UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~December~~June 30, ~~2017~~2018



	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to _______ .

Commission File Number 000-18548

______________________________________________________________________________

Xilinx, Inc.

(Exact name of registrant as specified in its charter)



Delaware				77-0188631
(State or other jurisdiction of incorporation or organization)				(I.R.S. Employer Identification No.)

2100 Logic Drive, San Jose, California				95124
(Address of principal executive offices)				(Zip Code)

(408) 559-7778

(Registrant’s telephone number, including area code)

N/A

(Former name, former address, and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer x	Accelerated filer o	Non-accelerated filer o
Smaller reporting company o	Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

Shares outstanding of the registrant’s common stock:



Class		Shares Outstanding as of ~~January 12,~~July 13, 2018
Common Stock, ~~$.01~~$0.01 par value		~~254,815,224~~252,913,557

Table of Contents

TABLE OF CONTENTS

Table of Contents


PART I.	FINANCIAL INFORMATION


Item 1.	Financial Statements

XILINX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


	Three Months Ended					Nine Months Ended					Three Months Ended
(In thousands, except per share amounts)	December 30, 2017		December 31, 2016			December 30, 2017		December 31, 2016			June 30, 2018			July 1, 2017 ^[1]
Net revenues	$	631,193	$	585,688		$	1,866,142	$	1,739,877		$	684,370		$	602,810
Cost of revenues	182,156		178,233			559,037		522,404			206,888			190,824
Gross margin	449,037		407,455			1,307,105		1,217,473			477,482			411,986
Operating expenses:
Research and development	166,231		159,248			477,267		437,187			170,826			153,051
Selling, general and administrative	92,753		83,780			272,981		250,353			90,532			89,175
Amortization of acquisition-related intangibles	353		1,455			1,568		3,943			360			705
Total operating expenses	259,337		244,483			751,816		691,483			261,718			242,931
Operating income	189,700		162,972			555,289		525,990			215,764			169,055
Interest and other income (expense), net	5,469		(392		)	9,138		(6,130		)	(2,847		)	1,839
Income before income taxes	195,169		162,580			564,427		519,860			212,917			170,894
Provision for income taxes	183,224		20,734			217,705		50,773			22,879			13,650
Net income	$	11,945	$	141,846		$	346,722	$	469,087		$	190,038		$	157,244
Net income per common share:
Basic	$	0.05	$	0.57		$	1.39	$	1.86		$	0.75		$	0.63
Diluted	$	0.05	$	0.52		$	1.34	$	1.74		$	0.74		$	0.59
Cash dividends per common share	$	0.35	$	0.33		$	1.05	$	0.99		$	0.36		$	0.35
Shares used in per share calculations:
Basic	254,089		250,982			248,671		252,811			252,682			247,911
Diluted	258,108		270,781			258,995		269,182			255,935			265,797

^[1]Prior year balances have been restated to reflect the retrospective application of the new revenue recognition accounting standard. Please refer to "Note 2. Recent Accounting Changes and Accounting Pronouncements."

See notes to condensed consolidated financial statements.

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XILINX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended						Nine Months Ended						Three Months Ended
(In thousands)	December 30, 2017			December 31, 2016			December 30, 2017			December 31, 2016			June 30, 2018			July 1, 2017 ^[1]
Net income	$	11,945		$	141,846		$	346,722		$	469,087		$	190,038		$	157,244
Other comprehensive income (loss), net of tax:
Change in net unrealized losses on available-for-sale securities	(7,502		)	(20,030		)	(1,566		)	(17,799		)
Reclassification adjustment for (gains) losses on available-for-sale securities	1,259			(170		)	1,154			(587		)
Change in net unrealized gains (losses) on hedging transactions	1,583			(3,059		)	3,781			(3,742		)
Reclassification adjustment for (gains) losses on hedging transactions	(1,018		)	875			(3,022		)	1,513
Change in net unrealized gains (losses) on available-for-sale securities													(1,660		)	5,250
Reclassification adjustment for gains on available-for-sale securities													(51		)	(48		)
Net change in unrealized gains (losses) on hedging transactions													(5,619		)	1,425
Reclassification adjustment for gains on hedging transactions													(441		)	(338		)
Cumulative translation adjustment, net	394			(2,848		)	2,831			(3,195		)	(2,050		)	1,760
Other comprehensive income (loss)	(5,284		)	(25,232		)	3,178			(23,810		)
Other comprehensive (loss) income													(9,821		)	8,049
Total comprehensive income	$	6,661		$	116,614		$	349,900		$	445,277		$	180,217		$	165,293

See notes to condensed consolidated financial statements.

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XILINX, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS


(In thousands, except par value amounts)	December 30, 2017			April 1, 2017 ^[1]			June 30, 2018			March 31, 2018^[1]
	(unaudited)						(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	911,461		$	966,695		$	1,677,389		$	2,179,328
Short-term investments	2,630,115			2,354,762			1,686,809			1,268,242
Accounts receivable, net	348,464			243,915			456,898			382,246
Inventories	226,533			227,033			247,001			236,077
Prepaid expenses and other current assets	81,310			87,711			57,448			88,695
Total current assets	4,197,883			3,880,116			4,125,545			4,154,588
Property, plant and equipment, at cost	862,147			839,458			871,411			855,023
Accumulated depreciation and amortization	(558,163		)	(535,633		)	(559,327		)	(550,906		)
Net property, plant and equipment	303,984			303,825			312,084			304,117
Long-term investments	102,375			116,288			91,700			97,896
Goodwill	162,421			161,287			162,421			162,421
Acquisition-related intangibles, net	4,708			3,576			3,763			4,123
Other assets	348,248			275,440			359,679			337,402
Total Assets	$	5,119,619		$	4,740,532		$	5,055,192		$	5,060,547

LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	94,588		$	108,293		$	105,484		$	98,999
Accrued payroll and related liabilities	209,055			176,601			198,602			206,367
Income taxes payable	37,281			6,309			82,410			47,713
Deferred income on shipments to distributors	32,974			54,567
Other accrued liabilities	88,497			95,098			56,696			59,680
Current portion of long-term debt	—			456,328			499,407			499,186
Total current liabilities	462,395			897,196			942,599			911,945
Long-term debt	1,730,211			995,247			1,207,387			1,214,440
Deferred tax liabilities	110			317,639
Long-term income taxes payable	531,522			4,503			530,167			523,864
Other long-term liabilities	30,747			16,908			56,401			49,945
Commitments and contingencies	—			—
Temporary equity	—			1,406
Commitments and contingencies (Note 17)
Stockholders' equity:
Preferred stock, $.01 par value (none issued)	—			—
Preferred stock, $.01 par value (none issued and outstanding)							—			—
Common stock, $.01 par value	2,547			2,480			2,515			2,534
Additional paid-in capital	855,197			803,522			894,588			878,672
Retained earnings	1,528,393			1,726,312			1,457,467			1,513,656
Accumulated other comprehensive loss	(21,503		)	(24,681		)	(35,932		)	(34,509		)
Total stockholders’ equity	2,364,634			2,507,633			2,318,638			2,360,353
Total Liabilities, Temporary Equity and Stockholders’ Equity	$	5,119,619		$	4,740,532
Total Liabilities and Stockholders’ Equity							$	5,055,192		$	5,060,547

^[1]~~Derived from audited financial statements~~Prior year balances have been restated to reflect the retrospective application of the new revenue recognition accounting standard. Please refer to "Note 2. Recent Accounting Changes and Accounting Pronouncements."

See notes to condensed consolidated financial statements.

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XILINX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Nine Months Ended						Three Months Ended
(In thousands)	December 30, 2017			December 31, 2016			June 30, 2018			July 1, 2017 ^[1]
Cash flows from operating activities:
Net income	$	346,722		$	469,087		$	190,038		$	157,244
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	34,416			33,917			15,075			11,232
Amortization	12,619			12,601			7,333			3,729
Stock-based compensation	105,209			90,073			35,608			32,036
Net loss (gain) on sale of available-for-sale securities	1,358			(771		)
Amortization of debt discounts	2,254			9,053			295			1,676
Provision (benefit) for deferred income taxes	(362,969		)	74,617			(13,532		)	24,694
Other	1,500			—
Others							6,147			(446		)
Changes in assets and liabilities:
Accounts receivable, net	(108,934		)	(33,395		)	(74,652		)	(23,654		)
Inventories	367			(27,295		)	(10,924		)	11,691
Prepaid expenses and other current assets	(8,656		)	(8,619		)	2,140			(5,023		)
Other assets	(27,292		)	(11,160		)	(7,770		)	(8,690		)
Accounts payable	(18,966		)	14,754			9,320			(3,049		)
Accrued liabilities	58,522			29,019			(32,437		)	2,378
Income taxes payable	563,178			(25,936		)	49,527			(12,910		)
Deferred income on shipments to distributors	(21,594		)	1,868
Net cash provided by operating activities	577,734			627,813			176,168			190,908
Cash flows from investing activities:
Purchases of available-for-sale securities	(2,211,372		)	(2,250,810		)	(559,159		)	(832,705		)
Proceeds from sale and maturity of available-for-sale securities	1,939,245			2,685,977			155,230			613,396
Purchases of property, plant and equipment	(28,940		)	(51,825		)
Purchases of property, plant and equipment and other intangibles							(26,359		)	(9,926		)
Other investing activities	(17,787		)	(20,754		)	(13,900		)	(3,008		)
Net cash provided by (used in) investing activities	(318,854		)	362,588
Net cash used in investing activities							(444,188		)	(232,243		)
Cash flows from financing activities:
Repurchases of common stock	(310,806		)	(413,983		)	(137,300		)	(67,062		)
Restricted stock units withholdings	(44,428		)	(29,874		)
Taxes paid related to net share settlements of restricted stock units							(5,495		)	(933		)
Proceeds from issuance of common stock through various stock plans	19,602			40,582			214			2,003
Payment of dividends to stockholders	(263,751		)	(250,733		)	(90,675		)	(87,303		)
Repayment of convertible debt	(457,918		)	—			—			(457,918		)
Proceeds from issuance of long-term debt, net	745,175			—			—			745,871
Other financing activities	(1,988		)	(663		)	(663		)	(663		)
Net cash used in financing activities	(314,114		)	(654,671		)
Net increase (decrease) in cash and cash equivalents	(55,234		)	335,730
Net cash (used in) provided by financing activities							(233,919		)	133,995
Net (decrease) increase in cash and cash equivalents							(501,939		)	92,660
Cash and cash equivalents at beginning of period	966,695			503,816			2,179,328			966,695
Cash and cash equivalents at end of period	$	911,461		$	839,546		$	1,677,389		$	1,059,355
Supplemental disclosure of cash flow information:
Interest paid	$	38,115		$	28,563		$	21,174		$	5,795
Income taxes paid, net	$	18,093		$	2,156
Income taxes (refunded) paid, net							$	(13,328	)	$	1,873

See notes to condensed consolidated financial statements.

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XILINX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


Note 1.	Basis of Presentation

The accompanying interim condensed consolidated financial statements have been prepared in conformity with United States (U.S.) generally accepted accounting principles (GAAP) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X, and should be read in conjunction with the Xilinx, Inc. (Xilinx or the Company) consolidated financial statements filed with the U.S. Securities and Exchange Commission (SEC) on Form 10-K for the fiscal year ended ~~April 1, 2017.~~March 31, 2018. The interim financial statements are unaudited, but reflect all adjustments which are, in the opinion of management, of a normal, recurring nature necessary to provide a fair statement of results for the interim periods presented. The results of operations for the interim periods shown in this report are not necessarily indicative of the results that may be expected for the fiscal year ending March ~~31, 2018~~30, 2019 or any future period.

The Company uses a 52- to 53-week fiscal year ending on the Saturday nearest March 31. Fiscal ~~year 2018~~2019 and fiscal ~~year 2017~~2018 are both 52-week years ending on March 30, 2019 and March 31, 2018, ~~and April 1, 2017,~~ respectively. The quarters ended ~~on December~~June 30, ~~2017~~2018 and ~~December 31, 2016~~July 1, 2017 each consisted of 13 weeks.


Note 2.	Recent Accounting Changes and Accounting Pronouncements

Recent Accounting Pronouncements Adopted

Revenue Recognition

In April 2014, the Financial Accounting Standards Board (FASB) issued the authoritative guidance, as amended, that outlines a new ~~global~~ revenue recognition standard that replaces virtually all existing U.S. GAAP guidance on contracts with customers and the related other assets and deferred costs. The authoritative guidance provides a five-step process for recognizing revenue that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled, in exchange for those goods or services. The ~~authoritative~~new guidance also requires expanded qualitative and quantitative disclosures relating to the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The new ~~authoritative~~ guidance is required to be applied retrospectively to each prior reporting period presented (Full Retrospective), or retrospectively with the cumulative effect of initially applying it recognized at the date of initial application. The Company ~~is currently evaluating~~adopted the ~~full~~new guidance on April 1, 2018, using the Full Retrospective method and restated the comparative prior periods. The Company implemented internal controls and certain system functionality to enable the preparation of financial information on adoption.

As a result of the adoption of the authoritative guidance, the Company changed its accounting policy for revenue recognition and the details of the significant changes and quantitative impact of ~~this new authoritative guidance on its consolidated financial statements, including selection~~the changes are disclosed below:

Revenue from sales to the Company's distributors is recognized upon shipment of the ~~transition method. However, assuming all other revenue recognition criteria have been met, it~~product to the distributors (sell-in) and is ~~expected that the new authoritative guidance would require the Company to recognize revenue and cost relating to distributor sales upon product delivery (Sell-In), subject to~~reduced by estimated ~~allowance~~allowances for distributor price adjustments and rights of ~~return, rather than deferring the distributor sales~~return. Previously, revenue was recognized upon ~~product delivery and subsequently recognizing revenue when~~reported resale of the product ~~is sold~~ by the distributors to their customers (sell-through) as reduced by actual allowances for distributor toprice adjustments. Revenue from software license agreements, software license renewals, and other contracts are recognized at point of sales, whereas previously these were deferred and recognized over the ~~end customer (Sell-Through). Upon adoption,~~contractual term before the ~~Company currently expects that it will record the balance~~implementation of the ~~deferred revenue (subject to true-ups) under Sell-Through to retained earnings, and the impact would be offset by the~~authoritative guidance. Revenue recognition ~~of revenue on shipments post adoption under Sell-In. The Company continues to evaluate the impact to revenues and related disclosures~~ related to the ~~pending~~Company's other revenue streams, such as direct customers, remains unchanged.

The adoption of this authoritative guidance has an impact on the Company’s condensed consolidated statements of income and balance sheets, but has no impact on net cash provided by or used in operating, financing, or investing activities on the condensed consolidated statements of cash flows.

The impact on the Company's previously reported condensed consolidated statement of income resulting from the adoption of the ~~new~~authoritative guidance ~~and the preliminary assessments are subject to change. Depending~~is as follows:

Table of Contents



	Three months ended July 1, 2017
(In thousands, except per share amounts)	As Reported		Adjustment			As Adjusted
Net revenues	$	615,446	$	(12,636	)	$	602,810
Cost of revenues	192,095		(1,271		)	190,824
Gross margin	423,351		(11,365		)	411,986
Operating expenses:
Research and development	153,051		—			153,051
Selling, general and administrative	89,175		—			89,175
Amortization of acquisition-related intangibles	705		—			705
Total operating expenses	242,931		—			242,931
Operating income	180,420		(11,365		)	169,055
Interest and other income, net	1,839		—			1,839
Income before income taxes	182,259		(11,365		)	170,894
Provision for income taxes	15,014		(1,364		)	13,650
Net income	$	167,245	$	(10,001	)	$	157,244
Net income per common share:
Basic	$	0.67	$	(0.04	)	$	0.63
Diluted	$	0.63	$	(0.04	)	$	0.59
Shares used in per share calculations:
Basic	247,911					247,911
Diluted	265,797					265,797

The impact on ~~timing of customer orders, timing of shipment to distributors and to end customers, distributor inventory strategies and other factors that may be beyond~~ the Company's ~~control,~~previously reported condensed consolidated balance sheet line items affected by the ~~difference in revenue recognized under Sell-Through and Sell-In could be material in~~adoption of the ~~future. The~~ authoritative guidance ~~will be effective for the Company beginning in fiscal year 2019~~is as ~~the Company decided not to early adopt it in fiscal year 2018.~~follows:



	March 31, 2018
(In thousands)	As Reported		Adjustment			As Adjusted
Accounts receivable	$	372,144	$	10,102		$	382,246
Other assets	342,644		(5,242		)	337,402
Deferred income on shipments to distributors	25,166		(25,166		)	—
Other accrued liabilities	59,772		(92		)	59,680
Retained earnings	1,483,538		30,118			1,513,656

Financial Instruments

In January 2016, the FASB issued ~~the~~ final authoritative guidance regarding how companies measure equity investments that do not result in consolidation and are not accounted for under the equity method and how they present changes in the fair value of financial liabilities measured under the fair value ~~option.~~option that are attributable to their own credit. The ~~new~~ authoritative guidance also changes certain disclosure requirements and other aspects of current U.S. ~~GAAP. It~~GAAP on this matter. The authoritative guidance does not change the guidance for classifying and measuring investments in debt securities and loans. The authoritative guidance is effective for public business entities for annual periods beginning after December 15, 2017, and interim periods within those annual ~~periods, which for Xilinx would be~~periods. The Company adopted this authoritative guidance on April 1, 2018 and recorded the ~~first quarter of fiscal year 2019. Upon adoption, the Company will record all~~balance of the unrealized ~~gains or~~ losses of $11.0 million as of the end of fiscal 2018 from its investment in debt mutual funds and equity securities to retained earnings, ~~and subsequent~~less the related deferred taxes of $2.6 million. Subsequent changes in fair value from such investments ~~will be~~are recorded ~~under its~~in the condensed consolidated statements of income.

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Income Taxes

In October 2016, the FASB issued authoritative guidance on income taxes which eliminates the deferred tax effects of intra-entity asset transfers other than inventory. As a result, a reporting entity would recognize the tax expense from the sale of an asset in the seller’s tax jurisdiction when the transfer occurs, even though the pre-tax effects of that transaction are eliminated in consolidation. The authoritative guidance is effective for public business entities in fiscal years beginning after December 15, 2017 and requires the adoption be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings. The Company adopted this authoritative guidance on April 1, 2018. Accordingly, $13.8 million of prepaid taxes associated with prior period intra-entity asset transfers was reclassified to retained earnings.

Recent Accounting Pronouncements Not Yet Adopted

Leases

In February 2016, the FASB issued ~~the~~ authoritative guidance on leases. The new authoritative guidance requires the recognition of assets and liabilities arising from lease transactions on the balance sheet and will also require significant additional disclosures about the amount, timing and uncertainty of cash flows from leases. Accordingly, a lessee will recognize a lease asset for its right to use the underlying asset and a lease liability for the corresponding lease obligation. The new authoritative guidance is effective for public business entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, which for Xilinx would be the first quarter of fiscal ~~year~~ 2020. Early adoption is permitted. The new authoritative guidance must be adopted using a modified retrospective transition ~~and provides for certain practical expedients. In addition, the transition will~~

~~Table of Contents~~

~~require~~with application of the new authoritative guidance for leases that existed at or are entered into after the beginning of the earliest comparative period presented. To help with the transition to the new guidance, certain practical expedients are provided. The Company is currently evaluating the impact of this new authoritative guidance on its condensed consolidated financial statements.

In August 2016, the FASB issued authoritative guidance for cash flow classification. The new authoritative guidance is intended to reduce diversity in practice in how cash receipts and cash payments are classified in the statement of cash flows. The new authoritative guidance will be effective for public business entities in fiscal years beginning after December 15, 2017, including interim periods within those years, which for Xilinx would be the first quarter of fiscal year 2019. Early adoption is permitted. The Company is currently evaluating the impact of this new authoritative guidance on its consolidated financial statements.

In May 2017, the FASB issued authoritative guidance that clarifies the scope of modification accounting for share-based compensation. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. The new guidance will reduce diversity in practice and result in fewer changes to the terms of an award being accounted for as modifications. The new authoritative guidance will be effective for public business entities in fiscal years beginning after December 15, 2017, which for Xilinx would be the first quarter of fiscal year 2019. Early adoption is permitted as of the beginning of the annual period. The authoritative guidance will be effective for the Company beginning in fiscal year 2019 as the Company decided not to early adopt it in fiscal year 2018. The Company is currently evaluating the impact of this new authoritative guidance on its consolidated financial statements.

In August 2017, the FASB issued authoritative guidance that amended the accounting for hedging activities. The guidance permits more hedging strategies to be eligible for hedge accounting and simplifies the application of hedge accounting guidance in areas where practice issues exist. The new authoritative guidance will be effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2018, which for Xilinx would be the first quarter of fiscal year 2020. Early adoption is permitted, including adoption in any interim periods after issuance of the authoritative guidance. The Company is currently evaluating the impact of this new authoritative guidance on its consolidated financial statements.


Note 3.	Significant Customers and Concentrations of Credit Risk

Avnet, Inc. (Avnet), one of the Company’s distributors, distributes the Company’s products worldwide. As of ~~December~~June 30, ~~2017~~2018 and ~~April 1, 2017,~~March 31, 2018, Avnet accounted for ~~64%~~70% and ~~59%~~61% of the Company’s total net accounts receivable, respectively. ~~For the third quarter and first nine months of fiscal year 2018, resale of product through~~Net revenues from Avnet accounted for ~~42%~~51% and ~~45%~~41% of the Company’s worldwide net revenues ~~respectively. For the third quarter and~~in the first ~~nine months~~quarter of fiscal ~~year 2017, resale of product through Avnet accounted for 42%~~2019 and ~~43% of~~2018, respectively. The Company expects its accounts receivable to be relatively higher than normal on a temporary basis as the ~~Company’s worldwide net revenues, respectively.~~Company partners with its distributors to manage their inventory requirements.

Xilinx is subject to concentrations of credit risk primarily in its trade accounts receivable and investments in debt securities to the extent of the amounts recorded on the condensed consolidated balance sheet. The Company attempts to mitigate the concentration of credit risk in its trade receivables through its credit evaluation process, collection terms, distributor sales to diverse end customers and through geographical dispersion of sales. Xilinx generally does not require collateral for receivables from its end customers or ~~from~~ distributors.

No end customer accounted for more than 10% of the Company’s worldwide net revenues for the ~~third~~first quarter ~~as well as the first nine months~~ of fiscal ~~years 2018~~2019 and ~~2017.~~2018.

The Company mitigates concentrations of credit risk in its investments in debt securities by currently investing approximately ~~85%~~91% of its portfolio in AA (or its equivalent) or higher grade securities as rated by Standard & Poor’s or Moody’s Investors Service. The Company’s methods to arrive at investment decisions are not solely based on the rating agencies’ credit ratings. Xilinx also performs additional credit due diligence and conducts regular portfolio credit reviews, including a review of counterparty credit risk related to the Company’s forward currency exchange and interest rate swap contracts. Additionally, Xilinx limits its investments in the debt securities of a single issuer based upon the issuer’s credit rating and attempts to further mitigate credit risk by diversifying risk across geographies and type of issuer.

As of ~~December~~June 30, ~~2017,~~2018, approximately ~~33%~~24% of the portfolio consisted of mortgage-backed securities. All of the mortgage-backed securities in the investment portfolio were issued by U.S. government-sponsored enterprises and agencies and are rated AA+ by Standard & Poor’s and Aaa by Moody’s Investors Service.

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Note 4.	Fair Value Measurements

The authoritative guidance for fair value measurements established by the FASB defines fair value as the exchange price that would be received from selling an asset or paid to transfer a liability (an exit price) in an orderly transaction between market

~~Table of Contents~~

participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which Xilinx would transact and also considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions and risk of nonperformance.

The Company determines the fair value for marketable debt securities using industry standard pricing services, data providers and other third-party sources and by internally performing valuation testing and analysis. The Company primarily uses a consensus price or weighted-average price for its fair value assessment. The Company determines the consensus price using market prices from a variety of industry standard pricing services, data providers, security master files from large financial institutions and other third party sources and uses those multiple prices as inputs into a distribution-curve-based algorithm to determine the daily market value. The pricing services use multiple inputs to determine market prices, including reportable trades, benchmark yield curves, credit spreads and broker/dealer quotes as well as other industry and economic events. For certain securities with short maturities, such as discount commercial paper and certificates of deposit, the security is accreted from purchase price to face value at maturity. If a subsequent transaction on the same security is observed in the marketplace, the price on the subsequent transaction is used as the current daily market price and the security will be accreted to face value based on the revised price.

The Company validates the consensus prices by taking random samples from each asset type and corroborating those prices using reported trade ~~activities,~~activity, benchmark yield curves, binding broker/dealer quotes or other relevant price information. There have not been any changes to the Company’s fair value methodology during the first ~~nine months~~quarter of fiscal ~~year 2018~~2019 and the Company did not adjust or override any fair value measurements as of ~~December~~June 30, ~~2017.~~2018.

Fair Value Hierarchy

The fair value framework requires the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities. The guidance for fair value measurements requires that assets and liabilities carried at fair value be classified and disclosed in one of the following categories:

Level 1 — Quoted (unadjusted) prices in active markets for identical assets or liabilities.

The Company’s Level 1 assets consist of U.S. government securities, money market funds and marketable equity securities.

Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.

The Company’s Level 2 assets consist of financial institution securities, non-financial institution securities, U.S. agency securities, foreign government and agency securities, mortgage-backed securities, debt mutual funds, ~~bank loans,~~ asset-backed securities and commercial mortgage-backed securities. The Company’s Level 2 assets and liabilities also include foreign currency forward contracts and interest rate swap contracts.

Level 3 — Unobservable inputs to the valuation methodology that are supported by little or no market activity and that are significant to the measurement of the fair value of the assets or liabilities. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques, as well as significant management judgment or estimation.

The Company has no Level 3 assets and ~~liabilities.~~liabilities measured at fair value on a recurring basis.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

In instances where the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability. The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring basis as of ~~December~~June 30, ~~2017~~2018 and ~~April 1, 2017:~~March 31, 2018:

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	December 30, 2017								June 30, 2018
(In thousands)	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value		Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
Assets
Cash equivalents:
Money market funds	$	279,946	$	—	$	—	$	279,946	$	458,706	$	—	$	—	$	458,706
Financial institution securities	—		225,128		—		225,128		—		349,850		—		349,850
Non-financial institution securities	—		122,390		—		122,390		—		350,624		—		350,624
U.S. government and agency securities	92,662		49,951		—		142,613		114,664		206,945		—		321,609
Foreign government and agency securities	—		76,152		—		76,152		—		130,622		—		130,622
Short-term investments:
Financial institution securities	—		274,868		—		274,868		—		249,982		—		249,982
Non-financial institution securities	—		272,874		—		272,874		—		263,922		—		263,922
U.S. government and agency securities	29,506		26,084		—		55,590		3,647		96,105		—		99,752
Foreign government and agency securities	—		224,624		—		224,624		—		43,783		—		43,783
Mortgage-backed securities	—		1,142,982		—		1,142,982		—		796,953		—		796,953
Debt mutual fund	—		34,068		—		34,068
Bank loans	—		163,673		—		163,673
Asset-backed securities	—		222,363		—		222,363		—		89,028		—		89,028
Commercial mortgage-backed securities	—		239,073		—		239,073		—		143,389		—		143,389
Long-term investments:
Mortgage-backed securities	—		39,344		—		39,344
Debt mutual fund	—		55,843		—		55,843
Asset-backed securities	—		1,252		—		1,252
Equity securities	5,936		—		—		5,936
Debt mutual funds									—		85,633		—		85,633
Marketable equity securities									6,067		—		—		6,067
Total assets measured at fair value	$	408,050	$	3,170,669	$	—	$	3,578,719	$	583,084	$	2,806,836	$	—	$	3,389,920
Liabilities
Derivative financial instruments, net	$	—	$	9,043	$	—	$	9,043	$	—	$	41,289	$	—	$	41,289
Total liabilities measured at fair value	$	—	$	9,043	$	—	$	9,043	$	—	$	41,289	$	—	$	41,289
Net assets measured at fair value	$	408,050	$	3,161,626	$	—	$	3,569,676	$	583,084	$	2,765,547	$	—	$	3,348,631

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	April 1, 2017								March 31, 2018
(In thousands)	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value		Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
Assets
Cash equivalents:
Money market funds	$	298,307	$	—	$	—	$	298,307	$	1,291,891	$	—	$	—	$	1,291,891
Financial institution securities	—		158,962		—		158,962		—		359,901		—		359,901
Non-financial institution securities	—		205,322		—		205,322		—		242,904		—		242,904
U.S government and agency securities	2,998		50,984		—		53,982
U.S. government and agency securities									996		34,999		—		35,995
Foreign government and agency securities	—		177,310		—		177,310		—		179,957		—		179,957
Short-term investments:
Financial institution securities	—		189,835		—		189,835		—		75,000		—		75,000
Non-financial institution securities	—		203,938		—		203,938		—		81,939		—		81,939
U.S. government and agency securities	31,732		44,820		—		76,552		3,639		19,008		—		22,647
Foreign government and agency securities	—		144,811		—		144,811
Mortgage-backed securities	—		1,115,403		—		1,115,403		—		844,397		—		844,397
Debt mutual fund	—		34,068		—		34,068
Bank loans	—		154,014		—		154,014
Asset-backed securities	—		218,170		—		218,170		—		91,389		—		91,389
Commercial mortgage-backed securities	—		217,971		—		217,971		—		152,870		—		152,870
Long-term investments:
Mortgage-backed securities	—		60,099		—		60,099
Debt mutual fund	—		54,608		—		54,608
Asset-backed securities	—		1,581		—		1,581
Debt mutual funds									—		89,670		—		89,670
Marketable equity securities									8,226				—		8,226
Total assets measured at fair value									$	1,304,752	$	2,172,034	$	—	$	3,476,786
Liabilities
Derivative financial instruments, net	—		1,661		—		1,661		$	—	$	26,091	$	—	$	26,091
Total assets measured at fair value	$	333,037	$	3,033,557	$	—	$	3,366,594
Total liabilities measured at fair value									$	—	$	26,091	$	—	$	26,091
Net assets measured at fair value									$	1,304,752	$	2,145,943	$	—	$	3,450,695

~~Changes~~For certain of the Company’s financial instruments, including cash held in ~~Level 3 Instruments Measured at Fair Value on a Recurring Basis~~banks, accounts receivable and accounts payable, the carrying amounts approximate fair value due to their short maturities, and are therefore excluded from the fair value tables above.

~~The following table is a reconciliation of all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3):~~

Three Months Ended Nine Months Ended
(In thousands) December 30, 2017 December 31, 2016 December 30, 2017 December 31, 2016
Balance as of beginning of period $ —
$ 10,160
$ —
$ 9,977
Total unrealized gains (losses):

Included in other comprehensive income (loss) —
67
—
250
Balance as of end of period $ —
$ 10,227
$ —
$ 10,227

As of ~~December~~June 30, 2018 and July 1, 2017,, the Company held no marketable securities measured at fair value using Level 3 inputs.

Financial Instruments Not Recorded at Fair Value on a Recurring Basis

The Company's $500.0 million principal amount of 2.125% notes due March 15, 2019 (2019 Notes), $500.0 million principal amount of 3.000% notes due March 15, 2021 (2021 Notes) and $750.0 million principal amount of 2.950% senior notes due June 1,

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2024 (2024 Notes) are measured at fair value on a quarterly basis for disclosure purposes. The fair values of the 2019 Notes, 2021 Notes and 2024 Notes as of ~~December~~June 30, ~~2017~~2018 were approximately ~~$499.2~~$498.0 million, ~~$504.7~~$495.9 million and ~~$746.4~~$713.4 million, respectively, based on the last trading price for the period (classified as Level 2 in ~~the~~ fair value hierarchy due to relatively low trading volume).

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

As of June 30, 2018, the Company had non-marketable equity securities in private companies of $49.6 million, which were classified as Level 3 assets. The Company’s investments in non-marketable securities of private companies, together with its non-financial assets such as property, plant and equipment, goodwill and acquisition-related intangibles, are recorded at fair value only if the Company recognizes an impairment or an observable price adjustment. Such impairment losses or observable price adjustments were not material during all periods presented.

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Note 5.	Financial Instruments

The following is a summary of cash equivalents and available-for-sale securities as of the end of the periods presented:


	December 30, 2017									April 1, 2017									June 30, 2018									March 31, 2018
(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Money market funds	$	279,946	$	—	$	—		$	279,946	$	298,307	$	—	$	—		$	298,307	$	458,706	$	—	$	—		$	458,706	$	1,291,891	$	—	$	—		$	1,291,891
Financial institution
securities	499,996		—		—			499,996		348,797		—		—			348,797		599,832		—		—			599,832		434,901		—		—			434,901
Non-financial institution
securities	395,795		259		(790		)	395,264		409,109		647		(496		)	409,260		615,958		1		(1,413		)	614,546		326,219		—		(1,376		)	324,843
U.S. government and
agency securities	198,416		13		(226		)	198,203		130,749		8		(223		)	130,534		421,679		9		(327		)	421,361		58,913		1		(272		)	58,642
Foreign government and
agency securities	300,776		—		—			300,776		322,172		—		(51		)	322,121		174,405		—		—			174,405		179,957		—		—			179,957
Mortgage-backed securities	1,193,776		3,874		(15,324		)	1,182,326		1,186,732		3,527		(14,757		)	1,175,502		820,305		580		(23,932		)	796,953		866,048		660		(22,311		)	844,397
Asset-backed securities	224,276		346		(1,007		)	223,615		220,033		404		(686		)	219,751		90,426		12		(1,410		)	89,028		92,751		16		(1,378		)	91,389
Debt mutual funds	101,350		—		(11,439		)	89,911		101,350		—		(12,674		)	88,676		101,350		—		(15,717		)	85,633		101,350		—		(11,680		)	89,670
Bank loans	163,230		631		(188		)	163,673		153,281		839		(106		)	154,014
Commercial mortgage-
backed securities	241,539		68		(2,534		)	239,073		221,504		146		(3,679		)	217,971		146,984		—		(3,595		)	143,389		156,296		1		(3,427		)	152,870
Equity securities	7,500		—		(1,564		)	5,936		—		—		—			—
Marketable equity securities																			7,500		—		(1,433		)	6,067		7,500		726		—			8,226
	$	3,606,600	$	5,191	$	(33,072	)	$	3,578,719	$	3,392,034	$	5,571	$	(32,672	)	$	3,364,933	$	3,437,145	$	602	$	(47,827	)	$	3,389,920	$	3,515,826	$	1,404	$	(40,444	)	$	3,476,786

Financial institution securities include securities issued or managed by financial institutions in various forms, such as commercial paper and time deposits. Substantially all time deposits were issued by institutions outside the U.S. as of June 30, 2018 and March 31, 2018.

The following tables show the fair values and gross unrealized losses of the Company’s investments, aggregated by investment category, for individual securities that have been in a continuous unrealized loss position for the length of time specified, as of ~~December~~June 30, ~~2017~~2018 and ~~April 1, 2017:~~March 31, 2018:


	December 30, 2017															June 30, 2018
	Less Than 12 Months					12 Months or Greater					Total					Less Than 12 Months					12 Months or Greater					Total
(In thousands)	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Non-financial institution securities	$	123,647	$	(580	)	$	15,312	$	(210	)	$	138,959	$	(790	)	$	57,501	$	(1,193	)	$	7,910	$	(220	)	$	65,411	$	(1,413	)
U.S. government and
agency securities	36,918		(164		)	7,076		(62		)	43,994		(226		)	52,351		(224		)	4,586		(103		)	56,937		(327		)
Mortgage-backed securities	644,939		(6,632		)	352,193		(8,692		)	997,132		(15,324		)	424,784		(10,639		)	340,733		(13,293		)	765,517		(23,932		)
Asset-backed securities	136,281		(596		)	48,739		(411		)	185,020		(1,007		)	53,832		(944		)	33,333		(466		)	87,165		(1,410		)
Debt mutual funds	—		—			89,911		(11,439		)	89,911		(11,439		)	—		—			85,633		(15,717		)	85,633		(15,717		)
Bank loans	29,161		(183		)	500		(5		)	29,661		(188		)
Commercial mortgage-
backed securities	134,826		(1,111		)	80,826		(1,423		)	215,652		(2,534		)	84,596		(1,830		)	57,875		(1,765		)	142,471		(3,595		)
Equity securities	5,936		(1,564		)	—		—			5,936		(1,564		)
Marketable equity securities																6,067		(1,433		)	—		—			6,067		(1,433		)
	$	1,111,708	$	(10,830	)	$	594,557	$	(22,242	)	$	1,706,265	$	(33,072	)	$	679,131	$	(16,263	)	$	530,070	$	(31,564	)	$	1,209,201	$	(47,827	)

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	April 1, 2017															March 31, 2018
	Less Than 12 Months					12 Months or Greater					Total					Less Than 12 Months					12 Months or Greater					Total
(In thousands)	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Non-financial institution securities	$	68,850	$	(492	)	$	1,022	$	(4	)	$	69,872	$	(496	)	$	69,780	$	(1,146	)	$	8,344	$	(230	)	$	78,124	$	(1,376	)
U.S. government and
agency securities	64,895		(223		)	—		—			64,895		(223		)	13,471		(176		)	9,176		(96		)	22,647		(272		)
Mortgage-backed securities	811,058		(11,872		)	139,931		(2,885		)	950,989		(14,757		)	510,988		(11,048		)	299,663		(11,263		)	810,651		(22,311		)
Asset-backed securities	119,845		(651		)	4,689		(35		)	124,534		(686		)	57,128		(876		)	32,696		(502		)	89,824		(1,378		)
Debt mutual funds	—		—			88,676		(12,674		)	88,676		(12,674		)	—		—			89,670		(11,680		)	89,670		(11,680		)
Bank loans	15,139		(106		)	—		—			15,139		(106		)
Foreign government and
agency securities	64,857		(51		)	—		—			64,857		(51		)
Commercial mortgage-
backed securities	165,393		(1,706		)	24,362		(1,973		)	189,755		(3,679		)	95,435		(1,760		)	56,051		(1,667		)	151,486		(3,427		)
	$	1,310,037	$	(15,101	)	$	258,680	$	(17,571	)	$	1,568,717	$	(32,672	)	$	746,802	$	(15,006	)	$	495,600	$	(25,438	)	$	1,242,402	$	(40,444	)

As of ~~December~~June 30, ~~2017,~~2018, the gross unrealized losses that had been outstanding for less than twelve months were primarily related to mortgage-backed securities due to the general rising of the interest-rate ~~environment. However,~~environment, although the percentage of such losses to the total estimated fair value of the mortgage-backed securities was relatively insignificant. The gross unrealized losses that had been outstanding for more than twelve months were primarily related to debt mutual funds and mortgage-backed securities, which were primarily due to the general rising of the interest-rate environment and foreign currency movement.

Starting April 1, 2018, the Company records the change in the fair value of its investment in debt mutual funds and marketable equity securities as part of its interest and other income (expense), net. This change in fair value was a net decrease of $6.2 million for the three months ended June 30, 2018 and resulted in an expense within interest and other income (expense) net for the period.

The Company reviewed the investment portfolio and determined that the gross unrealized losses on these investments as of ~~December~~June 30, ~~2017~~2018 and ~~April 1, 2017~~March 31, 2018 were temporary in nature as evidenced by the fluctuations in the gross unrealized losses within the investment categories. These investments are highly rated by the credit rating agencies, there have been no defaults on any of these securities and ~~we have~~the company has received interest payments as they become due. Therefore, the Company believes that it will be able to collect both principal and interest amount due to the Company. Additionally, in the past several years a portion of the Company's investment in the mortgage-backed securities ~~were~~was redeemed or prepaid by the debtors at par. Furthermore, the aggregate of individual unrealized losses that had been outstanding for twelve months or more ~~were~~was not significant as of ~~December~~June 30, ~~2017~~2018 and ~~April 1, 2017, the majority of which were related to debt mutual funds due to foreign currency and interest rate fluctuations.~~March 31, 2018. The Company neither intends to sell these investments nor concludes that it is more-likely-than-not that it will have to sell them until recovery of their carrying values.

The amortized cost and estimated fair value of marketable debt securities (financial institution securities, non-financial institution securities, U.S. and foreign government and agency securities, asset-backed securities, ~~bank loans,~~ mortgage-backed securities and commercial mortgage-backed securities), by contractual maturity, are shown in the table below. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations without call or prepayment penalties.


	December 30, 2017				June 30, 2018
(In thousands)	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	1,215,851	$	1,215,796	$	1,758,865	$	1,758,593
Due after one year through five years	477,119		475,244		176,391		172,941
Due after five years through ten years	328,437		326,893		148,349		143,894
Due after ten years	1,196,397		1,184,993		785,984		764,086
	$	3,217,804	$	3,202,926	$	2,869,589	$	2,839,514

As of ~~December~~June 30, ~~2017, $1.98~~2018, $1.08 billion of marketable debt securities with contractual maturities of greater than one year were classified as short-term investments. Additionally, the above table ~~did~~does not include investments in money market, ~~funds,~~debt mutual funds and marketable equity securities because these ~~securities~~investments do not have specific contractual maturities.

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Certain information related to available-for-sale securities is as follows:


	Three Months Ended						Nine Months Ended						Three Months Ended
(In thousands)	December 30, 2017			December 31, 2016			December 30, 2017			December 31, 2016			June 30, 2018			July 1, 2017
Proceeds from sale of available-for-sale securities	$	124,857		$	130,891		$	394,276		$	384,236		$	895		$	119,922
Gross realized gains on sale of available-for-sale securities	$	153		$	624		$	1,504		$	2,051		$	96		$	832
Gross realized losses on sale of available-for-sale securities	(2,267		)	(679		)	(2,862		)	(1,280		)	(47		)	(386		)
Net realized gains (losses) on sale of available-for-sale securities	$	(2,114	)	$	(55	)	$	(1,358	)	$	771
Net realized gains on sale of available-for-sale securities													$	49		$	446
Amortization of premiums on available-for-sale securities	$	4,225		$	8,034		$	14,437		$	22,209		$	2,491		$	6,823

The cost of securities matured or sold is based on the specific identification method.


Note 6.	Derivative Financial Instruments

The Company’s primary objective for holding derivative financial instruments is to manage foreign currency exchange rate risk and interest rate risk. As a result of the use of derivative financial instruments, the Company is exposed to the risk that counterparties to derivative contracts may fail to meet their contractual obligations. The Company manages counterparty credit risk in derivative contracts by reviewing counterparty creditworthiness on a regular basis, establishing collateral requirement and limiting exposure to any single counterparty. The right of set-off that exists with certain transactions enables the Company to net amounts due to and from the counterparty, reducing the maximum loss from credit risk in the event of counterparty default.

As of June 30, 2018 and March 31, 2018, the Company had the following outstanding forward currency exchange contracts (in notional amount), which were derivative financial instruments:



(In thousands and U.S. dollars)	June 30, 2018		March 31, 2018
Singapore Dollar	$	26,392	$	24,914
Euro	38,591		38,987
Indian Rupee	64,959		62,472
British Pound	8,125		8,155
Japanese Yen	3,882		3,859
Chinese Yuan	13,247		8,260
	$	155,196	$	146,647

As part of the Company’s strategy to reduce volatility of operating expenses due to foreign exchange rate fluctuations, the Company employs a hedging program with a forward outlook of up to two years for major foreign-currency-denominated operating expenses. The outstanding forward currency exchange contracts expire at various dates through May 2020. The net unrealized losses, which approximate the fair market value of the outstanding forward currency exchange contracts, are expected to be realized into net income within the next two years.

As of June 30, 2018, all of the forward foreign currency exchange contracts were designated and qualified as cash flow hedges and the effective portion of the gain or loss on the forward contracts was reported as a component of other comprehensive income (loss) and reclassified into net income in the same period during which the hedged transaction affects earnings. The estimated amount of such gains or losses as of June 30, 2018 that is expected to be reclassified into earnings was not material. The ineffective portion of the gains or losses on the forward contracts was immaterial and included in the net income for all periods presented.

The Company may enter into forward foreign currency exchange contracts to hedge firm commitments such as acquisitions and capital expenditures. Gains and losses on foreign currency forward contracts that are designated as hedges of anticipated transactions, for which a firm commitment has been attained and the hedged relationship has been effective, are deferred and included in income or expenses in the same period that the underlying transaction is settled. Gains and losses on any instruments not meeting the above criteria are recognized in income or expenses in the consolidated statements of income as they are incurred.

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The Company entered into interest rate swap contracts with certain independent financial institutions to manage interest rate risks related to fixed interest rate expenses from its 2024 Notes and floating interest rate income from its investments in marketable debt securities. See “Note 10. Debt and Credit Facility” for more discussion related to interest rate swap contracts. The interest rate swap contracts were designated and qualified as fair value hedges of the 2024 Notes, and were separately accounted for as a derivative. The interest rate swap contracts and the 2024 Notes were initially measured at fair value. Any subsequent changes in fair values of the interest rate swap contracts and the 2024 Notes will be recorded in the Company’s consolidated balance sheets. During the ~~nine~~three months ended ~~December~~June 30, ~~2017,~~2018, the net change in fair values of the interest rate swap contracts and the underlying 2024 Notes was ~~$11.8~~$7.4 million, which was recorded as a derivative liability for the interest rate swap contacts ~~(as a component of other long-term liabilities on the condensed consolidated balance sheets)~~ and also a reduction from the carrying amount of 2024 Notes. There was no ineffectiveness during all periods presented. ~~Other than this arrangement, there have been no~~

The Company had the following derivative instruments as of June 30, 2018 and March 31, 2018, located on the condensed consolidated balance sheets, utilized for risk management purposes detailed above:



	Foreign Exchange Contracts
	Asset Derivatives			Liability Derivatives
(In thousands)	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
June 30, 2018	Prepaid expenses and other current assets	$	167	Other accrued liabilities	$	5,040
March 31, 2018	Prepaid expenses and other current assets	$	2,922	Other accrued liabilities	$	12

The Company does not offset or net the fair value amounts of derivative financial instruments in its condensed consolidated balance sheets. The potential effect of rights of set-off associated with the derivative financial instruments was not material ~~changes~~ to the Company's condensed consolidated balance sheets for all periods presented.

The following table summarizes the effect of derivative ~~financial~~ instruments ~~since April 1, 2017.~~on the condensed consolidated statements of income for the first quarter of fiscal 2019 and 2018:



	Three Months Ended
(In thousands)	June 30, 2018			July 1, 2017
Amount of gains (losses) recognized in other comprehensive income on derivative (effective portion of cash flow hedging)	$	(5,909	)	$	1,086
Amount of gains (losses) reclassified from accumulated other comprehensive income into income (effective portion) *	$	(430	)	$	357
Amount of gains (losses) recorded (ineffective portion) *	$	(11	)	$	(19	)


*	Recorded in interest and other income (expense), net within the condensed consolidated statements of income.


Note 7.	Stock-Based Compensation Plans

The Company’s equity incentive plans are broad-based, long-term retention programs that cover employees, consultants and non-employee directors of the Company. These plans are intended to attract and retain talented employees, consultants and non-employee directors and to provide such persons with a proprietary interest in the Company.

Stock-Based Compensation

The following table summarizes stock-based compensation expense related to stock awards granted under the Company’s equity incentive plans and rights to acquire stock granted under the Company’s Employee Stock Purchase Plan (ESPP):

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	Three Months Ended				Nine Months Ended				Three Months Ended
(In thousands)	December 30, 2017		December 31, 2016		December 30, 2017		December 31, 2016		June 30, 2018		July 1, 2017
Stock-based compensation included in:
Cost of revenues	$	2,188	$	1,945	$	6,486	$	5,994	$	2,035	$	2,150
Research and development	20,217		17,154		57,779		48,803		20,930		17,466
Selling, general and administrative	14,396		11,768		40,944		35,276		12,643		12,420
	$	36,801	$	30,867	$	105,209	$	90,073	$	35,608	$	32,036

Employee Stock Option Plans

The types of awards allowed under the 2007 Equity Incentive Plan (2007 Equity Plan) include incentive stock options, non-qualified stock options, restricted stock units (RSUs), restricted stock and stock appreciation rights. To date, the Company has issued a mix of non-qualified stock options and RSUs under the 2007 Equity Plan; however, there was no issuance of stock options during the first ~~nine months~~quarter of fiscal ~~year 2018~~2019 and the entire fiscal ~~year 2017.~~2018. The Company's stock-based compensation expenses related to options during the first ~~nine months~~quarter of fiscal ~~year 2018~~2019 and the number of options outstanding as of ~~December~~June 30, ~~2017~~

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2018 were not material. ~~On August 9, 2017, the stockholders approved an amendment to increase the authorized number of shares reserved for issuance under the 2007 Equity Plan by 1.9 million shares.~~ As of ~~December~~June 30, ~~2017, 11.3~~2018, 11.2 million shares remained available for grant under the 2007 Equity Plan.

The total pre-tax intrinsic value of options exercised during the three ~~and nine~~ months ended ~~December~~June 30, 2018 and July 1, 2017 was ~~$303~~$220 thousand and ~~$3.5 million, respectively. The total pre-tax intrinsic value of options exercised during the three and nine months ended December 31, 2016 was~~ $2.8 ~~million and $24.2~~ million, respectively. This intrinsic value represents the difference between the exercise price and the fair market value of the Company’s common stock on the date of exercise.

RSU Awards

A summary of the Company’s RSU activity and related information is as follows:


	RSUs Outstanding				RSUs Outstanding
(Shares in thousands)	Number of Shares		Weighted-Average Grant-Date Fair Value Per Share		Number of Shares		Weighted-Average Grant-Date Fair Value Per Share
April 2, 2016	6,619		$	40.74
Granted	3,398		$	44.38
Vested	(2,619	)	$	39.49
Cancelled	(410	)	$	41.63
April 1, 2017	6,988		$	42.93	6,988		$	42.93
Granted	3,468		$	60.36	3,718		$	60.18
Vested	(2,426	)	$	42.18	(3,016	)	$	43.30
Cancelled	(416	)	$	46.94	(701	)	$	48.16
December 30, 2017	7,614		$	50.48
March 31, 2018					6,989		$	51.39
Granted					261		$	65.69
Vested					(212	)	$	53.68
Cancelled					(128	)	$	50.50
June 30, 2018					6,910		$	51.84

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The estimated fair values of ~~RSU awards~~RSUs were calculated based on the market price of Xilinx common stock on the date of grant, reduced by the present value of dividends expected to be paid on Xilinx common stock prior to vesting. The per share weighted-average fair value of RSUs granted during the ~~third~~first quarter of fiscal ~~year 2018~~2019 was ~~$67.40~~$65.69 ($~~49.50~~57.99 for the ~~third~~first quarter of fiscal ~~year 2017), and for the first nine months of fiscal year 2018 was $60.36 ($43.40 for the first nine months of fiscal year 2017)~~2018), which were calculated based on estimates at the date of grant using the following weighted-average assumptions:


	Three Months Ended				Nine Months Ended				Three Months Ended
	December 30, 2017		December 31, 2016		December 30, 2017		December 31, 2016		June 30, 2018		July 1, 2017
Risk-free interest rate	1.9	%	1.4	%	1.8	%	0.9	%	2.7	%	1.7	%
Dividend yield	2.0	%	2.5	%	2.2	%	2.8	%	2.1	%	2.3	%

For the majority of RSUs granted, the number of shares of common stock issued on the date the RSU awards vest is net of the minimum statutory withholding requirements that the Company pays in cash to the appropriate taxing authorities on behalf of ~~its~~the Company's employees. During the first three months of fiscal 2019 and 2018, the Company withheld $5.5 million and $25.6 million worth of RSU awards, respectively, to satisfy the employees’ tax obligations.

During the ~~third quarter~~first three months of fiscal ~~year 2018,~~2019, the Company realized an immaterial amount of excess tax benefits after adjusting for the impact of the decrease in the tax rate from 35% to 31.5% due to the enactment of the Tax Cuts and Jobs Act as detailed in “Note 14. Income Taxes” to our condensed consolidated financial statements, included in “Part I. Financial Information.” During the first nine months of fiscal year 2018, the Company realized excess tax benefits of $17.5 million. During the third quarter and the first nine months of fiscal year 2017, the Company realized excess tax benefits of $1.2 million and $10.9 million, respectively. These benefits were recorded in the condensed consolidated statements of income as a component of the provision for income taxes. During the first three months of fiscal 2018, the Company realized tax benefits of $11.6 million.

Employee Stock Purchase Plan

The fair values of stock purchase plan rights under the Company’s ESPP were estimated using the Black-Scholes option pricing model. Under the Company’s ESPP, shares are only issued during the second and fourth quarters of each fiscal year. ~~Employees purchased 355 thousand~~Therefore, no shares ~~for $16.9 million~~were issued during the ~~second~~first quarter of fiscal ~~year 2018 and 446 thousand shares for $15.0 million during~~

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the second quarter of fiscal year 2017. The per-share weighted-average fair value of stock purchase rights granted under the ESPP during the second quarter of fiscal years 2018 and 2017 was $16.46 and $11.64, respectively. The fair values of stock purchase plan rights granted in the second quarter of fiscal years 2018 and 2017 were estimated using the Black-Scholes option pricing model at the date of grant using the following assumptions:

2018 2017
Expected life of options (years) 1.25
1.25
Expected stock price volatility 0.28
0.23
Risk-free interest rate 1.3 % 0.5 %
Dividend yield 2.2 % 2.6 %

2019 or 2018. The next scheduled purchase under the ESPP is in the ~~fourth~~second quarter of fiscal ~~year 2018. On August 9, 2017, the stockholders approved an amendment to increase the authorized number of shares reserved for issuance under the ESPP by 2.0 million shares.~~2019. As of ~~December~~June 30, ~~2017, 9.9~~2018, 9.3 million shares were available for future issuance under the Company's ESPP.


Note 8.	Net Income Per Common Share

The computation of basic net income per common share for all periods presented is derived from ~~the~~ information on the condensed consolidated statements of income, and there are no reconciling items in the numerator used to compute the diluted net income per common share. The following table summarizes the computation of basic and diluted net income per common share:


	Three Months Ended				Nine Months Ended
(In thousands, except per share amounts)	December 30, 2017		December 31, 2016		December 30, 2017		December 31, 2016		June 30, 2018		July 1, 2017
Net income available to common stockholders	$	11,945	$	141,846	$	346,722	$	469,087	$	190,038	$	157,244
Weighted average common shares outstanding-basic	254,089		250,982		248,671		252,811		252,682		247,911
Dilutive effect of employee equity incentive plans	3,235		2,907		2,843		2,400		3,253		3,817
Dilutive effect of 2017 Convertible Notes	—		10,165		1,990		9,212
Dilutive effect of warrants	784		6,727		5,491		4,759
Dilutive effect of 2017 Convertible Notes and warrants									—		14,069
Weighted average common shares outstanding-diluted	258,108		270,781		258,995		269,182		255,935		265,797
Basic earnings per common share	$	0.05	$	0.57	$	1.39	$	1.86
Diluted earnings per common share	$	0.05	$	0.52	$	1.34	$	1.74
Basic net income per common share									$	0.75	$	0.63
Diluted net income per common share									$	0.74	$	0.59

The total shares used in the denominator of the diluted net income per common share calculation include potentially dilutive common equivalent shares outstanding that are not included in basic net income per common share calculation. The diluted shares were calculated by applying the treasury stock method to the impact of the equity incentive plans, the incremental shares issuable assuming conversion of the Company's $600.0 million principal amount of 2.625% convertible notes issued in June 2010 (2017 Convertible Notes), before its maturity on June 15, 2017, and exercise of warrants on a weighted-average outstanding ~~basis.~~basis, before the final settlements during the third quarter of fiscal 2018. The 2017 Convertible Notes matured during the first quarter of fiscal ~~year~~ 2018, and the Company exercised its call options to neutralize the dilutive effect of the incremental shares from the 2017 Convertible Notes. ~~The warrants were fully settled during the third quarter of fiscal year 2018.~~ Because the number of diluted shares in the above table for the ~~nine~~three months ended ~~December 30,~~July 1, 2017 was calculated based on a weighted-average outstanding basis, it included approximately ~~2.0~~6.0 million shares of dilutive impact from the 2017 Convertible Notes through the maturity ~~date and 5.5 million shares~~date. Such impact will no longer be applicable in future periods.

Table of ~~dilutive impact from warrants before the settlement. See "Note 10. Debt and Credit Facility" for more discussion of the Company's debt, call options and warrants.~~Contents

Outstanding stock options and RSUs under the Company's stock award plans to purchase approximately ~~248~~366 thousand and ~~3.4 million~~152 thousand shares for the ~~third~~first quarter ~~and the first nine months~~ of fiscal ~~year~~2019 and 2018, respectively, were excluded from the diluted net income per common share calculation by applying the treasury stock method, as their inclusion would have been ~~anti-dilutive.~~antidilutive. These options and RSUs could be dilutive in the future if the Company’s average share price increases and is greater than the combined exercise prices and the unamortized fair values of these options and RSUs.

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Note 9.	Inventories

Inventories are stated at the lower of actual cost (determined using the first-in, first-out method), or market (estimated net realizable value) and are comprised of the following:


(In thousands)	December 30, 2017		April 1, 2017		June 30, 2018		March 31, 2018
Raw materials	$	16,807	$	14,517	$	17,405	$	14,674
Work-in-process	164,609		161,120		169,926		167,039
Finished goods	45,117		51,396		59,670		54,364
	$	226,533	$	227,033	$	247,001	$	236,077


Note 10.	Debt and Credit Facility

~~2017 Convertible Notes~~

During the first quarter of fiscal year 2018, the Company received conversion requests from the remaining holders of the 2017 Convertible Notes. Upon settlement, the holders received a cash payment equal to the par value of the 2017 Convertible Notes of $457.9 million, as well as 9.0 million shares of the Company's common stock. In conjunction with the settlement, the Company exercised its call options on its shares of common stock that it purchased to hedge against the dilution from the conversion of the 2017 Convertible Notes, and received 9.0 million shares from the hedge counterparties. As of the end of the first quarter of fiscal year 2018, the 2017 Convertible Notes were no longer outstanding.

~~The carrying values of the liability and equity components of the 2017 Convertible Notes are reflected in the Company’s condensed consolidated balance sheets as follows:~~

(In thousands) December 30, 2017 April 1, 2017
Liability component:

   Principal amount of the 2017 Convertible Notes $ —
$ 457,918
   Unamortized discount of liability component —
(1,977 )
   Hedge accounting adjustment – sale of interest rate swap —
571
   Unamortized debt issuance costs associated with 2017 Convertible Notes —
(184 )
   Net carrying value of the 2017 Convertible Notes $ —
$ 456,328

Equity component (including temporary equity) – net carrying value $ —
$ 50,688

Prior to the conversion, interest expense related to the 2017 Convertible Notes was included in interest and other income (expense), net on the condensed consolidated statements of income, and was recognized as follows:

Three Months Ended Nine Months Ended
(In thousands) December 30, 2017 December 31, 2016 December 30, 2017 December 31, 2016
Contractual coupon interest $ —
$ 3,938
$ 2,300
$ 11,813
Amortization of debt issuance costs —
362
184
1,086
Amortization of debt discount, net —
2,763
1,406
8,289
Total interest expense related to the 2017 Convertible Notes $ —
$ 7,063
$ 3,890
$ 21,188

To reduce the hedging costs of purchasing the call options on its common stock as described above, the Company, under separate transactions, sold warrants to independent counterparties, which gave the counterparties the right to purchase up to 21.1 million shares of the Company's common stock at $40.26 per share. All of the warrants were exercised as of December 30, 2017 and the Company issued 9.2 million shares of its common stock for the settlement.

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2019 Notes and 2021 Notes

On March 12, 2014, the Company issued the 2019 Notes and 2021 Notes at a discounted price of 99.477% and 99.281% of par, respectively. Interest on the 2019 Notes and 2021 Notes is payable semi-annually on March 15 and September 15.

The Company received net proceeds of $990.1 million from issuance of the 2019 Notes and 2021 Notes, after the debt discount and deduction of debt issuance costs. The debt discounts and issuance costs are amortized to interest expense over the terms of the 2019 Notes and 2021 Notes. As of ~~December~~June 30, ~~2017,~~2018, the remaining term of the 2019 Notes and 2021 Notes are ~~1.2~~0.7 years and ~~3.2~~2.7 years respectively.

The following table summarizes the carrying value of the 2019 Notes and 2021 Notes as of ~~December~~June 30, ~~2017~~2018 and ~~April 1, 2017:~~March 31, 2018:



(In thousands)	December 30, 2017			April 1, 2017			June 30, 2018			March 31, 2018
Principal amount of the 2019 Notes	$	500,000		$	500,000		$	500,000		$	500,000
Unamortized discount of the 2019 Notes	(636		)	(1,037		)	(365		)	(501		)
Unamortized debt issuance costs associated with the 2019 Notes	(398		)	(654		)
Unamortized debt issuance costs associated with 2019 Notes							(228		)	(313		)
Carrying value of the 2019 Notes							499,407			499,186
Principal amount of the 2021 Notes	500,000			500,000			500,000			500,000
Unamortized discount of the 2021 Notes	(1,723		)	(2,107		)	(1,461		)	(1,593		)
Unamortized debt issuance costs associated with the 2021 Notes	(773		)	(955		)
Unamortized debt issuance costs associated with 2021 Notes							(651		)	(711		)
Carrying value of the 2021 Notes							$	497,888		$	497,696
Total carrying value	$	996,470		$	995,247		$	997,295		$	996,882

Interest expense related to the 2019 Notes and 2021 Notes was included in interest and other income (expense), net on the condensed consolidated statements of income as follows:


	Three Months Ended				Nine Months Ended				Three Months Ended
(In thousands)	December 30, 2017		December 31, 2016		December 30, 2017		December 31, 2016		June 30, 2018		July 1, 2017
Contractual coupon interest	$	6,406	$	6,406	$	19,219	$	19,219	$	6,406	$	6,406
Amortization of debt issuance costs	146		146		439		439		146		146
Amortization of debt discount, net	265		257		785		764		268		260
Total interest expense related to the 2019 Notes and 2021 Notes	$	6,817	$	6,809	$	20,443	$	20,422	$	6,820	$	6,812

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2024 Notes

On May 30, 2017, the Company issued the 2024 Notes at a discounted price of 99.887% of par. Interest on the 2024 Notes is payable semi-annually on June 1 and December 1.

The Company received ~~net proceeds of~~ $745.2 million from the issuance of the 2024 Notes, after the debt discount and deduction of debt issuance costs. The debt discounts and issuance costs are amortized to interest expense over the term of the 2024 Notes. As of ~~December~~June 30, ~~2017,~~2018, the remaining term of the 2024 Notes is approximately ~~6.5~~6.0 years.

In relation to the issuance of the 2024 Notes, the Company entered into interest rate swap contracts with certain independent financial institutions, whereby the Company pays on a semi-annual basis, a variable interest rate equal to the three-month London Interbank Offered Rate (LIBOR) plus 91.43 bps, and receives on a semi-annual basis, interest income at a fixed interest rate of 2.950%. The Company incurred a net interest expense of $851 thousand for the three months ended June 30, 2018 and earned a net interest income of ~~$1.3 million and $3.4 million during~~$643 thousand for the three ~~and nine~~ months ended ~~December 30,~~July 1, 2017, ~~respectively,~~ from the interest rate swap contracts, which was included in interest and other income (expense), net on the condensed consolidated statements of ~~income as a reduction to interest expense.~~income. As of ~~December~~June 30, ~~2017,~~2018, the fair value of the interest rate swap contracts was ~~$11.8~~$36.4 million, which was recorded in other long-term ~~liabilities on the condensed consolidated balance sheets.~~

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liabilities.

The following table summarizes the carrying value of the 2024 Notes as of ~~December~~June 30, ~~2017~~2018 and ~~April 1, 2017:~~March 31, 2018:


(In thousands)	December 30, 2017			April 1, 2017		June 30, 2018			March 31, 2018
Principal amount of the 2024 Notes	$	750,000		$	—	$	750,000		$	750,000
Unamortized discount of the 2024 Notes	(783		)	—		(727		)	(755		)
Unamortized debt issuance costs associated with 2024 Notes	(3,642		)	—		(3,358		)	(3,500		)
Carrying value of the 2024 Notes	$	745,575		$	—
Fair value hedge adjustment - interest rate swap contracts	(11,834		)	—
Carrying Value of the 2024 Notes						$	745,915		$	745,745
Fair value hedge adjustment — interest rate swap contracts						(36,416		)	(29,001		)
Net carrying value of the 2024 Notes	$	733,741		$	—	$	709,499		$	716,744

Interest expense related to the 2024 Notes was included in interest and other income (expense), net on the condensed consolidated statements of income as follows:


	Three Months Ended				Nine Months Ended				Three Months Ended
(In thousands)	December 30, 2017		December 31, 2016		December 30, 2017		December 31, 2016		June 30, 2018		July 1, 2017
Contractual coupon interest	$	4,238	$	—	$	9,604	$	—
Contractual coupon interest (including interest rate swap, net)									$	6,382	$	1,322
Amortization of debt issuance costs	142		—		331		—		142		47
Amortization of debt discount, net	27		—		65		—		28		10
Total interest expense related to the 2024 Notes	$	4,407	$	—	$	10,000	$	—	$	6,552	$	1,379

Revolving Credit Facility

On December 7, 2016,, the Company entered into a ~~$400.0~~$400.0 million senior unsecured revolving credit facility that, upon certain conditions, may be extended by an additional $150.0 million, with a syndicate of banks (expiring in December ~~2021~~)2021). Borrowings under the credit facility will bear interest at a benchmark rate plus an applicable margin based upon the Company’s credit rating. In connection with the credit facility, the Company is required to maintain certain financial and nonfinancial covenants. As of ~~December~~June 30, ~~2017~~,2018, the Company had made no borrowings under this credit facility and was not in violation of any of the covenants.

Note 11. Common Stock Repurchase Program

The Board of Directors (Board) has approved stock repurchase programs enabling the Company to repurchase its common stock in the open market or through negotiated transactions with independent financial institutions. On May 16, 2016, the Board authorized the repurchase of up to $1.00 billion of the Company's common stock and debentures (2016 Repurchase Program). The 2016 Repurchase Program has no stated expiration date. On May 16, 2018, the Board authorized the 2018 Repurchase Program to repurchase the Company's common stock and debentures up to $500.0 million.

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Through ~~December~~June 30, ~~2017,~~2018, the Company had used ~~$628.7~~$929.4 million of the $1.00 billion authorized under the 2016 Repurchase Program, leaving ~~$371.3~~$70.6 million available for future repurchases. The Company’s current policy is to retire all repurchased shares, and consequently, no treasury shares were held as of ~~December~~June 30, ~~2017~~2018 and ~~April 1, 2017.~~March 31, 2018.

During the first ~~nine months~~quarter of fiscal ~~year 2018,~~2019, the Company repurchased ~~4.7~~2.1 million shares of common stock ~~in the open market and through accelerated share repurchase agreements with multiple independent financial institutions~~ for a total of ~~$310.8 million. During~~$136.8 million and during the first ~~nine months~~quarter of fiscal ~~year 2017,~~2018, the Company repurchased ~~8.0~~1.0 million shares of common stock ~~in the open market~~ for a total of ~~$414.0~~$67.1 million.

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Note 12.	Interest and Other Income (Expense), Net

The components of interest and other income (expense), net are as follows:


	Three Months Ended						Nine Months Ended						Three Months Ended
(In thousands)	December 30, 2017			December 31, 2016			December 30, 2017			December 31, 2016			June 30, 2018			July 1, 2017
Interest income	$	17,738		$	14,504		$	44,984		$	38,068		$	17,397		$	13,414
Interest expense	(11,224		)	(13,872		)	(34,333		)	(41,610		)	(13,372		)	(12,081		)
Other expense, net	(1,045		)	(1,024		)	(1,513		)	(2,588		)
Interest and other income (expense), net	$	5,469		$	(392	)	$	9,138		$	(6,130	)
Other income (expense), net													(6,872		)	506
Total interest and other income (expense), net													$	(2,847	)	$	1,839


Note 13.	Accumulated Other Comprehensive Loss

Comprehensive income (loss) is defined as the change in equity of a company during a period from transactions and other events and circumstances from non-owner sources. The components of the Company's accumulated other comprehensive loss are as follows:


(In thousands)	December 30, 2017			April 1, 2017			June 30, 2018			March 31, 2018
Accumulated unrealized losses on available-for-sale securities, net of tax	$	(17,503	)	$	(17,091	)	$	(23,156	)	$	(29,844	)
Accumulated unrealized gains on hedging transactions, net of tax	1,419			661
Accumulated unrealized gains (losses) on hedging transactions, net of tax							(4,386		)	1,674
Accumulated cumulative translation adjustment, net of tax	(5,419		)	(8,251		)	(8,390		)	(6,339		)
Accumulated other comprehensive loss	$	(21,503	)	$	(24,681	)
Total accumulated other comprehensive loss							$	(35,932	)	$	(34,509	)

The related tax effects of other comprehensive ~~loss~~income (loss) were not material for all periods presented.


Note 14.	Income Taxes

The Company recorded a tax ~~provisions~~provision of ~~$183.2 million and $217.7~~$22.9 million for the ~~third~~first quarter ~~and the first nine months~~ of fiscal 2019 as compared to $13.7 million in the same prior year ~~2018, respectively,~~period, representing an effective tax ~~rate~~rates of ~~94%~~11% and ~~39%~~8%, respectively. The ~~Company recorded tax provisions~~prior year balance has been restated to reflect the retrospective application of ~~$20.7 million~~the current authoritative guidance for revenue recognition. Please refer to "Note 2. Recent Accounting Changes and ~~$50.8 million~~Accounting Pronouncements" for ~~the third quarter and the first nine months of fiscal year 2017, respectively, representing an effective tax rate of 13% and 10%, respectively.~~additional detail.

On December 22, 2017, the Tax Cuts and Jobs Act (TCJA) was enacted into law. The TCJA provides ~~for~~ numerous significant tax law changes ~~and modifications~~ including the reduction of the U.S. federal corporate income tax rate from 35% to 21%, the requirement for companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and the creation of new taxes on certain foreign-sourced earnings. ~~As a fiscal year-end taxpayer, certain~~Some provisions of the TCJA began to impact the Company in ~~the third quarter of~~ fiscal ~~year~~ 2018, while other provisions ~~will~~ impact the Company beginning in fiscal ~~year~~ 2019.

~~The corporate tax rate reduction is effective as of January 1, 2018. Since~~

In accordance with Staff Accounting Bulletin (SAB) 118, the Company has a fiscal year rather than a calendar year, it is subject to rules relating to transitional tax rates. As a result, the Company’s fiscal year 2018 federal statutory rate will be a blended rate of 31.5%. The change in the statutory tax rate from 35% to 31.5% for the Company's fiscal year 2018 does not have a significant impact on the effective tax rate.

~~Accounting Standards Codification (ASC) 740, Income Taxes, requires companies to recognize~~recorded provisional amounts recognizing the effect of the tax law changes in ~~the period of enactment. However, the SEC staff issued Staff Accounting Bulletin 118 which will allow companies to record~~prior periods, but may adjust those provisional amounts during a measurement period that is similar to the measurement period used when accounting for business combinations. As of ~~December~~June 30, ~~2017,~~2018, the Company has ~~made a reasonable~~not adjusted the provisional estimate ~~of the~~recorded in prior periods for effects ~~on its existing deferred tax balances and~~from the one-time transition tax. The ~~Company recognized a provisional~~ amount of $183.2 million, which was included as a component of income tax expense from continuing operations. The Company will continue to assess the impact of the recently enacted tax law (and expected further guidance from federal and state tax authorities as well as further guidancerecorded for the ~~associated income tax accounting) on its business and consolidated financial statements.~~

~~The~~ one-time transition tax ~~is based on~~remains provisional as the ~~Company’s~~Company has not yet finalized its calculation of the total post-1986 earnings and profits (E&P) of its foreign subsidiaries. The Company had previously accrued deferred taxes on a portion of these same earnings. The larger balance was permanently reinvested outside the U.S. The Company recorded provisional U.S. federal and state amounts for its one-time transition tax liabilities,

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resulting in an increase in income tax expense of $582.8 million. In addition, the Company released the related deferred tax liabilities, resulting in a decrease in income tax expense of $424.3 million. The net increase to tax expense is $158.5 million.

~~The Company has not yet completed its calculation of the total post-1986 E&P~~ for its foreign subsidiaries. ~~In addition,~~Additionally, the one-time transition tax is based in part on the amount of those earnings held in cash and other specified assets either as of the end of fiscal year 2018 or the average of the year-end balances for fiscal years 2016 and 2017. The Company's calculation of this amount will change with further analysis, fourth quarter activities, and further guidance from the U.S. federal and state tax authorities about the application of these new rules. The Company will continue to evaluate the impact of the tax law change as it relates to providing U.S. taxes on its investments in foreign subsidiaries. Since U.S. federal taxes have been recognized through the ~~accounting for~~one-time transition tax on all accumulated and previously untaxed foreign earnings through December 31, 2017, the ~~outside basis difference~~Company does not intend to permanently reinvest those earnings.

Table of ~~its foreign entities.~~Contents

As a result of the reduction of the corporate income tax rate to 21%, U.S. GAAP requires companies to remeasure their deferred tax assets and liabilities as of the date of enactment, with resulting tax effects accounted for in the reporting period of enactment. The Company remeasured deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future. The provisional amount recorded for the remeasurement and resulting write-down of the Company's deferred tax balance was $26.2 million. The Company’s actual write-down may vary materially from the provisional amount because the final analysis will be based on balances as of March 31, 2018 and actual activities of the fourth quarter of fiscal year 2018.

The difference between the ~~blended~~ U.S. federal statutory tax rate of ~~31.5%~~21% and the Company's effective tax rate in ~~all periods~~the first quarter of fiscal ~~year 2018~~2019 was primarily due to the ~~one-time transition~~beneficial impact of income earned in lower tax ~~net of~~rate jurisdictions, which was partially offset by the ~~reversal of the related deferred~~new tax ~~liabilities.~~

on low-taxed income from foreign subsidiaries. The difference between the U.S. federal statutory tax rate of 35% and the Company’s effective tax rate in ~~all periods~~the first quarter of fiscal ~~year 2017~~2018 was primarily due to income earned in lower tax rate jurisdictions, for which no U.S. income tax had been provided, as the Company had intended to permanently reinvest the earnings outside of the U.S.

The Company’s total gross unrecognized tax benefits as of ~~December~~June 30, ~~2017~~2018, determined in accordance with FASB authoritative guidance for measuring uncertain tax positions, increased by ~~$91.1 million~~$825 thousand in the first ~~nine months~~quarter of fiscal ~~year 2018~~2019 to ~~$121.5~~$126.0 million. The increase is primarily attributable to an additional deduction claimed on federal and state amended tax returns for repurchase premium paid in connection with the early redemption of the Company’s 3.125% Junior Convertible debenture due March 15, 2037 (2037 Convertible Notes) in fiscal year 2014. As of December 30, 2017, the total amount of unrecognized tax benefits that, if realized in a future period, would favorably affect the effective tax rate was ~~$14.5 million.~~$16.0 million as of June 30, 2018. Another $85.5 million ~~related to the 2037 Convertible Notes~~ would increase additional paid-in capital. The $85.5 million relates to an additional deduction claimed on federal and state amended tax returns for fiscal 2014 for repurchase premium paid in that year in connection with the early redemption of the Company’s 3.125% Junior Convertible debenture due March 15, 2037. It is reasonably possible that changes to ~~our~~the Company's unrecognized tax benefits could be significant in the next twelve months due to tax audit settlements and lapses of statutes of limitation. As a result of uncertainties regarding tax audit settlements and their possible outcomes, an estimate of the range of increase or decrease that could occur in the next twelve months cannot be ~~determined at this time.~~made.

The Company’s policy is to include interest and penalties related to income tax liabilities within the provision for income taxes on the condensed consolidated statements of income. The balance of accrued interest and penalties recorded in the condensed consolidated balance sheets and the amounts of interest and penalties included in the Company's provision for income taxes were not material for all periods presented.

The statutes of limitations have closed for U.S. federal income tax purposes for years through fiscal ~~year~~ 2014, for U.S. state income tax purposes for years through fiscal ~~year~~ 2010, and for Ireland income tax purposes for years through fiscal ~~year 2012.~~2013.


Note 15.	Commitments

Xilinx leases some of its facilities and office buildings under non-cancelable operating leases that expire at various dates through April ~~2029~~.2029. Additionally, Xilinx entered into a land lease in conjunction with the Company’s building in Singapore, which will expire in November 2035 and the lease cost was settled in an up-front payment in June 2006. Some of the operating leases for facilities and office buildings require payment of operating costs, including property taxes, repairs, maintenance and insurance. Most of the Company’s leases contain renewal options for varying terms. Xilinx also leases cars under non-cancelable operating leases that expire at various dates through May 2022. Approximate future minimum lease payments under non-cancelable operating leases are as follows:

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Fiscal Years	(In thousands)
2018 (remaining three months)	$	1,751
2019	6,453
Fiscal			(In thousands)
2019 (remaining nine months)			$	6,115
2020	7,752		9,216
2021	5,735		7,198
2022	5,756		5,923
2023			4,798
Thereafter	29,284		30,708
Total	$	56,731	$	63,958

Aggregate future rental income to be received, which includes rents from both owned and leased property, totaled ~~$8.4~~$12.0 million as of ~~December~~June 30, ~~2017.~~2018. Rent expense, net of rental income, under all operating leases was ~~$0.9~~$1.0 million and ~~$3.0~~$1.2 million for the three ~~and nine~~ months ended ~~December~~June 30, ~~2017, respectively. Rent expense, net of rental income, under all operating leases was $1.3 million~~2018 and ~~$3.8 million for the three and nine months ended December 31, 2016,~~July 1, 2017, respectively. Rental income was not material for the ~~third~~first quarter ~~and the first nine months~~ of fiscal ~~years~~ ~~2018~~ ~~and~~ ~~2017~~.2019 or 2018.

Other commitments as of ~~December~~June 30, ~~2017~~2018 totaled ~~$157.5~~$136.5 million and consisted of purchases of inventory and other non-cancelable purchase obligations related to subcontractors that manufacture silicon wafers and provide assembly and some test services. The Company expects to receive and pay for these materials and services in the next three to six months, as the products meet delivery and quality specifications. AsAdditionally, as of ~~December~~June 30, ~~2017~~,2018, the Company also had ~~$27.2~~$18.9 million of non-cancelable license obligations to providers of electronic design automation software and hardware/software maintenance ~~expiring~~and $33.7 million commitments primarily related to open purchase orders from ordinary operations. These commitments expire at various dates through December ~~2019.~~2022.

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Note 16.	Product Warranty and Indemnification

The Company generally sells products with a limited warranty for product quality. The Company provides an accrual for known product issues if a loss is probable and can be reasonably estimated. As of the end of the ~~third~~first quarter of fiscal ~~year~~ ~~2018~~2019 and the end of fiscal ~~year~~ ~~2017~~2018, the accrual ~~balance~~balances of the product warranty liability ~~was~~were immaterial.

The Company offers, subject to certain terms and conditions, to indemnify customers and distributors for costs and damages awarded against these parties in the event the Company’s hardware products are found to infringe third-party intellectual property rights, including patents, copyrights or trademarks, and to compensate certain customers for limited specified costs they actually incur in the event ~~our~~the Company's hardware products experience epidemic failure. To a lesser extent, the Company may from time-to-time offer limited indemnification with respect to its software products. The terms and conditions of these indemnity obligations are limited by contract, which obligations are typically perpetual from the effective date of the agreement. The Company has historically received only a limited number of requests for indemnification under these provisions and has not made any significant payments pursuant to these provisions. The Company cannot estimate the maximum amount of potential future payments, if any, that the Company may be required to make as a result of these obligations due to the limited history of indemnification claims and the unique facts and circumstances that are likely to be involved in each particular claim and indemnification provision. However, there can be no assurances that the Company will not incur any financial liabilities in the future as a result of these obligations.


Note 17.	Contingencies

Patent Litigation

On July 17, 2014, a patent infringement lawsuit was filed by PLL Technologies, Inc. (PTI) against the Company in the U.S. District Court for the District of Delaware (PLL Technologies, Inc. v. Xilinx, Inc., Case No. 1:14-CV-00945). On April 28, 2015, the U.S. Patent Trial and Appeal Board (PTAB) granted Xilinx's request for inter partes review (IPR) with respect to all claims in the litigation. On May 5, 2015, the Court ordered the litigation be stayed pending final resolution of the IPR. On April 18, 2016, the PTAB issued a final written decision in which all of the asserted claims were found unpatentable. On June 14, 2016, PTI filed notice of appeal from the final written decision. On June 13, 2017, the Federal Circuit affirmed the PTAB’s findings of invalidity. On July 19, 2017, the U.S. District Court case was dismissed with prejudice.

On February 1, 2017, a patent infringement lawsuit was filed by Godo Kaisha IP Bridge 1 (IP Bridge) against the Company in the U.S. District Court for the Eastern District of Texas (Godo Kaisha IP Bridge 1 v. Xilinx, Inc., Case. No. 2:17-cv-00100). The lawsuit pertains to two patents and IP Bridge seeks unspecified damages, interest, attorneys’ fees, costs, and a permanent injunction or an on-going royalty. On September 14, 2017, the court granted the Company’s motion to transfer venue and the matter is now pending before the U.S. District Court for the Northern District of California. ~~On February 1, 2017, the Company filed a complaint for declaratory judgment of patent non-infringement against IP Bridge in the U.S. District Court for~~

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the Northern District of California (Xilinx, Inc. v. Godo Kaisha IP Bridge 1, Case No. 5:17-cv-00509). The complaint filed by the Company pertained to twelve other patents and sought judgment of non-infringement by Xilinx, as well as costs, expenses and attorneys’ fees. On June 15, 2017, IP Bridge granted Xilinx a royalty-free covenant not to sue for infringement of those twelve patents, and on June 16, 2017, the parties filed a stipulated dismissal without prejudice of the declaratory judgment action in California. The Company is unable to estimate its range of possible loss, if any, in ~~the remaining action~~this matter at this time.

On March 17, 2017, a patent infringement lawsuit was filed by Anza Technology, Inc. (Anza) against the Company in the U.S. District Court for the District of Colorado (Anza Technology, Inc. v. Xilinx, Inc., Case No. 1:17-cv-00687). The lawsuit pertains to three patents and Anza seeks unspecified damages, attorney fees, interest, costs, and expenses. On October 27, 2017, the court granted the Company’s motion to transfer venue and the matter is now pending before the U.S. District Court for the Northern District of California. The Company is unable to estimate its range of possible loss, if any, in this matter at this time.

On December 11, 2017, a patent infringement lawsuit was filed by Lucio Development LLC (Lucio) against the Company in the U.S. District Court for the Eastern District of Texas (Lucio Development LLC v. Xilinx, Inc., Case No. 6:17-cv-00688). The lawsuit pertains to a single patent and Lucio seeks injunctive relief, unspecified damages, interest, and costs. The Company is unable to estimate its range of possible loss, if any, in this matter at this time.

The Company intends to continue to protect and defend ~~our~~its IP vigorously.

Other Matters

On June 11, 2015, John P. Neblett, as Chapter 7 Trustee of Valley Forge Composite Technologies, Inc., filed a complaint against Xilinx and others in the U.S. Bankruptcy Court for the Middle District of Pennsylvania (Bankruptcy No. 1:13-bk-05253-JJT). The complaint alleges causes of actions against Xilinx for negligence and civil conspiracy relating to alleged violations of U.S. export laws. It seeks at least $50.0 million in damages, together with punitive damages, from the defendants. On September 21, 2015, the action was withdrawn from the U.S. Bankruptcy Court for the Middle District of Pennsylvania and transferred to the U.S. District Court for the Eastern District of Kentucky. On November 2, 2015, Xilinx, along with other defendants, filed a motion to dismiss the complaint. On November 3, 2015, Xilinx filed a motion for sanctions pursuant to Federal Rule of Civil Procedure 11. On June 27, 2016, the Court denied both motions. On September 11, 2017, Xilinx, along with other defendants, filed motions for summary judgment seeking to dispose of the action in its entirety. The Court has not yet ruled on the motions for summary judgment. The Company intends to vigorously defend the case and is unable to estimate its range of possible loss, if any, in this matter at this time.

all claims against them. On April 4, 2017, Mountjoy Chilton Medley, LLP filed a third-party complaint against Xilinx and others in the U.S. District Court for the Middle District of Pennsylvania (Case No. 4:15-cv-01622-MWB). The complaint alleges that to the extent the third-party plaintiff is found liable, that the actions or inactions of Xilinx and others entitles the third-party plaintiff to apportionment of damages based on the allegations against Xilinx in the case filed by the Chapter 7 Trustee of Valley Forge Composite Technologies, Inc. On August 28, 2017, Xilinx, along with other third party defendants, filed a motion to dismiss the complaint. On October 10, 2017,July 3, 2018, the Court granted ~~the motion to dismiss.~~both of Xilinx’s Motions for Summary Judgment, disposing of all claims asserted against Xilinx.

From time to time, the Company is involved in various disputes and litigation matters that arise in the ordinary course of its business. These include disputes and lawsuits related to intellectual property, mergers and acquisitions, licensing, contract law, tax, regulatory, distribution arrangements, employee relations and other matters. Periodically, the Company reviews the status of each matter and assesses its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and a range of possible losses can be estimated, the Company accrues a liability for the estimated loss. Legal proceedings are subject to uncertainties, and the outcomes are difficult to predict. Because of such uncertainties, accruals are based only on the best information available at the time. As additional information becomes available, the Company continues to reassess the potential liability related to pending claims and litigation and may revise estimates.

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Note 18.	Goodwill and Acquisition-Related Intangibles

As of ~~December~~June 30, ~~2017, there have been no material changes to~~2018 and March 31, 2018, the ~~Company's~~gross and net amounts of goodwill and of acquisition-related intangibles ~~since April 1, 2017.~~for all acquisitions were as follows:



							Weighted-Average
(In thousands)	June 30, 2018			March 31, 2018			Amortization Life
Goodwill	$	162,421		$	162,421
Core technology, gross	82,480			82,480
Less accumulated amortization	(78,885		)	(78,562		)
Core technology, net	3,595			3,918			4.8 years
Other intangibles, gross	46,966			46,966
Less accumulated amortization	(46,798		)	(46,761		)
Other intangibles, net	168			205			2.6 years
Total acquisition-related intangibles, gross	129,446			129,446
Less accumulated amortization	(125,683		)	(125,323		)
Total acquisition-related intangibles, net	$	3,763		$	4,123

Amortization expense for acquisition-related intangibles for the three months ended June 30, 2018 and July 1, 2017 was $360 thousand and $705 thousand, respectively. Based on the carrying value of acquisition-related intangibles recorded as of June 30, 2018, and assuming no subsequent acquisition or impairment of the underlying assets, the annual amortization expense for acquisition-related intangibles is expected to be as follows:



Fiscal	(In thousands)
2019 (remaining nine months)	$	893
2020	1,160
2021	1,137
2022	573
Total	$	3,763

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Note 19.	Subsequent Events

On ~~January 23,~~July 17, 2018, the Company announced the acquisition of DeePhi Technology Co., Ltd, a leading artificial intelligence and machine learning company.

On July 24, 2018, the U.S. Court of Appeals for the Ninth Circuit reversed a 2015 decision of the U.S. Tax Court that had found U.S. Treasury Regulations requiring the inclusion of stock-based compensation in intercompany cost-sharing arrangements to be invalid. The case at issue was Altera Corp. v. Commissioner. The Company is currently evaluating the impact of this decision on its financial statements and is unable to estimate the impact at this time.

On July 24, 2018, the Company’s Board of Directors declared a cash dividend of ~~$0.35~~$0.36 per common share for the ~~fourth~~second quarter of fiscal ~~year 2018.~~2019. The dividend is payable on ~~February 22,~~August 28, 2018 to stockholders of record on ~~February 7,~~August 8, 2018.

As previously disclosed by the Company on a Form 8-K filed with the SEC on January 5, 2018, Victor Peng will succeed Moshe Gavrielov as the Company’s President and Chief Executive Officer effective January 29, 2018. In relation to the CEO transition, as well as other executive transitions in the fourth quarter of fiscal year 2018, the Company expects to record a one-time charge of approximately $30.0 million to operating expenses in the fourth quarter of fiscal year 2018.

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Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations

The statements in this Management's Discussion and Analysis that are forward-looking, within the meaning of the Private Securities Litigation Reform Act of 1995, involve numerous risks and uncertainties and are based on current expectations. The reader should not place undue reliance on these forward-looking statements. Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including those risks discussed under "Risk Factors" and elsewhere in this document. Often, forward-looking statements can be identified by the use of forward-looking words, such as "may," "will," "could," "should," "expect," "believe," "anticipate," "estimate," "continue," "plan," "intend," "project" and other similar terminology, or the negative of such terms. We disclaim any responsibility to update or revise any forward-looking statement provided in this Management's Discussion and Analysis for any reason.

Critical Accounting Policies and Estimates

The methods, estimates and judgments we use in applying our most critical accounting policies have a significant impact on the results we report in our condensed consolidated financial statements. The SEC has defined critical accounting policies as those that are most important to the portrayal of our financial condition and results of operations and require us to make our most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, our critical accounting policies include: valuation of marketable securities, which impacts losses on debt and equity securities when we record impairments; revenue recognition, which impacts the recording of revenues; and valuation of inventories, which impacts cost of revenues and gross margin. Our critical accounting policies also include: the assessment of impairment of long-lived assets, which impacts their valuation; the assessment of the recoverability of goodwill, which impacts goodwill impairment; accounting for income taxes, which impacts the provision or benefit recognized for income taxes, as well as the valuation of deferred tax assets recorded on our condensed consolidated balance ~~sheets;~~sheet; and valuation and recognition of stock-based compensation, which impacts gross margin, research and development (R&D) expenses, and selling, general and administrative (SG&A) expenses. For more discussion please refer to "Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations" included in our Form 10-K for the year ended ~~April 1, 2017. For more discussion specific~~March 31, 2018 filed with the SEC, and to ~~the accounting for income taxes~~"Note 2. Recent Accounting Changes and ~~the impacts from the enactment of the TCJA, please refer to “Note 14. Income Taxes”~~Accounting Pronouncements" to our condensed consolidated financial statements, included in ~~“Part~~Part I. ~~Financial~~"Financial Information.”" We also have other key accounting policies that are not as subjective, and therefore, their application would not require us to make estimates or judgments that are as difficult, but which nevertheless could significantly affect our financial reporting.

Results of Operations: ~~third~~first quarter ~~and first nine months~~ of fiscal ~~year 2018~~2019 compared to the ~~third~~first quarter ~~and first nine months~~ of fiscal ~~year 2017~~2018

The following table sets forth statement of income data as a percentage of net revenues for the periods indicated:


	Three Months Ended				Nine Months Ended				Three Months Ended
	December 30, 2017		December 31, 2016		December 30, 2017		December 31, 2016		June 30, 2018		July 1, 2017
Net revenues	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Cost of revenues	28.9		30.4		30.0		30.0		30.2		31.7
Gross margin	71.1		69.6		70.0		70.0		69.8		68.3
Operating expenses:
Research and development	26.3		27.2		25.6		25.1		25.0		25.4
Selling, general and administrative	14.7		14.3		14.6		14.4		13.2		14.8
Amortization of acquisition-related intangibles	0.1		0.2		0.1		0.2		0.1		0.1
Total operating expenses	41.1		41.7		40.3		39.7		38.3		40.3
Operating income	30.0		27.9		29.7		30.3		31.5		28.0
Interest and other income (expense), net	0.9		(0.1	)	0.5		(0.4	)	(0.4	)	0.3
Income before income taxes	30.9		27.8		30.2		29.9		31.1		28.3
Provision for income taxes	29.0		3.5		11.7		2.9		3.3		2.2
Net income	1.9	%	24.3	%	18.5	%	27.0	%	27.8	%	26.1	%

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Net Revenues

We sell our products to global manufacturers of electronic products in various end ~~markets such as wireline and wireless communications, aerospace and defense, industrial, scientific and medical, test and measurement, audio, video and broadcast, and automotive.~~markets. The vast majority of our net revenues ~~are~~is generated by sales of our semiconductor products, but we also generate sales from support ~~products, which include configuration solutions, software and support/services.~~products. We classify our product offerings into two categories: Advanced Products and Core Products:

Advanced Products include our most recent product offerings and ~~include~~consist of the UltraScale+, UltraScale and 7-series product families.

Core Products ~~include~~consist of all other product families.

These product categories are modified on a periodic basis to better reflect the maturity of the products and advances in technology. The most recent modification was made on April 3, 2016, which was the beginning of our fiscal ~~year~~ 2017, whereby we reclassified our product categories to be consistent with how these categories are analyzed and reviewed internally. Specifically, we ~~grouped~~are grouping the products manufactured at the ~~28nm,~~28 nanometer (nm), 20nm and 16nm nodes into a category named Advanced Products while all other products are ~~included~~grouped in a category named Core Products.

Net revenues of $631.2 million in the third quarter of fiscal year 2018 represented an 8% increase from the comparable prior year period of $585.7 million. Net revenues from Advanced Products increased 30% in the third quarter of fiscal year 2018 versus the comparable prior year period, but the declines from our Core Products partially offset the increase. No end customer accounted for more than 10% of our net revenues for the ~~third~~first quarter ~~and the first nine months~~ of fiscal ~~years 2018 and 2017.~~

For the first nine months of fiscal year 2018, approximately 52% of our net revenues were from products sold to distributors for subsequent resale to original equipment manufacturers (OEMs) or their subcontract manufacturers. As of December 30, 2017, we had $48.0 million of deferred revenue and $15.0 million of deferred cost of revenues recognized as a net $33.0 million of deferred income on shipments to distributors. As of April 1, 2017, we had $74.2 million of deferred revenue and $19.6 million of deferred cost of revenues recognized as a net $54.6 million of deferred income on shipments to distributors. The deferred income on shipments to distributors that will ultimately be recognized in our condensed consolidated statements of income will be different than the amount shown on the condensed consolidated balance sheets due to actual price adjustments issued to the distributors when the product is sold to their end customers.2019.

Net Revenues by Product

Net revenues by product categories for the ~~third~~first quarter ~~and the first nine months~~ of fiscal ~~years~~2019 and 2018 ~~and 2017~~ were as follows:


	Three Months Ended						Nine Months Ended						Three Months Ended
(In millions)	December 30, 2017		% Change		December 31, 2016		December 30, 2017		% Change		December 31, 2016		June 30, 2018		% of Total	% Change	July 1, 2017		% of Total
Advanced Products	$	356.0	30		$	273.1	$	1,002.3	28		$	782.6	$	383.9	56	21	$	317.8	53
Core Products	275.2		(12	)	312.6		863.8		(10	)	957.3		300.5		44	5	285.0		47
Total net revenues	$	631.2	8		$	585.7	$	1,866.1	7		$	1,739.9	$	684.4	100	14	$	602.8	100

Net revenues from Advanced Products increased ~~significantly~~ in ~~both the third quarter and~~ the first ~~nine~~three months of fiscal ~~year 2018~~2019 compared to the comparable prior year ~~periods.~~period. The ~~increases for both periods were~~increase was a result of sales growth from our ~~20nm,~~ 16nm and ~~to a lesser extent, our 28nm~~20nm product families. We expect sales of Advanced Products to continue to grow as more customer programs enter into volume production with our ~~28nm,~~16nm and 20nm ~~and 16nm~~ products.

Net revenues from Core Products ~~decreased~~increased in ~~both the third quarter and~~ the first ~~nine~~three months of fiscal ~~year 2018~~2019 from the comparable prior year ~~periods. For both the third quarter and the first nine months of fiscal year 2018, the decreases were~~period. The increase was largely due to higher sales from Virtex-2 and Virtex-5 product families, partially offset by decline in sales ~~of our Virtex-5~~from Virtex-6 and ~~to a lesser extent, our~~ Spartan-3 ~~and Virtex-6~~ product families.

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Core Products are relatively mature products and, as a result, their sales are expected to decline over time.

Net Revenues by End Markets

Our end market revenue data is derived from our understanding of our end customers’ primary ~~markets. Net revenues~~markets, which is based on reports provided by distributors and our internal records. To provide additional visibility, starting April 1, 2018 we classify our end markets ~~are classified~~ into ~~the following three categories: Communications &~~businesses with similar market drivers: Data ~~Center;~~Center and Test, Measurement and Emulation (TME); Automotive, Broadcast and Consumer; Communications; and Industrial, Aerospace & ~~Defense;~~Defense. Additionally, we classify revenue recognized from shipments to distributors but not yet subsequently sold to the end markets as Channel revenue. The Channel revenue represents the difference between the shipments to distributors and ~~Broadcast, Consumer & Automotive.~~what the distributors subsequently sold to the end customers within the given period. The percentage change calculation in the table below represents the ~~period-to-period~~year-to-year dollar change in each end market.

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Net revenues by end markets for the ~~third~~first quarter ~~and the first nine months~~ of fiscal ~~years~~2019 and 2018 ~~and 2017~~ were as follows:


	Three Months Ended						Nine Months Ended						Three Months Ended
(% of total net revenues)	December 30, 2017		% Change in Dollars		December 31, 2016		December 30, 2017		% Change in Dollars		December 31, 2016		June 30, 2018		% Change in Dollars		July 1, 2017
Communications & Data Center	35	%	(12	)	44	%	38	%	(6	)	43	%
Data Center and TME													19	%	11		19	%
Automotive, Broadcast and Consumer													16		13		17
Communications													31		(7	)	38
Industrial, Aerospace & Defense	47		23		41		45		19		40		33		30		28
Broadcast, Consumer & Automotive	18		24		15		17		14		17
Channel													1		(167	)	(2	)
Total net revenues	100	%	8		100	%	100	%	7		100	%	100	%	14		100	%

Net revenues from Data Center and TME increased, in terms of absolute dollar, in the first quarter of fiscal 2019 from the comparable prior year period. The increase was primarily due to higher sales from Data Center, but was partially offset by a decrease in sales from TME.

Net revenues from Automotive, Broadcast and Consumer increased, in terms of absolute dollar, in the first three months of fiscal 2019 from the comparable prior year period. The increase was due to higher sales from all sub-segments, in particular from automotive and Audio, Video and Broadcast.

Net revenues from Communications ~~& Data Center~~ decreased ~~for the third quarter and~~in the first ~~nine~~three months of fiscal ~~year 2018~~2019 from the comparable prior year ~~periods.~~period. The ~~decreases for both periods were~~decrease was primarily ~~driven by~~due to lower sales from ~~wireless, particularly in the Europe and Japan regions,~~Wireless, and to a lesser extent from ~~wireline, particularly in the North America region.~~Wireline business.

Net revenues from Industrial, Aerospace & Defense increased ~~for the third quarter and~~in the first ~~nine months~~quarter of fiscal ~~year 2018~~2019 from the comparable prior year ~~periods.~~period. The ~~increases for the third quarter of fiscal year 2018 were primarily due to~~increase was driven by higher ~~sales from aerospace & defense in the North America region and test & measurement in both the Europe and North America regions. For the first nine months of fiscal year 2018,~~ sales from all sub-segments, ~~grew significantly; in particular sales from aerospace & defense~~with Aerospace and Defense leading the increase.

Channel revenue was positive in the ~~North America region and test & measurement in both the Europe and North America regions.~~

~~Net revenues from Broadcast, Consumer & Automotive increased for the third quarter and the~~ first ~~nine~~three months of fiscal ~~year 2018 from~~2019. This is because shipments to distributors exceeded what the distributors subsequently shipped to their customers in the period. In the comparable prior year ~~periods. The increases~~period, our shipments to distributors were ~~driven by higher sales across all sub-segments, particularly from consumer~~less than what the distributors subsequently shipped to their customers. In the second half of fiscal 2018, we partnered with our distributors to reduce overall distributor inventory and ~~automotive, throughout most regions.~~improve the stability of inventory balances. We expect Channel revenue to be a positive amount as the distributors restock inventory to support growth and customer service objectives.

Net Revenues by Geography

Geographic revenue information reflects the geographic location of the distributors, ~~OEMs~~original equipment manufacturers (OEMs) or contract manufacturers who purchased our products. This may differ from the geographic location of the end customers. Net revenues by geography for the ~~third~~first quarter ~~and the first nine months~~ of fiscal ~~years~~2019 and 2018 ~~and 2017~~ were as follows:


	Three Months Ended					Nine Months Ended					Three Months Ended
(In millions)	December 30, 2017		% Change	December 31, 2016		December 30, 2017		% Change	December 31, 2016		June 30, 2018		% of Total	% Change	July 1, 2017		% of Total
North America	$	196.0	12	$	175.2	$	561.3	2	$	549.8	$	193.5	28	12	$	173.2	29
Asia Pacific	257.3		3	250.0		773.9		10	702.0		303.9		45	15	264.9		44
Europe	124.4		11	112.0		364.9		8	338.5		131.9		19	14	115.7		19
Japan	53.5		10	48.5		166.0		11	149.6		55.1		8	12	49.0		8
Total net revenues	$	631.2	8	$	585.7	$	1,866.1	7	$	1,739.9	$	684.4	100	14	$	602.8	100

Net revenues in North America increased in ~~both the third quarter and~~ the first ~~nine months~~quarter of fiscal ~~year 2018,~~2019 from the comparable prior year ~~periods.~~period. The ~~increases were~~increase was primarily due to higher sales from ~~aerospace~~Industrial, Aerospace & ~~defense and test & measurement,~~Defense but ~~were~~was partially offset by ~~a decrease~~decline in ~~wireline.~~sales from TME.

Net revenues in Asia Pacific increased in ~~both the third quarter and~~ the first ~~nine months~~quarter of fiscal ~~year 2018~~2019 from the comparable prior year ~~periods.~~period. The ~~increases were~~increase was primarily due to higher sales from ~~consumer, primarily~~Data Center in ~~China.~~China and Aerospace & Defense in India.

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Net revenues in Europe increased in ~~both the third quarter and~~ the first ~~nine months~~quarter of fiscal ~~year 2018~~2019 from the comparable prior year ~~periods.~~period. The ~~increases in both periods were largely driven by~~increase was primarily due to higher sales from ~~test & measurement~~Industrial, Scientific and ~~automotive,~~Medical and Data Center, but ~~were~~was partially offset by decline in sales from ~~wireless.~~Wireless and TME.

Net revenues in Japan increased in ~~both the third quarter and~~ the first ~~nine months~~quarter of fiscal ~~year 2018~~2019 from the comparable prior year ~~periods.~~period. The ~~increases for both periods were primarily driven by~~increase was due to higher sales ~~in test & measurement, industrial, scientific & medical and automotive, but were partially offset by a decline in sales~~ from ~~wireless.~~Automotive.

Gross Margin


	Three Months Ended							Nine Months Ended							Three Months Ended
(In millions)	December 30, 2017			% Change	December 31, 2016			December 30, 2017			% Change	December 31, 2016			June 30, 2018			Change		July 1, 2017
Gross margin	$	449.0		10	$	407.5		$	1,307.1		7	$	1,217.5		$	477.5		16	%	$	412.0
Percentage of net revenues	71.1		%		69.6		%	70.0		%		70.0		%	69.8		%			68.3		%

Gross margin was higher by 1.5 percentage points in the ~~third~~first quarter of fiscal 2019 from the comparable prior year ~~2018 compared to the same period last year, but remained flat for the first nine months of fiscal year 2018.~~period. The increase was driven primarily by manufacturing cost reduction in ~~the third quarter of fiscal year 2018 was due to~~our Advanced Products and favorable changes in the end market ~~mix, as the revenue mix shifted away from wireless, which generally has lower margin.~~mix.

Gross margin may be affected in the future due to multiple factors, including but not limited to those set forth in ~~"Item~~Item 1A. ~~Risk Factors"~~"Risk Factors," included in Part II of this Form 10-Q, shifts in the mix of customers and products, competitive-pricing pressure, manufacturing-yield issues and wafer pricing. We expect to mitigate any adverse impacts from these factors by continuing to improve yields on our Advanced Products, improve manufacturing efficiencies, and improve average selling price management. ~~Advanced Products~~The average selling prices of our products generally ~~have lower gross margins than Core Products~~decline as ~~they are~~the products mature. We seek to offset the decrease in ~~the early stages of their product life cycle and have higher unit costs associated with relatively lower volumes and early manufacturing maturity.~~

~~In order to compete effectively, we pass~~selling prices through yield improvement, manufacturing cost reductions and increased unit sales. We also continue to develop higher value products or product features that increase, or slow the decline of, the average selling price of our ~~customers in~~products. However, there is no guarantee that our ongoing efforts will be successful or that they will keep pace with the form of reduced prices to the extent that we can maintain acceptable margins. Price erosion is common in the semiconductor industry, as advances in both product architecture and manufacturing process technology permit continual reductions in unit cost. We have historically been able to offset much of this revenue decline in selling prices of our ~~Core Products with increased~~products, which could ultimately lead to a decline in revenues ~~from Advanced Products.~~and have a negative effect on our gross margins.

Research and Development


	Three Months Ended							Nine Months Ended							Three Months Ended
(In millions)	December 30, 2017			% Change	December 31, 2016			December 30, 2017			% Change	December 31, 2016			June 30, 2018			Change		July 1, 2017
Research and development	$	166.2		4	$	159.2		$	477.3		9	$	437.2		$	170.8		12	%	$	153.1
Percentage of net revenues	26		%		27		%	26		%		25		%	25		%			25		%

R&D spending increased ~~$7.0~~by $17.7 million, or 4%12%, for the ~~third~~first quarter of fiscal ~~year 2018 from the comparable prior year period. For the first nine months of fiscal year 2018, R&D spending increased $40.1 million, or 9%,~~2019 from the comparable prior year period. The ~~increases for both periods were~~increase was primarily attributable to ~~increases~~increase in headcount and employee compensation (including stock-based compensation) related to ~~support~~ our ~~next generation~~continuing product development. ~~These increases more than offset the decline in mask and wafer spending due to tape-out timing.~~

We plan to continue to selectively invest in R&D efforts in areas such as new products and more advanced process development, IP cores and software development environments. We may also consider acquisitions to complement our strategy for technology leadership and engineering resources in critical areas.

Selling, General and Administrative



	Three Months Ended
(In millions)	June 30, 2018			Change		July 1, 2017
Selling, general and administrative	$	90.5		1	%	$	89.2
Percentage of net revenues	13		%			15		%

SG&A expenses increased slightly by $1.3 million for the first quarter of fiscal 2019 from the comparable prior year period as we incurred slightly higher employee compensation (including stock-based compensation) in the first three months of fiscal 2019 to support our customers and accelerate adoption of our products.

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~~Selling, General and Administrative~~

Three Months Ended Nine Months Ended
(In millions) December 30, 2017 %
Change December 31, 2016 December 30, 2017 %
Change December 31, 2016
Selling, general and administrative $ 92.8
11
$ 83.8
$ 273.0
9
$ 250.4
Percentage of net revenues 15 %
14 % 15 %
14 %

SG&A expenses were higher in both the third quarter and the first nine months of fiscal year 2018, as compared to the comparable prior year periods. The increases for both periods were primarily due to higher employee compensation (including stock-based compensation) from increased headcount when compared with the prior year periods.

Amortization of Acquisition-Related Intangibles


	Three Months Ended								Nine Months Ended								Three Months Ended
(In millions)	December 30, 2017			% Change		December 31, 2016			December 30, 2017			% Change		December 31, 2016			June 30, 2018			Change		July 1, 2017
Amortization of acquisition-related intangibles	$	0.4		(76	)	$	1.5		$	1.6		(60	)	$	3.9		$	0.4		(49	)%	$	0.7
Percentage of net revenues	—		%			—		%	—		%			—		%	—		%			—		%

Amortization expense for ~~both the third quarter and~~ the first ~~nine months~~quarter of fiscal ~~year 2018~~2019 decreased slightly from the comparable prior year ~~periods~~period as certain acquisition-related intangibles ~~were~~have been fully amortized ~~by fiscal year 2018.~~and there was no new major addition to acquisition related intangibles in recent years.

Stock-Based Compensation


	Three Months Ended					Nine Months Ended					Three Months Ended
(In millions)	December 30, 2017		% Change	December 31, 2016		December 30, 2017		% Change	December 31, 2016		June 30, 2018		Change		July 1, 2017
Stock-based compensation included in:
Cost of revenues	$	2.2	12	$	1.9	$	6.5	8	$	6.0	$	2.0	(5	)%	$	2.2
Research and development	20.2		18	17.2		57.8		18	48.8		20.9		20	%	17.4
Selling, general and administrative	14.4		22	11.8		40.9		16	35.3		12.7		2	%	12.4
	$	36.8	19	$	30.9	$	105.2	17	$	90.1	$	35.6	11	%	$	32.0

~~Stock-based~~The 11% increase in stock-based compensation expense ~~increased in both the third quarter and~~for the first ~~nine months~~quarter of fiscal ~~year 2018 from~~2019 as compared to the ~~comparable~~ prior year ~~periods. The increases were~~period was primarily related to higher expenses associated with RSUs, as we granted ~~in the recent quarters, as more~~ RSUs ~~were granted, and were granted~~ at a higher fair ~~value.~~value than in the prior years.

Interest and Other Income (Expense), Net


	Three Months Ended							Nine Months Ended							Three Months Ended
(In millions)	December 30, 2017			% Change	December 31, 2016			December 30, 2017			% Change	December 31, 2016			June 30, 2018			Change		July 1, 2017
Interest and other income (expense), net	$	5.5		1,495	$	(0.4	)	$	9.1		249	$	(6.1	)	$	(2.8	)	(255	)%	$	1.8
Percentage of net revenues	1		%		—		%	—		%		—		%	—		%			—		%

Our net interest and other income (expense) ~~increased in both the third quarter and the first nine months~~was a net other expense of fiscal year 2018 from the comparable prior year periods. The increases were primarily due to higher interest income from the investment portfolio, and to a lesser extent lower interest expenses from 2024 Notes and its related interest rate swap contracts as compared to the total interest expenses recognized from the 2017 Convertible Notes that matured$2.8 million in the first quarter of fiscal ~~2018.~~2019, as compared to a net other income of $1.8 million in the same prior year period. The net reduction was due to unrealized losses on equity-type security investments during the first quarter of fiscal 2019, which was partially offset by higher income from the investment portfolio.

Provision for Income Taxes



	Three Months Ended
(In millions)	June 30, 2018			Change		July 1, 2017
Provision for income taxes	$	22.9		68	%	$	13.7
Percentage of net revenues	3		%			2		%
Effective tax rate	11		%			8		%

The increase in the effective tax rate in the first quarter of fiscal 2019 as compared to the same prior year period was primarily due to the new tax on low-taxed income from foreign subsidiaries and a decrease in excess tax benefits with respect to stock-based compensation. The increase was partially offset by a significant reduction in the amount of deferred tax accrued on foreign earnings not considered to be permanently reinvested.

The difference between the U.S. federal statutory tax rate of 21% and our effective tax rate in the first quarter of fiscal 2019 was primarily due to the beneficial impact of income earned in lower tax rate jurisdictions, which was partially offset by the new tax on low-taxed income from foreign subsidiaries.

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~~Provision~~The difference between the U.S. federal statutory tax rate of 35% and our effective tax rate in the first quarter of fiscal 2018 was primarily due to income earned in lower tax rate jurisdictions, for ~~Income Taxes~~

Three Months Ended Nine Months Ended
(In millions) December 30, 2017 %
Change December 31, 2016 December 30, 2017 %
Change December 31, 2016
Provision for income taxes $ 183.2
784
$ 20.7
$ 217.7
329
$ 50.8
Percentage of net revenues 29 %
4 % 12 %
3 %
Effective tax rate 94 %
13 % 39 %
10 %
which no U.S. income tax had been provided, as we intended to permanently reinvest these earnings outside of the U.S.

On December 22, 2017, the TCJA was enacted into law. The TCJA provides ~~for~~ numerous significant tax law changes ~~and modifications~~ including the reduction of the U.S. federal corporate income tax rate from 35% to 21%, the requirement for companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and the creation of new taxes on certain foreign-sourced earnings. As a fiscal year-end taxpayer, certain provisions of the TCJA began to impact us in our third quarter of fiscal ~~year~~ 2018, while other provisions ~~will~~began to impact us beginning in fiscal ~~year~~ 2019.

~~The corporate~~

Accounting Standards Codification (ASC) 740, Income Taxes, requires companies to recognize the effect of the tax rate reduction is effective as of January 1, 2018. Since the Company has a fiscal year rather than a calendar year, it is subject to rules relating to transitional tax rates. As a result, our fiscal year 2018 federal statutory rate will be a blended rate of 31.5%. The changelaw changes in the ~~statutory tax rate from 35%~~period of enactment. However, the SEC staff issued SAB 118 which allows companies to ~~31.5% for our fiscal year 2018 does not have~~record provisional amounts during a ~~significant impact on the effective tax rate.~~

~~The difference between this blended U.S. federal statutory tax rate of 31.5% and our effective tax rate in all periods of fiscal year 2018 was primarily due~~measurement period that is similar to the ~~one-time transition tax net of~~measurement period used when accounting for business combinations. There are no measurement period adjustments recorded during the ~~reversal of the related deferred tax liabilities as discussed in “Note 14. Income Taxes” to our condensed consolidated financial statements, included in “Part I. Financial Information.”~~

The difference between the U.S. federal statutory tax rate of 35% and our effective tax rate in all periods of fiscal year 2017 was primarily due to income earned in lower tax rate jurisdictions for which no U.S. income tax had been provided, as we intended to permanently reinvest the earnings outside of the U.S.

The increases in the effective tax rates in the third quarter and first nine months of fiscal year 2018 from the comparable prior year periods were primarily due to the one-time transition tax of $582.8 million (including state liabilities), a remeasurement of certain deferred tax assets and liabilities as a result of the reduction in the corporate income tax rate to 21% in the amount of $26.2 million and a release of reserves for uncertain tax positions in fiscal year 2017. The increases in the effective tax rate were partially offset by the reversal of deferred tax liabilities related to the portion of U.S. income tax on unremitted foreign earnings that had been accrued through the second quarter of fiscal year 2018 in the amount of $424.3 million.

~~As of December~~period ending June 30, 2017, we recognized provisional amounts for the tax effects of the TCJA which were included as components of income tax expense from continuing operations and reflected in the effective tax rates above.2018. We will continue to assess the impact of the recently enacted tax law on our business and our condensed consolidated financial statements. The final impact of the TCJA recorded by us may vary materially from the provisional impact recorded due to a number of uncertainties and factors, including ~~information not available until the completion of our consolidated financial statements as of and for the year ending March 31, 2018,~~ the need for further guidance and clarification of the new law by U.S. federal and state tax authorities and the need for further guidance on the income tax accounting.

~~In addition to the impacts of tax reform on fiscal year 2018 previously discussed,~~

As noted above, the TCJA ~~also establishes~~established new tax laws that ~~will be~~are effective ~~for~~beginning in our fiscal ~~year 2019 year, including, but not limited~~2019. The change with the most significant impact to ~~(1)~~us is a ~~new~~ provision designed to tax low-taxed income of foreign ~~subsidiaries, which allows for the possibility of using foreign tax credits (FTCs) and a deduction of up~~subsidiaries. With respect to 50 percent to offset the income tax liability (subject to some limitations); (2) limitations on the deductibility of certain executive compensation; (3) limitations on the deductibility of entertainment expenses; and (4) limitations on the use of FTCs to reduce the U.S. income tax liability. While each of these provisions is expected to have an impact on our tax expense for fiscal year 2019 and future periods, we expect the tax on low-taxed income of foreign subsidiaries to have the most significant impact.

~~Because of the complexity of the new tax on low-taxed income of foreign subsidiaries, we are continuing to evaluate~~ this provision, of the ~~TCJA and the application of ASC 740. Based on recent~~ FASB ~~deliberations, it appears we will be allowed~~allows taxpayers to make an accounting policy choice of either (1) treating taxes due on ~~future~~ U.S. inclusions in taxable income as a current-period expense when incurred or (2) ~~factoring such amounts into a company’s measurement of its~~recognizing deferred ~~taxes. Our selection of~~taxes for temporary basis differences expected to reverse as low-taxed income in future years. We have not yet selected an accounting policy and our selection will depend, in part, on analyzing our facts to determine what the impact is expected to be under each method.

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Financial Condition, Liquidity and Capital Resources

We have historically used a combination of cash flows from operations and equity as well as debt financing to support ongoing business activities, acquire or invest in critical or complementary technologies, purchase facilities and capital equipment, repurchase our common stock and debentures under our repurchase program, pay dividends and finance working capital. Additionally, our investments in debt securities are liquid and available for future business needs.

The combination of cash, cash equivalents ~~as well as~~and short-term and long-term investments as of ~~December~~June 30, ~~2017~~2018 and ~~April 1, 2017~~March 31, 2018 totaled ~~$3.64~~$3.46 billion and ~~$3.44~~$3.55 billion, respectively. As of ~~December~~June 30, ~~2017,~~2018, we had cash, cash equivalents and short-term investments of ~~$3.54~~$3.36 billion and working capital of ~~$3.74~~$3.18 billion. As of ~~April 1, 2017,~~March 31, 2018, cash, cash equivalents and short-term investments were ~~$3.32~~$3.45 billion and working capital was ~~$2.98~~$3.24 billion.

As of ~~December~~June 30, ~~2017, $3.20~~2018, we had $1.69 billion of ~~our $3.54 billion of~~ cash and cash equivalents and short-term investments ~~was~~ held byin our non-U.S. jurisdictions. ~~The recent~~As a result of TCJA, that was signed into law on December 22, 2017 subjects U.S. companies to a one-time transition tax on total post-1986 earnings and profits of their foreign subsidiaries. The TCJA also generally allows companies to repatriate these accumulated foreign earnings without incurring additional U.S. federal taxes beginning after December 31, 2017. Accordingly, substantially all ~~$3.20~~of $1.69 billion of cash, cash equivalents and short-term investments held by our non-U.S. ~~jurisdictions will be~~entities is available for use in the U.S. without incurring additional ~~U.S.~~U.S federal income taxes. The one-time transition tax liability will be payable in eight annual installments, as outlined in "Contractual Obligations" below. See “Note 14. Income Taxes” to our condensed consolidated financial statements, included in “Part I. Financial Information,” for additional information about the one-time transition tax.

Operating Activities —During the first ~~nine months~~quarter of fiscal ~~year 2018,~~2019, our operations generated net positive cash flow of ~~$577.7~~$176.2 million, which was ~~$50.1~~$14.7 million lower than the ~~$627.8~~$190.9 million generated during the first ~~nine months~~quarter of fiscal ~~year 2017.~~2018. The ~~net~~positive cash ~~provided by~~flow from operations generated during the first ~~nine months~~quarter of fiscal ~~year 2018~~2019 was primarily from net income as adjusted for non-cash related items, ~~a decrease~~increases in ~~inventory as well as an increase in other accrued liabilities~~income tax payable and ~~income tax~~accounts payable. These items were partially offset by increases in accounts receivable ~~prepaid expenses~~ and ~~other assets as well as decreases~~inventories and a decrease in ~~accounts payable.~~accrued liabilities. Accounts receivable increased by ~~$104.5~~$74.7 million ~~to $348.5 million at December 30, 2017 compared to $243.9 million at April 1, 2017. Days~~and days sales outstanding increased to 5161 days at ~~December~~June 30, ~~2017~~2018 from 3855 days at ~~April 1, 2017, primarily due~~March 31, 2018. We had no collectibility issues and our accounts receivable remained current as of June 30, 2018. We expect our accounts receivable to ~~timing of shipments and collections.~~be relatively higher than normal on a temporary basis as we partner with our distributors to manage their inventory requirements. Our inventory levels as of ~~December~~June 30, ~~2017~~2018 were ~~slightly lower~~$10.9 million higher at ~~$226.5~~$247.0 million compared to ~~$227.0~~$236.1 million at ~~April 1, 2017, and~~March 31, 2018, but the combined inventory days at Xilinx and distribution decreased to ~~118~~113 days at ~~December~~June 30, ~~2017~~2018 from ~~127~~117 days at ~~April 1, 2017.~~March 31, 2018.

Investing Activities —Net cash used in investing activities was ~~$318.9~~$444.2 million during the first ~~nine months~~quarter of fiscal ~~year 2018,~~2019, as compared to ~~net cash provided by investing activities of $362.6~~$232.2 million in the first ~~nine months~~quarter of fiscal ~~year 2017.~~2018. Net cash used in investing activities during the first ~~nine months~~quarter of fiscal ~~year 2018~~2019 consisted primarily of ~~$272.1~~$403.9 million of net ~~cash used in~~ purchases of available-for-sale securities ~~$28.9~~and $26.4 million ~~net cash used in~~for purchases of property, plant and equipment and ~~$17.8~~other intangibles and $13.9 million ~~used in~~of other investing activities.

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Financing Activities —Net cash used in financing activities was ~~$314.1~~$233.9 million in the first ~~nine months~~quarter of fiscal ~~year 2018,~~2019, as compared to ~~$654.7~~net cash provided by financing activities of $134.0 million in the first ~~nine months~~quarter of fiscal ~~year 2017.~~2018. Net cash used in financing activities during the first ~~nine months~~quarter of fiscal ~~year 2018~~2019 consisted primarily of ~~$457.9~~$137.3 million of ~~cash repayment for the 2017 Convertible Notes, $310.8 million~~ cash payment to repurchase shares of common stock, ~~$263.8~~$90.7 million dividend payments to stockholders and ~~$44.4~~$5.5 million of payment for RSU ~~withholdings, which were partially offset by $745.2 million of proceeds from issuance of the 2024 Notes and $19.6 million of proceeds from issuance of common stock under employee stock plans.~~withholdings.

Contractual Obligations

We lease some of our facilities, office buildings and land under non-cancelable operating leases that expire at various dates through April 2029. See "Note 15. Commitments" to our condensed consolidated financial statements, included in ~~"Part~~Part I. ~~Financial~~"Financial Information," for a schedule of our operating lease commitments as of ~~December~~June 30, ~~2017~~2018 and additional information about operating leases.

Due to the nature of our business, we depend entirely upon subcontractors to manufacture our silicon wafers and provide assembly and some test services. The lengthy subcontractor lead times require us to order the materials and services in advance, and we are obligated to pay for the materials and services when completed. As of ~~December~~June 30, ~~2017,~~2018, we had ~~$157.5~~$136.5 million of outstanding inventory and other non-cancelable purchase obligations to subcontractors. We expect to receive and pay for these materials and services in the next three to six months, as the products meet delivery and quality specifications. As of ~~December~~June 30, ~~2017,~~2018, we also had ~~$27.2~~

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$18.9 million of non-cancelable license obligations to providers of electronic design automation software and hardware/software ~~maintenance expiring~~and $33.7 million commitments primarily related to open purchase orders from ordinary operations. These commitments expire at various dates through December ~~2019.~~

On May 30, 2017, we issued $750.0 million principal amount of 2024 Notes with a maturity date on June 1, 2024. The 2024 Notes were offered to the public at a discounted price of 99.887% of par. Interest on the 2024 Notes is payable semi-annually on June 1 and December 1. As of December 30, 2017, we had $750.0 million of the 2024 Notes outstanding. We also had $500.0 million of 2019 Notes and $500.0 million of 2021 Notes outstanding as of December 30, 2017. The 2019 Notes and 2021 Notes require payment of interest semiannually on March 15 and September 15. See "Note 10. Debt and Credit Facility" to our condensed consolidated financial statements, included in Part 1. "Financial Information," for additional information about our debentures.2022.

As of ~~December~~June 30, ~~2017,~~2018, we had ~~$531.5~~$530.2 million of liabilities classified as long-term income taxes payable in the condensed consolidated balance sheets. Of the ~~$531.5~~$530.2 million, ~~$520.9~~$512.5 million was the estimated long-term portion of the one-time transition tax that resulted from the enactment of the TCJA, which will be payable in eight annual installments. The first installment is classified as a current income tax payable. The installment amounts will be equal to 8% of the total liability, payable in fiscal ~~years~~ 2019 through 2023, 15% in fiscal ~~year~~ 2024, 20% in fiscal ~~year~~ 2025, and 25% in fiscal ~~year~~ 2026. See “Note 14. Income Taxes” to our condensed consolidated financial statements, included in “Part I. Financial Information,” for additional information about the one-time transition tax. The remaining ~~$10.6~~$17.7 million of the long-term income taxes payable is for uncertain tax positions and related interest and penalties. Due to the inherent uncertainty with respect to the timing of future cash outflows associated with such liabilities, we are unable to reliably estimate the timing of cash settlement with the respective taxing authorities.

Off-Balance-Sheet Arrangements

As of ~~December~~June 30, ~~2017,~~2018, we did not have any significant off-balance-sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

Liquidity and Capital Resources

Cash generated from operations is used as our primary source of liquidity and capital resources. Our investment portfolio is also available for future cash requirements as is our $400.0 million revolving credit facility ~~that, upon certain conditions, may be extended by an additional $150.0 million, and was~~ entered into in December 2016 (expiring in December 2021). We are not aware of any lack of access to the revolving credit facility; however, we can provide no assurance that access to the revolving credit facility will not be impacted by adverse conditions in the financial markets. Our revolving credit facility is not reliant upon a single bank. There have been no borrowings to date under our existing revolving credit facility.

We repurchased 2.1 million shares of our common stock for $136.8 million during the first quarter of fiscal 2019. During the first ~~nine months~~quarter of fiscal ~~year~~ 2018, we repurchased ~~4.7~~1.0 million shares of common stock ~~in the open market and through an accelerated share repurchase agreement with an independent financial institution~~ for a total of ~~$310.8~~$67.1 million. During the first ~~nine months~~quarter of fiscal year 2017, we repurchased 8.0 million shares of common stock in the open market for a total of $414.0 million. On October 19, 2016, we announced our plan to utilize the $1.00 billion repurchase authorization under the 2016 Repurchase Program over the next several quarters. As of December 30, 2017, we have $371.3 million left available for future purchase. During the first nine months of fiscal year 2018,2019, we paid ~~$263.8~~$90.7 million in cash dividends to stockholders, representing ~~$1.05~~$0.36 per common share. During the first ~~nine months~~quarter of fiscal ~~year 2017,~~2018, we paid ~~$250.7~~$87.3 million in cash dividends to stockholders, representing ~~$0.99~~$0.35 per common share. On ~~January 23,~~July 24, 2018 our Board of Directors declared a cash dividend of ~~$0.35~~$0.36 per common share for the ~~fourth~~second quarter of fiscal ~~year 2018.~~2019. The dividend is payable on ~~February 22,~~August 28, 2018 to stockholders of record on ~~February 7,~~August 8, 2018. Our common stock and debentures repurchase program and dividend policy could be impacted by, among other items, our views on potential future capital requirements relating to R&D, investments and acquisitions, legal risks, ~~changes in tax law,~~ principal and interest payments on our debentures and other strategic investments.

We anticipate that existing sources of liquidity and cash flows from operations will be sufficient to satisfy our cash needs for the foreseeable future. We will continue to evaluate opportunities for investments to obtain additional wafer capacity, to procure additional capital equipment and facilities, to develop new products, and to potentially acquire technologies or businesses that could complement our business. However, the risk factors discussed in ~~"Item 1A. Risk Factors"~~Item 1A included in Part ~~II of this Form 10-Q~~II. "Risk Factors" and below could affect our cash positions adversely.

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Item 3.	~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

Our exposure to interest rate risk relates ~~primarily~~ to ~~our investment portfolio,~~certain types of investments, which ~~consists~~consist of fixed income securities with a fair value of approximately ~~$3.29~~$2.93 billion as of ~~December~~June 30, ~~2017,~~2018, and to our interest rate swap contracts in relation to the issuance of the 2024 Notes (as our interest rate swap contracts carry a variable interest rate based on LIBOR plus a spread). These investments include mortgage-backed securities, asset-backed securities, financial institution securities, non-financial institution securities, U.S. and foreign government and agency securities, ~~bank loans,~~ debt mutual funds and commercial mortgage-backed securities. Our primary aim with our investment portfolio is to invest available cash while preserving principal and meeting liquidity needs. In accordance with our investment policy, we place investments with high credit quality issuers and limit the amount of credit exposure to any one issuer based upon the issuer’s credit rating. These securities are subject to interest rate risk and will decrease in value if market interest rates increase. A hypothetical 100 basis-point (one percentage point) increase or decrease in interest rates compared to rates at ~~December~~June 30, ~~2017~~2018 would have affected the fair value of our investment portfolio by ~~approximately $55.0~~less than $38.0 million.

Credit Market Risk

The global credit markets may experience adverse conditions that negatively impact the values of various types of investment and non-investment grade securities. The global credit and capital markets may experience significant volatility and disruption due to instability in the global financial system, uncertainty related to global economic conditions and concerns regarding sovereign financial stability. Therefore, there is a risk that we may incur other-than-temporary impairment charges for certain types of investments should credit market conditions deteriorate. See "Note 5. Financial Instruments" to our condensed consolidated financial statements, included in ~~"Part~~Part 1. ~~Financial~~"Financial Information."

Foreign Currency Exchange Risk

Sales to all direct OEMs and distributors are denominated in U.S. dollars.

Gains and losses on foreign currency forward contracts that are designated as hedges of anticipated transactions, for which a firm commitment has been attained and the hedged relationship has been effective, are deferred and included in income or expenses in the same period that the underlying transaction is settled. Gains and losses on any instruments not meeting the above criteria are recognized in income or expenses in the condensed consolidated statements of income as they are incurred.

We enter into forward currency exchange contracts to hedge our overseas operating expenses and other liabilities when deemed appropriate. As of ~~December~~June 30, ~~2017~~2018 and ~~April 1, 2017,~~March 31, 2018, we had the following outstanding forward currency exchange contracts (in notional amount):


(In millions and U.S. dollars)	December 30, 2017		April 1, 2017		June 30, 2018		March 31, 2018
Singapore Dollar	$	22.8	$	22.0	$	26.4	$	24.9
Euro	29.3		18.6		38.6		39.0
Indian Rupee	52.7		31.1		65.0		62.5
British Pound	7.9		10.8		8.1		8.1
Japanese Yen	3.8		3.8		3.9		3.8
Chinese Yuan	4.2		—		13.2		8.3
	$	120.7	$	86.3	$	155.2	$	146.6

As part of our strategy to reduce volatility of operating expenses due to foreign exchange rate fluctuations, we employ a hedging program with forward outlook of up to two years for major foreign-currency-denominated operating expenses. The outstanding forward currency exchange contracts expire at various dates through ~~November 2019.~~May 2020. The ~~majority of~~ net unrealized ~~gains,~~losses, which approximate the fair market value of the ~~outstanding~~ forward currency exchange contracts, are expected to be realized into net income within the next two years.

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Our investments in several of our wholly-owned subsidiaries are recorded in currencies other than the U.S. dollar. As the financial statements of these subsidiaries are translated at each quarter end during consolidation, fluctuations of exchange rates between the foreign currency and the U.S. dollar increase or decrease the value of those investments. These fluctuations are recorded within stockholders’ equity as a component of accumulated other comprehensive income (loss). Other monetary foreign-denominated assets and liabilities are revalued on a monthly basis with gains and losses on revaluation reflected in net income. A hypothetical 10% favorable or unfavorable change in foreign currency exchange rates at ~~December~~June 30, ~~2017~~2018 would have affected the annualized foreign-currency-denominated operating expenses of our foreign subsidiaries by less than ~~$11.0~~$13.0 million. In addition, a hypothetical 10% favorable or unfavorable change in foreign currency exchange rates compared to rates at ~~December~~June 30, ~~2017~~2018 would have affected the value of foreign-currency-denominated cash and investments by less than $7.0 million.

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Item 4.	Controls and Procedures

We maintain a system of disclosure controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the U.S. Securities Exchange Act of 1934, as amended (Exchange Act), is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms. These controls and procedures are also designed to ensure that such information is accumulated and communicated to our management, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), as appropriate to allow timely decisions regarding required disclosure. Internal controls are procedures designed to provide reasonable assurance that: transactions are properly authorized; assets are safeguarded against unauthorized or improper use; and transactions are properly recorded and reported, to permit the preparation of our financial statements in conformity with generally accepted accounting principles.

A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple errors or mistakes. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with its policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. We continuously evaluate our internal controls and make changes to improve them as necessary. Our intent is to maintain our disclosure controls as dynamic systems that change as conditions warrant.

An evaluation was carried out, under the supervision of and with the participation of our management, including our CEO and CFO, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a–15(e) and 15d–15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon this evaluation, our CEO and CFO have concluded that, as of the end of the period covered by this Form 10-Q, our disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended ~~December~~June 30, ~~2017~~2018 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II.	OTHER INFORMATION


Item 1.	Legal Proceedings

See "Note 17. Contingencies" to our condensed consolidated financial statements, included in Item 1. "Financial Statements" for information regarding patent litigation.


Item 1A.	Risk Factors

The following risk factors and other information included in this Quarterly Report on Form 10-Q should be carefully considered. The risks and uncertainties described below are not the only risks to the Company. Additional risks and uncertainties not presently known to the Company or that the Company’s management currently deems immaterial also may impair its business operations. If any of the risks described below were to occur, our business, financial condition, operating results and cash flows could be materially adversely affected.

Our success depends on our ability to develop and introduce new products and failure to do so would have a material adverse impact on our financial condition and results of operations.

Our success depends in large part on our ability to develop and introduce new products that address customer requirements and compete effectively on the basis of price, density, functionality, power consumption and performance. Consolidation in our industry may increasingly mean that our competitors have greater resources, or other synergies, that provide them with a competitive advantage in those regards. The success of new product introductions is dependent upon several factors, including:

timely completion of new product designs;

ability to generate new design opportunities and design wins;

availability of specialized field application engineering resources supporting demand creation and customer adoption of new products;

ability to utilize advanced manufacturing process technologies on circuit geometries of 28nm and smaller;

achieving acceptable yields;

ability to obtain adequate production capacity from our wafer foundries and assembly and test subcontractors;

ability to obtain advanced packaging;

availability of supporting software design tools;

utilization of predefined IP logic;

customer acceptance of advanced features in our new products;

ability of our customers to complete their product designs and bring them to market; and

market acceptance of our customers' products.

Our product development efforts may not be successful, our new products may not achieve industry acceptance and we may not achieve the necessary volume of production that would lead to further per unit cost reductions. Revenues relating to our mature products are expected to decline in the future, which is normal for our product life cycles. As a result, we may be increasingly dependent on revenues derived from design wins for our newer products as well as anticipated cost reductions in the manufacture of our current products. We rely primarily on obtaining yield improvements and corresponding cost reductions in the manufacture of existing products, and on introducing new products that incorporate advanced features and other price/performance factors that enable us to increase revenues while maintaining consistent margins. To the extent that such cost reductions and new product introductions do not occur in a timely manner, or to the extent that our products do not achieve market acceptance at prices with higher margins, our financial condition and results of operations could be materially adversely affected.

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We rely on independent foundries for the manufacture of all of our products and a manufacturing problem or insufficient foundry capacity could adversely affect our operations.

Most of our wafers are manufactured in Taiwan by ~~TSMC~~Taiwan Semiconductor Manufacturing Company (TSMC) and ~~UMC.~~United Microelectronics Corporation (UMC). In addition, we also have wafers manufactured in South Korea by Samsung Electronics Co., Ltd. Terms with respect to the volume and timing of wafer production and the pricing of wafers produced by the semiconductor foundries are determined bythrough periodic negotiations ~~between us and~~with these wafer foundries, which usually result in short-term agreements that do not provide for long-term supply or allocation commitments. We are dependent on these foundries to supply the substantial majority of our wafers. We rely on TSMC, UMC and our other foundries to produce wafers with competitive performance attributes. Therefore, the foundries, particularly TSMC who manufactures our newest products, must be able to transition to advanced manufacturing process technologies and increased wafer sizes, produce wafers at acceptable yields and deliver them in a timely manner. Furthermore, we cannot guarantee that the foundries that supply our wafers will offer us competitive pricing terms or other commercial terms important to our business.

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We cannot guarantee that our foundries will not experience manufacturing problems, including delays in the realization of advanced manufacturing process technologies or difficulties due to limitations of new and existing process technologies. Furthermore, we cannot guarantee the foundries will be able to manufacture sufficient quantities of our products or that they will continue to manufacture a product for the full life of the product. In addition, weak economic conditions may adversely impact the financial health and viability of the foundries and result in their insolvency or their inability to meet their commitments to us. For example, we may experience supply shortages due to the difficulties foundries may encounter if they must rapidly increase their production capacities from low utilization levels to high utilization levels because of an unexpected increase in demand. Furthermore, we cannot guarantee that the foundries will be able to manufacture sufficient quantities of our products or that they will continue to manufacture a given product for the full life of the product. We ~~may~~could also experience supply shortages due to very strong demand for our products, ~~and~~or a surge in demand for semiconductors in general, which may lead to tightening of foundry capacity across the industry. In addition, weak economic conditions may adversely impact the financial health and viability of the foundries and result in their insolvency or their inability to meet their commitments to us. The insolvency of a foundry or any significant manufacturing problem or insufficient foundry capacity would disrupt our operations and negatively impact our financial condition and results of operations.

Earthquakes and other natural disasters could disrupt our operations and have a material adverse effect on our financial condition and results of operations.

Our worldwide operations could be disrupted by earthquakes or other natural disasters such as typhoons, tsunamis, volcano eruptions, fires or floods, as well as disruptions in access to adequate supplies of electricity, natural gas or water. The independent foundries, upon which we rely to manufacture our products, as well as our California and Singapore facilities, are located in regions that are subject to earthquakes and other natural disasters. ~~UMC's~~TSMC's and ~~TSMC's~~UMC's foundries in Taiwan and our assembly and test partners in other regions as well as many of our operations in California are ~~centered~~located in areas that have been seismically active in the ~~recent~~ past and some of these areas have also been affected by other natural disasters such as typhoons. Disruption of operations at these foundries and our facilities could cause delays in manufacturing and shipments of our products, and could have a material adverse effect on our results of operations. Any catastrophic event in these locations ~~will~~would disrupt our operations, ~~including our manufacturing activities,~~ and our insurance may not cover losses resulting from such disruptions of our ~~operations. This type of disruption could result in our inability to manufacture or ship products,~~operations, thereby materially adversely affecting our financial condition and results of operations. For example, as a result of the March 2011 earthquake in Japan, production at the Seiko ~~foundry~~factory at Sakata was halted temporarily, impacting production of some of our older devices. In addition, suppliers of wafers and substrates were forced to halt production temporarily. Disruption of operations at these foundries for any reason, including other natural disasters such as typhoons, tsunamis, volcano eruptions, fires or floods, as well as disruptions in access to adequate supplies of electricity, natural gas or water could cause delays in shipments of our products, and could have a material adverse effect on our results of operations. Furthermore, natural disasters can also indirectly impact us. For example, our customers' supply of other complimentary products may be disrupted by a natural disaster and may cause them to delay orders of our products. More vertically-integrated competitors may be less exposed to some or all of these and other risks.

~~General negative economic conditions and any related deterioration in the global business environment could have a material adverse effect on our business, operating results and financial condition.~~

As a result of the 2008 global financial crisis, global consumer confidence eroded amidst concerns over declining asset values, inflation, volatility in energy costs, geopolitical issues, the availability and cost of credit, rising unemployment, and the stability and solvency of financial institutions, financial markets, businesses and sovereign nations, among other concerns. These concerns slowed global economic growth and resulted in recessions in numerous countries, including many of those in North America, Europe and Asia. The financial condition of certain sovereign nations, particularly in Europe, is of continuing concern as the sovereign debt crisis remains unresolved. These weak economic conditions resulted in reduced customer demand and had a negative impact on our results of operations in some parts of fiscal year 2012 and fiscal year 2013. If weak economic conditions return, there may be a number of negative effects on our business, including customers or potential customers reducing or delaying orders, the insolvency of key suppliers, potentially causing production delays, the inability of customers to obtain credit, and the insolvency of one or more customers. Any of these effects could impact our ability to effectively manage inventory levels and collect receivables and ultimately decrease our net revenues and profitability.

The semiconductor industry is characterized by cyclical market patterns and a significant industry downturn could adversely affect our operating results.

The semiconductor industry is highly cyclical and our financial performance has been affected by downturns in the industry. Down cycles are generally characterized by price erosion and weaker demand for our products. Weaker demand for our products resulting from economic conditions in the end markets we serve and reduced capital spending by our customers can result, and in the past has resulted, in excess and obsolete inventories and corresponding inventory write-downs. We attempt to identify changes in market conditions as soon as possible; however, the dynamics of the market in which we operate make prediction of and timely reaction to such events difficult. Due to these and other factors, our past results are not reliable predictors of our future results.

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The nature of our business makes our revenues difficult to predict which could have an adverse impact on our business.

In addition to the challenging market conditions we may face, we have limited visibility into the demand for our products, particularly new products, because demand for our products depends upon our products being designed into our end customers' products and those products achieving market acceptance. Due to the complexity of our customers' designs, the design to volume production process for our customers requires a substantial amount of time, frequently longer than a year. In addition, ~~to this,~~ other factors may affect our end customers' demand for our products, including, but not limited to, end customer program delays and the ability of end customers to secure other complementary products. We also are dependent upon "turns," orders received and turned for shipment in the same quarter. These factors make it difficult for us to forecast future sales and project quarterly revenues. The difficulty in forecasting future sales impairs our ability to project our inventory requirements, which could result, and in the past has resulted, in inventory write-downs or failure to meet customer product demands in a timely manner. In addition, difficulty in forecasting revenues compromises our ability to provide forward-looking revenue and earnings guidance.

If we are not able to compete successfully in our industry, our financial results and future prospects will be adversely affected.

Our ~~PLDs~~programmable logic devices (PLDs) compete in the ICintegrated circuits (IC) industry, an industry that is intensely competitive, continues to consolidate, and is characterized by rapid technological change, increasing levels of integration, product obsolescence and continuous price erosion. We expect increased competition from our primary PLD competitors, ~~including~~ Intel, Lattice and Microsemi, and from new market entrants. In addition, competition from the ~~ASIC~~application specific integrated circuits (ASIC) market and from the ~~ASSP~~application specific standard products (ASSP) market continues. We believe that important competitive factors in the logic IC industry include:

product pricing;

time-to-market;

product performance, reliability, quality, power consumption and density;

field upgradeability;

adaptability of products to specific applications;

ease of use and functionality of software design tools;

availability and functionality of predefined IP logic;

inventory and supply chain management;

access to leading-edge process technology and assembly capacity;

ability to provide timely customer service and support; and

access to advanced packaging technology.

Our strategy for expansion in the logic market includes continued introduction of new product architectures that address high-volume, low-cost and low-power applications as well as high-performance, high-density applications. However, we may not be successful in executing this strategy. In addition, we anticipate continued pressure from our customers to reduce prices, which may outpace our ability to lower the cost for established products.

Other competitors include manufacturers of:

high-density programmable logic products characterized by ~~FPGA~~field programmable gate arrays (FPGA) type architectures;

high-volume and low-cost FPGAs as programmable replacements for ASICs and ASSPs;

ASICs and ASSPs with incremental amounts of embedded programmable logic;

high-speed, low-density complex programmable logic devices;

high-performance digital signal processing devices;

products with analog, mixed signal and digital signal processing capabilities;

products with embedded processors;

products with embedded multi-gigabit transceivers;

discrete general purpose GPUs targeting non-graphics applications; and

other new or emerging programmable logic products.

Several companies have introduced products that compete with ours or have announced their intention to sell PLD products. To the extent that our efforts to compete are not successful, our financial condition and results of operations could be materially adversely affected.

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The benefits of programmable logic have attracted a number of competitors to this segment. We recognize that different applications require different programmable technologies, and we are developing architectures, processes and products to meet these varying customer needs. Recognizing the increasing importance of standard software solutions, we have developed common software

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design tools that support the full range of our IC products. We believe that automation and ease of design are significant competitive factors in this segment.

We could also face competition from our licensees. In the past we have granted limited rights to other companies with respect to certain aspects of our older technology, and we may do so in the future. Granting such rights may enable these companies to manufacture and market products that may be competitive with some of our older products.

Increased costs of wafers and materials, or shortages in wafers and materials, could adversely impact our gross margins and lead to reduced revenues.

If greater demand for wafers is not offset by an increase in foundry capacity, market demand for wafers or production and assembly materials increases, or if a supplier of our wafers or other materials ceases or suspends operations, our supply of wafers and other materials could become limited. Such shortages raise the likelihood of potential wafer price increases, wafer shortages or shortages in materials at production and test facilities, resulting in potential inability to address customer product demands in a timely manner. For example, in 2011, when certain suppliers located in Japan were forced to temporarily halt production as the result of a natural disaster, this resulted in a tightening of supply for those materials. Such shortages of wafers and materials as well as increases in wafer or materials prices could adversely affect our gross margins and would adversely affect our ability to meet customer demands and lead to reduced revenue.

We depend on distributors, primarily Avnet, to generate a significant portion of our sales and complete order fulfillment.

Resale of product through Avnet accounted for ~~45%~~51% of our worldwide net revenues in the first ~~nine months~~quarter of fiscal ~~year 2018~~2019 and as of ~~December~~June 30, ~~2017,~~2018, Avnet accounted for ~~64%~~70% of our total net accounts receivable. Any adverse change to our relationship with Avnet or our remaining distributors could have a material impact on our business. Furthermore, if a key distributor materially defaults on a contract or otherwise fails to perform, our business and financial results would suffer. In addition, we are subject to concentrations of credit risk in our trade accounts receivable, which includes accounts of our distributors. A significant reduction of effort by a distributor to sell our products or a material change in our relationship with one or more distributors may reduce our access to certain end customers and adversely affect our ability to sell our products.

In addition, the financial health of our distributors and our continuing relationships with them are important to our success. Unpredictable economic conditions may adversely impact the financial health of some of these distributors, particularly our smaller distributors. This could ~~result in~~increase our credit risk exposure relating to the insolvency of certain distributors, the inability of distributors to obtain credit to finance the purchase of our products, or ~~cause distributors to delay~~delayed payment ~~of their obligations to us and increase our credit risk exposure.~~for such purchases. Our business could be harmed if the financial health of these distributors ~~impairs~~impaired their performance and we ~~are~~were unable to secure alternate distributors.

We are dependent on independent subcontractors for most of our assembly and test services, and unavailability or disruption of these services could negatively impact our financial condition and results of operations.

We are dependent on subcontractors to provide semiconductor assembly, substrate, test and shipment services. Any (i) prolonged inability to obtain wafers with competitive performance and cost attributes, adequate yields or timely delivery, ~~any~~(ii) disruption in assembly, test or shipment services, (iii) delays in stabilizing manufacturing processes and ramping up volume for new products, (iv) transitions to new service providers, or ~~any~~(v) other circumstance that would require us to seek alternative sources of supply, could delay shipments and have a material adverse effect on our ability to meet customer demands. In addition, unpredictable economic conditions may adversely impact the financial health and viability of these subcontractors and result in their insolvency or their inability to meet their commitments to us. These factors would result in reduced net revenues and could negatively impact our financial condition and results of operations.

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A number of factors, including our inventory strategy, can impact our gross margins.

A number of factors can cause our gross margins to fluctuate, including yield, wafer pricing, product mix, market acceptance of our new products, competitive pricing dynamics, licensing costs, geographic and/or market segment pricing ~~strategies can cause our gross margins to fluctuate.~~strategies. In addition, forecasting our gross margins is difficult because a significant portion of our business is based on turns within the same quarter.

While our overall inventory levels fluctuate over time, the inventory of newer product lines may be higher than other products due to a planned increase in safety stock in anticipation of future revenue growth. In the event demand does not materialize, we may be subject to incremental obsolescence costs. In addition, future product cost reductions could have ~~an increased~~ impact on our inventory valuation ~~which would then impact~~as well as our operating results.

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Reductions in the average selling prices of our products could have a negative impact on our gross margins.

The average selling prices of our products generally decline as the products mature. We seek to offset the decrease in selling prices through yield improvement, manufacturing cost reductions and increased unit sales. We also continue to develop higher value products or product features that increase the average selling prices of our products or slow the decline of ~~the average selling price of our products.~~such prices. However, there is no guarantee that our ongoing efforts will be successful or that they will keep pace with the decline in selling prices of our products, which could ultimately lead to a decline in our revenues and ~~have a negative effect on our~~ gross margins.

~~Because of our international business and operations, we are vulnerable to the~~General negative economic conditions ofand any related deterioration in the ~~countries in which we operate and currency fluctuations~~global business environment could have a material adverse effect on our business, operating results and ~~negatively impact our~~ financial ~~condition and results of operations.~~condition.

In addition to our U.S. operations, we also have significant international operations, including foreign sales offices to support our international customers and distributors, our regional headquarters in Ireland and Singapore and an R&D site in India. Our international operations have grown because we have established certain operations and administrative functions outside the U.S. Sales and operations outside of the U.S. subject us to the risks associated with conducting business in foreign economic and regulatory environments. Our financial condition and results of operations could be adversely affected by unfavorableIf weak economic conditions ~~in countries in which we do significant business or by changes in foreign currency exchange rates affecting those countries. We derive over one-half~~happen, there may be a number of our revenues from international sales, primarily in the Asia Pacific region, Europe and Japan. Past economic weaknesses in these markets adversely affected revenues. Sales to all direct OEMs and distributors are denominated in U.S. dollars. While the recent movements of the Euro and Yen exchange rates against the U.S. dollar had no material impact tonegative effects on our business, ~~increased volatility~~including customers or potential customers reducing or delaying orders, the insolvency of key suppliers, potentially causing production delays, the inability of customers to obtain credit, and the insolvency of one or more customers. Any of these effects could impact our European and Japanese customers. Currency instability and volatility and disruptions in the credit and capital markets, including as a result of the United Kingdom referendum on June 23, 2016, in which voters approved an exit from the European Union (commonly referred to as "Brexit"), may increase credit risks for some of our customers and may impair our customers' ability to ~~repay existing obligations. Increased currency volatility could also positively or negatively impact~~effectively manage inventory levels and collect receivables and ultimately decrease our ~~foreign-currency-denominated costs, assets~~net revenues and liabilities. In addition, any devaluation of the U.S. dollar relative to other foreign currencies may increase the operating expenses of our foreign subsidiaries adversely affecting our results of operations. Furthermore, because we are increasingly dependent on the global economy, instability in worldwide economic environments occasioned, for example, directly or indirectly by political instability (such as due to Brexit), terrorist activity, U.S. or other military actions, and international sanctions or other diplomatic actions (potentially including sanctions adopted or under consideration by the U.S. or European Union with respect to Russia or Russian individuals or businesses), could adversely impact economic activity and lead to a contraction of capital spending by our customers generally or in specific regions. Any or all of these factors could adversely affect our financial condition and results of operations in the future.profitability.

We are subject to the risks associated with conducting business operations outside of the U.S. which could adversely affect our business.

In addition to international sales and support operations and development activities, we purchase our wafers from foreign foundries, have our commercial products assembled, packaged and tested by subcontractors located outside the U.S. and utilize third party warehouse operators to store and manage inventory levels for certain of our products. All of these activities are subject to the uncertainties associated with international business operations, including global laws and regulations, trade barriers, economic sanctions, tax regulations, import and export regulations, duties and tariffs and other trade restrictions, changes in trade policies, anti-corruption laws, foreign governmental regulations, potential vulnerability of and reduced protection for IP, longer receivable collection periods and disruptions or delays in production or shipments, any of which could have a material adverse effect on our business, financial condition and/or operating results. ~~For~~As an example ~~on March 8, 2016, the U.S. Department~~ of ~~Commerce added~~such uncertainties, in recent years ZTE Corporation (ZTE) has been subject to ~~its "Entity List"~~a number of government restrictions affecting our ability to do business with ZTE; the terms and ~~placed certain export restrictions on ZTE and its suppliers. Although interim relief was provided until the U.S. Department~~duration of ~~Commerce and ZTE reached a settlement effective on March 29, 2017, which removed ZTE from the "Entity List," had ZTE~~any such restriction have not been ~~removed, the restrictions could~~known to us in advance and have ~~caused a material adverse effect on our business, financial condition and/or operating results.~~been subject to ongoing modifications. Additional factors that could adversely affect us due to our international operations include rising oil prices and increased costs, or limited supply of other natural resources. Moreover, our financial condition and results of operations could be adversely affected in the event of political conflicts, or economic crises or changes in international relations affecting countries where our main wafer providers, warehouses, end customers and contract manufacturers who provide assembly and test services worldwide, are located. ~~Adverse change~~For example, the United Kingdom's pending exit from the European Union, commonly referred to ~~the circumstances or conditions of our international business operations, including~~as "Brexit", has led to significant instability and uncertainty asin such regions, which could have a material adverse effect on our business. In addition, in the first half of 2018, the U.S and China began threatening to impose tariffs on each other's products, leading to fears of a trade war, which, if were to materialize, could result ~~of Brexit, could~~in general economic downturn or otherwise have a material adverse effect on our business.

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Because of our international business and operations, we are vulnerable to the economic conditions of the countries in which we operate and currency fluctuations could have a material adverse effect on our business and negatively impact our financial condition and results of operations.

In addition to our U.S. operations, we also have significant international operations, including foreign sales offices to support our international customers and distributors, our regional headquarters in Ireland and Singapore and an R&D site in India. Sales and operations outside of the U.S. subject us to the risks associated with conducting business in foreign economic and regulatory environments. Our financial condition and results of operations could be adversely affected by unfavorable economic conditions in countries in which we do significant business or by changes in foreign currency exchange rates affecting those countries. We derive more than half of our revenues from international sales, primarily in the Asia Pacific region, Europe and Japan where economic weaknesses have adversely affected our revenues in the past. Sales to all direct OEMs and distributors are denominated in U.S. dollars. While the recent movements of the Euro and Yen exchange rates against the U.S. dollar had no material impact on our business, increased volatility could impact our European and Japanese customers. Currency instability and volatility and disruptions in the credit and capital markets may increase credit risks for some of our customers and may impair our customers' ability to repay existing obligations. For example, the United Kingdom's 2016 referendum vote to approve "Brexit" has created economic uncertainty and currency volatility in the European Union. Increased currency volatility could also positively or negatively impact our foreign-currency-denominated costs, assets and liabilities. In addition, any devaluation of the U.S. dollar relative to other foreign currencies may increase the operating expenses of our foreign subsidiaries adversely affecting our results of operations. Furthermore, because we are increasingly dependent on the global economy, instability in worldwide economic environments occasioned, for example, directly or indirectly by political instability (such as due to Brexit), terrorist activity, U.S. or other military actions, changes to U.S. domestic and foreign policy and international sanctions or other diplomatic actions (potentially including sanctions adopted or under consideration by the U.S. or European Union with respect to Russia or Russian individuals or businesses), could adversely impact economic activity and lead to a contraction of capital spending by our customers generally or in specific regions. Any or all of these factors could adversely affect our financial condition and results of operations in the future.

We are exposed to fluctuations in interest rates and changes in credit rating and in the market values of our portfolio investments which could have a material adverse impact on our financial condition and results of operations.

Our cash, short-term and long-term investments represent significant assets that may be subject to fluctuating or even negative returns depending upon interest rate movements, changes in credit rating and financial market conditions. Global credit market disruptions and economic slowdown and uncertainty have in the past negatively impacted the values of various types of investment and non-investment grade securities. The global credit and capital markets may again experience significant volatility and disruption due to instability in the global financial system, uncertainty related to global economic conditions and concerns regarding sovereign financial stability.

Therefore, there is a risk that we may incur other-than-temporary impairment charges for certain types of investments should credit market conditions deteriorate or the underlying assets fail to perform as anticipated. Our future investment income may fall short of expectations due to changes in interest rates or if the decline in fair values of our debt securities iswas judged to be other than temporary. Furthermore, we may suffer losses in principal if we are forced to sell securities that have declined in market value due to changes in interest rates or financial market conditions.

Our failure to protect and defend our IP could impair our ability to compete effectively.

We rely upon patent, copyright, trade secret, mask work and trademark laws to protect our IP. We cannot provide assurance that such IP rights can be successfully asserted in the future or will not be invalidated, violated, circumvented or challenged. From time to time, third parties, including our competitors, have asserted against us patent, copyright ~~and~~or other IP rights to technologies that are important to us. Third parties may attempt to misappropriate our IP through electronic or other means or assert infringement claims against ~~our indemnities~~us or ~~us in the future.~~parties we have agreed to indemnify. Such assertions by third parties may result in costly litigation, indemnity claims or other legal actions, and we may not prevail in such matters or be able to license any valid and infringed patents from third parties on commercially reasonable terms. This could result in the loss of our ability to import and sell our products or require us to pay costly royalties to third parties in connection with sales of our products. Any infringement claim, indemnification claim, or impairment or loss of use of our IP could materially adversely affect our financial condition and results of operations.

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Our ability to design and introduce new products in a timely manner is dependent upon third-party IP.

In the design and development of new products and product enhancements, we rely on third-party intellectual property such as software development tools and hardware testing tools. Furthermore, certain product features may rely on intellectual property acquired from third parties, including hardware and software tools and ~~products acquired from third parties.~~products. The design requirements necessary to meet future consumer demands for more features and greater functionality from semiconductor products may exceed the capabilities of the third-party intellectual property or development tools that are available to us. In addition, hardware and software tools and products procured from third parties may contain design or manufacturing defects, including flaws that could unexpectedly interfere with the operation of our products. If the third-party intellectual property that we use becomes unavailable or fails to produce designs that meet consumer demands, our business could be adversely affected.

~~We rely on~~Any failure of our information technology ~~(IT) systems, and failure of these~~ systems to function properly ~~or unauthorized access to our systems~~ could result in business disruption.

We rely in part on various ITinformation technology (IT) systems to manage our operations, including, but not limited to, financial reporting, and we regularly evaluate these systems and make changes to improve them as necessary. Consequently, we periodically implement new, or upgrade or enhance existing, operational and IT systems, procedures and controls. Any delay in the implementation of, or disruption in the transition to, new or enhanced systems, procedures or controls, could harm our ability to record and report financial, ~~and~~ management, or operational information on a timely and accurate basis. In addition, hardware and software tools and products procured from third parties included in our IT systems ~~may~~could contain design or manufacturing defects, including flaws that could unexpectedly interfere with the operation of our IT systems. These systems are also subject to power and telecommunication outages or other general system failures. Failure of our IT systems or difficulties in managing them could result in business disruption.

Cyber-attacks and data breaches could have an adverse effect on our business and reputation and negatively impact our financial condition and results of operations.

Security breaches, including cyber-attacks, phishing attacks or attempts to misappropriate or compromise confidential or proprietary information or sabotage enterprise IT systems, are becoming increasingly frequent and more sophisticated. We ~~also may be subject to unauthorized access to~~depend on the uninterrupted operation of our IT systems ~~through a security breach or cyber attack.~~to manage our operations, store and retrieve business and financial data and facilitate internal communications and communications with customers, subcontractors, suppliers and distribution partners. We experience ~~cyber attacks~~security incidents of varying degrees on an ongoing basis. In the past there have been attempts by third parties to penetrate and/or infect our network and systems with malicious software in an effort to gain access to our network and systems. Third parties may continue to attempt to fraudulently induce employees, users, or customers to disclose sensitive information in order to gain access to our network systems. We ~~seek~~take steps to detect and investigate any security incidents and prevent their recurrence, but, in some cases, we might be unaware of an incident or its magnitude and effects. Because the techniques used to obtain unauthorized access to ~~and~~or sabotage ~~our~~networks and systems change frequently, we may be unable to anticipate these techniques or to implement adequate protections. ~~Our~~These security incidents may involve unauthorized access, misuse or disclosure of intellectual property or confidential or proprietary information regarding our business ~~could be significantly harmed, and we could~~or that of our customers or business partners. We also may be subject to ~~third party claims in the event of such~~unauthorized access to our IT systems through a security ~~breach. Our IT~~breach or cyber-attack. In the past there have been attempts by third parties to penetrate and/or infect our network and systems ~~are also linked~~with malicious software in an effort to gain access to our network and systems. Recently, several large organizations have been infected by “ransomware,” through which an attacker gains access to the ~~IT systems of~~organization’s computer files, renders them temporarily inaccessible and threatens to permanently delete them if a cash ransom is not paid by a specified deadline. Third parties may continue to attempt to fraudulently induce employees, users, or customers ~~suppliers,~~to disclose sensitive information in order to gain access to our network and ~~distribution partners and those links provide critical information we use to~~

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~~manage our operations, including information used for financial reporting.~~systems. The IT systems of our customers, suppliers, and distribution partners and the links between our IT systems and our customers are subject to the same risks as ~~that~~those of our IT systems. In the event of a security breach, our business and reputation could be harmed and we could be subject to legal and regulatory claims which could negatively impact our financial condition and results of operations.

Acquisitions and strategic investments present risks, and we may not realize the goals that were contemplated at the time of a transaction.

In the past, we have acquired technology companies whose products complement our products. We also have made a number of strategic investments in other technology companies. We may make similar acquisitions and strategic investments in the future. Acquisitions and strategic investments present risks, including:

our ongoing business may be disrupted and our management's attention may be diverted by investment, acquisition, transition or integration activities;

an acquisition or strategic investment may not further our business strategy as we expected, and we may not integrate an acquired company or technology as successfully as we expected;

our operating results or financial condition may be adversely impacted by claims or liabilities that we assume from an acquired company or technology or that are otherwise related to an acquisition;

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we may have difficulty incorporating acquired technologies or products with our existing product lines;

we may have higher than anticipated costs in continuing support and development of acquired products, and in general and administrative functions that support such products;

our strategic investments may not perform as expected; and

we may experience unexpected changes in how we are required to account for our acquisitions and strategic investments pursuant to U.S. GAAP.

The occurrence of any of these risks could have a material adverse effect on our business, results of operations, financial condition or cash flows, particularly in the case of a larger acquisition or several concurrent acquisitions or strategic investments.

If we are unable to maintain effective internal controls, our stock price could be adversely affected.

We are subject to the ongoing internal control provisions of Section 404 of the Sarbanes-Oxley Act of 2002 (the Sarbanes-Oxley Act). Our controls necessary for continued compliance with the Sarbanes-Oxley Act may not operate effectively at all times and may result in a material weakness disclosure. The identification of material weaknesses in internal control, if any, could indicate a lack of proper controls to generate accurate financial statements and could cause investors to lose confidence and our stock price to drop.

We compete with others to attract and retain key personnel, and any loss of, or inability to attract, such personnel would harm us.

We depend on the efforts and abilities of certain key members of management and other technical personnel. Our future success depends, in part, upon our ability to retain, develop and transition such personnel and attract and retain other highly qualified personnel, particularly product engineers. Competition for such personnel is intense and we may not be successful in hiring or retaining new or existing qualified personnel. Changes to the U.S. immigration laws may also impact the availability of qualified personnel. From time to time we have effected ~~restructurings which~~restructuring that eliminate a number of positions. Even if such personnel are not directly affected by the restructuring effort, such terminations can have a negative impact on morale and our ability to attract and hire new qualified personnel in the future. If we are unable to retain or develop existing qualified personnel or are unable to hire new qualified personnel, as needed, our business, financial condition and results of operations could be seriously harmed. Further, changes to our qualified personnel, including key members of management, may be disruptive to our business, and any failure to successfully assimilate key new hires, or to successfully retain, develop and transition promoted employees, could adversely affect our business and results of operations.

Unfavorable results of legal proceedings could adversely affect our financial condition and operating results.

From time to time we are subject to various legal proceedings and claims that arise out of the ordinary conduct of our business. The amount of damages alleged in certain legal claims may be significant. For example, in December 2013, we entered into a Settlement and License Agreement with PACT XPP Technologies, AG (PACT) in which the parties agreed to dismiss with prejudice all outstanding patent litigation among us, Avnet and PACT. As part of the settlement, we agreed to pay PACT a lump sum of $33.5 million. Certain other claims involving the Company are not yet resolved, including those that are discussed under "Note ~~17.~~16. Litigation Settlement and Contingencies" to our ~~condensed~~ consolidated financial statements, included in ~~Part II.~~ Item 1.8. "Financial ~~Statements"~~Statements and Supplementary Data" of this Form ~~10-Q,~~10-K, and additional claims may arise in the future. Results of legal proceedings cannot be predicted with certainty. Regardless of its merit, litigation may be both time-consuming and disruptive to our operations and cause significant expense and diversion of management attention and we may enter into material settlements to avoid these risks. Entering into settlements may result in payment of significant amounts which may materially and adversely affect our financial condition and operation results. Should we fail to prevail in certain matters, or should several of these matters be resolved against us, ~~in the same reporting period,~~ we may be faced with significant monetary damages or injunctive relief against us that would materially and adversely affect a portion of our business and might materially and adversely affect our financial condition and operating results.

Our products could have defects which could result in reduced revenues and claims against us.

We develop complex and evolving products that include both hardware and software. Despite our testing efforts and those of our subcontractors, defects may be ~~found~~discovered in existing or new products. ~~These~~Such defects may cause us to incur significant warranty, support and repair or replacement costs, divert the attention of our engineering personnel from our product development efforts and harm our relationships with customers. Subject to certain terms and conditions, we have agreed to compensate certain customers for limited specified costs they actually incur in the event our hardware products experience epidemic failure. As a result, epidemic failure and other performance problems could result in claims against us or the delay or loss of market acceptance of our products and would likely harm our business. Our customers could also seek damages from us for their losses.

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In addition, we could be subject to product liability claims. A product liability claim brought against us, even if unsuccessful, would likely be time-consuming and costly to defend. Product liability risks are particularly significant with respect to aerospace, automotive and medical applications because of the risk of serious harm to users of these products. Any product liability claim, whether or not determined in our favor, could result in significant expense, divert the efforts of our technical and management personnel, and harm our business.

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In preparing our financial statements, we make good faith estimates and judgments that may change or turn out to be erroneous.

In preparing our financial statements in conformity with accounting principles generally accepted in the U.S., we must make estimates and judgments in applying our ~~most~~ critical accounting policies. Those estimates and judgments have a significant impact on the results we report in our consolidated financial statements. The most difficult estimates and subjective judgments that we make concern valuation of marketable and non-marketable securities, revenue recognition, inventories, long-lived assets including acquisition-related intangibles, goodwill, taxes and stock-based compensation. We base our estimates on historical experience, input from outside experts and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We also have other key accounting policies that are not as subjective, and therefore, their application would not require us to make estimates or judgments that are as difficult, but which nevertheless could significantly affect our financial reporting. Actual results may differ materially from these estimates. If these estimates or their related assumptions change, our operating results for the periods in which we revise our estimates or assumptions could be adversely and ~~perhaps~~ materially affected.

Our failure to comply with the requirements of the Export Administration Regulations (EAR) and the International Traffic and Arms Regulations (ITAR) could have a material adverse effect on our financial condition and results of operations.

Our FPGAs and related technologies are subject to EAR, which are administered by the U.S. Department of Commerce. In addition, we may, from time to time, receive technical data from third parties that is subject to the ITAR, which are administered by the U.S. Department of State. EAR and ITAR govern the export and re-export of these FPGAs, the transfer of related technologies, whether in the U.S. or abroad, and the provision of services. We are required to maintain an internal compliance program and security infrastructure to meet EAR and ITAR requirements.

An inability to obtain the required export licenses, or to predict when they will be granted, increases the difficulties of forecasting shipments. In addition, security or compliance program failures that could result in penalties or a loss of export privileges, as well as stringent licensing restrictions that may make our products less attractive to overseas customers, could have a material adverse effect on our business, financial condition and/or operating results.

Our inability to effectively control the sale of our products on the gray market could have a material adverse effect on us.

We market and sell our products directly to OEMs and through authorized third-party distributors which helps to ensure that products delivered to our customers are authentic and properly handled. From time to time, customers may purchase products bearing our name from the unauthorized "gray market." These parts may be counterfeit, salvaged or re-marked parts, or parts that have been altered, mishandled, or damaged. Gray market products result in shadow inventory that is not visible to us, thus making it difficult to forecast supply or demand. Also, when gray market products enter the market, we and our authorized distributors may compete with brokers of these discounted products, which can adversely affect demand for our products and negatively impact our margins. In addition, our reputation with customers may be negatively impacted when gray market products bearing our name fail or are found to be substandard.

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The conflict minerals provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act could result in additional costs and liabilities.

In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC established disclosure and reporting requirements for ~~those~~ companies ~~who use~~whose products incorporate "conflict" minerals mined from the Democratic Republic of Congo and adjoining countries, ~~in their products,~~ regardless of whether such products are manufactured by those companies or by third parties. These requirements could affect the sourcing and availability of minerals used in the manufacture of our semiconductor products. The costs associated with complying with the disclosure requirements include those for due diligence in regard to the sources of any conflict minerals used in our products, remediation and other changes to products, processes, or sources of supply as a consequence of such verification activities. We may face reputational challenges if we are unable to sufficiently verify the origins for all minerals used in our products through the due diligence process we implement. Moreover, wesome of our customers may ~~encounter challenges to satisfy those customers who~~ require that all of the components of our products are certified as ~~conflict free.~~

~~Table~~conflict-free, and we may be unable to verify the origin of ~~Contents~~

the raw materials used in our products to the extent necessary to make this certification.

Exposure to greater than anticipated income tax liabilities, changes in tax rules and regulations, changes in interpretation of tax rules and regulations, or unfavorable assessments from tax audits could affect our effective tax rates, financial condition and results of operations.

We are a U.S.-based multinational company subject to tax in multiple U.S. and foreign tax jurisdictions. Our income tax obligations could be affected by many factors, including but not limited to changes to our corporate operating structure, intercompany arrangements and tax planning strategies.

Our income tax expense is computed based on tax rates at the time of the respective financial period. Our future effective tax rates, financial condition and results from operations could be unfavorably affected by changes in the tax rates in jurisdictions where our income is earned, by changes in the tax rules and regulations or the interpretation of tax rules and regulations in the jurisdictions in which we do business or by changes in the valuation of our deferred tax assets.

Recently enacted U.S. tax legislation ~~will~~ significantly ~~change~~changed the taxation of U.S.-based multinational corporations, by, among other things, reducing the U.S. corporate income tax rate, adopting elements of a territorial tax system, assessing a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, and ~~the creation of~~imposing new taxes on certain foreign-sourced earnings. The legislation is unclear in some respects and will require interpretations and implementing regulations by the Internal Revenue Service, as well as state tax authorities, and the legislation could be subject to ~~potential~~ amendments and technical corrections, any of which could lessen or increase certain adverse impacts of the legislation. A significant portion of our earnings are earned by our subsidiaries outside the U.S. Changes to the taxation of certain foreign earnings resulting from the newly enacted U.S. tax legislation, along with the state tax impact of these changes, ~~and potential future cash distributions,~~ may have an adverse effect on our effective tax rate. Furthermore, changes to the taxation of undistributed foreign earnings could change our future intentions regarding reinvestment of such earnings. The foregoing items could have a material effect on our business, cash flow, results of operations or financial ~~conditions.~~condition.

In addition, we are subject to examinations of our income tax returns by domestic and foreign tax authorities. We regularly assess the likelihood of outcomes resulting from these examinations to determine the adequacy of our provision for income taxes and have reserved for potential adjustments that may result from the current examinations. There can be no assurance that the final determination of any of these examinations will not have an adverse effect on our effective tax rates, financial ~~position~~condition and results of operations.

Considerable amounts of shares of our common stock are available for issuance under our equity incentive plans, and significant issuances in the future may adversely impact the market price of our common stock.

As of ~~December~~June 30, ~~2017~~2018 we had 2.00 billion authorized common shares, of ~~common stock, of~~ which ~~254.7~~247.9 million shares were outstanding. In addition, ~~28.8~~27.4 million shares of common stock were reserved for issuance pursuant to our equity incentive plans and Amended and Restated 1990 Employee Qualified Stock Purchase ~~Plan.~~Plan (ESPP). The availability of substantial amounts of our common stock resulting from the exercise or settlement of equity awards outstanding under our equity incentive plans, which would ~~in the future~~ be dilutive to existing stockholders, could adversely affect the prevailing market price of our common stock and could impair our ability to raise additional capital through the sale of equity securities.

We have indebtedness that could adversely affect our financial condition and prevent us from fulfilling our debt obligations.

The aggregate amount of our consolidated indebtedness as of ~~December~~June 30, ~~2017~~2018 was $1.75 billion (principal amount), which consists of $500.0 million in aggregate principal amount of our 2.125% Notes due 2019 ~~Notes,~~(2019 Notes), $500.0 million in aggregate principal

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amount of our 3.000% Notes due 2021 ~~Notes~~(2021 Notes) and $750.0 million in aggregate principal amount of our 2.950% senior notes due 2024 ~~Notes.~~(2024 Notes). We also may incur additional indebtedness in the future. Our indebtedness may:

make it difficult for us to satisfy our financial obligations, including making scheduled principal and interest payments on the debentures and our other indebtedness;

limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions or other general corporate purposes;

limit our ability to use our cash flow or obtain additional financing for future working capital, capital expenditures, acquisitions or other general business purposes;

require us to use a portion of our cash flow from operations to make debt service payments;

limit our flexibility to plan for, or react to, changes in our business and industry;

place us at a competitive disadvantage compared to our less leveraged competitors; and

increase our vulnerability to the impact of adverse economic and industry conditions; ~~and~~

~~require us to repatriate off-shore cash to the U.S. at unfavorable tax rates.~~

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Our ability to meet our debt service obligations will depend on our future performance, which will be subject to financial, business and other factors affecting our operations, many of which are beyond our control.

The agreements governing the 2019 Notes, 2021 Notes and 2024 Notes contain covenants that may adversely affect our ability to operate our business.

The indentures governing the 2019 Notes, 2021 Notes and 2024 Notes contain various covenants limiting our and our subsidiaries' ability to, among other things:

create certain liens on principal property or the capital stock of certain subsidiaries;

enter into certain sale and leaseback transactions with respect to principal property; and

consolidate or merge with, or convey, transfer or lease all or substantially all our assets, taken as a whole, to, another person.

A failure to comply with these covenants and other provisions in these indentures could result in events of default under the indentures, which could permit acceleration of the 2019 Notes, the 2021 Notes and the 2024 Notes. Any required repayment as a result of such acceleration could have a material adverse effect on our business, results of operations, financial condition or cash flows.

~~Acquisitions and strategic investments present risks, and we may not realize the goals that were contemplated at the time of a transaction.~~

~~our ongoing business may be disrupted and our management's attention may be diverted by investment, acquisition, transition or integration activities;~~

~~an acquisition or strategic investment may not further our business strategy as we expected, and we may not integrate an acquired company or technology as successfully as we expected;~~

~~our operating results or financial condition may be adversely impacted by claims or liabilities that we assume from an acquired company or technology or that are otherwise related to an acquisition;~~

~~we may have difficulty incorporating acquired technologies or products with our existing product lines;~~

~~we may have higher than anticipated costs in continuing support and development of acquired products, and in general and administrative functions that support such products;~~

~~our strategic investments may not perform as expected, and we may be required to recognize a loss on any or all of our strategic investments; and~~

~~we may experience unexpected changes in how we are required to account for our acquisitions and strategic investments pursuant to U.S. GAAP.~~

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Item 2.	Unregistered ~~Sales~~Sale of Equity Securities and Use of Proceeds

On May 16, 2016, the Board authorized 2016 Repurchase Program to repurchase of up to $1.00 billion of shares of our common stock and debentures. The 2016 Repurchase Program has no stated expiration date. Through ~~December~~June 30, ~~2017,~~2018, we have used ~~$628.7~~$929.4 million of the $1.00 billion authorized under the 2016 Repurchase Program, leaving ~~$371.3~~$70.6 million available for future purchases. On May 16, 2018, the Board authorized 2018 Repurchase Program to repurchase the Company's common stock and debentures up to $500.0 million.

The following table summarizes our repurchase of shares of our common stock during the ~~third~~first quarter of fiscal ~~year 2018:~~2019:


	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program		Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program
(In thousands, except per share amounts)
Period
October 1, 2017 to November 4, 2017	—	$	—	—	$	444,617
November 5, 2017 to December 2, 2017	490	$	71.34	490	$	409,630
December 3, 2017 to December 30, 2017	537	$	71.34	537	$	371,327
April 1, 2018 to May 5, 2018							1,395	$	65.77	1,395	$	115,587
May 6, 2018 to June 2, 2018							224	$	67.88	224	$	100,411
June 3, 2018 to June 30, 2018							445	$	67.04	445	$	70,580
Total for the Quarter	1,027			1,027			2,064			2,064

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Item 6.	Exhibits

Incorporated by Reference

Exhibit No. Exhibit Title Form File No. Exhibit Filing Date Filed Herewith

10.1
Employment Agreement, dated as of January 4, 2018, by and between Xilinx, Inc. and Victor Peng
8-K 000-18548 10.1 1/5/2018

31.1
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
X

31.2
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
X

32.1
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
X

32.2
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
X

101.INS XBRL Instance Document X

101.SCH XBRL Taxonomy Extension Schema Document X

101.CAL XBRL Taxonomy Extension Calculation Linkbase Document X

101.LAB XBRL Taxonomy Extension Label Linkbase Document X

101.PRE XBRL Taxonomy Extension Presentation Linkbase Document X

101.DEF XBRL Taxonomy Extension Definition Linkbase. X

Incorporated by Reference

Exhibit No

Exhibit Title

Form

File No.

Exhibit

Filing
Date

Filed
Herewith

10.1

Separation Agreement between the Company and Steven Glaser dated January 5, 2018

31.1

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1

Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2

Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS

XBRL Instance Document

101.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document



*	Management contract or compensatory plan or arrangement.

Items 3, 4 and 5 are not applicable and have been omitted.

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



			XILINX, INC.

Date: ~~January 26,~~July 27, 2018			/s/ Lorenzo A. Flores
			Lorenzo A. Flores
			~~Senior~~Executive Vice President and Chief Financial Officer (as principal accounting and financial officer and on behalf of Registrant)




PART I. FINANCIAL INFORMATION	3
ITEM 1. FINANCIAL STATEMENTS	3
CONDENSED CONSOLIDATED STATEMENTS OF INCOME	3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME	4
CONDENSED CONSOLIDATED BALANCE SHEETS	5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS	6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	25
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	3332
ITEM 4. CONTROLS AND PROCEDURES	3534

PART II. OTHER INFORMATION	3635
ITEM 1. LEGAL PROCEEDINGS	3635
ITEM 1A. RISK FACTORS	3635
ITEM 2. UNREGISTERED ~~SALES~~SALE OF EQUITY SECURITIES AND USE OF PROCEEDS	4645
ITEM 6. EXHIBITS	46
SIGNATURES	47



	2018		2017
Expected life of options (years)	1.25		1.25
Expected stock price volatility	0.28		0.23
Risk-free interest rate	1.3	%	0.5	%
Dividend yield	2.2	%	2.6	%