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Xilinx Announces Second Quarter Fiscal 2007 Results; $0.27 EPS

PRNewswire-FirstCall
SAN JOSE, Calif.
Oct 19, 2006

Xilinx, Inc. (NASDAQ: XLNX) today announced net revenues of $467.2 million in the second quarter of fiscal 2007, down 3% sequentially from the prior quarter and up 17% from the same quarter a year ago. Second quarter net income of $93.0 million, or $0.27 per diluted share, increased 13% from the prior quarter, and included stock-based compensation of $21.9 million.

(Logo: http://www.newscom.com/cgi-bin/prnh/20020822/XLNXLOGO )

Xilinx also announced that its Board of Directors declared a quarterly cash dividend of $0.09 per outstanding share of common stock, payable on December 6, 2006 to all stockholders of record at the close of business on November 15, 2006.

  Additional second quarter comparisons are represented in the chart below:

   GAAP Results
   (In millions, except EPS)
                                                             Growth Rates
                     Q2 FY 2007    Q1 FY 2007   Q2 FY 2006   Q-T-Q  Y-T-Y
   Net revenues         $467.2        $481.4       $398.9     -3%     17%
   Operating income      $93.2         $93.1        $82.3      0%     13%
   Net income            $93.0         $82.5        $85.6     13%      9%
   Diluted earnings
    per share            $0.27         $0.24        $0.24     13%     13%


   Results excluding the effects of stock-based compensation
   (In millions, except EPS)
                                                            Growth Rates
                      Q2 FY 2007  Q1 FY 2007  Q2 FY 2006    Q-T-Q  Y-T-Y
   Net revenues          $467.2      $481.4      $398.9      -3%     17%
   Operating income      $115.1      $122.1       $82.3      -6%     40%
   Net income            $109.9      $105.5       $85.6       4%     28%
   Diluted earnings
    per share             $0.32       $0.30       $0.24       7%     33%

Sales to wireline and wireless communications end markets were particularly weak during the quarter as a result of inventory rebalancing and consolidation activity among several large customers. All other end markets were up sequentially with the Industrial and Other category posting the strongest sales growth due primarily to strength from defense applications.

"In spite of a seasonally weak quarter, I am pleased with the growth of our New Products, which increased 18% sequentially. Sales from 90-nanometer (nm) and 65nm products were particularly strong during the quarter representing over 20% of total sales, up from less than 10% a year ago. Our success on these process nodes is a reflection of our clear technology leadership," said Wim Roelandts, Xilinx chief executive officer. "Additionally, the rollout of our latest Virtex™-5 family, the industry's first field programmable gate array (FPGA) family on 65nm technology, remains on schedule and significantly ahead of competition."

  Business Review - September Quarter FY07

  -- Total inventory days at Xilinx and distribution were 126 days, up from
     117 days last quarter.
  -- Accounts receivable days sales outstanding were 36, up from 29 in the
     prior quarter.
  -- Capital expenditures and depreciation were both $13 million.


  Net Revenues by Geography:
                                    Percentages              Growth Rates
                            Q2          Q1         Q2
                         FY 2007     FY 2007    FY 2006     Q-T-Q   Y-T-Y
   North America            40%         39%        41%       -1%      15%
   Europe                   23%         24%        20%       -7%      34%
   Japan                    12%         11%        16%        6%     -14%
   Asia Pacific/ROW         25%         26%        23%       -5%      29%


  Net Revenues by End Market:
                                    Percentages              Growth Rates
                           Q2          Q1         Q2
                        FY 2007     FY 2007    FY 2006     Q-T-Q   Y-T-Y
   Communications          45%         49%       48%       -9%      10%
   Industrial & Other      29%         26%       24%        5%      37%
   Consumer & Automotive   16%         15%       15%        1%      28%
   Data Processing         10%         10%       13%        2%      -6%


  Net Revenues by Product*:
                                    Percentages             Growth Rates
                            Q2          Q1         Q2
                        FY 2007     FY 2007    FY 2006    Q-T-Q   Y-T-Y
   New                     22%         18%       12%       18%     125%
   Mainstream              54%         59%       60%      -10%       6%
   Base                    18%         17%       22%       -2%      -6%
   Support                  6%          6%        6%       -1%      12%


  *Products are classified as follows:

New products: Virtex-5, Virtex-4, Spartan™-3, Spartan-3E, and CoolRunner™- II products

Mainstream products: Virtex-II Pro, Virtex-II, Spartan-IIE, Spartan-II, CoolRunner, Virtex-E products

Base products: Virtex, XC3000, XC3100, XC4000, XC4000XL, XC4000XLA, XC4000XV, XC4000E, XC4000EX, XC5200, XC9500, XC9500XL, XC9500XV and Spartan products

Support products: Configuration solutions, HardWire, Software & Support/Services

  Highlights - September quarter fiscal 2007:

  -- Xilinx continued to expand its leadership in 65nm technology and began
     shipments of Virtex-5 LXT FPGAs.  The LXT platform is the second of
     four Virtex-5 platforms that Xilinx has begun shipping and features the
     industry's lowest power 65nm transceivers. Xilinx's 8.2i Integrated
     Software Environment (ISE™) offers full support for Virtex-5
     devices, including the Virtex-5 LX330 FPGA, the industry's highest
     density 65nm FPGA.  Xilinx remains the only PLD company to ship 65nm
     products.
  -- For the third consecutive year Xilinx earned the highest ranking for
     FPGA-level EDA vendor usage among respondents in the FPGA EDA tool
     vendor survey conducted by EE Times, part of CMP Technology LLC. In
     addition, Xilinx ranked number one in all the categories covering the
     "most important attributes in selecting an FPGA EDA tool vendor" and
     scored higher than any other FPGA vendor in user satisfaction. Xilinx
     top rating is strong testament to its excellence in design tools
     technology, support and services and the Company's total solutions
     approach to handling today's complex system designs.

  Business Outlook - December Quarter FY07

  -- Revenues expected to increase 2% to 5% sequentially.
  -- Gross margin expected to be 61% to 62%, including approximately
     $2 million of stock-based compensation charges.
  -- R&D and SG&A expenses are expected to be approximately flat
     sequentially, including approximately $20 million of stock-based
     compensation.
  -- Other income expected to be approximately $18 million.
  -- Tax rate is expected to be approximately 23% - 24%.
  -- Fully diluted share count expected to decrease to approximately
     340 million shares.

  Business Update - December Quarter FY07

The Company expects to issue a third quarter business update press release after the market closes on Thursday, December 7, 2006. Financial guidance to the investment community will be limited to the points mentioned in the business update document. Please sign up for a push email alert, which is available from our investor relations web site at http://www.investor.xilinx.com/ .

This release contains forward-looking statements and projections. Actual events and results may differ materially from those in the forward-looking statements and are subject to risks and uncertainties including the general health of global economies as well as of the semiconductor industry, the health of our end markets and our customers' customers, our ability to forecast end customer demand, customer acceptance of our new products, the ability of our customers to manage their inventories, a high dependence on turns business, higher-than-anticipated product delinquencies, 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 secure meaningful wafer capacity from our suppliers, our ability to secure adequate test, packaging and assembly capacity from our suppliers, our ability to successfully manage production at multiple foundries, variability in wafer pricing, and other risk factors listed in our most recent Form 10-K.

About Xilinx

Xilinx, Inc. is the worldwide leader of programmable logic solutions. Additional information about Xilinx is available at http://www.xilinx.com/ .

#06105

  XILINX, INC.

  CONDENSED CONSOLIDATED STATEMENTS OF INCOME
  (Unaudited)
  (In thousands, except per share amounts)

                                Three Months Ended       Six Months Ended
                          Sept. 30,   Oct. 1,   Jul. 1,  Sept. 30,  Oct. 1,
                             2006      2005      2006      2006      2005
  Net revenues             $467,180  $398,929  $481,362  $948,542  $804,308
  Cost of revenues          180,580   153,968   192,059   372,639   312,450
  Gross margin              286,600   244,961   289,303   575,903   491,858

  Operating expenses:
     Research and
      development            95,951    79,953    97,582   193,533   158,657
     Selling, general and
      administrative         95,462    77,744    94,418   189,880   153,731
     Amortization of
      acquisition-related
      intangibles             2,031     1,755     2,031     4,062     3,511
     Stock-based
      compensation related
      to prior years             --        --     2,209     2,209        --
     Litigation
      settlements and
      contingencies              --     3,165        --        --     3,165
       Total operating
        expenses            193,444   162,617   196,240   389,684   319,064

  Operating income           93,156    82,344    93,063   186,219   172,794
  Impairment loss on
   investments                   --        --      (437)     (437)       --
  Interest income and
   other, net                26,132    15,910    14,841    40,973    25,253

  Income before income
   taxes                    119,288    98,254   107,467   226,755   198,047
  Provision for income
   taxes                     26,242    12,656    24,976    51,218    35,608

  Net income                $93,046   $85,598   $82,491  $175,537  $162,439

  Basic net income per
   common share               $0.27     $0.25     $0.24     $0.52     $0.46
  Diluted net income per
   common share               $0.27     $0.24     $0.24     $0.51     $0.45
  Cash dividends declared
   per common share           $0.09     $0.07     $0.09     $0.18     $0.14

  Common and equivalent
   shares used in
   computing net income
   per share amounts:
    Basic                   339,431   349,254   341,853   340,845   350,165
    Diluted                 343,192   356,360   348,988   346,734   357,384


  XILINX, INC.

  CONDENSED CONSOLIDATED BALANCE SHEETS
  (In thousands)
                                              Sept. 30,            Apr. 1,
                                                 2006               2006
                                             (Unaudited)             (1)

  ASSETS

  Current assets

  Cash, cash equivalents and short-term
   investments                                $1,227,352          $984,917
  Investment in United Microelectronics
   Corporation, current portion                   11,506            37,285
  Accounts receivable, net                       186,224           194,205
  Inventories                                    198,958           201,029
  Deferred tax assets and other current
   assets                                        242,758           230,812

  Total current assets                         1,866,798         1,648,248

  Net property, plant and equipment              359,736           358,257
  Long-term investments                          552,260           616,296
  Investment in United Microelectronics
   Corporation, net of current portion            65,164           239,209
  Other assets                                   290,380           311,537

  Total Assets                                $3,134,338        $3,173,547

  LIABILITIES AND STOCKHOLDERS' EQUITY

  Current liabilities

  Accounts payable and accrued
   liabilities                                  $237,757          $218,466
  Deferred income on shipments to
   distributors                                  109,775           126,558

  Total current liabilities                      347,532           345,024

  Deferred tax liabilities                        83,596            92,153
  Other long-term liabilities                      5,043             7,485

  Stockholders' equity                         2,698,167         2,728,885

  Total Liabilities and Stockholders'
   Equity                                     $3,134,338        $3,173,547

    (1) Derived from audited financial statements


                               Xilinx, Inc.
               RECONCILIATIONS OF GAAP TO NON-GAAP RESULTS
                               (Unaudited)
                 (In thousands, except per share amounts)

                                                                Six Months
                                           Three Months Ended      Ended
                                          Sept. 30,    July 1,    Sept. 30,
                                             2006       2006        2006


  GAAP OPERATING INCOME                    $93,156     $93,063    $186,219
  Adjustment for stock-based
   compensation within:
     Cost of revenues                        2,426       3,642       6,068
     Research and development                9,810      12,364      22,174
     Selling, general and
      administrative                         9,670      10,802      20,472
     Stock-based compensation related
      to prior years                            --       2,209       2,209
  NON-GAAP OPERATING INCOME               $115,062    $122,080    $237,142

  GAAP NET INCOME                          $93,046     $82,491    $175,537
  Adjustment for stock-based
   compensation within:
     Cost of revenues                        2,426       3,642       6,068
     Research and development                9,810      12,364      22,174
     Selling, general and
      administrative                         9,670      10,802      20,472
     Stock-based compensation related
      to prior years                            --       2,209       2,209
     Provision for income taxes             (5,016)     (5,986)    (11,002)
  NON-GAAP NET INCOME                     $109,936    $105,522    $215,458

  GAAP DILUTED NET INCOME PER COMMON
   SHARE                                     $0.27       $0.24       $0.51
  Adjustment for stock-based
   compensation                               0.05        0.06        0.11
  NON-GAAP DILUTED NET INCOME PER
   COMMON SHARE                              $0.32       $0.30       $0.62


  GAAP DILUTED SHARES                      343,192     348,988     346,734
   Adjustment for stock-based
    compensation                              (739)     (2,340)     (1,855)
  NON-GAAP DILUTED SHARES                  342,453     346,648     344,879


  GAAP GROSS MARGIN PERCENTAGE               61.3%       60.1%       60.7%
  Adjustment for stock-based
   compensation                               0.6%        0.8%        0.7%
  NON-GAAP GROSS MARGIN PERCENTAGE           61.9%       60.9%       61.4%

  GAAP OPERATING MARGIN PERCENTAGE           19.9%       19.3%       19.6%
  Adjustment for stock-based
   compensation                               4.7%        6.1%        5.4%
  NON-GAAP OPERATING MARGIN PERCENTAGE       24.6%       25.4%       25.0%

  GAAP NET MARGIN PERCENTAGE                 19.9%       17.1%       18.5%
  Adjustment for stock-based
   compensation                               3.6%        4.8%        4.2%
  NON-GAAP NET MARGIN PERCENTAGE             23.5%       21.9%       22.7%


   In addition to disclosing financial results calculated in accordance with
   U.S. generally accepted accounting principles (GAAP), the Company's
   earnings release contains non-GAAP financial measures that exclude the
   effects of stock-based compensation and the requirements of Statement of
   Financial Accounting Standards No. 123( R ), "Share-based Payment"
   (SFAS 123( R )). The non-GAAP financial measures used by management and
   disclosed by the Company exclude the statement of income effects of all
   forms of stock-based compensation and the effects of SFAS 123( R ) upon
   the number of diluted shares used in calculating non-GAAP net income per
   share.  These non-GAAP financial measures are not in accordance with or
   an alternative for GAAP measures and may be different from, and therefore
   not comparable to, non-GAAP measures used by other companies. The Company
   has provided reconciliations of the non-GAAP measures to the most
   directly comparable GAAP measures. Xilinx believes that the presentation
   of these non-GAAP measures, when shown in conjunction with the
   corresponding GAAP measures and our reconciliations, provides useful
   information to management and investors regarding financial and business
   trends relating to Xilinx's financial condition and results of
   operations.  For additional information regarding these non-GAAP
   financial measures and their use by Company management, see the Form 8-K
   dated October 19, 2006 that Xilinx has filed with the SEC.
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SOURCE: Xilinx, Inc.

CONTACT: Investor Relations, Lori Owen of Xilinx, Inc., +1-408-879-6911,
or ir@xilinx.com

Web site: http://www.xilinx.com/


Worldwide Media Contacts

Silvia E. Gianelli
Phone: 408-626-4328
Email: silvia.gianelli@xilinx.com

 

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