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 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, 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 six months of fiscal year 2018 and the Company did not adjust or override any fair value measurements as of September 30, 2017.

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 and money market funds.

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.

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 September 30, 2017 and April 1, 2017:



	September 30, 2017
(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
Assets
Cash equivalents:
Money market funds	$	323,034	$	—	$	—	$	323,034
Financial institution securities	—		255,864		—		255,864
Non-financial institution securities	—		192,800		—		192,800
U.S. government and agency securities	13,880		31,528		—		45,408
Foreign government and agency securities	—		184,868		—		184,868
Short-term investments:
Financial institution securities	—		324,853		—		324,853
Non-financial institution securities	—		226,546		—		226,546
U.S. government and agency securities	27,098		23,158		—		50,256
Foreign government and agency securities	—		79,920		—		79,920
Asset-backed securities	—		217,827		—		217,827
Mortgage-backed securities	—		1,154,680		—		1,154,680
Debt mutual fund	—		34,029		—		34,029
Bank loans	—		157,899		—		157,899
Commercial mortgage-backed securities	—		244,017		—		244,017
Long-term investments:
Asset-backed securities	—		1,430		—		1,430
Mortgage-backed securities	—		41,971		—		41,971
Debt mutual fund	—		56,461		—		56,461
Total assets measured at fair value	$	364,012	$	3,227,851	$	—	$	3,591,863
Liabilities
Derivative financial instruments, net	$	—	$	1,462	$	—	$	1,462
Total liabilities measured at fair value	$	—	$	1,462	$	—	$	1,462
Net assets measured at fair value	$	364,012	$	3,226,389	$	—	$	3,590,401



	April 1, 2017
(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
Assets
Cash equivalents:
Money market funds	$	298,307	$	—	$	—	$	298,307
Non-financial institution securities	—		205,322		—		205,322
Foreign government and agency securities	—		177,310		—		177,310
Financial institution securities	—		158,962		—		158,962
U.S government and agency securities	2,998		50,984		—		53,982
Short-term investments:
Financial institution securities	—		189,835		—		189,835
Non-financial institution securities	—		203,938		—		203,938
U.S. government and agency securities	31,732		44,820		—		76,552
Foreign government and agency securities	—		144,811		—		144,811
Mortgage-backed securities	—		1,115,403		—		1,115,403
Debt mutual fund	—		34,068		—		34,068
Bank loans	—		154,014		—		154,014
Asset-backed securities	—		218,170		—		218,170
Commercial mortgage-backed securities	—		217,971		—		217,971
Long-term investments:
Mortgage-backed securities	—		60,099		—		60,099
Debt mutual fund	—		54,608		—		54,608
Asset-backed securities	—		1,581		—		1,581
Derivative financial instruments, net	—		1,661		—		1,661
Total assets measured at fair value	$	333,037	$	3,033,557	$	—	$	3,366,594

Changes in Level 3 Instruments Measured at Fair Value on a Recurring Basis

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				Six Months Ended
(In thousands)	September 30, 2017		October 1, 2016		September 30, 2017		October 1, 2016
Balance as of beginning of period	$	—	$	10,068	$	—	$	9,977
Total unrealized gains (losses):
Included in other comprehensive income (loss)	—		92		—		183
Balance as of end of period	$	—	$	10,160	$	—	$	10,160

As of September 30, 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, 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 September 30, 2017 were approximately $501.3 million, $509.6 million and $750.1 million, respectively, based on the last trading price for the period (classified as Level 2 in fair value hierarchy due to relatively low trading volume).