products for shipment. In addition, a significant increase in general industry demand or any interruption of supply could reduce the Company's supply of wafers or increase the Company's cost of such wafers. Such events could have a material adverse affect on the Company's financial condition and results of operations. LITIGATION The Company is currently engaged in patent litigation with Altera Corporation (Altera). See Note 11 of Notes to Consolidated Financial Statements. The ultimate outcome of these matters cannot be determined at this time. Management believes that it has meritorious defenses to the claims asserted against it and is defending them vigorously. The foregoing is a forward looking statement subject to risks and uncertainties, and the future outcome could differ materially due to the uncertain nature of the litigation with Altera and because the lawsuits are still in the pre-trial stage. DEPENDENCE ON NEW PRODUCTS The Company's future success depends in large part on its ability to develop and introduce on a timely basis new products which address customer requirements and compete effectively on the basis of price, functionality and performance. The success of new product introductions is dependent upon several factors, including timely completion of new product designs, the ability to utilize advanced manufacturing process technologies, achievement of acceptable yields, availability of supporting software design tools, utilization of predefined cores of logic and market acceptance. No assurance can be given that the Company's product development efforts will be successful or that its new products will achieve market acceptance. Revenues relating to some of the Company's mature products are expected to continue to decline in the future as a percentage of total revenues. As a result, the Company will be increasingly dependent on revenues derived from newer products. In addition, the average selling price for any particular product tends to decrease rapidly over the product's life. To offset such decreases, the Company relies primarily on obtaining yield improvements and corresponding cost reductions in the manufacture of existing products and on introducing new products which incorporate advanced features and other price/performance factors such that higher average selling prices and higher margins are achievable relative to mature product lines. To the extent that such cost reductions and new product introductions do not occur in a timely manner, or the Company's products do not achieve market acceptance at prices with higher margins, the Company's financial condition and results of operations could be materially adversely affected. COMPETITION The Company's field programmable gate arrays (FPGAs) and complex programmable logic devices (CPLDs) compete in the programmable logic marketplace, with a substantial majority of the Company's revenues derived from its FPGA product families. The industries in which the Company competes are intensely competitive and are characterized by rapid technological change, rapid product obsolescence and continuous price erosion. The Company expects significantly increased competition both from existing competitors and from a number of companies that may enter its market. Xilinx believes that important competitive factors in the programmable logic market include price, product performance and reliability, adaptability of products to specific applications, ease of use and functionality of software design tools, functionality of predefined cores of logic and the ability to provide timely customer service and support. The Company's strategy for expansion in the programmable logic market includes continued introduction of new product architectures which address high volume, low cost applications as well as high performance, leading edge density applications and continued price reductions proportionate with the ability to lower the cost of manufacture for established products. However, there can be no assurance that the Company will be successful in achieving these strategies. The Company's major sources of competition are comprised of several elements: the manufacturers of custom CMOS gate arrays, providers of high density programmable logic products characterized by FPGA-type architectures, providers of high speed, low density CPLDs devices and other providers of new or emerging programmable logic products. The Company competes with custom gate array manufacturers on the basis of lower design costs, shorter development schedules and reduced inventory risks. The primary attributes of custom gate arrays are high density, high speed and low production costs in high volumes. The Company continues to develop lower cost architectures intended to narrow the gap between current custom gate array production costs (in high volumes) and PLD production costs. The Company competes with high density programmable logic suppliers on the basis of performance, the ability to deliver complete solutions to customers, voltage and customer support, taking advantage of the primary characteristics of flexible, high speed implementation and quick time-to-market capabilities of the Company's PLD product offerings. Competition among CPLD suppliers is based primarily on price, performance, design, software utility and the ability to deliver complete solutions to customers. In addition, the Company competes with manufacturers of new or emerging programmable logic products on the basis of price, performance, customer support, software utility and the ability to deliver complete solutions to customers. Some of the Company's current or potential competitors have substantially greater financial, manufacturing, marketing and technical resources than Xilinx. To the extent that such efforts to compete are not successful, the Company's financial condition and results of operations could be materially adversely affected. INTELLECTUAL PROPERTY The Company relies upon patent, trademark, trade secret and copyright law to protect its intellectual property. There can be no assurance that such intellectual property rights can be successfully asserted in the future or will not be invalidated, circumvented or challenged. From time to time, third parties, including competitors of the Company, have asserted patent, copyright and other intellectual property rights to technologies that are important to the Company. There can be no assurance that third parties will not assert infringement claims against the Company in the future, that assertions by third parties will not result in costly litigation or that the Company would prevail in such litigation or be able to license any valid and infringed patents from third parties on commercially reasonable terms. Litigation, regardless of its outcome, could result in substantial cost and diversion of resources of the Company. Any infringement claim or other litigation against or by the Company could materially adversely affect the Company's financial condition and results of operations. YEAR 2000 COMPLIANCE As is the case with most other companies using computers in their operations, the Company is currently working to resolve the potential impact of the year 2000 on the processing of date-sensitive information by the Company's computerized information systems, as well as the vendor and customer date-sensitive computerized information electronically transferred to the Company. The year 2000 issue is the result of computer programs being written using two digits, rather than four, to define the applicable year. Any of the Company's systems that have time-sensitive software may recognize the year "00" as 1900 rather than the year 2000, which could result in miscalculations, classification errors or system failures. Based on preliminary information, costs of addressing potential problems are not currently expected to have a material adverse impact on the Company's financial position, results of operations or cash flows in future periods. However, if the Company, its customers or vendors are unable to resolve such processing issues on a timely basis, the Company's financial condition and results of operations could be adversely affected. Accordingly, the Company plans to devote the necessary resources to resolve all significant year 2000 issues in a timely manner. MARKET RATE RISKS Interest Rate Risk - The Company's exposure to interest rate risk relates primarily to the Company's investment portfolio and long-term debt obligations. See Note 5 of Notes to Consolidated Financial Statements. The Company's primary aim with its investment portfolio is to invest available cash while preserving principal and meeting liquidity needs. The portfolio includes tax-advantaged municipal bonds, tax-advantaged auction rate preferred municipal bonds, corporate bonds, and US Treasury securities. In accordance with the Company's investment policy, the Company places investments with high credit quality issuers and limits the amount of credit exposure to any one issuer. These securities are subject to interest rate risk and will decrease in value if market interest rates increase. All securities have remaining maturities less than one year as of the balance sheet date, and the Company believes it has the ability to hold its investments until maturity. Therefore, the Company does not expect to recognize an adverse impact on income or cash flows, although there can be no assurance of this. The Company is also subject to interest rate risk related to outstanding long-term debt. If long-term market interest rates decrease, the effective cost of the debt will increase. In order to mitigate the interest rate risks, the long-term debt fixed interest rate liability has been matched against the Company's short-term variable interest rate assets through a liability interest rate swap agreement. The liability swap exchanges one half of the underlying debt amount based on a fixed interest rate for the same amount based on variable interest rates. If interest rates rise by 10%, the cash flow impact of the swap would continue to be immaterial and would be offset by the increase in short-term investment interest rates. This contract was entered into for a two and a half-year period and will end in November 1998. As the long-term debt may be outstanding until November 2002, the Company will continue to evaluate its strategy related to the fixed rate debt. The table below summarizes the Company's investment, debt and interest rate swap notional amounts as of March 31, 1998 as well as weighted average interest rates by year of maturity for the next four years and thereafter. The fair value as of March 31, 1998 is also shown.
Maturity Date Fair Value (In thousands) March 31, 1999 2000 2001 2002 Total 1998 --------- --------- ------ --------- --------- ----------- ASSETS Available-for-sale securities $ 340,415 - - - $ 340,415 $ 340,585 Average pre-tax interest rate 3.87% Held-to-maturity securities $ 36,271 - - - $ 36,271 $ 36,266 Average interest rate 5.09% LIABILITIES Convertible long-term debt - - - $ 250,000 $ 250,000 $ 255,000 Average interest rate 5.25% 5.25% 5.25% 5.25% INTEREST RATE DERIVATIVE FINANCIAL INSTRUMENTS Interest rate swap Pay variable/receive fixed $ 125,000 - - - $ 125,000 $ 170 Average pay rate USD 3 month Libor Average receive rate 5.94%
Foreign currency risk - Through fiscal year 1998, the Company's purchases of processed silicon wafers from Japanese foundries have been denominated in yen. To help offset the Company's exposure for yen denominated liabilities, the Company's sales to Japanese customers through fiscal 1998 have also been denominated in yen. The Company has periodically hedged its net exposure to fluctuations in the yen-to-US dollar exchange rates through the use of forward exchange or option contracts. However, beginning in fiscal 1999, most wafers purchased from Japanese suppliers will be denominated in US dollars. The Company also intends to begin invoicing Japanese customers in US dollars during the second half of fiscal 1999. For a period of time, wafers will be purchased in US dollars and invoicing to Japanese customers will continue to be in yen, resulting in a yen exposure. However, after invoicing begins in US dollars, the Company believes that its net yen exposure relating to fluctuations in the yen-to-US dollar exchange rate should decline, although there can be no assurance that this will be the case. As a result, the Company plans to adjust its future hedging strategy. In addition, the Company entered into foreign exchange forward contracts in fiscal 1997 to minimize the impact of future exchange fluctuations relating to its fiscal 1998 investment in the USIC joint venture, which was denominated in New Taiwan dollars. No currency forward or option contracts were outstanding as of March 31, 1998. The Company has several subsidiaries and an equity investment in the USIC joint venture whose financial statements are recorded in currencies other than the US dollar. As these foreign currency financial statements are translated at each month end during consolidation, fluctuations of exchange rates between the foreign currency and the US dollar increase or decrease the value of those investments. If permanent changes occur in exchange rates after an investment is made, the investment's value will increase or decrease accordingly. These fluctuations are recorded as a separate component of stockholders' equity as cumulative translation adjustments. To date, the USIC joint venture has recorded approximately $17 million as cumulative translation adjustments, as the New Taiwan dollar has decreased in value against the US dollar. Also, as the Company's subsidiaries and the USIC joint venture maintain investments denominated in other than local currencies, exchange rate fluctuations will occur. USIC's net income to date has resulted largely from favorable foreign currency exchange gains on its US dollar denominated investments. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share amounts) Years ended March 31, 1998 1997 1996 --------- --------- --------- Net revenues $613,593 $568,143 $560,802 Costs and expenses: Cost of revenues 230,690 214,337 203,192 Write-off of discontinued product family - 5,000 - Research and development 80,456 71,075 64,600 Marketing, general and administrative 128,579 118,670 107,888 Non-recurring charges - - 19,366 --------- --------- --------- Total operating costs and expenses 439,725 409,082 395,046 --------- --------- --------- Operating income 173,868 159,061 165,756 Interest income and other 20,652 21,258 10,791 Interest expense (13,924) (14,561) (5,645) --------- --------- --------- Income before provision for taxes on income and equity in joint venture 180,596 165,758 170,902 Provision for taxes on income 56,728 55,382 69,448 --------- --------- --------- Income before equity in joint venture 123,868 110,376 101,454 Equity in net income of joint venture 2,719 - - --------- --------- --------- Net income $126,587 $110,376 $101,454 ========= ========= ========= Net income per share: Basic $ 1.72 $ 1.52 $ 1.43 ========= ========= ========= Diluted $ 1.58 $ 1.39 $ 1.28 ========= ========= ========= Shares used in per share calculations: Basic 73,741 72,816 71,092 ========= ========= ========= Diluted 80,010 79,675 78,955 ========= ========= ========= See accompanying notes.
CONSOLIDATED BALANCE SHEETS
(In thousands except per share amounts) March 31, 1998 1997 ---- ---- ASSETS Current assets: Cash and cash equivalents $166,861 $215,903 Short-term investments 195,326 209,944 Accounts receivable, net of allowances for doubtful accounts, pricing adjustments and customer returns of $8,408 and $5,734 in 1998 and 1997, respectively 60,912 72,248 Inventories 55,289 62,367 Deferred income taxes 38,694 36,420 Advances for wafer purchases 72,267 - Other current assets 10,875 4,673 --------- --------- Total current assets 600,224 601,555 --------- --------- Property, plant and equipment, at cost: Land 10,361 3,111 Building 27,414 26,840 Machinery and equipment 114,955 114,525 Furniture and fixtures 10,902 9,967 --------- --------- 163,632 154,443 Accumulated depreciation and amortization (75,356) (67,863) --------- --------- Net property, plant and equipment 88,276 86,580 Restricted investments 36,271 36,257 Investment in joint venture 90,872 35,286 Advances for wafer purchases 77,342 60,000 Developed technology and other assets 48,253 28,015 --------- --------- $941,238 $847,693 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 20,332 $ 16,758 Accrued payroll and payroll related liabilities 15,318 13,769 Interest payable 5,399 5,364 Income tax payable 16,692 10,858 Deferred income on shipments to distributors 55,898 36,355 Other accrued liabilities 12,018 14,149 --------- --------- Total current liabilities 125,657 97,253 --------- --------- Long-term debt 250,000 250,000 Deferred tax liabilities 15,406 9,760 Commitments and contingencies Stockholders' equity: Preferred stock, $.01 par value; 2,000 shares authorized; none issued and outstanding - - Common stock, $.01 par value; 300,000 shares authorized; 74,363 and 73,383 shares issued; 72,913 and 73,342 shares outstanding at March 31, 1998 and 1997, respectively 729 733 Additional paid-in capital 119,070 114,447 Retained earnings 504,468 377,881 Unrealized gain on available-for-sale securities, net of tax 102 83 Treasury stock, at cost (56,973) (1,847) Cumulative translation adjustment (17,221) (617) --------- --------- Total stockholders' equity 550,175 490,680 --------- --------- $941,238 $847,693 ========= ========= See accompanying notes.
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands) Years ended March 31, 1998 1997 1996 ---- ---- ---- Increase (decrease) in Cash and Cash Equivalents Cash flows from operating activities: Net income $126,587 $110,376 $101,454 Adjustments to reconcile net income to net cash provided by operating activities: Write-off of in-process technology - - 19,366 Depreciation and amortization 32,709 27,997 22,464 Undistributed earnings of joint venture (3,747) (1,336) - Changes in assets and liabilities net of effects of NeoCAD acquisition: Accounts receivable 11,336 7,280 (34,777) Inventories, excluding receipts against advances for wafer purchases 7,469 (14,095) 19,375 Deferred income taxes and other 15,644 14,134 (783) Accounts payable, accrued liabilities and income taxes payable 8,861 (3,193) 7,408 Deferred income on shipments to distributors 19,543 (1,213) 15,755 ---------- ---------- ---------- Total adjustments net of effects of NeoCAD acquisition 91,815 29,574 48,808 ---------- ---------- ---------- Net cash provided by operating activities 218,402 139,950 150,262 ---------- ---------- ---------- Cash flows from investing activities: Purchases of short-term available-for-sale investments (337,500) (247,022) (292,013) Proceeds from sale or maturity of short-term available-for-sale investments 352,149 303,604 92,333 Purchases of restricted held-to-maturity investments (72,281) (72,227) (96,141) Proceeds from maturity of restricted held-to-maturity investments 72,267 72,189 72,555 Advances for wafer purchases (90,000) (60,000) - Acquisition of NeoCAD, net of cash acquired - - (33,412) Property, plant and equipment (29,700) (26,803) (60,506) Investment in joint venture (67,422) - (34,316) Deposit on building (28,351) - - Other - - (1,235) ---------- ---------- ---------- Net cash used in investing activities (200,838) (30,259) (352,735) ---------- ---------- ---------- Cash flows from financing activities: Net proceeds from issuance of long-term debt - - 243,901 Acquisition of treasury stock (93,795) (32,028) - Principal payments on capital lease obligations - (977) (1,389) Proceeds from issuance of common stock 27,189 28,324 14,151 ---------- ---------- ---------- Net cash (used)/provided by financing activities (66,606) (4,681) 256,663 ---------- ---------- ---------- Net (decrease)/increase in cash and cash equivalents (49,042) 105,010 54,190 Cash and cash equivalents at beginning of period 215,903 110,893 56,703 ---------- ---------- ---------- Cash and cash equivalents at end of period $ 166,861 $ 215,903 $ 110,893 ========== ========== ========== Schedule of non-cash transactions: Tax benefit from stock options $ 16,099 $ 16,730 $ 7,907 Issuance of treasury stock under employee stock plans 38,669 30,181 8,223 Receipts against advances for wafer purchases 391 9,034 32,966 Supplemental disclosures of cash flow information: Interest paid 13,008 13,309 201 Income taxes paid $ 39,472 $ 34,426 $ 74,688 See accompanying notes.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Unrealized Three years ended March 31, 1998 Gain/(Loss) On Common Stock Additional Available- Cumulative Total (In thousands) Outstanding Paid-in Retained For-Sale Treasury Translation Stockholders' Shares Amount Capital Earnings Securities Stock Adjustment Equity ------- ------- -------- -------- ---------- --------- --------- ---------- BALANCE AT MARCH 31, 1995 71,658 $ 717 $ 85,755 $166,051 $ (329) $ (8,223) $ - $ 243,971 Issuance of common shares under employee stock plans 275 2 2,070 - - - - 2,072 Issuance of treasury stock under employee stock plans - - 3,856 - - 8,223 - 12,079 Tax benefit from exercise of stock options - - 7,907 - - - - 7,907 Unrealized gain on available- for-sale securities, net of tax - - - - 761 - - 761 Net income - - - 101,454 - - - 101,454 ------ ------ --------- -------- -------- ---------- --------- --------- BALANCE AT MARCH 31, 1996 71,933 719 99,588 267,505 432 - - 368,244 Issuance of common shares under employee stock plans 2,287 14 28,310 - - - - 28,324 Acquisition of treasury stock (878) - - - - (32,028) - (32,028) Issuance of treasury stock under employee stock plans - - (30,181) - - 30,181 - - Tax benefit from exercise of stock options - - 16,730 - - - - 16,730 Unrealized loss on available- for-sale securities, net of tax - - - - (349) - - (349) Cumulative translation adjustment - - - - - - (617) (617) Net income - - - 110,376 - - - 110,376 ------ ------ -------- -------- --------- ---------- ---------- -------- BALANCE AT MARCH 31, 1997 73,342 733 114,447 377,881 83 (1,847) (617) 490,680 Issuance of common shares under employee stock plans 1,901 (4) 27,193 - - - - 27,189 Acquisition of treasury stock (2,330) - - - - (93,795) - (93,795) Issuance of treasury stock under employee stock plans - - (38,669) - - 38,669 - - Tax benefit from exercise of stock options - - 16,099 - - - - 16,099 Unrealized gain on available- for-sale securities, net of tax - - - - 19 - - 19 Cumulative translation adjustment - - - - - - (16,604) (16,604) Net income - - - 126,587 - - - 126,587 ------ ------ -------- -------- --------- ---------- ---------- -------- BALANCE AT MARCH 31, 1998 72,913 $ 729 $119,070 $504,468 $ 102 $ (56,973) $(17,221) $550,175 ====== ====== ======== ======== ========= ========== ========== ========= See accompanying notes.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. NATURE OF OPERATIONS Xilinx designs, develops and markets complete programmable logic solutions, including advanced integrated circuits, software design tools, predefined system functions delivered as cores of logic and field engineering support. The wafers used to manufacture the Company's products are obtained from independent wafer manufacturers, located primarily in Japan and Taiwan. The Company is dependent upon these manufacturers to produce and deliver wafers on a timely basis. The Company is also dependent on subcontractors, located in the Asia Pacific region, to provide semiconductor assembly services. Xilinx is a global company with manufacturing facilities in the United States and Ireland and sales offices throughout the world. The Company derives more than one-third of its revenues from international sales, primarily in 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 the Company and its wholly owned subsidiaries after elimination of all intercompany accounts and transactions. The Company's fiscal year ends on the Saturday nearest March 31. For ease of presentation, March 31 has been utilized as the fiscal year-end for all financial statement captions. Certain amounts from the prior year have been reclassified to conform to the current year presentation. Reclassifications had no effect on previously reported statements of financial position or results of operations. Cash equivalents and investments Cash and cash equivalents consist of cash on deposit with banks, tax-advantaged municipal bonds, and investments in money market instruments with insignificant interest rate risk and original maturities at date of acquisition of 90 days or less. Short-term investments consist of tax-advantaged municipal bonds, tax-advantaged auction rate preferred municipal bonds and corporate bonds with maturities greater than 90 days but less than one year from the balance sheet date. Restricted investments consist of US Treasury Securities held as collateral relating to leases for the Company's facilities. See Note 6 of Notes to Consolidated Financial Statements. The Company invests its cash, cash equivalents and short-term investments through various banks and investment banking institutions. This diversification of risk is consistent with Company policy to maintain liquidity and ensure the safety of principal. Management classifies investments as available-for-sale or held-to-maturity at the time of purchase and re-evaluates such designation as of each balance sheet date, although classification is generally not 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. Securities not classified as held-to-maturity are classified as available-for-sale. Available-for-sale securities are carried at fair value with the unrealized gains or losses, net of tax, included as a separate component of stockholders' equity. Realized gains and losses and declines in value judged to be other-than-temporary on available-for-sale securities are included in other income. The fair values for marketable debt and equity securities are based on quoted market prices. The cost of securities matured or sold is based on the specific identification method. Inventories Inventories are stated at the lower of cost (first-in, first-out) or market (estimated net realizable value) and are comprised of the following at March 31, 1998 and 1997:
(In thousands) 1998 1997 ------- ------- Raw materials $ 5,976 $ 4,952 Work-in-progress 24,845 30,898 Finished goods 24,468 26,517 ------- ------- $55,289 $62,367 ======= =======
Advances for wafer purchases In fiscal 1997, the Company signed an agreement with Seiko Epson, a primary wafer supplier. This agreement was amended in fiscal 1998 and now provides for an advance to Seiko Epson of $150.0 million. In conjunction with the agreement, $60.0 million was paid in fiscal 1997 and an additional $90.0 million was paid in fiscal 1998. Repayment of this advance is in the form of wafer deliveries, which began during the fourth quarter of fiscal 1998. Specific wafer pricing is in US dollars and is based upon the prices of similar wafers manufactured by other, specifically identified, leading-edge foundry suppliers. The advance payment provision also provides for interest to be paid to the Company in the form of free wafers. Property, Plant and Equipment Property, plant and equipment are stated at cost. 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 up to thirty years for buildings. Revenue Recognition Net revenues are stated net of discounts and allowances. Revenue from product sales direct to customers and foreign distributors is generally recognized upon shipment. However, the Company defers the recognition of revenue and the related cost of revenue on shipments to domestic distributors that have certain rights of return and price protection privileges on unsold product until the distributor sells the product. Foreign currency translation The US dollar is the functional currency for the Company's Ireland manufacturing facility. Assets and liabilities that are not denominated in the functional currency are remeasured into US dollars, and the resulting gains or losses are included in net income. The functional currency is the local currency for each of the Company's other foreign subsidiaries and the USIC joint venture. Assets and liabilities are translated at month-end exchange rates, and statements of operations are translated at the average exchange rates during the year. Exchange gains or losses arising from translation of foreign currency denominated assets and liabilities are included as a component of stockholders' equity. Derivative financial instruments As part of its ongoing asset and liability management activities, the Company periodically enters into certain derivative financial arrangements to reduce financial market risks. These instruments are used to hedge foreign currency, equity and interest rate market exposures of underlying assets and liabilities. The Company does not enter into derivative financial instruments for trading purposes. The Company periodically enters into currency forward or option contracts to minimize foreign exchange risk relating to the Company's wafer purchases that are denominated in yen. These contracts are accounted for as identifiable hedges against wafer purchases. Realized gains or losses are recognized upon maturity of the contracts and are included in cost of sales. The Company also periodically enters into foreign exchange forward contracts to minimize the impact of future exchange fluctuations in foreign currency firm commitments. A forward foreign exchange contract obligates the Company to exchange predetermined amounts of specified foreign currencies at specified exchange rates on specified dates or to make an equivalent US dollar payment equal to the value of such exchange. These contracts are accounted for as hedges of an identifiable foreign currency commitment. Realized gains or losses are recognized upon maturity of the contracts and offset the underlying asset or liability. The Company has entered into an interest rate swap agreement in order to mitigate the interest rate risks whereby the long-term debt fixed interest rate liability is matched against the Company's short-term variable interest rate assets. The liability interest rate swap agreement involves the exchange of fixed interest rate payments for variable interest rate payments over the life of the agreement without an exchange of the notional amount. The differential to be paid or received as the variable interest rate changes is accrued and recognized as interest expense. The related amounts payable or receivable from the third party is included in other liabilities or assets. The fair value of the swap agreement and changes in the fair value as a result of changes in market interest rates are not material. See Note 5 of Notes to Consolidated Financial Statements. Employee stock plans The Company accounts for its stock option and employee stock purchase plans in accordance with provisions of the Accounting Principles Board's Opinion No. 25 (APB 25), "Accounting for Stock Issued to Employees." In addition the Company discloses pro forma information related to its stock plans according to Financial Accounting Standards Board's Statement No. 123, "Accounting for Stock-Based Compensation" (FASB 123). See Note 8 of Notes to Consolidated Financial Statements. Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles 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 the useful lives of fixed assets and intangible assets, allowances for doubtful accounts, pricing adjustments, customer returns, inventory reserves, potential reserves relating to litigation matters as well as other accruals or reserves. Actual results may differ from those estimates, and such differences may be material to the financial statements. New Accounting Pronouncements In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 130 (FASB 130), "Reporting Comprehensive Income". FASB 130 establishes standards for the reporting and disclosure of comprehensive income and its components in a full set of general-purpose financial statements. Comprehensive income is defined as the change in equity (net assets) during the period from non-owner sources. The Company is required to adopt FASB 130 in fiscal 1999. Reclassification of financial statements for earlier periods provided for comparative purposes is required. The adoption of FASB 130 will have no impact on the Company's consolidated results of operations, financial position or cash flows. Also in June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 131 (FASB 131), "Disclosures about Segments of an Enterprise and Related Information". FASB 131 revises previous standards related to the way public companies report information about operating segments in annual financial statements and requires that those companies report selected information about operating segments in interim financial reports issued to shareholders. It also establishes standards for related disclosures about products and services, geographic areas, and major customers. The Company is required to adopt FASB 131 in fiscal 1999. The adoption of FASB 131 will have no impact on the Company's consolidated results of operations, financial position or cash flows. Concentrations of credit risk The Company attempts to mitigate the concentration of credit risk in its trade receivables with respect to the high-technology industry with the Company's credit evaluation process, relatively short collection terms, distributor agreements, sales among various end-user applications throughout the high-technology market and the geographical dispersion of sales. The Company generally does not require collateral. Bad debt write-offs have been insignificant for all years presented. Concentration of other risks The semiconductor industry is characterized by rapid technological change, intense competitive pressure and cyclical market patterns. The Company's results of operations are affected by a wide variety of factors, including general economic conditions, conditions relating to technology companies, conditions specific to the semiconductor industry, decreases in average selling prices over the life of any particular product, the timing of new product introductions (by the Company, its competitors and others), the ability to manufacture sufficient quantities of a given product in a timely manner, the timely implementation of new manufacturing process technologies, the ability to safeguard patents and intellectual property from competitors, and the impact of new technologies resulting in rapid escalation of demand for some products in the face of equally steep decline in demand for others. Based on the factors noted herein, the Company may experience substantial period-to-period fluctuations in future operating results. NOTE 3. ACQUISITION In April 1995, the Company acquired NeoCAD, Inc. (NeoCAD), a private company engaged in the design, development and sale of FPGA software design tools for programmable electronic technologies, for $35.0 million in cash. The transaction was treated as a purchase for accounting purposes; accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on their estimated fair values. NeoCAD's financial results from the date of acquisition are included in the Company's consolidated financial results. The excess of the purchase price over the fair values of liabilities assumed, net of tangible assets acquired, was allocated to in-process technology ($19.4 million), the assembled workforce ($0.7 million), and developed technology ($15.7 million). The amount of in-process technology was written-off as a non-recurring item during fiscal 1996. The assembled workforce asset was amortized over two years and was completed in fiscal year 1997. The developed technology asset is being amortized over six years, $2.6 million of which was recorded as amortization in fiscal 1998, for cumulative amortization to date of $7.8 million. NOTE 4. JOINT VENTURE The Company, United Microelectronics Corporation (UMC) and other parties have entered into a joint venture to construct a wafer fabrication facility in Taiwan, known as United Silicon Inc. (USIC). The Company invested an additional $67.4 million in USIC during fiscal 1998 to bring the total cumulative investment to $101.7 million. The Company currently holds a 25% equity ownership and the right to receive 31.25% of the wafer capacity from this facility. UMC has committed to and is supplying the Company with wafers manufactured in an existing facility until capacity is available in the USIC facility. The Company is accounting for this investment using the equity method. To date, USIC's net income has resulted primarily from favorable foreign currency exchange gains as well as interest earned on its investment portfolio. Through the second quarter of fiscal 1998, equity income was immaterial and remained classified in "Interest income and other". See further discussion in Note 6 of Notes to Consolidated Financial Statements. NOTE 5. FINANCIAL INSTRUMENTS Cash and Investments The following is a summary of available-for-sale securities:
March 31, 1998 March 31, 1997 --------------------------------------------- -------------------------------------------- Gross Gross Estimated Gross Gross Estimated Amortized Unrealized Unrealized Fair Amortized Unrealized Unrealized Fair (In thousands) Cost Gains Losses Value Cost Gains Losses Value --------- -------- ---------- --------- ---------- --------- --------- ---------- Money market funds $ 13,614 $ - $ - $ 13,614 $ 23,864 $ - $ - $ 23,864 Auction rate preferred 30,292 12 (2) 30,302 17,297 5 (1) 17,301 Municipal bonds 296,509 189 (29) 296,669 378,848 165 (31) 378,982 ---------- --------- --------- --------- ---------- --------- ---------- --------- $ 340,415 $ 201 $ (31) $ 340,585 $ 420,009 $ 170 $ (32) $ 420,147 ========== ========= ========= ========= ========== ========= ========== ========= Included in short-term investments $ 195,326 $ 209,944 Included in cash and cash equivalents 145,259 210,203 --------- --------- $ 340,585 $ 420,147 ========= =========
All investments classified as "available-for-sale securities" have maturities due in one year or less. Realized gains or losses from sales of available-for-sale securities were immaterial for all periods presented. Held-to-maturity securities of $36.3 million at March 31, 1998 and March 31, 1997, represent investments in US Treasury Securities for which amortized cost approximates estimated fair value. Held-to-maturity securities relate to certain collateral requirements for lease agreements associated with the Company's corporate facilities and have maturities due in one year or less. See Note 6 of Notes to Consolidated Financial Statements. Derivatives In fiscal 1997, the Company entered into foreign exchange forward contracts to minimize the impact of future exchange fluctuations on the US dollar cost of investing in the USIC joint venture. The contracts required the Company to exchange US dollars for New Taiwan dollars and matured within one year. The contracts were accounted for as a hedge of an identifiable foreign currency commitment. Realized losses, which were immaterial, were recognized upon maturity of the contracts in fiscal 1998 and included in the USIC joint venture investment. The Company has entered into an interest rate swap agreement with a third party in order to reduce risk related to movements in interest rates. Under the agreement, which was effective starting in May 1996 and terminates in November 1998, the Company effectively converted the fixed rate interest payments related to $125 million of the Company's convertible long-term debt to variable rate interest payments without the exchange of the underlying principal amounts. The Company receives fixed interest rate payments (equal to 5.935%) from the third party and is obligated to make variable rate payments (equal to the three month Libor rate) to the third party during the term of the agreement. The fair value of the interest rate swap is immaterial based on market exchange rates. At March 31, 1998, no commitments under foreign currency forward or option contracts were outstanding. Long-Term Debt and Lines of Credit In November 1995, the Company completed a private placement of $250 million aggregate principal convertible subordinated notes under Rule 144A of the Securities Act of 1933. The notes, which mature in 2002, are convertible at the option of the note holders into the Company's common stock at a conversion price of $51 per share, subject to adjustment upon the occurrence of certain events. The conversion price represented a 24.77% premium over the closing price of the Company's stock on November 7, 1995. Interest is payable semi-annually at 5.25% per annum. As of November 4, 1997, the notes are redeemable at the option of the Company at an initial redemption price of 103.75% of the principal amount. However, prior to November 3, 1998, the notes are not redeemable unless the closing price of the Company's common stock has exceeded $71.40 (40% premium over the conversion price) per share for twenty trading days within a period of thirty consecutive trading days. Redemption prices as a percentage of the principal amount are 103%, 102.25%, 101.50% and 100.75% in the years beginning November 1, 1998, November 1, 1999, November 1, 2000 and November 1, 2001, respectively. Debt issuance costs of $6.1 million incurred in conjunction with issuance of the convertible subordinated notes are being amortized over the seven-year life of the notes. In 1998, the Company recorded debt issuance cost amortization of $0.9 million. At March 31, 1998, the fair value of the convertible subordinated notes was approximately $255 million based on quoted market prices. The Company has reserved 4,901,961 shares of common stock for the conversion of these notes. The Company has $40 million available under a syndicated bank revolving credit line agreement, which expires in March 2001. Under this agreement, borrowings bear interest at the prime rate or 0.625% over the Libor rate. Additionally, the Company's Ireland manufacturing facility has an additional $6.2 million available under a multicurrency credit line, which expires in November 1999. Under this agreement, borrowings bear interest at the bank's prime rate. At March 31, 1998, no borrowings were outstanding under any credit lines. The Company is in full compliance with the agreement's required covenants and financial ratios. The agreements prohibit the payment of cash dividends without prior bank approval. NOTE 6. COMMITMENTS The Company leases its manufacturing and office facilities under operating leases that expire at various dates through December 2014. Lease agreements for certain corporate facilities contain payment provisions, which allow for changes in rental amounts based upon interest rate changes. The approximate future minimum lease payments under operating leases are as follows:
Years ended March 31, (In thousands) --------------- 1999 $ 4,150 2000 3,268 2001 332 2002 188 2003 118 Thereafter 655 --------------- $ 8,711 ===============
Rent expense was approximately $4.5 million for the years ended March 31, 1998 and 1997 and approximately $4.3 million for the year ended March 31, 1996. The Company has entered into lease agreements relating to certain corporate facilities which would allow the Company to purchase the facilities on or before the end of the lease term in December 1999. If at the end of the lease term the Company does not purchase the property under lease or arrange a third party purchase, then the Company would be obligated to the lessor for a guarantee payment equal to a specified percentage of the Company's purchase price for the property. The Company would also be obligated to the lessor for all or some portion of this amount if the price paid by the third party is below a specified percentage of the Company's purchase price. The Company is also required to comply with certain covenants and maintain certain financial ratios. As of March 31, 1998, the total amount related to the leased facilities for which the Company is contingently liable is $39.8 million. Under the terms of the agreements, the Company is required to maintain collateral (restricted investments) of approximately $36 million during the lease term. During fiscal 1998, the Company entered into an agreement for a facility to be built on property adjacent to the Company's corporate facilities. Building construction is expected to be completed in fiscal 1999. Upon signing the lease agreement, the Company paid the lessor $31.3 million for prepaid rent and an option to purchase the facility. The rent prepayment covers one year and was discounted to its present value. Additionally, the Company can exercise the lease agreement's purchase option between the sixth and twelfth month following the commencement date of the lease term. If the Company elects to exercise the option, the prepaid purchase option will be considered payment in full. However, if the Company decides not to exercise the purchase option, the prepaid option will be returned without interest at the end of the first year of the lease. Under the terms of the agreement entered into between the Company and USIC, the Company may be required to make a third equity installment of up to an additional $30 million in the USIC joint venture, if warranted based on the capital and operational requirements of the joint venture. NOTE 7. NET INCOME PER SHARE During the quarter ended December 27, 1997, the Company adopted the Financial Accounting Standards Board's Statement No. 128 (FASB 128), "Earnings per Share". The new standard required the Company to change the method used to compute net income per share and to restate all prior periods. The new requirement includes a calculation of "basic" net income per share, which excludes the dilutive effect of stock options. Basic net income per share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. In computing diluted net income per share, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options. Diluted earnings per share is computed using the weighted average common and dilutive common equivalent shares outstanding, plus other dilutive shares which are not common equivalent shares. The computation of basic net income per share for all years presented is derived from the information on the face of the income statement, and there are no reconciling items in either the numerator or denominator. Additionally, there are no reconciling items in the numerator used to compute diluted net income per share. The total shares used in the denominator of the diluted net income per share calculation includes 6,269,000, 6,859,000 and 7,863,000 incremental common shares attributable to outstanding options for fiscal years 1998, 1997 and 1996, respectively. The shares issuable upon conversion of long-term debt to equity, approximately 4.9 million shares, were not included in the calculation of diluted net income per share as their inclusion would have had an anti-dilutive effect for all periods presented. In addition, outstanding options to purchase approximately 1.9 million, 1.0 million and 0.6 million shares, for the fiscal years 1998, 1997 and 1996, respectively, under the Company's Stock Option Plan were not included in the treasury stock calculation to derive diluted income per share as their inclusion would have had an anti-dilutive effect. NOTE 8. STOCKHOLDERS' EQUITY The Company's Certificate of Incorporation provides for 300 million shares of common stock and 2 million shares of undesignated preferred stock. Treasury Stock The Company authorized a stock buyback program in September 1996 whereby up to 2 million shares of the Company's common stock were purchased in the open market from time to time as market and business conditions warranted. This program was completed in November 1997. In December 1997 an additional program was authorized to buyback up to an additional 2 million shares. The Company has reissued treasury shares repurchased in response to Employee Stock Option exercises and Employee Qualified Stock Purchase Plan requirements. During fiscal 1998 and 1997, the Company repurchased a total of 2,330,000 and 877,500 shares of common stock for $93.8 million and $32.0 million, respectively. In fiscal 1998 and 1997, 921,000 and 837,000 shares were reissued, respectively. As a result, the Company was holding 1,449,500 treasury stock shares at March 31, 1998. Stockholder Rights Plan In October 1991, the Company adopted a stockholder rights plan and declared a dividend distribution of one common stock purchase right for each outstanding share of common stock. The rights become exercisable based upon the occurrence of certain conditions including acquisitions of Company stock, tender or exchange offers and certain business combination transactions of the Company. In the event one of the conditions is triggered, each right entitles the registered holder to purchase a number of shares of common stock of the Company or, under limited circumstances, of the acquirer. The rights are redeemable at the Company's option, under certain conditions, for $.01 per right and expire on October 4, 2001. Employee Stock Option Plan Under existing stock option plans (Option Plan), options reserved for future issuance to employees and directors of the Company total 18,410,000 shares. Options to purchase shares of the Company's common stock under the Option Plan are granted at 100% of the fair market value of the stock on the date of grant. Options granted to date expire ten years from date of grant and vest at varying rates over four or five years. A summary of the Company's Option Plan activity, and related information, follows:
Years ended March 31, 1998 1997 1996 ------------------ ------------------ ------------------ Weighted Weighted Weighted Average Average Average Shares Exercise Shares Exercise Shares Exercise (000) Price (000) Price (000) Price ------- --------- ------- --------- ------- --------- Outstanding at beginning of year 13,708 $ 20.54 13,888 $ 16.78 11,452 $ 10.81 Granted 2,979 47.82 2,597 33.52 3,971 30.95 Exercised (1,540) 10.73 (1,752) 10.58 (1,169) 6.22 Forfeited (622) 31.76 (1,025) 19.49 (366) 17.18 ------- ------- ------- Outstanding at end of year 14,525 $ 26.70 13,708 $ 20.54 13,888 $ 16.78 ======= ======= ======= Shares available for grant 3,885 2,992 1,264 ------- ------- -------
The following table summarizes information relating to options outstanding and exercisable under the Option Plan at March 31, 1998:
Options Outstanding Options Exercisable Weighted Average Weighted Weighted Options Remaining Average Options Average Range of Outstanding Contractual Exercise Exercisable Exercise Exercise Prices (000) Life (Years) Price (000) Price - -------------------- ----------- ------------ --------- ------------ --------- 0.12 - $12.96 2,025 3.93 $ 6.86 1,949 $ 6.66 12.96 - $15.58 2,361 5.62 13.23 1,785 13.25 15.58 - $22.88 2,707 6.70 18.92 1,371 18.71 23.33 - $33.63 3,107 7.87 31.19 1,069 30.62 33.75 - $56.88 4,325 8.83 44.98 943 43.72 - -------------------- ----------- ------------ --------- ------------ --------- 0.12 - $56.88 14,525 7.02 $ 26.70 7,117 $ 19.14
At March 31, 1997, 5.7 million options were exercisable. Employee Qualified Stock Purchase Plan Under the Company's 1990 Employee Qualified Stock Purchase Plan (Stock Purchase Plan), qualified employees can elect to have up to 15 percent of their annual earnings withheld, up to a maximum of $21,250, to purchase the Company's common stock at the end of six-month enrollment periods. The purchase price of the stock is 85% of the lower of the fair market value at the beginning of the twenty-four month offering period or at the end of each six-month purchase period. Almost all employees are eligible to participate. Under this plan, 361,359 and 535,360 shares were issued during 1998 and 1997, respectively, and 815,331 shares were available for issuance at March 31, 1998. Stock-Based Compensation As permitted under FASB Statement No. 123, "Accounting for Stock-Based Compensation" (FASB 123), the Company has elected to continue to follow Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25) and related Interpretations in accounting for its stock-based awards to employees. Under APB 25, the Company generally recognizes no compensation expense with respect to such awards. Pro forma information regarding net income and earnings per share is required by FASB 123 and has been determined as if the Company had accounted for awards to employees under the fair value method of FASB 123. The fair value of stock options and stock purchase plan rights under the Option Plan and Stock Purchase Plan was estimated as of the grant date using the Black-Scholes option pricing model. The Black-Scholes model was originally developed for use in estimating the fair value of traded options and requires the input of highly subjective assumptions including expected stock price volatility. The Company's stock options and stock purchase plan rights have characteristics significantly different from those of traded options, and changes in the subjective input assumptions can materially affect the fair value estimate. The fair value of stock options and stock purchase plan rights granted in fiscal years 1998, 1997 and 1996 was estimated at the date of grant assuming no expected dividends and the following weighted average assumptions.
Stock Options Stock Purchase Plan Rights Years ended March 31, 1998 1997 1996 1998 1997 1996 - -------------------------------- ----- ----- ----- ----- ----- ----- Expected Life (years) 3 4 4 .5 .5 .5 Expected Stock Price Volatility .62 .56 .56 .65 .56 .68 Risk-Free Interest Rate 6.0% 6.3% 6.0% 5.5% 5.4% 5.6%
For purposes of pro forma disclosures, the estimated fair value of stock-based awards is amortized against pro forma net income over the stock-based awards' vesting period. Because FASB 123 is applicable only to the Company's awards granted subsequent to March 31, 1995, its pro forma effect will not be fully reflected until approximately fiscal 2000. Had the Company accounted for stock-based awards to employees under FASB 123, the Company's net income would have been $95.6 million, $87.4 million and $86.2 million in 1998, 1997 and 1996, respectively. Basic net income per share would have been $1.30, $1.20 and $1.21 in 1998, 1997 and 1996, respectively, while diluted net income per share would have been $1.25, $1.12 and $1.10, respectively. Calculated under FASB 123, the weighted-average fair value of the stock options granted during 1998, 1997 and 1996 was $21.38, $15.91 and $14.41 per share, respectively. The weighted-average fair value of stock purchase rights granted under the Stock Purchase Plan during 1998, 1997 and 1996 were $14.50, $14.47 and $16.68 per share, respectively. NOTE 9. INCOME TAXES The provision for taxes on income consists of:
(In thousands) Years ended March 31, 1998 1997 1996 -------- -------- -------- Federal: Current $45,808 $40,901 $64,917 Deferred (3,880) (200) (7,004) -------- -------- -------- 41,928 40,701 57,913 -------- -------- -------- State: Current 9,285 12,073 10,343 Deferred (311) (1,483) (363) -------- -------- -------- 8,974 10,590 9,980 -------- -------- -------- Foreign: Current 5,826 4,091 1,555 -------- -------- -------- Total $56,728 $55,382 $69,448 ======== ======== ========
The tax benefits associated with the disqualifying dispositions of stock options or employee stock purchase plan shares reduce taxes currently payable by $16.1 million, $16.7 million, and $7.9 million for 1998, 1997, and 1996, respectively. Such benefits are credited to additional paid-in capital when realized. Pretax income from foreign operations was $55.5 million, $36.1 million and $11.5 million for fiscal years 1998, 1997 and 1996, respectively. Unremitted foreign earnings that are considered to be permanently invested outside the United States and on which no deferred taxes have been provided, accumulated to approximately $32.9 million as of March 31, 1998. The residual US tax liability, if such amounts were remitted, would be approximately $8.2 million. The provision for income taxes reconciles to the amount obtained by applying the Federal statutory income tax rate to income before provision for taxes as follows:
(In thousands) Years ended March 31, 1998 1997 1996 --------- --------- --------- Income before provision for taxes $180,596 $165,758 $170,902 Federal statutory tax rate 35% 35% 35% Computed expected tax $ 63,209 $ 58,016 $ 59,816 State taxes net of federal benefit 5,833 6,884 6,487 Tax exempt interest (4,003) (3,278) (2,552) Write-off of NeoCAD in-process technology - - 7,069 Foreign earnings at lower tax rates (4,586) (2,478) (1,057) Research and development tax credit (3,007) (2,522) - Other (718) (1,240) (315) --------- --------- --------- Provision for taxes on income $ 56,728 $ 55,382 $ 69,448 ========= ========= =========
The major components of deferred tax assets and liabilities consist of the following:
(In thousands) Years ended March 31, 1998 1997 1996 --------- -------- -------- Deferred tax assets: Inventory valuation differences $ 7,846 $12,471 $ 3,887 Deferred income on shipments to distributors 23,431 15,808 15,917 Nondeductible accrued expenses 6,904 7,568 7,778 Other 326 3,156 2,773 --------- -------- -------- Total 38,507 39,003 30,355 --------- -------- -------- Deferred tax liabilities: Depreciation and amortization 763 (4,026) (3,082) Unremitted foreign earnings (16,032) (7,601) (1,876) Other (137) (716) (264) --------- -------- -------- Total net deferred tax assets $ 23,101 $26,660 $25,133 ========= ======== ========
NOTE 10. INDUSTRY AND GEOGRAPHIC INFORMATION The Company operates in one single industry segment comprising the design, development and marketing of programmable logic semiconductor devices and the related software design tools. Geographic information for fiscal years 1998, 1997 and 1996 is presented in the tables below. Intercompany activity has been eliminated from amounts shown.
(In thousands) 1998 1997 1996 ------------------------------- -------------------------------- ------------------------------- Income Income Income Net Before Identifiable Net Before Identifiable Net Before Identifiable Revenues Taxes Assets Revenues Taxes Assets Revenues Taxes Assets -------- -------- ---------- --------- -------- ------------ --------- -------- ---------- United States $449,053 $109,182 $833,701 $432,009 $115,800 $779,626 $482,615 $157,872 $650,979 Europe 164,540 71,052 106,543 136,134 49,680 66,893 78,187 12,854 68,861 Other - 362 994 - 278 1,174 - 176 1,040 --------- -------- ---------- --------- -------- ----------- --------- -------- ---------- $613,593 $180,596 $941,238 $568,143 $165,758 $847,693 $560,802 $170,902 $720,880 ========= ======== ========== ========= ======== =========== ========= ======== ===========
Export revenues consisting of sales from the US to non-affiliated customers in certain geographic areas were as follows:
(In thousands) Years ended March 31, 1998 1997 1996 ------- ------- -------- US exports to Europe $41,961 $40,804 $ 70,124 US exports to Japan 26,137 26,496 50,957 US exports to Southeast Asia/Rest of World 15,013 10,676 18,288 ------- ------- -------- $83,111 $77,976 $139,369 ======= ======= ========
No single end customer accounted for more than 5% of revenues in 1998 or 1997 or 6% of revenues in 1996. Approximately 14%, 15% and 13% of net product revenues were made through the Company's largest domestic distributor in 1998, 1997 and 1996, respectively. A second domestic distributor accounted for approximately 11% of net product revenues in fiscal 1998 and a third distributor accounted for approximately 10% of net product revenues in 1996. NOTE 11. LITIGATION On June 7, 1993, the Company filed suit against Altera Corporation (Altera) in the United States District Court for the Northern District of California for infringement of certain of the Company's patents. Subsequently, Altera filed suit against the Company alleging that certain of the Company's products infringe certain Altera patents. Fact and expert discovery have been completed in both cases, which have been consolidated. In October 1997, the Court held a hearing with respect to construction of the claims of the various patents in suit. On April 20, 1995, Altera filed an additional suit against the Company in Federal District Court in Delaware alleging that the Company's XC5200 family infringes an Altera patent. The Company answered the Delaware suit denying that the XC5200 family infringes the patent in suit, asserting certain affirmative defenses and counterclaiming that the Altera Max 9000 family infringes certain of the Company's patents. The Delaware suit was transferred to the United States District Court for the Northern District of California. Discovery has not begun. The ultimate outcome of these matters cannot be determined at this time. Management believes that it has meritorious defenses to such claims and is defending them vigorously, and has not recorded a provision for the ultimate outcome of these matters in its financial statements. The foregoing is a forward looking statement subject to risks and uncertainties, and the future outcome could differ materially due to the uncertain nature of the litigation with Altera and because the lawsuits are still in the pre-trial stage. In addition, in the normal course of business, the Company receives and makes inquiries with regard to possible patent infringement. Where deemed advisable, the Company may seek or extend licenses or negotiate settlements. Outcomes of such negotiations may not be determinable at any point in time; however, management does not believe that such licenses or settlements will, individually or in the aggregate, have a material adverse effect on the Company's financial position or results of operations. NOTE 12. WRITE-OFF OF DISCONTINUED PRODUCT FAMILY During fiscal 1997, the Company discontinued the XC8100 family of one-time programmable antifuse devices. As a result, the Company recorded a pretax charge against earnings of $5 million. This charge primarily related to the write-off of inventory and for termination charges related to purchase commitments to foundry partners for work-in-process wafers which had not completed the manufacturing process. SCHEDULE II - XILINX, INC. VALUATION AND QUALIFYING ACCOUNTS (in thousands)
Description Beginning Charged to Deductions Balance at of Year Income (a) End of Year For the year ended March 31, 1996: Allowances for doubtful accounts, pricing adjustments and customer returns $4,863 $5,296 $4,960 $5,199 For the year ended March 31, 1997: Allowances for doubtful accounts, pricing adjustments and customer returns $5,199 $7,991 $7,456 $5,734 For the year ended March 31, 1998: Allowance for doubtful accounts, pricing $5,734 $5,637 $2,963 $8,408 adjustments and customer returns (a) Represents amounts written off against the allowance, customer returns or pricing adjustments to international distributors.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS The Board of Directors and Stockholders Xilinx, Inc. We have audited the accompanying consolidated balance sheets of Xilinx, Inc. as of March 31, 1998 and 1997, and the related consolidated statements of income, stockholders' equity and cash flows for each of the three years in the period ended March 31, 1998. Our audits also included the financial statement schedule listed in the Index at Item 14(a). 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 generally accepted auditing standards. 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 consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Xilinx, Inc. at March 31, 1998 and 1997, and the consolidated results of its operations and its cash flows for each of the three years in the period ended March 31, 1998, in conformity with 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. /s/ Ernst & Young LLP San Jose, California April 22, 1998 SUPPLEMENTARY FINANCIAL DATA QUARTERLY DATA (UNAUDITED)
Year Ended March 31, 1998 (In thousands except per share amounts) First Second Third Fourth Quarter Quarter Quarter Quarter -------- -------- -------- -------- Net revenues $160,761 $150,272 $148,735 $153,825 Gross margin 99,855 94,224 93,067 95,757 Operating income 47,251 43,048 41,071 42,498 Net income 33,444 30,950 31,600 30,593 Net income per share: Basic 0.46 0.42 0.43 0.42 Diluted $ 0.41 $ 0.38 $ 0.40 $ 0.39 Shares used in per share calculations: Basic 73,495 73,921 74,196 73,350 Diluted 81,326 81,416 79,248 78,053 -------- -------- -------- --------
QUARTERLY DATA (UNAUDITED)
Year Ended March 31, 1997 (In thousands except per share amounts) First Second Third Fourth Quarter Quarter Quarter Quarter -------- -------- -------- -------- Net revenues $150,200 $130,579 $135,587 $151,777 Gross margin 96,875 74,921* 83,431 93,579 Operating income 49,490 29,464* 36,903 43,204 Net income 32,492 21,218* 26,223 30,443 Net income per share: Basic 0.45 0.29* 0.36 0.42 Diluted $ 0.41 $ 0.27* $ 0.33 $ 0.38 Shares used in per share calculations: Basic 72,176 72,853 72,931 73,305 Diluted 78,944 79,378 79,791 80,586 -------- -------- -------- -------- *After write-off of discontinued product family of $5 million, $0.05 per basic share and $0.04 per diluted share net of tax.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. 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 (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 which specifically address the items set forth herein are incorporated by reference. Such incorporation does not include the Compensation Committee Report or the Performance Graph included in the Proxy Statement. ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information concerning the Company's directors required by this Item is incorporated by reference to the Company's Proxy Statement. The information concerning the Company's executive officers required by this Item is incorporated by reference to the section in Item 1 hereof entitled "Executive Officers of the Registrant". ITEM 11. EXECUTIVE COMPENSATION The information required by this Item is incorporated by reference to the Company's Proxy Statement. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by this Item is incorporated by reference to the Company's Proxy Statement. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by this Item is incorporated by reference to the Company's Proxy Statement. PART IV ------- ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) (1) The Financial Statements required by Item 14 (a) are filed as Item 8 of this annual report. (2) The Financial Statement Schedule required by Item 14 (a) is filed as Item 8 of this annual report. 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 (c) are filed or incorporated by reference as part of this annual report. (b) Reports on Form 8-K. No reports on Form 8-K were filed during the ------------------- fourth quarter of fiscal 1998. (c) Exhibits. --------
Exhibit Number Description - ----------------- ------------------------------------------------------------------------------------- 3.1 (1) Restated Certificate of Incorporation of the Company, as amended to date. 3.2 (2) Bylaws of the Company, as amended to date. 4.1 (3) Preferred Shares Rights Agreement dated as of October 4, 1991 between the Company and The First National Bank of Boston, as Rights Agent. 10.1 (4) Lease dated March 27, 1995 for adjacent facilities at 2055 Logic Drive and 2065 Logic Drive, San Jose, California. 10.2 (4) First Amendment to Master Lease dated April 27, 1995 for the Company's facilities at 2100 Logic Drive and 2101 Logic Drive, San Jose, California. 10.3 (5) Lease dated October 8, 1997 for an additional facility on Logic Drive, San Jose, California. 10.4.1 (6) Agreement of Purchase and Sale of Land in Longmont Colorado, dated November 24, 1997. 10.4.2 (6) First Amendment to Agreement of Purchase and Sale of Land in Longmont Colorado, dated January 15, 1998. 10.5 (2) 1988 Stock Option Plan, as amended. 10.6 (2) 1990 Employee Qualified Stock Purchase Plan, as amended. 10.7 (7) 1997 Stock Option Plan 10.8 (2) Form of Indemnification Agreement between the Company and its officers and directors. 10.9 (8) Letter Agreement dated as of January 22, 1996 of the Company to Willem P. Roelandts. 10.10 (8) Separation Agreement dated as of April 8, 1996 between the Company and Curtis Wozniak. 10.11.1 (8) Consulting Agreement dated as of June 1, 1996 between the Company and Bernard V. Vonderschmitt. 10.11.2 (6) Amended Services and Compensation Exhibit to the Consulting Agreement dated as of June 1, 1996 between the Company and Bernard Vonderschmitt. 10.11.3 (6) Second Amendment to the Consulting Agreement dated as of June 1, 1996 between the Company and Bernard Vonderschmitt. 10.12 (7) Letter Agreement dated as of April 1, 1997 of the Company to Richard W. Sevcik. 10.13 (2) Technology Transfer Agreement and Preferred Shares and Warrant Purchase Agreement for Series E Preferred Stock and Series F Preferred Stock dated June 9, 1986 between the Company and Monolithic Memories, Inc. 10.14 (2) Common Stock Purchase Agreement dated March 19, 1990 between the Company and Advanced Micro Devices, Inc. 10.15 (9) (10) Patent Cross License Agreement dated as of April 22, 1993 between the Company and Actel Corporation. 10.16.1 (11) Agreement and Plan of Reorganization dated as of March 29, 1995, among Registrant, NeoCAD, Inc. and XNX Acquisition Corporation. 10.16.2 (11) Certificate of Merger filed on April 10, 1995 between NeoCAD, Inc. and XNX Acquisition Corporation. 10.17.1 (10) (12) Foundry Venture Agreement dated as of September 14, 1995 between the Company and United Microelectronics Corporation (UMC). 10.17.2 (10) (12) Fabven Foundry Capacity Agreement dated as of September 14, 1995 between the Company and UMC. 10.17.3 (10) (12) Written Assurances Re Foundry Venture Agreement dated as of September 29, 1995 between UMC and the Company. 10.18.1 (8) (10) Advance Payment Agreement entered into on May 17, 1996 between Seiko Epson Corporation and the Company. 10.18.2 (6) (10) Amended and Restated Advance Payment Agreement with Seiko Epson dated December 12, 1997. 10.19 (8) Indenture dated November 1, 1995 between the Company and State Street Bank and Trust Company. 12.1 Statement of Computation of Ratios of Earnings to Fixed Charges. 21.1 Subsidiaries of the Company. 23 Consent of Ernst & Young LLP, Independent Auditors. 24.1 Power of Attorney. 27.1 Financial Data Schedule for fiscal years ended March 31, 1998, 1997 and 1996. 27.2 Financial Data Schedule for quarters in the fiscal year ended March 31, 1998. 27.3 Financial Data Schedule for quarters in the fiscal year ended March 31, 1997.
(1) Filed as an exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended March 30, 1991. (2) Filed as an exhibit to the Company's Registration Statement on Form S-1 (File No. 33-34568) which was declared effective June 11, 1990. (3) Filed as an exhibit to the Company's Registration Statement on Form S-1 (File No. 33-43793) effective November 26, 1991. (4) Filed as an exhibit to the company's Annual Report on Form 10-K for the fiscal year ended April 1, 1995. (5) Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended September 27, 1997. (6) Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended December 27, 1997. (7) Filed as an exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended March 29, 1997. (8) Filed as an exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended March 30, 1996. (9) Filed as an exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended April 3, 1993. (10) Confidential treatment requested as to certain portions of these exhibits. (11) Filed as an exhibit to the Company's Current Report on Form 8-K filed on April 18, 1995. (12) Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1995.
SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant, has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Jose, State of California, on the 16th day of June, 1998. XILINX, INC. By: /s/ Willem P. Roelandts ------------------------------------- Willem P. Roelandts, Chief Executive Officer and President

                                                                  EXHIBIT 12.1



                                 XILINX, INC.
        STATEMENT OF COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
                         (in thousands, except ratios)


Years Ended March 31, 1998 1997 1996 1995 1994 -------- -------- -------- ------- ------- Income before taxes and joint venture $180,596 $165,758 $170,902 $94,845 $67,436 Add fixed charges 14,669 14,480 6,356 1,213 1,113 -------- -------- -------- ------- ------- Earnings (as defined) $195,265 $180,238 $177,258 $96,058 $68,549 ======== ======== ======== ======= ======= Fixed charges Interest expense $ 13,041 $ 12,842 $ 5,282 $ 549 $ 535 Amortization of debt issuance costs 871 882 363 -- -- Estimated interest component of rent expenses 757 756 711 664 578 Total fixed charges $ 14,669 $ 14,480 $ 6,356 $ 1,213 $ 1,113 ======== ======== ======== ======= ======= Ratio of earnings to fixed charges 13.3 12.4 27.9 79.2 61.6 ======== ======== ======== ======= =======

                                                                  EXHIBIT 21.1


                                 XILINX, INC.
                          SUBSIDIARIES OF REGISTRANT



PLACE OF INCORPORATION NAME OR ORGANIZATION - ------------------------------ ---------------------- Xilinx, Ltd. United Kingdom Xilinx, KK Japan Xilinx Development Corporation California Xilinx, SARL France Xilinx, GmbH Germany Xilinx AB Sweden Xilinx Holding One, Ltd. Ireland Xilinx Holding Two, Ltd. Ireland Xilinx Holding Three, Ltd. Cayman Islands Xilinx, Ireland ULC Ireland
                                                                    EXHIBIT 23


              CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS


We  consent  to  the incorporation by reference in the Registration Statements
(Form  S-8  Nos.  33-80075,  33-83036,  33-52184,  33-67808,  333-12339  and
333-44233)  pertaining  to the 1988 Stock Option Plan, 1997 Stock Plan and the
1990  Employee  Qualified Stock Purchase Plan of Xilinx, Inc. and Registration
Statement  (Form  S-3  No.  333-00054) filed in conjunction with the Company's
issuance  of convertible subordinated notes and in the related Prospectuses of
our  report  dated  April 22, 1998, with respect to the consolidated financial
statements  and  schedule of Xilinx, Inc. included in this Annual Report (Form
10-K)  for  the  year  ended  March  31,  1998.





                                                        /s/  Ernst & Young LLP





San  Jose,  California
June  17,  1998



                                                                  EXHIBIT 24.1


                               POWER OF ATTORNEY


KNOW  ALL  PERSONS BY THESE PRESENTS, that each person whose signature appears
below  constitutes  and  appoints  Willem  P.  Roelandts  and Gordon M. Steel,
jointly  and  severally,  his  attorneys-in-fact,  each  with  the  power  of
substitution,  for  him  in  any and all capacities, to sign any amendments to
this  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  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
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 Date - --------- ----- ------------- /s/ Bernard V. Vonderschmitt Chairman of the Board June 16, 1998 - ---------------------------- (Bernard V. Vonderschmitt) /s/ Willem P. Roelandts Chief Executive Officer, President (Principal) June 16, 1998 - ------------------------ Executive Officer) and Director (Willem P. Roelandts) /s/ Gordon M. Steel Senior Vice President, Finance and Chief June 16, 1998 - ---------------------- Financial Officer (Principal Accounting and (Gordon M. Steel) Financial Officer) /s/ Philip T. Gianos Director June 16, 1998 - ---------------------- (Philip T. Gianos) /s/ John L. Doyle Director June 16, 1998 - ------------------ (John L. Doyle) /s/ William G. Howard, Jr. Director June 16, 1998 - -------------------------- (William G. Howard, Jr.)
 

5 This schedule contains summary information extracted from Xilinx, Inc.'s CONSOLIDATED STATEMENTS OF INCOME AND CONSOLIDATED BALANCE SHEETS and is qualified in its entirety by reference to such financial statements. During the quarter ended December 27, 1997, the Company adopted the Financial Accounting Standards Board's Statement No. 128 (FASB 128), "Earnings per Share". The new standard required the Company to change the method used to compute net income per share and to restate all prior periods. The table below shows the restated earnings per share numbers. 1000 12-MOS 12-MOS 12-MOS MAR-28-1998 MAR-29-1997 MAR-30-1996 MAR-30-1997 MAR-31-1996 APR-02-1995 MAR-28-1998 MAR-29-1997 MAR-30-1996 166,861 215,903 110,893 195,326 209,944 267,068 69,320 77,982 84,727 8408 5,734 5,199 55,289 62,367 39,238 600,224 601,555 538,706 163,632 154,443 128,283 75,356 67,863 45,645 941,238 847,693 720,880 125,657 97,253 102,636 250,000 250,000 250,000 0 0 0 0 0 0 729 733 719 549,446 489,947 367,525 941,238 847,693 720,880 613,593 568,143 560,802 613,593 568,143 560,802 230,690 219,337 203,192 230,690 219,337 203,192 209,035 189,745 191,854 0 0 0 13,924 14,561 5,645 180,596 165,758 170,902 56,728 55,382 69,448 126,587 110,376 101,454 0 0 0 0 0 0 0 0 0 126,587 110,376 101,454 1.72 1.52 1.43 1.58 1.39 1.28 Amount from the prior year has been reclassified to conform to the current year presentation. Represents basic earnings per share.
 

5 This schedule contains summary information extracted from Xilinx, Inc.'s CONSOLIDATED STATEMENTS OF INCOME AND CONSOLIDATED BALANCE SHEETS and is qualified in its entirety by reference to such financial statements. During the quarter ended December 27, 1997, the Company adopted the Financial Accounting Standards Board's Statement No. 128 (FASB 128), "Earnings per Share". The new standard required the Company to change the method used to compute net income per share and to restate all prior periods. The table below shows the restated earnings per share numbers. 1000 9-MOS 6-MOS 3-MOS MAR-28-1998 MAR-28-1998 MAR-28-1998 MAR-30-1997 MAR-30-1997 MAR-30-1997 DEC-27-1997 SEP-27-1997 JUN-28-1997 244,079 260,372 130,531 173,480 174,241 334,954 70,709 72,542 79,163 6,907 6,557 6,459 54,605 54,313 51,232 639,721 636,552 651,002 165,518 163,096 158,777 82,287 79,381 73,331 966,847 936,287 908,223 121,364 113,473 115,032 250,000 250,000 250,000 0 0 0 0 0 0 742 740 736 583,513 561,321 530,512 966,847 936,287 908,223 459,768 311,033 160,761 459,768 311,033 160,761 172,622 116,954 60,906 172,622 116,954 60,906 155,776 103,780 52,604 0 0 0 10,474 6,987 3,491 136,410 94,401 49,546 43,030 30,007 16,102 95,994 64,394 33,444 0 0 0 0 0 0 0 0 0 95,994 64,394 33,444 1.31 0.88 0.46 1.19 0.79 0.41 Represents basic earnings per share.
 

5 This schedule contains summary information extracted from Xilinx, Inc.'s CONSOLIDATED STATEMENTS OF INCOME AND CONSOLIDATED BALANCE SHEETS and is qualified in its entirety by reference to such financial statements. During the quarter ended December 27, 1997, the Company adopted the Financial Accounting Standards Board's Statement No. 128 (FASB 128), "Earnings per Share". The new standard required the Company to change the method used to compute net income per share and to restate all prior periods. The table below shows the restated earnings per share numbers. 1000 9-MOS 6-MOS 3-MOS MAR-29-1997 MAR-29-1997 MAR-29-1997 MAR-31-1996 MAR-31-1996 MAR-31-1996 DEC-28-1996 SEP-28-1996 JUN-29-1996 155,003 114,081 129,826 235,099 309,403 268,947 73,097 71,317 77,123 4,548 3,942 5,119 70,181 63,407 49,324 563,891 591,215 552,680 150,338 145,418 138,387 61,843 55,894 50,881 810,811 809,713 767,929 100,680 120,546 106,982 250,000 250,000 250,000 0 0 0 0 0 0 730 730 722 459,401 438,437 410,225 810,811 809,713 767,929 416,366 280,779 150,200 416,366 280,779 150,200 161,139 108,983 53,325 161,139 108,983 53,325 139,370 92,842 47,385 0 0 0 10,320 6,912 3,475 120,658 81,809 50,375 40,725 28,099 17,883 79,933 53,710 32,492 0 0 0 0 0 0 0 0 0 79,933 53,710 32,492 1.10 0.74 0.45 1.01 0.68 0.41 Amount from the prior year has been reclassified to conform to the current year presentation. Represents basic earnings per share.