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Xilinx Reports Fiscal Second Quarter 2020 Results

SAN JOSE, Calif., Oct. 23, 2019 /PRNewswire/ -- Xilinx, Inc. (Nasdaq: XLNX), the leader in adaptive and intelligent computing, today announced revenues of $833 million for the second quarter of fiscal year 2020, down 2% from the prior quarter and up 12% year over year. GAAP net income for the September quarter was $227 million, or $0.89 per diluted share. Non-GAAP net income for the September quarter was $240 million, or $0.94 per diluted share.

The Xilinx Board of Directors declared a quarterly cash dividend of $0.37 per outstanding share of common stock payable on December 3, 2019, to all stockholders of record at the close of business on November 12, 2019. The Xilinx Board of Directors also approved a new authorization for the Company to repurchase up to $1.0 billion of its common stock. The timing of share repurchases and exact number of common shares to be purchased will depend upon prevailing market conditions and other factors.

Additional second quarter of fiscal year 2020 comparisons are provided in the charts below.

Q2 2020 Financial Highlights
(In millions, except EPS)


                                         
          
          GAAP





                                   
     
           Q2    
            
       Q1        Q2


                                           FY 2020            FY 2020  FY 2019   Q-T-Q    Y-T-Y



     
     Net revenues*                         $833                $850      $746      -2%      12%



     
     Operating income                      $204                $251      $233     -19%     -13%



     
     Net income                            $227                $241      $216      -6%       5%


        Diluted earnings per share           $0.89               $0.94     $0.84      -5%       6%




                                       
          
          Non-GAAP





                                   
     
           Q2    
            
       Q1        Q2


                                           FY 2020            FY 2020  FY 2019   Q-T-Q    Y-T-Y



     
     Net revenues*                         $833                $850      $746      -2%      12%



     
     Operating income                      $217                $260      $236     -16%      -8%



     
     Net income                            $240                $249      $221      -4%       8%


        Diluted earnings per share           $0.94               $0.97     $0.87      -3%       8%




              * No adjustment between GAAP and Non-GAAP

"I am pleased to report that we were able to exceed the midpoint of our revenue guidance for the fiscal second quarter amidst a challenging business environment driven by global trade disputes. Overall, the first half of our current fiscal year remained strong despite the impact of continued business restrictions related to Huawei which was offset by higher than expected 5G product demand from other global communications OEMs and stronger than expected growth in our data center business," said Victor Peng, president and chief executive officer. "However, we are seeing a combination of headwinds in the second half related to continuing business restrictions, weaker demand for communications products and macro-related weakness offsetting strong overall growth in data center and improvement across our core vertical markets. For fiscal 2020, we believe that third quarter will be our low point and we expect to see a return to sequential revenue growth in our fourth quarter. Despite the weaker third quarter, we expect fiscal year 2020 revenues to grow approximately six percent compared to fiscal year 2019, which represents the midpoint of our guidance."



     
     Net Revenues by Geography:


                                                   Percentages                 Growth Rates


                                                       Q2           Q1              Q2


                                           FY 2020          FY 2020    FY 2019            Q-T-Q Y-T-Y

                            ---


     
     North America                                           28%        23%              28%           18%    12%



     
     Asia Pacific                                            51%        51%              44%           -2%    29%



     
     Europe                                                  15%        18%              20%          -19%   -19%



     
     Japan                                                    6%         8%               8%          -20%    -8%







     
     Net Revenues by End Market:


                                                   Percentages                 Growth Rates


                                                       Q2           Q1              Q2


                                           FY 2020          FY 2020    FY 2019            Q-T-Q Y-T-Y

                            ---


     
     A&D, Industrial and TME                                 36%        39%              38%           -9%     7%



     
     Automotive, Broadcast and Consumer                      16%        15%              16%            6%     9%



     
     Wired and Wireless Group                                38%        41%              35%           -8%    24%



     
     Data Center Group                                       10%         5%               9%           92%    24%



     
     Channel                                                  0%         0%               2%       
     NM    
     NM







     
     Net Revenues by Product:


                                                   Percentages                 Growth Rates


                                                       Q2           Q1              Q2


                                           FY 2020          FY 2020    FY 2019            Q-T-Q Y-T-Y

                            ---


     
     Advanced Products                                       74%        69%              64%            5%    29%



     
     Core Products                                           26%        31%              36%          -18%   -19%

Products are classified as follows:

Advanced Products: Alveo, UltraScale+, UltraScale and 7-series products.
Core Products: Virtex-6, Spartan-6, Virtex?5, CoolRunner?II, Virtex-4, Virtex-II, Spartan-3, Spartan-2, XC9500 products, configuration solutions, software & support/services.

Key Statistics:
(Dollars in Millions)


                                                             Q2         Q1          Q2

                                                                FY 2020    FY 2020     FY 2019






     Annual Return on Equity (%)*                                   34          35           34





     Operating Cash Flow                                          $224        $298         $313





     Depreciation Expense (including software amortization)        $22         $20          $16





     Capital Expenditures (including software)                     $34         $29          $14





     Inventory Days (internal)                                     104         107           96





     Revenue Turns (%)                                             37          24           48



               *Return on equity calculation:
                Annualized year to date GAAP net
                income/average stockholders' equity

Product and Financial Highlights - Fiscal Second Quarter 2020

    --  The Advanced Products category increased 29% year over year and
        constituted approximately 74% of total revenues in the second quarter.
        Our 16 nanometer (nm) node continued its accelerated ramp, with revenues
        increasing over 3 times year-over-year, primarily driven by customers in
        5G and Data Center.
    --  Xilinx announced the expansion of its 16nm Virtex® UltraScale+(TM)
        family to include the world's largest FPGA -- the Virtex UltraScale+
        VU19P. With 35 billion transistors, the VU19P provides the highest logic
        density and I/O count on a single device ever built, enabling emulation
        and prototyping of tomorrow's most advanced ASIC and SoC technologies,
        as well as test, measurement, compute, networking, aerospace and
        defense-related applications.
    --  Zynq-based revenues grew 61% year over year, with continuing business
        momentum from a broad base of end markets including Communications,
        Automotive and Industrial. The Zynq SoC platform, which includes Zynq at
        28nm and both MPSoC and RFSoC at 16nm, now represents 26% of total
        revenues, indicating significant progress in Xilinx's transformation
        into a platform company.
    --  Xilinx announced the expansion of its Alveo accelerator card portfolio
        with the launch of the Alveo(TM) U50. The Alveo U50 is the industry's
        first low profile, half-height, half-length accelerator card with PCIe
        Gen 4 support and delivers between 10-20x improvements in throughput,
        latency and power efficiency.
    --  At the third annual Xilinx Developer Forum held in San Jose, California,
        Xilinx announced Vitis(TM), a unified software platform that enables a
        broad new range of developers - including software engineers and AI
        scientists - to take advantage of the power of hardware adaptability.
        The Vitis unified software platform automatically tailors the Xilinx
        hardware architecture to the software or algorithmic code without the
        need for hardware expertise. Rather than imposing a proprietary
        development environment, the Vitis platform plugs into common software
        developer tools and utilizes a rich set of optimized open source
        libraries, enabling developers to focus on their algorithms.
    --  Xilinx repurchased 1.5 million shares of common stock at an average
        price of $103.60 per share and paid dividends of $93 million during the
        quarter.

Business Outlook - Fiscal Third Quarter 2020 & Fiscal Year 2020

The following guidance is based on current expectations and estimates, and as indicated, is presented on a GAAP and non-GAAP basis. This guidance is forward-looking and actual results may differ materially, as a result of, among other things, the important factors discussed and referred to at the end of this release.

Xilinx's fiscal third quarter and fiscal year 2020 guidance takes into account the impact from the U.S. government's announced export restriction to one of our customers in China and assumes no revenues from that customer.

Fiscal Third Quarter 2020


                          
        GAAP            
            Non-GAAP       
         Non-GAAP
                                                 Adjustments



     Revenues              
         $710M- $740M                             
          $710M- $740M



     Gross Margin                   66% - 68%      
              1% (1)               67% - 69%


      Operating Expenses 
        ~$336M                 
              $6M(2)  
         ~$330M



     Other Income        
        ~$1M                                      
         ~$1M



     Tax Rate                           4%-6%                                          4%-6%

Fiscal Year 2020


                     
         GAAP               
            Non-GAAP       
         Non-GAAP
                                                Adjustments


     Revenues          
          $3,210M-$3,280M                             
          $3,210M-$3,280M


     Gross Margin               65.5% - 67.5%      
              1% (1)              66.5% - 68.5%


     Operating
      Expenses     
         ~$1,330M                  
              $24M(2) 
         ~$1,306M


     Other Income    
         ~$25M                                        
         ~$25M


     Tax Rate                           4%-5%                                             4%-5%


     Diluted Share
      Count          
         256M                                         
         256M



               Notes regarding Non-GAAP Adjustments:




                         (1)  Amortization of
                          acquisition-related
                          intangibles and inventory
                          valuation adjustment


                         (2)  M&A related expenses and
                          amortization of acquisition-
                          related intangibles

Conference Call

A conference call will be held today at 2:00 p.m. Pacific Time to discuss the September quarter financial results and management's outlook for the December quarter and fiscal year 2020. The webcast and subsequent replay will be available in the investor relations section of the Company's web site at www.investor.xilinx.com. A telephonic replay of the call may be accessed later in the day by calling (855) 859-2056 and referencing confirmation code 5089455. The telephonic replay will be available for two weeks following the live call.

Non-GAAP Financial Information

Fiscal second quarter 2020 results and business outlook for the December quarter and fiscal year 2020 include financial measures which are not determined in accordance with the United States generally accepted accounting principles (GAAP), as indicated. Non-GAAP measures should not be considered as a substitute for, or superior to, financial measures determined in accordance with GAAP. The presentation of non-GAAP financial measures has been reconciled, in each case, to the most directly-comparable GAAP measure, as indicated in the accompanying tables. The Company's calculation of such non-GAAP measures may not be comparable to similarly-titled measures used by other companies.

Management uses the non-GAAP financial measures disclosed herein to evaluate the Company's financial results from continuing operations (excluding the impact of acquisitions) and compare to operating performance in past periods. Similarly, Management believes presentation of these non-GAAP measures is useful to investors because it enables investors and analysts to evaluate operating expenses of the Company's core business, excluding the impact of non-core business expenses such as acquisition-related amortization and non-recurring items.

M&A related expenses: These expenses mainly consist of legal and consulting fees associated with acquisition activities. We believe these costs do not reflect the Company's current operating performance. Consequently, the non-GAAP adjustments exclude these charges to facilitate an evaluation of the Company's current operating performance and comparisons to its past operating performance.

Amortization of acquisition-related intangibles: Amortization of acquisition-related intangible assets consists of amortization of intangible assets such as developed technology acquired in connection with business combinations. The non-GAAP adjustments exclude these charges to facilitate an evaluation of the Company's current operating performance and comparisons to its past operating performance.

Inventory valuation adjustment: Business combination accounting principles require us to measure acquired inventory at fair value. The fair value of inventory reflects the acquired company's cost of manufacturing plus a portion of the expected profit margin. The non-GAAP adjustment to our cost of sales excludes the expected profit margin component that is recorded under business combination accounting principles associated with our acquisitions. We believe the adjustments are useful to investors as an additional means to reflect cost of sales and gross margin trends of our business.

Gain on investment related to acquisition: The Company excludes the accounting gain resulting from revaluation of its prior minority investment in DeePhi Tech. The Company believes excluding this gain will facilitate a comparable evaluation of its current operating performance to its past operating performance.

Income taxes: The Company excludes the income tax effects of non-GAAP adjustments reflected in Operating Expenses and Other Income, as detailed above. It also excludes U.S. tax reform related items. The Company believes excluding U.S. tax reform related items will facilitate a comparable evaluation of its current performance to its past performance. The third quarter of fiscal 2020 and fiscal year 2020 outlook does not reflect other tax related items which we are not able to predict without unreasonable efforts due to their inherent uncertainty.

Forward-Looking Statements

This release contains forward-looking statements and projections. Forward-looking statements and projections can often be identified by the use of forward-looking words such as "expect," "believe," "may," "will," "could," "anticipate," "estimate," "continue," "plan," "intend," "project" or other similar expressions. Statements that refer to or are based on projections, uncertain events or assumptions also identify forward-looking statements. Such forward looking statements include, but are not limited to, statements related to the semiconductor market, the growth and acceptance of our products, expected revenue growth, the demand and growth in the markets we serve, opportunity for expansion into new markets, and our expectations regarding our business outlook for the December quarter and for fiscal year 2020. Undue reliance should not be placed on such forward-looking statements and projections, which speak only as of the date they are made. We undertake no obligation to update such forward-looking statements. Actual events and results may differ materially from those in the forward-looking statements and are subject to risks and uncertainties including, among others, customer acceptance of our new products, current global economic conditions, our dependence on certain customers, trade and export restrictions, the condition and performance of our customers and the end markets in which they participate, our ability to forecast end customer demand, a high dependence on turns business, more customer volume discounts than expected, greater product mix changes than anticipated, fluctuations in manufacturing yields, our ability to deliver product in a timely manner, our ability to successfully manage production at multiple foundries, variability in wafer pricing, costs and liabilities associated with current and future litigation, our ability to realize the goals contemplated by our acquisitions and strategic investments, the impact of current and future legislative and regulatory changes, the impact of new accounting pronouncements and tax laws, including the U.S. Tax Cuts and Jobs Act, and interpretations thereof, and other risk factors described in our most recent Forms 10-Q and 10-K.

About Xilinx

Xilinx develops highly flexible and adaptive processing platforms that enable rapid innovation across a variety of technologies - from the endpoint to the edge to the cloud. Xilinx is the inventor of the FPGA, hardware programmable SoCs and the ACAP, designed to deliver the most dynamic processor technology in the industry and enable the adaptable, intelligent and connected world of the future. For more information, visit www.xilinx.com.

Xilinx, the Xilinx logo, Artix, ISE, Kintex, Spartan, Virtex, Zynq, Vivado, Alveo, Versal and other designated brands included herein are trademarks of Xilinx in the United States and other countries. All other trademarks are the property of their respective owners.

XLNX-F

Investor Relations Contact:
Suresh Bhaskaran
Xilinx, Inc.
(408) 879-4784
ir@xilinx.com



     
                XILINX, INC.



     
                CONDENSED CONSOLIDATED STATEMENTS OF INCOME



     
                (Unaudited)



     
                (In thousands, except per share amounts)


                                                             
       
         Three Months Ended                     
     
     Six Months Ended

                                                                                                                               ---

                                                         
         
       September 28, 2019      
     
     June 29, 2019                       
     
     September 29, 2018        
     
     September 28, 2019         
     
     September 29, 2018

                                                                                                                                                                                                                        ---


     Net revenues                                                                $833,366            $849,632                                          $746,252                     $1,682,998                      $1,430,622



     Cost of revenues:



     Cost of products sold                                                        287,372             283,500                                           231,620                        570,872                         438,508


      Amortization of acquisition-related
       intangibles                                                                   5,734               3,269                                                                           9,003                               -




     Total cost of revenues                                                       293,106             286,769                                           231,620                        579,875                         438,508




     Gross margin                                                                 540,260             562,863                                           514,632                      1,103,123                         992,114




     Operating expenses:



     Research and development                                                     222,979             204,100                                           183,372                        427,079                         354,198


      Selling, general and administrative                                          111,596             107,425                                            97,685                        219,021                         188,217


      Amortization of acquisition-related
       intangibles                                                                   2,169                 400                                               839                          2,569                           1,199



     Total operating expenses                                                     336,744             311,925                                           281,896                        648,669                         543,614




     Operating income                                                             203,516             250,938                                           232,736                        454,454                         448,500


      Interest and other income, net                                                12,329              11,612                                             6,408                         23,941                           3,561




     Income before income taxes                                                   215,845             262,550                                           239,144                        478,395                         452,061


      Provision (benefit) for income taxes                                        (11,148)             21,091                                            23,432                          9,943                          46,311




     Net income                                                                  $226,993            $241,459                                          $215,712                       $468,452                        $405,750

                                                                                                                                                                                                                        ===


     Net income per common share:



     Basic                                                                          $0.90               $0.95                                             $0.85                          $1.85                           $1.61

                                                                                                                                                                                                                        ===


     Diluted                                                                        $0.89               $0.94                                             $0.84                          $1.83                           $1.59

                                                                                                                                                                                                                        ===

      Cash dividends per common share                                                $0.37               $0.37                                             $0.36                          $0.74                           $0.72

                                                                                                                                                                                                                        ===


     Shares used in per share calculations:



     Basic                                                                        252,399             253,268                                           252,988                        252,728                         252,541




     Diluted                                                                      255,269             257,928                                           255,522                        256,509                         255,057



     
                XILINX, INC.



     
                CONDENSED CONSOLIDATED BALANCE SHEETS



     
                (In thousands)


                                                              
       
       September 28, 2019      
     
     March 30, 2019 *

                                                                                                                  ---

                                                                
       
         (unaudited)



     
                ASSETS



     
                Current assets:



       Cash, cash equivalents and short-term investments                          $2,515,843               $3,175,684



       Accounts receivable, net                                                      335,499                  335,165



       Inventories                                                                   335,258                  315,358



       Other current assets                                                           71,400                   65,771




     Total current assets                                                          3,258,000                3,891,978



     Net property, plant and equipment                                               362,160                  328,929



     Long-term investments                                                                 -                  53,433



     Other assets                                                                  1,399,738                  877,008




     
                Total Assets                                                    $5,019,898               $5,151,348

                                                                                                                  ===






     
                LIABILITIES AND STOCKHOLDERS' EQUITY



     
                Current liabilities:



       Accounts payable and accrued liabilities                                     $505,828                 $475,036



     Long-term debt                                                                1,245,631                1,234,807



     Other long-term liabilities                                                     572,534                  579,996



     Stockholders' equity                                                          2,695,905                2,861,509




     
                Total Liabilities and Stockholders' Equity                      $5,019,898               $5,151,348

                                                                                                                  ===



               *Fiscal 2019 balances are
                derived from audited
                financial statements.



     
                XILINX, INC.



     
                SUPPLEMENTAL FINANCIAL INFORMATION



     
                (Unaudited)



     
                (In thousands)


                                                    
          
         Three Months Ended                     
     
     Six Months Ended

                                                                                                                         ---

                                                
            
       September 28, 2019      
     
     June 29, 2019                       
     
     September 29, 2018        
     
     September 28, 2019         
     
     September 29, 2018

                                                                                                                                                                                                                 ---


     
                SELECTED CASH FLOW INFORMATION:


      Depreciation and amortization
       of software                                                           $22,438             $20,113                                           $16,048                        $42,551                        $31,123


      Amortization -others                                                    12,965               9,085                                             8,144                         22,050                         15,477


      Stock-based compensation                                                49,822              42,753                                            34,945                         92,575                         70,553


      Net cash provided by
       operating activities                                                  223,694             298,216                                           313,123                        521,910                        489,291


      Purchases of property, plant
       and equipment and software                                             33,641              29,201                                            14,174                         62,842                         40,533


      Payment of dividends to
       stockholders                                                           93,484              93,961                                            91,077                        187,445                        181,752


      Repurchases of common stock                                             32,250             444,995                                            23,236                        477,245                        160,536


      Taxes paid related to net
       share settlement of
       restricted stock units, net
       of proceeds from issuance of
       common stock                                                           47,857               4,119                                            15,797                         51,976                         21,078







     
                STOCK-BASED COMPENSATION INCLUDED IN:



     Cost of revenues                                                        $2,812              $2,613                                            $2,249                         $5,425                         $4,284


      Research and development                                                29,702              24,874                                            20,047                         54,576                         40,977


      Selling, general and
       administrative                                                         17,308              15,266                                            12,649                         32,574                         25,292



     
                XILINX, INC.



     
                RECONCILIATIONS OF GAAP ACTUALS TO NON-GAAP ACTUALS



     
                (Unaudited)



     
                (In thousands, except per share amounts)


                                                  
              
                Three Months Ended                     
     
     Six Months Ended

                                                                                                                                  ---

                                              
              
                September 28, 2019      
     
     June 29, 2019                       
     
     September 29, 2018        
     
     September 28, 2019         
     
     September 29, 2018

                                                                                                                                                                                                                            ---

                   GAAP gross margin                                                 $540,260            $562,863                                          $514,632                     $1,103,123                         $992,114


      Inventory
       valuation
       adjustment                                                                       1,741                                                                                              1,741                                -


      Amortization of
       acquisition-
       related
       intangibles                                                                      5,734               3,269                                                                           9,003                                -



                   Non-GAAP gross
                    margin                                                           $547,735            $566,132                                          $514,632                     $1,113,867                         $992,114

                                                                                                                                                                                                                            ===



                   GAAP operating
                    income                                                           $203,516            $250,938                                          $232,736                       $454,454                         $448,500


      Inventory
       valuation
       adjustment                                                                       1,741                                                                                              1,741                                -


      Amortization of
       acquisition-
       related
       intangibles                                                                      7,903               3,669                                               839                         11,572                            1,199


      Acquisition-
       related costs                                                                    3,979               5,371                                             2,206                          9,350                            3,701



                   Non-GAAP
                    operating income                                                 $217,139            $259,978                                          $235,781                       $477,117                         $453,400

                                                                                                                                                                                                                            ===



                   GAAP net income                                                   $226,993             241,459                                          $215,712                       $468,452                         $405,750


      Inventory
       valuation
       adjustment                                                                       1,741                                                                                              1,741                                -


      Amortization of
       acquisition-
       related
       intangibles                                                                      7,903               3,669                                               839                         11,572                            1,199


      Acquisition-
       related costs                                                                    3,979               5,371                                             2,206                          9,350                            3,701


      Gain on investment
       related to
       acquisition                                                                          -                                                             (6,503)                                                       (6,503)


      Income tax effect
       of changes in
       applicable U.S.
       tax laws                                                                             -                                                               9,355                                                          9,355


      Income tax effect
       of non-GAAP
       adjustments                                                                      (536)            (1,423)                                            (160)                       (1,959)                           (160)



                   Non-GAAP net
                    income                                                           $240,080            $249,076                                          $221,449                       $489,156                         $413,342

                                                                                                                                                                                                                            ===



                   GAAP diluted EPS                                                     $0.89               $0.94                                             $0.84                          $1.83                            $1.59


      Inventory
       valuation
       adjustment                                                                           -


      Amortization of
       acquisition-
       related
       intangibles                                                                       0.03                0.01                                                                            0.05                                -


      Acquisition-
       related costs                                                                     0.02                0.02                                              0.01                           0.04                             0.01


      Gain on investment
       related to
       acquisition                                                                          -                                                              (0.02)                                                        (0.02)


      Income tax effect
       of changes in
       applicable U.S.
       tax laws                                                                             -                                                                0.04                                                           0.04


      Income tax effect
       of non-GAAP
       adjustments                                                                          -                                                                                            (0.01)

                                                                                                                                                                                                                            ---

                   Non-GAAP diluted
                    EPS                                                                 $0.94               $0.97                                             $0.87                          $1.91                            $1.62

                                                                                                                                                                                                                            ===

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