Xilinx 2002 Annual Report and Form 10-K Letter to Shareholders Charts
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Xilinx, Inc. 2001 Form 10-K Download Back Next

Note 14. Business Combinations


On November 9, 2000, we completed the acquisition of RocketChips, Inc., a privately held fabless semiconductor company. RocketChips is a developer of ultra-high-speed analog and mixed-signal communication ICs fabricated in submicron CMOS processes. These ICs are used in products created by system OEMs serving the networking, telecommunications and enterprise storage markets.

In connection with the acquisition, we issued approximately 2,806,000 shares of Common stock in exchange for all outstanding preferred and common stock of RocketChips and reserved approximately 807,000 additional shares of Common stock for issuance upon exercise of outstanding employee stock options of RocketChips. Of the approximately 2,806,000 shares issued, 2,619,000 shares were issued in fiscal 2001 and 187,000 shares were issued in fiscal 2002, depending on the timing of the submission of the RocketChips’ stock certificates in exchange for Xilinx certificates. Of the shares issued, approximately 380,000 shares of Xilinx’s Common stock were held in escrow for a period of one year following the acquisition for the purpose of providing a fund against which Xilinx could seek indemnification from former RocketChips stockholders for any breaches of representations, warranties or covenants under the Merger Agreement. The escrowed shares were all released from escrow in November 2001.

The acquisition was accounted for under the purchase method of accounting. The purchase price of RocketChips was allocated to the fair value of the specific tangible and intangible assets acquired and liabilities assumed from RocketChips pursuant to an independent valuation. The total purchase price for RocketChips was $291.2 million, consisting of $231.0 million of Xilinx common stock, $57.3 million of options to purchase Xilinx common stock and $2.8 million of acquisition related costs. Xilinx recorded a charge to operations upon consummation of the transaction for acquired in-process research and development of approximately $90.7 million. In addition, Xilinx recorded approximately $218.9 million of intangible assets, goodwill, and deferred compensation on the balance sheet, which resulted in amortization expense of approximately $51.4 million in fiscal 2002 and $22.4 million in fiscal 2001.

Deferred compensation recorded in connection with the acquisition represents the estimated intrinsic value of unvested RocketChips stock options assumed by Xilinx in the merger agreement for which employee service is required after the closing date of the merger in order for the options to vest. Deferred compensation is being amortized to expense over the remaining vesting period of the options.

Below is a table of the acquisition cost and amortization period of the intangible assets.

Deferred compensation $  24.3   1 month to 4 years
Goodwill 140.5   5 years
Developed technology 6.6   5 years
Noncompete agreements 23.6   3 years
Patents 13.2   7 years
Other intangibles 10.7   2 to 3 years
     Total $218.9    


We completed the acquisition of Philips Semiconductors’ line of low-power CPLDs on August 2, 1999. The total cost, including acquisition related fees, was approximately $22.8 million. The purchase price allocation, based on an independent appraisal, resulted in a $4.6 million write-off of acquired in-process research and development in the second quarter of fiscal 2000. The acquired in-process technology represented the appraised value of technologies in the development stage that had not yet reached technological feasibility and did not have alternative future uses.


In addition to the transactions described above, we purchased other businesses in smaller transactions. The total amount allocated to goodwill and identified intangibles for these transactions was $15.4 million in fiscal 2001 (none in fiscal 2002), which represents a substantial majority of the consideration for these transactions.

As of March 31, 2002 and 2001, the gross and net amounts of intangible assets were as follows:

Goodwill–gross $152,249   $152,249   3 to 5 years
Less accumulated amortization 51,525   15,872    
Goodwill-net 100,724   136,377    
Noncompete agreements–gross 23,600   23,600   3 years
Less accumulated amortization 11,144   3,278    
Noncompete agreements–net 12,456   20,322    
Patents-gross 15,141   15,141   7 years
Less accumulated amortization 4,341   1,154    
Patents-net 10,800   13,987    
Other intangibles–gross 39,701   49,484   2 to 5 years
Less accumulated amortization 29,007   21,559    
Other intangibles–net 10,694   27,925    
Total intangible assets–gross 230,691   240,474    
Less accumulated amortization 96,017   41,863    
Total intangible assets–net $134,674   $198,611    

Amortization expense for all intangible assets for fiscal year 2002, 2001 and 2000 was $49.0 million, $30.5 million and $5.8 million, respectively. Of these amounts, $3.6 million, $8.3 million and $3.7 million of intangibles amortization related to technology acquisitions is included in cost of revenues and $2.4 million, $4.3 million and $2.1 million is included in research and development expenses for 2002, 2001 and 2000, respectively. Intangible assets are amortized on a straight-line basis.

The unaudited pro forma information below assumes that companies acquired in fiscal 2001 and 2000 had been acquired at the beginning of the respective fiscal year and includes the effect of amortization of goodwill and other identified intangibles from that date. The impact of charges for in-process research and development has been excluded. The unaudited proforma information is presented for informational purposes only and is not indicative of the results of future operations or results that would have been achieved had the acquisitions taken place at the beginning of fiscal years.


Net revenues $1,660,019 $1,021,738
Net income (loss) $24,143 $   639,927
Basic income (loss) per share $        0.07 $        2.00
Diluted income (loss) per share $        0.07 $        1.85

© 2002 Xilinx Incorporated