10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 10-Q

(Mark One)

ý	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the quarterly period ended December 31, 2005 or
o	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   0-18548

Xilinx, Inc.

(Exact name of registrant as specified in its charter)

Delaware	77-0188631
(State or other jurisdiction of	(IRS Employer
incorporation or organization)	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  ý         No  o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes  ý        No  o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  o        No  ý

Shares outstanding of the Registrant’s common stock:

Class	Shares Outstanding at January 24, 2006
Common Stock, $.01 par value	344,765,431

Part I.                     Financial Information

Item 1.  Financial Statements

XILINX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Three Months Ended					Nine Months Ended
(In thousands, except per share amounts)	Dec. 31, 2005		Jan. 1, 2005			Dec. 31, 2005		Jan. 1, 2005
Net revenues	$	449,605	$	355,396		$	1,253,913	$	1,182,256
Cost of revenues	166,476		135,096			478,926		424,283
Gross margin	283,129		220,300			774,987		757,973
Operating expenses:
Research and development	81,073		77,356			239,730		227,414
Selling, general and administrative	80,683		71,856			234,414		229,532
Amortization of acquisition-related intangibles	1,536		1,759			5,047		4,918
Litigation settlements and contingencies	—		—			3,165		—
Write-off of acquired in-process research and development	—		—			—		7,198
Total operating expenses	163,292		150,971			482,356		469,062
Operating income	119,837		69,329			292,631		288,911
Impairment loss on investments	—		(3,099		)	—		(3,099		)
Interest income and other, net	10,943		8,811			36,196		21,975
Income before income taxes	130,780		75,041			328,827		307,787
Provision for income taxes	49,811		10,984			85,419		62,269
Net income	$	80,969	$	64,057		$	243,408	$	245,518
Net income per common share:
Basic	$	0.23	$	0.18		$	0.70	$	0.71
Diluted	$	0.23	$	0.18		$	0.68	$	0.68
Cash dividends declared per common share	$	0.07	$	0.05		$	0.21	$	0.15
Shares used in per share calculations:
Basic	348,203		348,441			349,674		347,555
Diluted	353,237		358,211			355,881		358,551

See notes to condensed consolidated financial statements.

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XILINX, INC.

 CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value amounts)	Dec. 31, 2005			April 2, 2005
	(Unaudited)			(1)
ASSETS
Current assets:
Cash and cash equivalents	$	623,907		$	449,388
Short-term investments	264,413			412,170
Investment in United Microelectronics Corporation, current portion	32,685			—
Accounts receivable, net	142,271			213,459
Inventories	211,882			185,722
Deferred tax assets	74,493			125,342
Prepaid expenses and other current assets	128,703			80,283
Total current assets	1,478,354			1,466,364
Property, plant and equipment, at cost	651,758			629,812
Accumulated depreciation and amortization	(301,863		)	(285,296		)
Net property, plant and equipment	349,895			344,516
Long-term investments	784,344			766,596
Investment in United Microelectronics Corporation, net of current portion	209,698			246,110
Goodwill	118,847			119,415
Acquisition-related intangibles, net	14,892			20,004
Other assets	156,107			76,191
Total Assets	$	3,112,137		$	3,039,196
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	78,810		$	63,172
Accrued payroll and related liabilities	85,236			61,616
Income taxes payable	65,514			45,835
Deferred income on shipments to distributors	111,717			102,511
Other accrued liabilities	35,631			25,260
Total current liabilities	376,908			298,394
Deferred tax liabilities	35,551			67,294
Other long-term liabilities	7,485			—
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $.01 par value (none issued)	—			—
Common stock, $.01 par value	3,443			3,502
Additional paid-in capital	1,379,280			906,929
Retained earnings	1,314,914			1,762,873
Accumulated other comprehensive income (loss)	(5,444		)	204
Total stockholders’ equity	2,692,193			2,673,508
Total Liabilities and Stockholders’ Equity	$	3,112,137		$	3,039,196

(1)           Derived from audited financial statements

See notes to condensed consolidated financial statements.

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XILINX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended
(In thousands)	Dec. 31, 2005			Jan. 1, 2005
Cash flows from operating activities:
Net income	$	243,408		$	245,518
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	39,177			38,568
Amortization	11,815			8,328
Amortization of deferred compensation	—			504
Litigation settlements and contingencies	3,165			—
Net (gain) loss on sale of available-for-sale securities	1,375			(375		)
Write-off of acquired in-process research and development	—			7,198
Noncash compensation expense	735			—
Impairment loss on investments	—			3,099
Tax benefit from exercise of stock options	25,027			34,455
Changes in assets and liabilities, net of effects from acquisition of business:
Accounts receivable, net	71,188			95,947
Inventories	(26,160		)	(114,275		)
Deferred income taxes	(5,179		)	8,880
Prepaid expenses and other current assets	(38,130		)	(13,222		)
Other assets	(47,764		)	(32,663		)
Accounts payable	15,638			4,333
Accrued liabilities	20,734			3,474
Income taxes payable	81,404			651
Deferred income on shipments to distributors	9,207			(48,207		)
Net cash provided by operating activities	405,640			242,213
Cash flows from investing activities:
Purchases of available-for-sale securities	(1,308,277		)	(1,893,087		)
Proceeds from sale and maturity of available-for-sale securities	1,435,765			1,860,092
Purchases of property, plant and equipment	(44,556		)	(43,973		)
Acquisition of business, net of cash acquired	—			(18,223		)
Other investing activities	(24,109		)	—
Net cash provided by (used in) investing activities	58,823			(95,191		)
Cash flows from financing activities:
Acquisition of treasury stock	(276,584		)	(102,185		)
Proceeds from issuance of common stock through various stock plans	59,716			47,437
Payment of dividends to stockholders	(73,076		)	(52,172		)
Net cash used in financing activities	(289,944		)	(106,920		)
Net increase in cash and cash equivalents	174,519			40,102
Cash and cash equivalents at beginning of period	449,388			337,343
Cash and cash equivalents at end of period	$	623,907		$	377,445
Supplemental schedule of non-cash activities:
Accrual of affordable housing credit investments	$	19,821		$	—
Supplemental disclosure of cash flow information:
Income taxes paid	$	7,503		$	17,066

See notes to condensed consolidated financial statements.

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XILINX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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 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 on Form 10-K for the fiscal year ended April 2, 2005.  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 April 1, 2006 or any future period.

The Company uses a 52- to 53-week fiscal year ending on the Saturday nearest March 31.  Fiscal 2006 is a 52-week year ending on April 1, 2006.  Fiscal 2005, which ended on April 2, 2005, was also a 52-week fiscal year.  The first, second and third quarters of fiscal 2006 and 2005 were all 13-week quarters.

Reclassifications

Certain immaterial amounts from the prior periods have been reclassified to conform to the current period’s presentation.  These changes had no impact on previously reported net income.

During the second quarter of fiscal 2006, the Company made a reclassification adjustment of $502.6 million between additional paid-in capital and retained earnings.  This reclassification adjustment was a result of miscalculations on the gains and losses from the reissuance of the Company’s treasury shares for fiscal 1995 through the first quarter of fiscal 2006. This miscalculation resulted in an intra-equity reclassification between additional paid-in capital and retained earnings and had no impact on the Company’s earnings, financial trends or ratios in any period.  Total stockholders’ equity remained unchanged after the reclassification.

2.Recent Accounting Pronouncements

 In December 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial    Accounting Standards No. 123(R), “Share-Based Payment: An Amendment of FASB Statements No. 123 and 95” [SFAS 123(R)].  This statement replaces SFAS No. 123, “Accounting for Stock-Based Compensation” (SFAS 123) and supersedes Accounting Principles Board’s Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25).  In March 2005, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin No. 107 (SAB 107) regarding the SEC’s interpretation of SFAS 123(R) and the valuation of share-based payments for public companies.  SFAS 123(R) will require the Company to measure the cost of all employee stock-based compensation awards that are expected to be exercised and which are granted after the effective date based on the grant date fair value of those awards and to record that cost as compensation expense over the period during which the employee is required to perform service in exchange for the award (generally over the vesting period of the award).  SFAS 123(R) addresses all forms of share-based payment awards, including shares issued under employee stock purchase plans, stock options, restricted stock and stock appreciation rights.  In addition, the Company is required to record compensation expense (as previous awards continue to vest) for the unvested portion of previously granted awards that remain outstanding at the date of adoption. SFAS 123(R) will become effective for annual periods beginning after June 15, 2005.  The Company will be required to implement the standard no later than the quarter beginning April 2, 2006.  SFAS 123(R) permits public companies to adopt its requirements using either prospective recognition of compensation expense or retrospective recognition.  The Company plans to adopt SFAS 123(R) using the modified-prospective method.  As permitted by SFAS 123, the Company currently accounts for share-based payments to employees using APB 25’s intrinsic value method and, as such, generally recognizes no compensation cost for employee stock options.  Accordingly, the adoption of SFAS 123(R)’s fair value method will have a significant impact on the Company’s results of operations.  The impact of adoption of SFAS 123(R) cannot be predicted at this time because it will depend on levels of share-based payments granted in the future.

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In December 2004, the FASB issued FASB Staff Position (FSP) No. FAS 109-2, “Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004” (FSP 109-2).  On October 22, 2004, the American Jobs Creation Act of 2004 (the AJCA) was signed into law.  The AJCA provides a one-time 85% dividends received deduction for certain foreign earnings that are repatriated under a plan for reinvestment in the U.S., provided certain criteria are met. FSP 109-2 is effective immediately and provides accounting and disclosure guidance for the repatriation provision.  During the third quarter of fiscal 2006, the Company’s Chief Executive Officer and its Board of Directors approved a domestic reinvestment plan to repatriate $500.0 million in earnings of its foreign subsidiaries qualifying for the 85% dividends received deduction under the AJCA.  The tax effect of the repatriation dividend was recorded during the third quarter of fiscal 2006 resulting in an approximate increase in federal income tax expense of $21.9 million and state income tax of $3.4 million, net of federal benefit.

In August 2005, the FASB issued FSP No. FAS 123(R)-1, “Classification and Measurement of Freestanding Financial Instruments Originally Issued in Exchange for Employee Services under FASB Statement 123(R).”  This guidance applies to equity shares, as well as stock options, and requires that a freestanding financial instrument issued to an employee in exchange for past or future employee services that is subject to SFAS 123(R) shall continue to be subject to the recognition and measurement provisions of SFAS 123(R) throughout the life of the instrument, unless its terms are modified when the holder is no longer an employee.  The effective date of this guidance is upon initial adoption of SFAS 123(R). The Company is currently evaluating the new guidance.

In October 2005, the FASB issued FSP No. FAS 123(R)-2, “Practical Accommodation to the Application of Grant Date as Defined in FASB Statement No. 123(R)” (FSP 123(R)-2).   SFAS 123(R) requires companies to estimate the fair value of share-based payment awards when the awards have been granted.  One of the criteria for determining that an award has been granted is that the employer and its employees have a mutual understanding of the key terms and conditions of the award.  Under FSP 123(R)-2, a mutual understanding is presumed to exist on the date the award is approved by the Board of Directors or management with relevant authority, assuming certain conditions are met.  FSP 123(R)-2 is applicable upon initial adoption of SFAS 123(R) or, for companies that adopted SFAS 123(R) prior to the issuance of FSP 123(R)-2, the guidance shall be applied to the first reporting period after the date the FSP is posted to the FASB website.  Xilinx will apply the guidance in FSP 123(R)-2 beginning on April 2, 2006.  The Company does not anticipate that the adoption of this guidance will have a material impact on its financial condition or results of operations.

In November 2005, the FASB issued FSP No. FAS 123(R)-3, “Transition Election Related to Accounting for the Tax Effects of Share-Based Payment Awards” (FSP 123(R)-3). FSP 123(R)-3 provides an elective alternative method that establishes a computational component to arrive at the beginning balance of the accumulated paid-in capital pool related to employee compensation and a simplified method to determine the subsequent impact on the accumulated paid-in capital pool of employee awards that are fully vested and outstanding upon the adoption of SFAS 123(R).  The Company is currently evaluating this transition method.

In November 2005, the FASB issued FSP Nos. FAS 115-1 and FAS 124-1, “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments (FSP 115-1),” which replaces the measurement and recognition guidance set forth in the Emerging Issues Task Force (EITF) Issue No. 03-1, “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments,” and codifies certain existing guidance on investment impairment.  FSP 115-1 clarifies that an investor should recognize an impairment loss no later than when the impairment is deemed other-than-temporary, even if a decision to sell the security has not been made, and also provides guidance on the subsequent accounting for an impaired debt security.  FSP 115-1 also requires certain disclosures about unrealized losses that have not been recognized as other-than-temporary impairments.  The guidance in FSP 115-1 amends SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities” and is effective for reporting periods beginning after December 15, 2005.  Xilinx plans to adopt the provisions of FSP 115-1 beginning on January 1, 2006 and the adoption is not expected to have a material impact on its financial condition or results of operations.

3.Stock-Based Compensation

The Company accounts for stock-based compensation under APB 25 and related interpretations, using the intrinsic value method.  In addition, the Company has adopted the disclosure requirements related to its stock plans according to SFAS 123, as amended by SFAS No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure” (SFAS 148).

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As required by SFAS 148, the following table shows the estimated effect on net income and net income per share as if the Company had applied the fair value recognition provisions of SFAS 123 to stock-based compensation:

	Three Months Ended						Nine Months Ended
(In thousands, except per share amounts)	Dec. 31, 2005			Jan. 1, 2005			Dec. 31, 2005			Jan. 1, 2005
Net income as reported	$	80,969		$	64,057		$	243,408		$	245,518
Deduct: Stock-based employee compensation expense determined under fair value method for all awards, net of tax	(21,380		)	(27,181		)	(62,327		)	(91,467		)
Pro forma net income	$	59,589		$	36,876		$	181,081		$	154,051
Net income per share:
Basic-as reported	$	0.23		$	0.18		$	0.70		$	0.71
Basic-pro forma	$	0.17		$	0.11		$	0.52		$	0.44
Diluted-as reported	$	0.23		$	0.18		$	0.68		$	0.68
Diluted-pro forma	$	0.17		$	0.10		$	0.50		$	0.43

The fair values of stock options and stock purchase plan rights under the Company’s stock option plans and employee stock purchase plan were estimated as of the grant date using the Black-Scholes option pricing model.  The Black-Scholes model was originally developed for use in estimating a fair value of traded options and requires the input of highly subjective assumptions including expected stock price volatility.  The Company’s stock options and stock purchase plan rights have characteristics significantly different from those of traded options, and changes in the subjective input assumptions can materially affect the fair value estimates.  In the first quarter of fiscal 2006, the Company modified its volatility assumption to use implied volatility for options granted. Previously, the Company used only historical volatility in deriving its volatility assumption.  Management determined that implied volatility is more reflective of market conditions and a better indicator of expected volatility than historical volatility.  Calculated under SFAS 123, the per share weighted-average fair value of stock options granted during the third quarter of fiscal 2006 was $7.80 ($14.99 for the third quarter of fiscal 2005) and for the first nine months of fiscal 2006 was $7.91 ($20.33 for the first nine months of fiscal 2005).  The pro forma stock-based employee compensation expenses for the third quarter and the first nine months of fiscal 2005 have been adjusted for changes in the application of volatility assumptions used in estimating the fair value of employee stock options issued during this nine-month period.  The adjustment had no material impact to the pro forma condensed consolidated financial statements.  Under the Company’s 1990 Employee Qualified Stock Purchase Plan (Stock Purchase Plan), shares are only issued during the second and fourth quarters of the Company’s fiscal year.  The per share weighted-average fair values of stock purchase rights granted under the Stock Purchase Plan during the third quarter of fiscal 2006 and 2005 were $7.47 and $10.23, respectively.

Under the Stock Purchase Plan, employees purchased 631 thousand shares for $15.2 million in the second quarter of fiscal 2006 and 934 thousand shares for $15.0 million in the second quarter of fiscal 2005.  No shares were issued during the first or third quarters of fiscal 2006 or 2005.  The next scheduled purchase under the Stock Purchase Plan is in the fourth quarter of fiscal 2006.  On August 4, 2005, the stockholders approved an amendment to increase the authorized number of shares available for issuance under the Stock Purchase Plan by 7.0 million shares.  At December 31, 2005, 8.7 million shares were available for future issuance out of 34.5 million shares authorized.

4.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 diluted net income per common share.  The total shares used in the denominator of the diluted net income per common share calculation includes 5.0 million and 6.2 million common equivalent shares attributable to outstanding stock options for the third quarter and the first nine months of fiscal 2006,

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respectively, that are not included in basic net income per common share.  For the third quarter and the first nine months of fiscal 2005, the total shares used in the denominator of the diluted net income per common share calculation includes 9.8 million and 11.0 million common equivalent shares attributable to outstanding stock options, respectively.

Outstanding out-of-the-money stock options to purchase approximately 37.6 million and 31.3 million shares, for the third quarter and the first nine months of fiscal 2006, respectively, under the Company’s stock option plans were excluded from diluted net income per common share, applying the treasury stock method, as their inclusion would have been antidilutive.  These options could be dilutive in the future if the Company’s average share price increases and is greater than the exercise price of these options.  For the third quarter and the first nine months of fiscal 2005, respectively, 29.3 million and 28.7 million of the Company’s stock options outstanding were excluded from the calculation.

5.Inventories

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

(In thousands)	Dec. 31, 2005		April 2, 2005
Raw materials	$	8,456	$	8,589
Work-in-process	135,405		122,788
Finished goods	68,021		54,345
	$	211,882	$	185,722

6.Investment in United Microelectronics Corporation

At December 31, 2005, the fair value of the Company’s equity investment in United Microelectronics Corporation (UMC) stock totaled $242.4 million. The Company accounts for its investment in UMC as available-for-sale marketable securities in accordance with SFAS 115.

The following table summarizes the cost basis and fair values of the investment in UMC:

	Dec. 31, 2005				April 2, 2005
	Adjusted		Fair		Adjusted		Fair
(In thousands)	Cost		Value		Cost		Value
Current portion	$	32,235	$	32,685	$	—	$	—
Long-term portion	206,807		209,698		239,064		246,110
Total investment	$	239,042	$	242,383	$	239,064	$	246,110

During the first nine months of fiscal 2006, the fair value of the UMC investment decreased by $3.7 million.  The fair value of the Company’s total UMC investment decreased by $43.7 million during the three months ended December 31, 2005.  At December 31, 2005, the Company recorded $1.4 million of deferred tax liabilities and a net $2.0 million balance in accumulated other comprehensive income associated with the UMC investment.  As of December 31, 2005, the Company classified $32.7 million in fair value ($32.2 million in adjusted cost) of the UMC investment as short-term because the Company intends to sell this portion of the investment within the next 12 months.

7.Common Stock Repurchase Programs

The Board of Directors has approved stock repurchase programs enabling the Company to repurchase its common stock in the open market.  During the second quarter of fiscal 2006, the Company completed its $250.0 million repurchase program announced in April 2004 by repurchasing 2.1 million shares for $56.9 million.  On April 20, 2005, the Board authorized the repurchase of up to an additional $350.0 million of common stock.  This share repurchase program has no stated expiration date.  Through December 31, 2005, the Company had repurchased $151.1 million of the $350.0 million of common stock approved for repurchase under the April 2005 authorization.  As of December 31, 2005, the Company held no shares of treasury stock in conjunction with the stock repurchase program due to the retirement of all treasury shares repurchased as of the end of the third quarter of fiscal 2006.  Beginning with the third quarter of fiscal 2006, the Company adopted the policy of retiring all treasury shares.  The Company held no shares of treasury stock in conjunction with the stock

8

repurchase program as of April 2, 2005 since all treasury shares had been reissued under the employee stock option plans.

During the first nine months of fiscal 2006, the Company entered into stock repurchase agreements with an independent financial institution.  Under these agreements, Xilinx provided this financial institution with up-front payments totaling $125.0 million in the third quarter of fiscal 2006 ($225.0 million for the first nine months of fiscal 2006).  The financial institution agreed to deliver to Xilinx a certain number of shares based upon the volume weighted-average price, during the contract period, less a specified discount. As of December 31, 2005, no up-front payment balances remained under these agreements.  In addition, under the guidelines of SEC Rule 10b5-1, Xilinx entered into other agreements with the same independent financial institution in the first and second quarters to repurchase additional shares on its behalf after the conclusion of the purchase periods of the aforementioned agreements.  No additional shares were repurchased in the third quarter after the conclusion of the aforementioned agreements.

During the third quarter and the first nine months of fiscal 2006, the Company repurchased a total of 5.0 million and 10.5 million shares of common stock for $125.0 million and $274.9 million, respectively, as adjusted for accrued and unsettled transactions and including the amounts purchased by the independent financial institution and remitted to the Company.  During the third quarter and the first nine months of fiscal 2005, the Company repurchased a total of 1.2 million and 3.3 million shares of common stock for $36.1 million and $103.0 million, respectively, as adjusted for accrued and unsettled transactions.

8.Impairment Loss

The Company recognized an impairment loss on investments of $3.1 million during the third quarter of fiscal 2005 related to non-marketable equity securities in private companies.  These impairment losses resulted from certain investees diluting Xilinx’s investment through the receipt of an additional round of investment at a lower valuation or from the liquidation of certain investees.

9.Comprehensive Income

The components of comprehensive income are as follows:

	Three Months Ended						Nine Months Ended
(In thousands)	Dec. 31, 2005			Jan. 1, 2005			Dec. 31, 2005			Jan. 1, 2005
Net income	$	80,969		$	64,057		$	243,408		$	245,518
Net change in unrealized loss on available-for- sale securities, net of tax	(27,074		)	(257		)	(3,598		)	(49,632		)
Reclassification adjustment for (gains) losses on available-for-sale securities, net of tax, included in earnings	68			(163		)	680			(566		)
Net change in unrealized loss on hedging transactions, net of tax	(331		)	—			(751		)	—
Net change in cumulative translation adjustment	(1,248		)	1,611			(1,979		)	1,327
Comprehensive income	$	52,384		$	65,248		$	237,760		$	196,647

The components of accumulated other comprehensive income (loss) at December 31, 2005 and April 2, 2005 are as follows:

(In thousands)	Dec. 31, 2005			April 2, 2005
Accumulated unrealized loss on available-for-sale securities, net of tax	$	(5,300	)	$	(2,382	)
Accumulated unrealized loss on hedging transactions,net of tax	(751		)	—
Accumulated cumulative translation adjustment	607			2,586
Total accumulated other comprehensive income (loss)	$	(5,444	)	$	204

The change in the accumulated unrealized loss on available-for-sale securities, net of tax, at December 31, 2005, primarily reflects the decrease in value of the UMC investment since April 2, 2005 (see Note 6).  In

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addition, the unrealized loss on the Company’s short-term and long-term investments increased by $1.2 million during the first nine months of fiscal 2006.

10.Significant Customers and Concentrations of Credit Risk

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 distributors.

On April 26, 2005, two of the Company’s distributors, Avnet, Inc. (Avnet) and the Memec Group (Memec), announced that they had reached a definitive agreement for Avnet to acquire Memec.  On July 5, 2005, Avnet announced that it had completed its acquisition of Memec.  As of December 31, 2005, the combined Avnet/Memec entity accounted for 72% of the Company’s total accounts receivable.  Had this acquisition been completed for all periods presented, resale of product through this combined entity would have accounted for 69% and 74% of the Company’s worldwide net revenues in the third quarter of fiscal 2006 and 2005, respectively, and 71% and 76% in the first nine months of fiscal 2006 and 2005, respectively.  No end customer accounted for more than 10% of the Company’s net revenues for any of the periods presented.

The Company mitigates concentrations of credit risk in its investments in debt securities by investing more than 80% of its portfolio in AA or higher grade securities as rated by Standard & Poor’s.  Additionally, Xilinx limits its investments in the debt securities of a single issuer and attempts to further mitigate credit risk by diversifying risk across geographies and type of issuer.

11.Income Taxes

The Company recorded tax provisions of $49.8 million and $85.4 million for the third quarter and the first nine months of fiscal 2006, respectively, representing effective tax rates of 38% and 26%, respectively.  The Company recorded tax provisions of $11.0 million and $62.3 million for the third quarter and the first nine months of fiscal 2005, respectively, representing effective tax rates of 15% and 20%, respectively.

When compared to the same period last year, the increase in the effective tax rate for the third quarter of fiscal 2006 reflects an increase in relative growth of U.S. profits which are generally taxed at higher rates than international profits.  Additionally, during the third quarter of fiscal 2006, the Company’s Chief Executive Officer and its Board of Directors approved a $500.0 million repatriation dividend from its foreign subsidiaries that will qualify for the 85% dividends received deduction under the provisions of the American Jobs Creation Act of 2004.  The dividend will be paid prior to the end of the fourth quarter of fiscal 2006.  The tax effect of the repatriation dividend recorded in the third quarter resulted in a net increase in federal and state tax (net of federal benefit) of $25.3 million.  The negative effects are partially offset by approximately $5.9 million in tax benefit related to the recognition of deferred tax assets for state research and development (R&D) tax credits where the Company has  determined that it is more likely than not that the asset will be realized.  The state R&D tax credits will be utilized, in part, to offset California tax on the repatriation dividend.  Also included in the first nine months of fiscal 2006 was the positive effect of a favorable U.S. Tax Court decision and an increase in tax credits for R&D and affordable housing.

The first nine months of fiscal 2005 included the recognition of positive tax benefits related to agreements with the Internal Revenue Service (IRS) for fiscal 1996 through 2001 and favorable adjustments for R&D tax credits claimed on federal and state income tax returns in excess of previous estimates.  The positive benefits were partially offset by the negative effect of a non-deductible write-off of acquired in-process R&D, related to the acquisition of Hier Design Inc. (HDI) in June 2004.

The IRS audited and issued proposed adjustments to the Company for fiscal 1996 through 2001.  The Company filed petitions with the U.S. Tax Court in response to assertions by the IRS relating to fiscal 1996 through 2000.  In addition, the IRS proposed adjustments to the Company’s net operating loss for fiscal 2001. To date, all issues have been settled with the IRS except as described in the following paragraph.

On August 30, 2005, the U.S. Tax Court issued its opinion concerning whether the value of stock options must be included in the cost sharing agreement with Xilinx Ireland.  The U.S. Tax Court agreed with the Company that no amount for stock options is to be included in the cost sharing agreement.  Thus, the U.S. Tax Court

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determined that the Company has no tax, interest or penalties due for this issue.  The IRS has not indicated whether it will appeal the decision to the Ninth Circuit Court of Appeals.

12.Commitments

Xilinx leases some of its facilities and office buildings under operating leases that expire at various dates through February 2026.  Some of the operating leases require payment of operating costs, including property taxes, repairs, maintenance and insurance.

Approximate future minimum lease payments under operating leases are as follows:

Fiscal year	(In thousands)
2006 (remaining three months)	$	1,829
2007	6,483
2008	5,221
2009	4,438
2010	3,505
Thereafter	6,751
	$	28,227

Most of the Company’s leases contain renewal options for varying terms.  Rent expense, net of rental income, under all operating leases was approximately $1.5 million and $4.9 million for the third quarter and the first nine months of fiscal 2006, respectively.  Rent expense, net of rental income, was approximately $1.6 million and $3.5 million for the third quarter and the first nine months of fiscal 2005, respectively.

In November 2005, Xilinx announced a $40.0 million investment in a new building in Singapore, the Company’s Asia regional headquarters.  The project is expected to be completed in June 2007.

Other commitments at December 31, 2005 totaled approximately $84.2 million and consisted of purchases of inventory and other non-cancelable purchase obligations related to subcontractors that manufacture silicon wafers and provide assembly and 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.  As of December 31, 2005, the Company also has approximately $17.8 million of non-cancelable obligations to providers of electronic design automation software expiring at various dates through July 2008.

In the fourth quarter of fiscal 2005, the Company committed up to $20.0 million to acquire, in the future, rights to intellectual property.  License payments will be amortized over the useful life of the intellectual property acquired.

13.Product Warranty and Indemnification

The Company generally sells products with a limited warranty for product quality.  The Company provides for known product issues if a loss is probable and can be reasonably estimated.  The following table summarizes the warranty reserve activity for the first nine months of fiscal 2006 and 2005:

	Nine Months Ended
(In thousands)	Dec. 31, 2005			Jan. 1, 2005
Balance at beginning of period	$	—		$	5,905
Provision	1,649			3,426
Utilized	(551		)	(5,845		)
Adjustments	—			(1,902		)
Balance at end of period	$	1,098		$	1,584

The Company generally sells its products with a limited indemnification of customers against intellectual property infringement claims related to the Company’s products.  Xilinx has historically received only a limited number of requests for indemnification under these provisions and has not been required to make any significant payments pursuant to these provisions.

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14.Contingencies

The Company filed petitions with the U.S. Tax Court in response to assertions by the IRS that the Company owed additional tax for fiscal 1996 through 2000.  On August 30, 2005, the U.S. Tax Court issued its opinion concerning whether the value of stock options should be included in the cost sharing agreement with Xilinx Ireland.  The U.S. Tax Court agreed with the Company that no amount for stock options should be included in the cost sharing agreement.  Accordingly, it was determined that the Company has no additional liability for tax, interest or penalties on this issue.  The IRS has not indicated whether it will appeal the decision to the Ninth Circuit Court of Appeals.  Other than these petitions, Xilinx knows of no legal proceedings contemplated by any governmental authority or agency against the Company.

The Company allowed sales representative agreements with three related European entities, Rep’tronic S.A., Rep’tronic España, and Acsis S.r.l., a Rep’tronic Company (collectively Rep’tronic) to expire pursuant to their terms on March 31, 2003.  Rep’tronic pursued claims allegedly arising from the expiration of these contracts against Xilinx Ireland and Xilinx Sarl in the High Court of Ireland, the Labor Court of Versailles (France) and the Commercial Court of Versailles (France).  The proceeding in the French Commercial Court was decided in favor of the Company in June 2005.   In November 2005, the Company settled all outstanding litigation with Rep’tronic. The settlement payment was provided for through prior accruals through the second quarter of fiscal 2006 under SFAS 5, “Accounting for Contingencies”.

On October 17, 2005, a patent infringement lawsuit was filed by Lizy K. John (John) against Xilinx, Inc. in the U.S. District Court for the Eastern District of Texas, Marshall Division.  John seeks an injunction, unspecified damages and attorneys’ fees.   The Company filed its answer on January 2, 2006, denying John’s allegations and including a counterclaim for declaratory judgment.  John filed her reply on January 20, 2006.  As of December 31, 2005, no trial date had been set, the initial case management conference had not been scheduled and discovery had not commenced.  Neither the likelihood, nor the amount of any potential exposure to the Company is estimable at this time.

Except as stated above, there are no pending legal proceedings of a material nature to which the Company is a party or of which any of its property is the subject.

15.Goodwill and Acquisition-Related Intangibles

As of December 31, 2005 and April 2, 2005, the gross and net amounts of goodwill and acquisition-related intangibles for all acquisitions were as follows:

(In thousands)	Dec. 31, 2005		April 2, 2005		Amortization Life
Goodwill-gross	$	170,372	$	170,940
Less accumulated amortization through fiscal 2002	51,525		51,525
Goodwill-net	$	118,847	$	119,415
Noncompete agreements-gross	$	24,304	$	24,304	2.5 to 3 years
Less accumulated amortization	24,046		23,835
Noncompete agreements-net	258		469
Patents-gross	22,752		22,752		5 to 7 years
Less accumulated amortization	14,425		11,804
Patents-net	8,327		10,948
Miscellaneous intangibles-gross	49,259		49,259		2 to 5 years
Less accumulated amortization	42,952		40,672
Miscellaneous intangibles-net	6,307		8,587
Total acquisition-related intangibles-gross	96,315		96,315
Less accumulated amortization	81,423		76,311
Total acquisition-related intangibles-net	$	14,892	$	20,004

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Amortization expense for all intangible assets for the third quarter and the first nine months of fiscal 2006 was $1.5 million and $5.1 million, respectively.  For the third quarter and the first nine months of fiscal 2005, amortization expense for all intangible assets was $1.8 million and $4.9 million, respectively.  Intangible assets are amortized on a straight-line basis.  Based on the carrying value of acquisition-related intangibles recorded at December 31, 2005, and assuming no subsequent impairment of the underlying assets, the annual amortization expense for acquisition-related intangibles is expected to be as follows: fiscal 2006 (remaining three months) - $1.4 million; 2007 - $5.6 million; 2008 - $4.4 million; 2009 - $3.2 million; 2010 - $300 thousand.

16.Subsequent Event

On January 13, 2006, Xilinx completed the acquisition of AccelChip, Inc. (AccelChip), a privately-held company that provides MATLAB(R) synthesis software tools for building digital signal processing (DSP) systems.  The total purchase price was approximately $21.5 million in cash in exchange for all of the outstanding stock of AccelChip.  The Company is currently going through the valuation process which is expected to be completed by the end of the fourth quarter of fiscal 2006.

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 “Factors Affecting Future Results” and elsewhere in this document.  Forward-looking statements can often be identified by the use of forward-looking words, such as “may,” “will,” “could,” “should,” “expect,” “believe,” “anticipate,” “estimate,” “continue,” “plan,” “intend,” “project” or other similar words.  We disclaim any responsibility to update any forward-looking statement provided in this document.

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 financial statements.  The U.S. Securities and Exchange Commission 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 policies include: valuation of marketable and non-marketable securities, which impacts losses on 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 including acquisition-related intangibles, which impacts their valuation; the assessment of the recoverability of goodwill, which impacts goodwill impairment; and 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 consolidated balance sheet.  Below, we discuss these policies further, as well as the estimates and judgments involved.  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.

                Valuation of Marketable and Non-marketable Securities

The Company’s short-term and long-term investments include marketable and non-marketable equity and debt securities.  At December 31, 2005, the Company had an equity investment in UMC, a publicly-held Taiwanese semiconductor wafer manufacturing company, of $242.4 million and strategic investments in non-marketable equity securities of $21.6 million.  In determining if and when a decline in market value below adjusted cost of marketable equity and debt securities is other-than-temporary, the Company evaluates quarterly the market conditions, trends of earnings, financial condition and other key measures for our investments.  In determining whether a decline in value of non-marketable equity investments in private companies is other-than-temporary, the assessment is made by considering available evidence including the general market conditions in the investee’s industry, the investee’s product development status, the investee’s ability to meet business milestones and the financial condition and near-term prospects of the individual investee, including the rate at which the investee is using its cash and the investee’s need for possible additional funding at a lower valuation.   When a decline in value is deemed to be other-than-

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temporary, the Company recognizes an impairment loss in the current period’s operating results to the extent of the decline.

                Revenue Recognition

Sales to distributors are made under agreements providing distributor price adjustments and rights of return under certain circumstances.  Revenue and costs relating to distributor sales are deferred until products are sold by the distributors to end customers.  For the first nine months of fiscal 2006, approximately 86% of our net revenues were from products sold to distributors for subsequent resale to original equipment manufacturers (OEMs) or their subcontract manufacturers.  Revenue recognition depends on notification from the distributor that product has been sold to the end customer.  Also reported by the distributor are product resale price, quantity and end customer shipment information, as well as inventory on hand.  Reported distributor inventory on hand is reconciled to deferred revenue balances monthly.  We maintain system controls to validate distributor data and verify that the reported information is accurate.  Deferred income on shipments to distributors reflects the effects of distributor price adjustments and, the amount of gross margin expected to be realized when distributors sell through product purchased from the Company.  Accounts receivable from distributors are recognized and inventory is relieved when title to inventories transfers, typically upon shipment from Xilinx at which point we have a legally enforceable right to collection under normal payment terms.

Revenue from sales to our direct customers is recognized upon shipment provided that persuasive evidence of a sales arrangement exists, the price is fixed, title has transferred, collection of resulting receivables is reasonably assured, and there are no customer acceptance requirements and no remaining significant obligations.  For each of the periods presented, there were no formal acceptance provisions with our direct customers.

Revenue from software term licenses is deferred and recognized as revenue over the term of the licenses of one year.  Revenue from support services is recognized when the service is performed.  Revenue from support products, which includes software and services sales, was approximately 6% to 7% of net revenues for all of the periods presented.

Allowances for end customer sales returns are recorded based on historical experience and for known pending customer returns or allowances.

                Valuation of Inventories

Inventories are stated at the lower of actual cost (determined using the first-in, first-out method) or market (estimated net realizable value).  The valuation of inventory requires us to estimate excess or obsolete inventory as well as inventory that is not of saleable quality.  We review and set standard costs quarterly at current manufacturing costs in order to approximate actual costs.  Our manufacturing overhead standards for product costs are calculated assuming full absorption of forecasted spending over projected volumes, adjusted for excess capacity. Given the cyclicality of the market, the obsolescence of technology and product lifecycles, we write down inventory based on forecasted demand and technological obsolescence.  These factors are impacted by market and economic conditions, technology changes, new product introductions and changes in strategic direction and require estimates that may include uncertain elements.  The estimates of future demand that we use in the valuation of inventory are the basis for our published revenue forecasts, which are also consistent with our short-term manufacturing plans. If our demand forecast for specific products is greater than actual demand and we fail to reduce manufacturing output accordingly, we could be required to write down additional inventory, which would have a negative impact on our gross margin.

                Impairment of Long-Lived Assets Including Acquisition-Related Intangibles

Long-lived assets and certain identifiable intangible assets to be held and used are reviewed for impairment if indicators of potential impairment exist.  Impairment indicators are reviewed on a quarterly basis.  When indicators of impairment exist and assets are held for use, we estimate future undiscounted cash flows attributable to the assets.  In the event such cash flows are not expected to be sufficient to recover the recorded value of the assets, the assets are written down to their estimated fair values based on the expected discounted future cash flows attributable to the assets or based on appraisals.  Factors affecting impairment of assets held for use include the overall profitability of the Company’s business and our ability to generate positive cash flows.

When assets are removed from operations and held for sale, we estimate impairment losses as the excess of the carrying value of the assets over their fair value.  Factors affecting impairment of assets held for sale include market conditions.   Changes in any of these factors could necessitate impairment recognition in future periods for assets held for use or assets held for sale.

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                Goodwill

As required by SFAS No. 142, “Goodwill and Other Intangible Assets” (SFAS 142), goodwill is not amortized but is subject to impairment tests on an annual basis, or more frequently if indicators of potential impairment exist, and goodwill is written down when it is determined to be impaired.  We perform an annual impairment review in the fourth quarter of each year and compare the fair value of the reporting unit in which the goodwill resides to its carrying value.  If the carrying value exceeds the fair value, the goodwill of the reporting unit is potentially impaired.  For purposes of impairment testing under SFAS 142, Xilinx operates as a single reporting unit.  We use the quoted market price method to determine the fair value of the reporting unit.  Based on the impairment review performed during the fourth quarter of fiscal 2005, there was no impairment of goodwill in fiscal 2005.  Unless there are indicators of impairment, our next impairment review for RocketChips, Triscend Corporation (Triscend) and HDI goodwill will be performed and completed in the fourth quarter of fiscal 2006.  To date, no impairment indicators have been identified.

                Accounting for Income Taxes

Xilinx is a multinational corporation operating in multiple tax jurisdictions.  We must determine the allocation of income to each of these jurisdictions based on estimates and assumptions and apply the appropriate tax rates for these jurisdictions.  We undergo routine audits by taxing authorities regarding the timing and amount of deductions and the allocation of income among various tax jurisdictions.  Tax audits often require an extended period of time to resolve and may result in income tax adjustments if changes to the allocation are required between jurisdictions with different tax rates.

In determining income for financial statement purposes, we must make certain estimates and judgments.  These estimates and judgments occur in the calculation of certain tax liabilities and in the determination of the recoverability of certain deferred tax assets, which arise from temporary differences between the tax and financial statement recognition of revenue and expense.  Additionally, we must estimate the amount and likelihood of potential losses arising from audits or deficiency notices issued by taxing authorities.  The taxing authorities’ positions and our assessment can change over time resulting in material impacts on the provision for income taxes in periods when these changes occur.

We must also assess the likelihood that we will be able to recover our deferred tax assets.  If recovery is not likely, we must increase our provision for taxes by recording a reserve, in the form of a valuation allowance, for the deferred tax assets that we estimate will not ultimately be recoverable.  As of December 31, 2005 and April 2, 2005, we had a valuation allowance for the deferred tax assets relating to certain California tax credit carryforwards.

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Results of Operations: Third quarter and first nine months of fiscal 2006 compared to the third quarter and first nine months of fiscal 2005

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
	Dec. 31, 2005		Jan. 1, 2005		Dec. 31, 2005		Jan. 1, 2005
Net Revenues	100.0	%	100.0	%	100.0	%	100.0	%
Cost of revenues	37.0		38.0		38.2		35.9
Gross Margin	63.0		62.0		61.8		64.1
Operating Expenses:
Research and development	18.0		21.8		19.1		19.3
Selling, general and administrative	18.0		20.2		18.7		19.4
Amortization of acquisition-related intangibles	0.3		0.5		0.4		0.4
Litigation settlements and contingencies	0.0		0.0		0.3		0.0
Write-off of acquired in-process research and development	0.0		0.0		0.0		0.6
Total operating expenses	36.3		42.5		38.5		39.7
Operating Income	26.7		19.5		23.3		24.4
Impairment loss on investments	0.0		(0.9	)	0.0		(0.3	)
Interest income and other, net	2.4		2.5		2.9		1.9
Income Before Income Taxes	29.1		21.1		26.2		26.0
Provision for income taxes	11.1		3.1		6.8		5.2
Net Income	18.0	%	18.0	%	19.4	%	20.8	%

Net Revenues

Net revenues of $449.6 million in the third quarter of fiscal 2006 represented a 27% increase from the same period last year of $355.4 million.  Net revenues for the first nine months of fiscal 2006 were $1.3 billion, a 6% increase from the same period last year of $1.2 billion.

The increase in net revenues in the third quarter of fiscal 2006 resulted from broad-based growth across several end markets, geographies and product lines.  Sales from the Industrial and Other category were the strongest during the quarter.  Strength in this category was driven by increased revenues from test and measurement and defense applications.  In addition, the Communications end market, which was impacted during the second quarter of fiscal 2006 by a decrease in sales to wireless infrastructure, rebounded during the quarter, driven by increases in both wireless and wireline communications.

The increase in net revenues for the first nine months of fiscal 2006 was a result of improved market conditions driven primarily by strength in Communications and Industrial and Other end markets.  The first nine months of fiscal 2005 were negatively impacted by various factors that included a semiconductor-wide inventory correction, a weakened global economy and weakness in the Communications end market.  These conditions led to two consecutive quarters of revenue declines for Xilinx in the second and third quarters of fiscal 2005.

No end customer accounted for more than 10% of the Company’s net revenues for any of the periods presented.

Net Revenues by Product

We classify our product offerings into four categories: New, Mainstream, Base and Support Products.  These product categories, excluding Support Products, are modified on a periodic basis to better reflect advances in technology.  The most recent modification was on July 4, 2004, which was the beginning of our second quarter of fiscal 2005.  Amounts for the prior periods have been reclassified to conform to the recategorization.  New Products

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include our most recent product offerings and include the Spartan-3^TM, Spartan™-3E, Spartan-IIE^TM, Virtex-4^TM, Virtex-II Pro^TM, EasyPath^TM and CoolRunner-II^TM product lines.  Mainstream Products include the CoolRunner^TM, Spartan-II^TM, SpartanXL^TM, Virtex-II^TM, Virtex-E^TM and Virtex^TM product lines.  BaseProducts consist of our mature product families and include the XC3000, XC3100, XC4000, XC5200, XC9500, XC9500XL, XC9500XV, XC4000E, XC4000EX, XC4000XL, XC4000XLA, XC4000XV and Spartan^TM families.  Support Products make up the remainder of our product offerings and include configuration solutions (serial PROMs — programmable read only memory), software, intellectual property (IP) cores, customer training, design services and support.

Net revenues by product categories for the third quarter and the first nine months of fiscal 2006 were as follows:

	Three Months Ended						Nine Months Ended
(In millions)	Dec. 31, 2005		Jan. 1, 2005		% Change		Dec. 31, 2005		Jan. 1, 2005		% Change
New Products	$	148.3	$	70.0	112	%	$	376.0	$	189.2	99	%
Mainstream Products	212.3		201.3		5	%	610.8		702.4		(13	)%
Base Products	62.9		60.2		4	%	191.3		213.7		(10	)%
Support Products	26.1		23.9		9	%	75.8		77.0		(2	)%
Total Net Revenues	$	449.6	$	355.4	27	%	$	1,253.9	$	1,182.3	6	%

New Products represented 33% and 30% of total net revenues in the third quarter and the first nine months of fiscal 2006 respectively, compared to 20% and 16% in the same periods last year, respectively.  The increase in New Products net revenues during the third quarter and the first nine months of fiscal 2006 was due primarily to the strong market acceptance of the Virtex-4, Virtex-II Pro and Spartan-3 families across a broad base of end markets.  Our 130-nanometer Virtex-II Pro family is currently the largest contributor to the New Products net revenues.  However, design win momentum is rapidly shifting to 90-nanometer technology.  Our 90-nanometer products include our high-volume, low-cost Spartan-3 and Spartan-3E families and our high-performance, high-density Virtex-4 family. We expect that sales of New Products will continue to increase as customers continue to adopt these products and begin moving their programs into volume production.

Mainstream Products represented 47% and 49% of total net revenues in the third quarter and the first nine months of fiscal 2006, respectively, compared to 57% and 59% in the same periods last year, respectively.  Base Products represented 14% and 15% of total net revenues in the third quarter and the first nine months of fiscal 2006, respectively, compared to 17% and 18% in the prior year periods, respectively.  The decreases in percentages of total net revenues for Mainstream and Base Products during the third quarter and the first nine months of fiscal 2006 were due to a decline in sales of our older and more mature products manufactured using 180- nanometer and older process technologies.

Support Products represented 6% of total net revenues in the third quarter as well as the first nine months of fiscal 2006, compared to 6% and 7% in the prior year periods, respectively.  Support products increased 9% in the third quarter of fiscal 2006 compared to the same period last year, mostly due to the growth in sales of serial PROMs.

Net Revenues by Geography

Geographic revenue information reflects the geographic location of the distributors or OEMs who purchased our products.  This may differ from the geographic location of the end customers.  Net revenues by geography for the

third quarter and the first nine months of fiscal 2006 and 2005 were as follows:

	Three Months Ended						Nine Months Ended
(In millions)	Dec. 31, 2005		Jan. 1, 2005		% Change		Dec. 31, 2005		Jan. 1, 2005		% Change
North America	$	193.2	$	150.8	28	%	$	522.0	$	498.6	5	%
Europe	90.0		72.7		24	%	249.2		242.5		3	%
Japan	63.0		50.3		25	%	186.2		171.0		9	%
APAC/ROW	103.4		81.6		27	%	296.5		270.2		10	%
Total Net Revenues	$	449.6	$	355.4	27	%	$	1,253.9	$	1,182.3	6	%

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In absolute dollars, net revenues in North America, Europe, Japan and Asia Pacific/Rest of World (APAC/ROW) all increased during the third quarter and the first nine months of fiscal 2006 compared to the same periods last year.  The increases were primarily due to improved market conditions and market acceptance of our new products.

Net revenues in North America grew in the third quarter and the first nine months of fiscal 2006 driven primarily by strength in Communications and Industrial and Other end markets.

Net revenues in Europe increased in the third quarter and the first nine months of fiscal 2006 compared to the same periods last year.   Similar to North America revenues, Europe has benefited from the recent strength in the Communications and Industrial and Other end markets.

Net revenues in Japan increased during the third quarter and the first nine months of fiscal 2006 compared to the same periods a year ago.  This region has benefited from strength in the Communications end market as well as from the growing adoption of our programmable logic devices (PLDs) in various consumer applications that were previously served by application specific integrated circuits (ASICs).

Net revenues in APAC/ROW also increased during the third quarter and the first nine months of fiscal 2006 compared to the same periods last year.  Strength in this region has been driven by an increase in communications and consumer applications as well as a continued transfer of manufacturing operations by U.S. OEMs to Asia.

Net Revenues by End Markets

Our end market revenue data is derived from our understanding of our end customers’ primary markets.  In order to better reflect our diversification efforts and to provide more detailed end market information, we split the category formerly called “Consumer, Industrial and Other” into two components:  “Consumer and Automotive” and “Industrial and Other” beginning with the quarter ended January 1, 2005. We will begin to show historical comparisons of the two new categories when information is available for all periods presented (beginning with the quarter ending September 30, 2006).

As a result, we classify our net revenues by end markets into four categories: Communications, Storage and Servers, Consumer and Automotive, and Industrial and Other.  Since historical comparisons of the two new categories are not available, we have combined them in the table below to show their aggregated changes over the comparable periods.  The percentage change calculation in the table below represents the year-to-year dollar change in each end market.

Net revenues by end markets for the third quarter and the first nine months of fiscal 2006 and 2005 were as follows:

	Three Months Ended						Nine Months Ended
(% of total net revenues)	Dec. 31, 2005		Jan. 1, 2005		% Change in Dollars		Dec. 31, 2005		Jan. 1, 2005		% Change in Dollars
Communications	48	%	47	%	30	%	49	%	51	%	2	%
Storage and Servers	11		16		(16	)%	12		13		(2	)%
Consumer, Automotive, Industrial and Other	41		37		41	%	39		36		15	%
Total Net Revenues	100	%	100	%	27	%	100	%	100	%	6	%

Net revenues in Communications increased during the third quarter and the first nine months of fiscal 2006 compared to the same periods last year. The increases were driven in large part by a rebound in wireless and wired communications end market.

As expected, net revenues from the Storage and Servers category declined during the third quarter and the first nine months of fiscal 2006 compared to the same periods a year ago. Storage revenues have been negatively impacted due to customer programs migrating to lower cost alternatives. However, these transitions are nearly complete.

Sales from the Consumer, Automotive, Industrial and Other category increased during the third quarter and the first nine months of fiscal 2006 compared to the same periods a year ago. Sales from Consumer and Automotive increased during the third quarter, with particular strength from audio, video and broadcast applications. Within the Industrial and Other category, test and measurement as well as defense applications were particularly strong in the third quarter of fiscal 2006. Growth in these end markets during the third quarter and the first nine months of fiscal 2006 was primarily driven by the success of our diversification efforts into new markets and applications.  Our

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success in these end markets is due to many factors, including the enhanced features and low cost of our newer products, more customized product offerings and certain competitive advantages of PLDs which can enable shorter product design cycles for our customers.

Gross Margin

	Three Months Ended										Nine Months Ended
(In millions)	Dec. 31, 2005			Jan. 1, 2005			$ Change		% Change		Dec. 31, 2005			Jan. 1, 2005			$ Change		% Change
Gross margin	$	283.1		$	220.3		$	62.8	28.5	%	$	775.0		$	758.0		$	17.0	2.2	%
% of Net Revenues	63.0		%	62.0		%					61.8		%	64.1		%

The gross margin increase of 1.0 percentage point for the third quarter of fiscal 2006 compared to the same period last year was due to yield and cost improvements in 130-nanometer and 90-nanometer products.  The gross margin decrease of 2.3 percentage points for the nine months ended December 31, 2005 compared to the same period last year was due to a signficant shift in product mix towards 130-nanometer and 90-nanometer products, which drove a 99% growth in our New Products category, and a decline in Mainstream and Base Products, which have higher gross margins than New Products.

Gross margin may be adversely affected in the future due to product mix shifts, competitive pricing pressure, manufacturing yield issues and wafer pricing.  We expect to mitigate these risks by continuing to improve yields on new products, and employing a dual foundry strategy, which promotes price competition and manufacturing flexibility.

In order to compete effectively, we pass manufacturing cost reductions on to our customers in 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 the revenue decline in our mature products with increased revenues from newer products.

Research and Development

	Three Months Ended										Nine Months Ended
(In millions)	Dec. 31, 2005			Jan. 1, 2005			$ Change		% Change		Dec. 31, 2005			Jan. 1, 2005			$ Change		% Change
Research and Development	$	81.1		$	77.4		$	3.7	5	%	$	239.7		$	227.4		$	12.3	5	%
% of Net Revenues	18		%	22		%					19		%	19		%

The increase in research and development (R&D) expenses over the same periods last year was primarily related to additional product development investment required for next generation products and our increased investments in resources and new markets such as digital signal processing (DSP) and embedded processing.

We plan to continue to invest in R&D efforts in a wide variety of areas such as new products, 65-nanometer and more advanced process development, IP cores, DSP, embedded processing and the development of new design and layout software.

Selling, General and Administrative

	Three Months Ended										Nine Months Ended
(In millions)	Dec. 31, 2005			Jan. 1, 2005			$ Change		% Change		Dec. 31, 2005			Jan. 1, 2005			$ Change		% Change
Selling, General and Administrative	$	80.7		$	71.9		$	8.8	12	%	$	234.4		$	229.5		$	4.9	2	%
% of Net Revenues	18		%	20		%					19		%	19		%

Selling, general and administrative (SG&A) expenses increased for the third quarter of fiscal 2006 compared to the same period last year.  This increase was attributable to higher commissions due to higher net revenues and expenses

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related to increased sales resources. The increase in SG&A expenses for the first nine months of fiscal 2006 compared to the same period last year was due to salary and headcount increases.

Amortization of Acquisition-Related Intangibles

	Three Months Ended									Nine Months Ended
(In millions)	Dec. 31, 2005		Jan. 1, 2005		$ Change			% Change		Dec. 31, 2005		Jan. 1, 2005		$ Change		% Change
Amortization	$	1.5	$	1.8	$	(0.3	)	(13	)%	$	5.0	$	4.9	$	0.1	3	%

Amortization expense was primarily related to the intangible assets acquired from the RocketChips, Triscend and HDI acquisitions.  Amortization expense for these intangible assets increased slightly for the first nine months of fiscal 2006 from the same period last year, due to the acquisition of HDI in June 2004.  However, for the third quarter of fiscal 2006, amortization expense decreased due to the complete amortization of some intangible assets.  We expect amortization of acquisition-related intangibles to be approximately $6.5 million for fiscal 2006 compared with $6.7 million for fiscal 2005.  The expected amortization expense for fiscal 2006 will increase slightly due to the acquisition of AccelChip which was completed on January 13, 2006.  See Note 16 to our condensed consolidated financial statements included in Part 1. “Financial Information.”

Litigation Settlements and Contingencies

The Company has accrued amounts that represent anticipated payments for liability for legal contingencies under the provisions of SFAS 5, “Accounting for Contingencies”, including an increase of $3.2 millionin the second quarter of fiscal 2006.  See Note 14 to our condensed consolidated financial statements included in Part 1. “Financial Information” and Item 1. “Legal Proceedings” included in Part II. “Other Information.”

Write-Off of Acquired In-Process Research and Development

In connection with the acquisition of HDI in the first quarter of fiscal 2005, approximately $7.2 million of in-process research and development costs were written off.  The projects identified as in-process would have required additional effort in order to establish technological feasibility.  These projects had identifiable technological risk factors indicating that successful completion, although expected, was not assured.  If an identified project is not successfully completed, there is no alternative future use for the project; therefore, the expected future income will not be realized.  The acquired in-process research and development represented the fair value of technologies in the development stage that had not yet reached technological feasibility and did not have alternative future uses.

To determine the value of HDI’s in-process research and development, the expected future cash flow attributable to the in-process technology was discounted, taking into account the percentage of completion, utilization of pre-existing “core” technology, risks related to the characteristics and applications of the technology, existing and future markets, and technological risk associated with completing the development of the technology.  We expensed these non-recurring charges in the period of acquisition.  The development project was completed during the fourth quarter of fiscal 2005 at a cost that approximated the original estimate.

Impairment Loss on Investments

We recognized an impairment loss on investments of $3.1 million during the third quarter of fiscal 2005 related to non-marketable equity securities in private companies.  The impairment losses resulted from certain investees diluting Xilinx’s investment through the receipt of an additional round of investment at a lower valuation or from the liquidation of certain investees.

Interest Income and Other, Net

	Three Months Ended										Nine Months Ended
(In millions)	Dec. 31, 2005			Jan. 1, 2005			$ Change		% Change		Dec. 31, 2005			Jan. 1, 2005			$ Change		% Change
Interest Income and Other, Net	$	10.9		$	8.8		$	2.1	24	%	$	36.2		$	22.0		$	14.2	65	%
% of Net Revenues	2		%	2		%					3		%	2		%

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The increase in interest income and other, net for the third quarter of fiscal 2006 over the prior year’s comparable period was due to higher yields resulting from an increase in short-term interest rates that was partially offset by losses from foreign currency transactions.  For the first nine months of fiscal 2006, the increase was due to higher yields resulting from an increase in short-term interest rates and $3.7 million of interest income earned from an IRS prepayment relating to the U.S. Tax Court decision.

Provision for Income Taxes

	Three Months Ended										Nine Months Ended
(In millions)	Dec. 31, 2005			Jan. 1, 2005			$ Change		% Change		Dec. 31, 2005			Jan. 1, 2005			$ Change		% Change
Provision for Income Taxes	$	49.8		$	11.0		$	38.8	353	%	$	85.4		$	62.3		$	23.1	37	%
% of Net Revenues	11		%	3		%					7		%	5		%
Effective Tax Rate	38		%	15		%					26		%	20		%

During the third quarter of fiscal 2006, the Company’s Chief Executive Officer and its Board of Directors approved a domestic reinvestment plan to repatriate $500.0 million in earnings of its foreign subsidiaries.  This repatriation dividend will qualify for the 85% dividends received deduction provided for under the American Jobs Creation Act of 2004.

When compared to the same period last year, the increase in the effective tax rate for the third quarter of fiscal 2006 is primarily attributable to the approval of the dividend that will be repatriated from the Company’s foreign subsidiaries prior to the end of the fourth quarter of fiscal 2006.  This resulted in the recognition of approximately $25.3 million of federal and state tax expense (net of federal benefit).  Additionally, the increased effective tax rate reflects relatively higher earnings in the U.S. which are generally taxed at higher rates than income from international operations.  The negative tax effects are partially offset by approximately $5.9 million in tax benefit related to the recognition of deferred tax assets for state R&D tax credits where the Company has determined that it is more likely than not that the asset will be realized.  These credits will be utilized, in part, to offset California tax on the repatriation dividend.  Additionally, the effective tax rate in the first nine months of fiscal 2006 was positively impacted by the favorable ruling by the U.S. Tax Court for Xilinx in its litigation with the IRS for fiscal 1996 to 1999 and by an increase in tax credits for R&D and affordable housing.

The effective tax rate in the first nine months of fiscal 2005 included the positive effect of agreements with the IRS for fiscal 1996 to 2001.  In addition, the Company recorded positive benefits related to R&D tax credits on its fiscal 2004 federal and state income tax returns in excess of its original estimates.  Favorable benefits were partially offset by the negative effect of the non-deductibility of the write-off of acquired in-process R&D related to the acquisition of HDI in June 2004.

The Company filed petitions with the U.S. Tax Court in response to assertions by the IRS that the Company owed additional tax for fiscal 1996 through 2000.  See Note 11 to our condensed consolidated financial statements included in Part 1. “Financial Information” and Item 1. “Legal Proceedings” included in Part II. “Other Information.”

Financial Condition, Liquidity and Capital Resources

We have historically used a combination of cash flows from operations and equity and debt financing to support ongoing business activities, acquire or invest in critical or complementary technologies, purchase facilities and capital equipment, repurchase our common stock under our stock repurchase program, pay dividends and finance working capital.  Additionally, our investments in debt securities and in UMC stock are available for future sale.  The combination of cash, cash equivalents and short-term and long-term investments at December 31, 2005 totaled $1.7 billion compared to $1.6 billion at April 2, 2005.  As of December 31, 2005, we had cash, cash equivalents and short-term investments of $888.3 million and working capital of $1.1 billion.  As of April 2, 2005, cash, cash equivalents and short-term investments were $861.6 million and working capital was $1.2 billion.

Operating Activities - - During the first nine months of fiscal 2006, our operations generated net positive cash flow of $405.6 million, which was $163.4 million higher than the $242.2 million generated during the first nine months of fiscal 2005.  The positive cash flow from operations generated during the first nine months of fiscal 2006 was primarily from net income as adjusted for non-cash related items, a decrease in accounts receivable and increases in accounts payable and accrued liabilities.  These items were partially offset by increases in inventories, prepaid expenses and other current assets and in other assets.  Our inventory levels were $26.2 million higher at December

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31, 2005 compared to April 2, 2005.  The increase was primarily due to increased inventory in our new products to support the revenue growth.  Combined inventory days at Xilinx and distribution increased to 144 days at December 31, 2005 from 139 days at April 2, 2005.  The increases in prepaid expenses and other current assets and in other assets were primarily related to the second $50.0 million advance wafer purchase payment paid in September 2005 and $17.6 million investments in intellectual property and licenses.  In October 2004, the Company entered into an advanced purchase agreement with Toshiba Corporation (Toshiba) under which the Company paid Toshiba a total of $100.0 million in installments for advance payment of silicon wafers produced under the agreement.  The entire advance payment of $100.0 million (or any unused portion thereof) will be reduced by future wafer purchases from Toshiba and is fully refundable on or about December 2007 if Toshiba is not able to maintain ongoing production and quality criteria or if future wafer purchases do not exceed the total amount advanced.  Accounts receivable decreased by $71.2 million from the levels at April 2, 2005, due to strong collections during the first nine months of fiscal 2006 that were partially offset by increased shipments.  Days sales outstanding decreased to 29 days at December 31, 2005 from 50 days at April 2, 2005.

For the first nine months of fiscal 2005, the net positive cash flow from operations was primarily from net income, as adjusted for non-cash related items and a decrease in accounts receivable.  These items were partially offset by increases in inventories, prepaid expenses and other current assets and in other assets and a decrease in deferred income on shipments to distributors.  The increases in prepaid expenses and other current assets and in other assets were primarily related to the first $50.0 million advance wafer purchase payment paid to Toshiba in December 2004.

Investing Activities - Net cash provided by investing activities of $58.8 million during the first nine months of fiscal 2006 included net proceeds from the sale and maturity of available-for-sale securities of $127.5 million, which was partially offset by $44.6 million for purchases of property, plant and equipment and $24.1 million for other investing activities, primarily related to affordable housing credit investments.  Net cash used in investing activities of $95.2 million during the first nine months of fiscal 2005 included net purchases of available-for-sale securities of $33.0 million, $44.0 million for purchases of property, plant and equipment and $18.2 million for the acquisition of HDI.

Financing Activities - Net cash used in financing activities was $289.9 million in the first nine months of fiscal 2006 and consisted of $276.6 million for the acquisition of treasury stock and $73.0 million for dividend payments to stockholders, which were partially offset by $59.7 million of proceeds from the issuance of common stock under employee stock plans.  For the comparable fiscal 2005 period, net cash used in financing activities was $106.9 million and consisted of $102.2 million for the acquisition of treasury stock and $52.2 million for dividend payments to stockholders.  These items were partially offset by $47.4 million of proceeds from the issuance of common stock under employee stock plans.

Stockholders’ equity increased $18.7 million during the first nine months of fiscal 2006.  The increase was attributable to the $243.4 million in net income for the first nine months of fiscal 2006, the issuance of common stock under employee stock plans of $59.3 million, the related tax benefits associated with stock option exercises and the employee stock purchase plan of $68.9 million and noncash compensation expense of $735 thousand.  The increases were partially offset by the acquisition of treasury stock of $274.9 million, as adjusted for accrued and unsettled transactions, the payment of dividends to stockholders of $73.1 million, $2.9 million in unrealized losses on available-for-sale securities, net of deferred tax benefits, mainly from our investment in UMC, and the combination of cumulative translation adjustment and hedging transaction loss totaling $2.7 million.

Contractual Obligations

We lease some of our facilities and office buildings under operating leases that expire at various dates through February 2026.  See Note 12 to our condensed consolidated financial statements included in Part 1. “Financial Information” for a schedule of our operating lease commitments as of December 31, 2005.

In November 2005, Xilinx announced a $40.0 million investment in a new building in Singapore, our Asia regional headquarters.  The project is expected to be completed in June 2007.

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 31, 2005, we had approximately $84.2 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 31, 2005, the Company also has

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approximately $17.8 million of non-cancelable obligations to providers of electronic design automation software expiring at various dates through July 2008.

In the fourth quarter of fiscal 2005, the Company committed up to $20.0 million to acquire, in the future, rights to intellectual property.  License payments will be amortized over the useful life of the intellectual property acquired.

Off-Balance-Sheet Arrangements

As of December 31, 2005, we did not have any significant off-balance-sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

Summary of Liquidity and Capital Resources

On April 20, 2005, our Board of Directors declared an increase in the dividend rate on our common stock from $0.05 to $0.07 per common share for the first quarter of fiscal 2006.  The dividend was paid on June 1, 2005 to stockholders of record on May 11, 2005.  On July 20 and October 19, 2005, our Board of Directors declared cash dividends of $0.07 per common share for the second and third quarters of fiscal 2006 which were paid on September 7 and December 1, 2005, respectively, to stockholders of record on August 17 and November 17, 2005, respectively.  On January 18, 2006, our Board of Directors declared a cash dividend of $0.07 per common share for the fourth quarter of fiscal 2006 which is payable on March 1, 2006 to stockholders of record on February 8, 2006.  For fiscal 2005, the Board of Directors declared four quarterly common stock dividends of $0.05 per share each for a total of $0.20 per share for the entire fiscal year.  Our dividend policy could be impacted by, among other items, our views on potential future capital requirements relating to research and development, investments and acquisitions, legal risks, stock repurchase programs 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.  However, the factors affecting future results discussed below could affect our cash positions adversely.  We will continue to evaluate opportunities for investments to obtain additional wafer capacity, procurement of additional capital equipment and facilities, development of new products, and potential acquisitions of technologies or businesses that could complement our business.

Employee Stock Options

Our stock option program is a broad-based, long-term retention program that is intended to attract and retain talented employees and align stockholder and employee interests.  All of our employees participate in the plan.

Employee and Executive Option Grants
Year-to-Date as of December 31, 2005 and Full Year Fiscal 2005 and 2004

	2006 YTD		2005		2004
Net grants during the period as a% of outstanding shares	1.6	%	2.4	%	2.8	%
Grants to listed officers during the period as a% of total options granted	8.4	%	0		7.2	%
Grants to listed officers during the period as a% of outstanding shares	0.2	%	0		0.2	%
Cumulative options held by listed officers as a% of total outstanding options	9.5	%	10.4	%	11.5	%

Listed officers for fiscal 2006 are those listed in our 2005 proxy statement dated June 1, 2005 (defined as our Chief Executive Officer and each of the four other most highly compensated executive officers) and our Chief Financial Officer who joined the Company on June 27, 2005.  As disclosed in our fiscal 2005 proxy statement, the Company did not grant any options as part of its annual focal review process to any of its employees during the fiscal year ended April 2, 2005.  Options granted to employees as part of the annual focal review in calendar year 2005 were effective as of July 1, 2005.

All stock option grants are made after a review by, and with the approval of, the Compensation Committee of the Board of Directors. All members of the Compensation Committee are independent directors, as defined in the applicable rules for issuers traded on the NASDAQ National Market.  See the “Report Of The Compensation Committee of the Board of Directors for Fiscal Year 2005” appearing in the Company’s 2005 proxy statement dated June 1, 2005 for further information concerning the policies and procedures of the Company and the Compensation Committee regarding the use of stock options.

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General Option Information

			Options Outstanding
(Shares in thousands)	Shares Available for Options		Number of Shares		Weighted Average Exercise Price
April 3, 2004	28,707		58,123		$	27.13
Additional shares reserved	13,560		—		—
Granted	(9,810	)	9,810		$	37.12
Exercised	—		(5,993	)	$	8.75
Forfeited	1,297		(1,297	)	$	40.78
April 2, 2005	33,754		60,643		$	30.18
Granted	(7,535	)	7,535		$	25.67
Exercised	—		(3,922	)	$	11.38
Forfeited	2,072		(2,072	)	$	40.41
December 31, 2005	28,291		62,184		$	30.47

During the first nine months of fiscal 2006, we granted options to purchase approximately 7.5 million shares of our common stock to our employees.  The net options granted after forfeitures represented 1.6% of our total outstanding shares of approximately 350.0 million as of the beginning of fiscal 2006.  For additional information about our employee stock option plan activity for fiscal 2003 through 2005, please refer to the Company’s Form 10-K for the fiscal year ended April 2, 2005.

In-the-Money and Out-of-the-Money Option Information
As of December 31, 2005

(Shares in thousands)	Exercisable Shares	Unexercisable Shares	Total Shares	Weighted Average Exercise Price
In-the-Money	22,043	2,744	24,787	$	16.94
Out-of-the-Money (1)	23,833	13,564	37,397	$	39.44
Total Options Outstanding	45,876	16,308	62,184	$	30.47

(1)Out-of the-money options are those options with an exercise price equal to or above the closing price of $25.21 per share at December 31, 2005.

As of December 31, 2005, the total outstanding options held by listed officers amounted to 9.5% of the approximately 62.2 million outstanding options held by all employees.

Options Granted to Listed Officers
Year-to-Date as of December 31, 2005
Individual Grants

	Number of Securities Underlying	Percent of Total Options Granted to		Exercise Price Per	Expiration	Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Term (1)
	Option Grants	Employees		Share	Date	5%		10%
Total Listed Officers	635,000	8.4	%	$25.48-$25.66	06/27/15-07/01/15	$	10,198,029	$	25,843,809

(1)Potential realizable value is based on an assumption that the market price of Xilinx stock appreciates at annualized rates of 5% and 10% from the date of grant until the end of the ten-year option term.

For the first nine months of fiscal 2006, options granted to the listed officers amounted to 8.4% of the grants made to all employees.  Options granted to listed officers as a percentage of the total options granted to all employees vary from year to year.  For additional information about the compensation of our executive officers and stock option grants to listed officers, please refer to our 2005 proxy statement dated June 1, 2005.

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Options Exercises and Remaining Holdings of Listed Officers
Year-to-Date as of December 31, 2005
Individual Grants

	Shares Acquired	Value		Number of Shares Underlying Unexercised Options at Dec. 31, 2005		Value of Unexcercised In-the-Money Options at Dec. 31, 2005 (1)
	on Exercise	Realized		Exercisable	Unexercisable	Exercisable		Unexercisable
Total Listed Officers	1,000,775	$	19,242,686	4,672,552	1,265,604	$	22,374,599	$	398,466

(1)These amounts represent the difference between the exercise price and $25.21, the market price of Xilinx stock at December 31, 2005, for all the in-the-money options held by the listed officers.

Information as of December 31, 2005 regarding equity compensation plans approved and not approved by stockholders is summarized in the following table (shares in thousands):

	A	B		C
Plan Category	Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights	Weighted-average Exercise Price of Outstanding Options, Warrants and Rights		Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (excluding securities reflected in Column A)
Equity Compensation Plans Approved by Security Holders
1988 Stock Option Plan	6,473	$	10.60	0
1997 Stock Plan	55,481	$	32.84	26,103
1990 Employee Stock Purchase Plan	N/A	N/A		8,726
Total-Approved Plans	61,954	$	30.52	34,829
Equity Compensation Plans NOT Approved by Security Holders (1)
Supplemental Stock Option Plan	12	$	34.67	2,188
Total-All Plans	61,966	$	30.52	37,017

(1)In November 2000, the Company acquired RocketChips.  Under the terms of the merger, the Company assumed all of the stock options previously issued to RocketChips’ employees pursuant to four different stock option plans.  A total of approximately 807 thousand options were assumed by the Company.  Of this amount, a total of 218 thousand options, with an average weighted exercise price of $16.88, remained outstanding as of December 31, 2005.  These options are excluded from the above table.

Factors Affecting Future Results

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 ones the Company faces.  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.

The semiconductor industry is characterized by rapid technological change, intense competition and cyclical market patterns which contribute to create factors that may affect our future operating results including:

Market Demand

•increased dependence on turns orders (orders received and shipped within the same fiscal quarter);

•limited visibility of demand for products, especially new products;

•reduced capital spending by our customers;

•weaker demand for our products or those of our customers due to a prolonged period of economic uncertainty;

•excess inventory at Xilinx and within the supply chain including overbuilding of OEM products;

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•additional excess and obsolete inventories and corresponding write-downs due to a significant deterioration in demand;

•inability to manufacture sufficient quantities of a given product in a timely manner;

•inability to obtain manufacturing or test and assembly capacity in sufficient volume;

•inability to predict the success of our customers’ products in their markets;

•an unexpected increase in demand resulting in longer lead times that causes delays in customer production schedules;

•dependence on the health of the end markets and customers we serve;

Competitive Environment

•price and product competition, which can change rapidly due to technological innovation;

•major customers converting to ASIC or Application Specific Standard Product (ASSP) designs from Xilinx PLDs;

•faster than normal erosion of average selling prices;

•timely introduction of new products and ability to manufacture in sufficient quantities at introduction;

Technology

•lower gross margins due to product mix shifts and reduced manufacturing efficiency;

•failure to retain or attract specialized technical/management personnel;

•timely introduction of advanced manufacturing technologies;

•ability to safeguard the Company’s products from competitors by means of patents and other intellectual property protections;

•impact of new technologies which result in rapid escalation of demand for some products in the face of equally steep declines in demand for others;

•ability to successfully manage multiple foundry relationships;

Other

•changes in accounting pronouncements;

•dependence on distributors to generate sales and process customer orders;

•disruption in sales generation, order processing and logistics if a distributor materially defaults on a contract;

•impact of changes to current export/import laws and regulations;

•volatility of the securities market, particularly as it relates to the technology sector and our investment in UMC;

•unexpected product quality issues;

•global events impacting the world economy or specific regions of the world;

•parts shortages at our suppliers;

•failure of information systems impacting financial reporting;

•catastrophes that impact the ability of our supply chain to operate or deliver product; and

•higher costs associated with multiple foundry relationships.

We attempt to identify changes in market conditions as soon as possible; however, the dynamics of the market make prediction of and timely reaction to such events difficult.  Due to these and other factors, our past results, including those described in this report, are much less reliable predictors of the future than with companies in many older, more stable and mature industries.  Based on the factors noted herein, we may experience substantial fluctuations in future operating results.

Our results of operations are impacted by global economic and political conditions, dependence on new products, dependence on independent manufacturers and subcontractors, competition, intellectual property, potential new accounting pronouncements, Sarbanes-Oxley Section 404 compliance and litigation, each of which is discussed in greater detail below.

Potential Effect of Global Economic and Political Conditions

Sales and operations outside of the United States 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 and by changes in foreign currency exchange rates affecting those countries.  For example, we have sales and operations in Asia

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Pacific, Japan and Europe.  Past economic weakness in these markets adversely affected revenues, and such conditions may occur in the future.  Sales to all direct OEMs and distributors are denominated in U.S. dollars.  While the recent movement of the Euro and Yen against the U.S. dollar had no material impact to our business, increased volatility could impact our European and Japanese customers.  Currency instability 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 our foreign currency denominated costs, assets and liabilities.  Any or all of these factors could adversely affect our financial condition and results of operations in the future.

Our financial condition and results of operations are increasingly dependent on the global economy.  Any instability in worldwide economic environments occasioned for example, by political instability or terrorist activity could impact economic activity and could lead to a contraction of capital spending by our customers.  Additional risks to us include U.S. military actions, U.S. government spending on military and defense activities, economic sanctions imposed by the U.S. government, government regulation of exports, imposition of tariffs and other potential trade barriers, reduced protection for intellectual property rights in some countries and generally longer receivable collection periods.  Moreover, our financial condition and results of operations could be affected in the event of political conflicts or economic crises in countries where our main wafer providers, end customers and contract manufacturers who provide assembly and test services worldwide, are located.

Dependence on New Products

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.  The success of new product introductions is dependent upon several factors, including:

•timely completion of new product designs;

•ability to generate new 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 to circuit geometries on 90 nanometers and smaller;

•achieving acceptable yields;

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

•ability to obtain advanced packaging;

•availability of supporting software design tools;

•utilization of predefined IP cores of logic;

•industry acceptance; and

•successful deployment of electronic systems by our customers.

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 will 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.

Dependence on Independent Manufacturers and Subcontractors

During the first nine months of fiscal 2006, nearly all of our wafers were manufactured in Taiwan by UMC and in Japan by Toshiba and Seiko Epson Corporation (Seiko).  Terms with respect to the volume and timing of wafer production and the pricing of wafers produced by the semiconductor foundries are determined by periodic negotiations between Xilinx and these wafer foundries, which usually result in short-term agreements.  We are dependent on these foundries, especially UMC, which supplies the substantial majority of our wafers.  We rely on UMC to produce wafers with competitive performance and cost attributes, which include transitioning to advanced manufacturing process technologies and increased wafer sizes, producing wafers at acceptable yields, and delivering them in a timely manner.  We cannot guarantee that the foundries that supply our wafers will not experience

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manufacturing problems, including delays in the realization of advanced manufacturing process technologies.  In addition, greater demand for wafers produced by the foundries without an offsetting increase in foundry capacity, raises the likelihood of potential wafer price increases.

UMC’s foundries in Taiwan and Toshiba’s and Seiko’s foundries in Japan as well as many of our operations in California are centered in areas that have been seismically active in the recent past.  Should there be a major earthquake in our suppliers’ or our operating locations in the future, our operations, including our manufacturing activities, may be disrupted.  This type of disruption could result in our inability to ship products in a timely manner, thereby materially adversely affecting our financial condition and results of operations.  Additionally, disruption of operations at these foundries for any reason, including other natural disasters such as 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.

We are also dependent on subcontractors to provide semiconductor assembly, test and shipment services.  Any prolonged inability to obtain wafers with competitive performance and cost attributes, adequate yields or timely delivery, unavailability of or disruption in assembly, test or shipment services, or any 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 demand reducing net sales and negatively impacting our financial condition and results of operations.

Competition

Our PLDs compete in the logic integrated circuit (IC) industry, an industry that is intensely competitive and characterized by rapid technological change, increasing levels of integration, product obsolescence and continuous price erosion.  We expect increased competition from our primary PLD competitors, Altera Corporation (Altera) and Lattice Semiconductor Corporation (Lattice), from the ASIC market, which has been ongoing since the inception of field programmable gate arrays (FPGAs), and from new companies that may enter the traditional programmable logic market segment.  We believe that important competitive factors in the logic industry include:

•product pricing;

•time-to-market;

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

•field upgradability;

•adaptability of products to specific applications;

•ease of use and functionality of software design tools;

•functionality of predefined IP cores of logic;

•inventory management;

•access to leading-edge process technology;

•ability to provide timely customer service and support and

• ability to provide distinguishing product features such as embedded processing, multi-gigabit transceivers and digital signal processing.

Our strategy for expansion in the logic market includes continued introduction of new product architectures that address high-volume, low-cost applications as well as high-performance, high-density applications.  In addition, we anticipate continued price reductions proportionate with our ability to lower the cost for established products.  However, we may not be successful in achieving these strategies.

Other competitors include manufacturers of:

•high-density programmable logic products characterized by FPGA-type architectures;

•high-volume and low-cost FPGAs as programmable replacements for standard cell or custom gate array based ASICs and ASSPs;

•ASICs and ASSPs with incremental amounts of embedded programmable logic;

•high-speed, low-density complex programmable logic devices (CPLDs);

•ASIC products including standard cell, structured ASIC and custom gate array products;

•products with embedded processors;

•products with embedded multi-gigabit transceivers; and

•other new or emerging programmable logic products.

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

The benefits of programmable logic have attracted a number of competitors to the market 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 design tools that support the full range of our IC products.  We believe that automation and ease of design are significant competitive factors in the PLD market segment.

In conjunction with Xilinx’s settlement of the patent litigation with Altera in July 2001, both companies entered into a royalty-free patent cross license agreement for many of each company’s patents through July 2006.

Intellectual Property

We rely upon patent, copyright, trade secret, mask work and trademark laws to protect our intellectual property.  We cannot provide assurance that such intellectual property rights can be successfully asserted in the future or will not be invalidated, circumvented or challenged.  From time to time, third parties, including our competitors, have asserted patent, copyright and other intellectual property rights to technologies that are important to us.  Third parties may assert infringement claims against us in the future, assertions by third parties may result in costly litigation and we may not prevail in such litigation or be able to license any valid and infringed patents from third parties on commercially reasonable terms.  Litigation, regardless of its outcome, could result in substantial costs and diversion of our resources.  Any infringement claim or other litigation against us or by us could materially adversely affect our financial condition and results of operations.

Potential Effect of New Accounting Pronouncements

There may be potential new accounting pronouncements or regulatory rulings, which may have an impact on our future financial condition and results of operations.  In December 2004, the FASB issued SFAS No. 123(R), “Share-Based Payment: An Amendment of FASB Statements No. 123 and 95.”  SFAS 123(R) eliminates the ability to account for share-based compensation transactions using APB 25, “Accounting for Stock Issued to Employees,” and will instead require companies to recognize compensation expense, using a fair-value based method, for costs related to share-based payments including stock options and employee stock purchase plans. The Company will be required to implement the standard no later than the quarter beginning April 2, 2006.  The adoption of SFAS 123(R) will have a material adverse impact on our results of operations.

See Note 2 to our condensed consolidated financial statements, included in Part 1. “Financial Information,” for additional information about new accounting pronouncements.

Sarbanes-Oxley Section 404 Compliance

We are now subject to the ongoing internal control provisions of Section 404 of the Sarbanes-Oxley Act of 2002 (the Act). Our controls necessary for continued compliance with the 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.  Further, our internal control effectiveness may be impacted if we are unable to retain sufficient skilled finance and accounting personnel, especially in light of the increased demand for such personnel among publicly traded companies.

Litigation

See Part II, Item 1.   “Legal Proceedings.”

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk

Our exposure to interest rate risk relates primarily to our investment portfolio, which consists of fixed income securities with a fair value of approximately $1.4 billion at December 31, 2005.  Our primary aim with our investment portfolio is to invest available cash while preserving principal and meeting liquidity needs.  The portfolio includes tax-advantaged municipal bonds, tax-advantaged auction rate securities, commercial paper, corporate bonds, government agency bonds and U.S. Treasury securities.  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.  These

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securities are subject to interest rate risk and will decrease in value if market interest rates increase.  A hypothetical 10% increase or decrease in market interest rates compared to interest rates at December 31, 2005 would not materially affect the fair value of our available-for-sale securities and the impact on our investment portfolio would have been less than $12.0 million.

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 and effective as hedges of anticipated transactions, for which a firm commitment has been attained, are deferred and included in the basis of the transaction 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 will enter into forward currency exchange contracts to hedge our overseas operating expenses and other liabilities when deemed appropriate.  As of December 31, 2005, we had approximately U.S. $27.4 million of outstanding forward currency exchange contracts against the Euro, approximately U.S. $4.5 million of outstanding forward currency exchange contracts against the Japanese Yen and approximately U.S. $16.9 million of outstanding forward currency exchange contracts against the Singapore dollar.  The net unrealized gain or loss which approximates the fair market value of the above contracts was immaterial at December 31, 2005.  The contracts expire at various dates between January 2006 and June 2007.

Our investments in several subsidiaries are recorded in currencies other than the U.S. dollar.  As these foreign currency denominated investments 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.  In addition, as our subsidiaries maintain investments denominated in other than local currencies, exchange rate fluctuations will occur.  A hypothetical 10% favorable or unfavorable change in foreign currency exchange rates compared to rates at December 31, 2005 would have affected the value of our investments in foreign currency denominated subsidiaries by less than $12.0 million.

Equity Security Price Risk

Our investment in marketable equity securities at December 31, 2005 consists almost entirely of our investment in UMC, which consists of shares of common stock, the value of which is determined by the Taiwan Stock Exchange.  This value is converted from new Taiwan dollars into U.S. dollars and included in our determination of the change in the fair value of our investment in UMC which is accounted for under the provisions of SFAS No. 115.  The market value of our investment in UMC was approximately $242.4 million at December 31, 2005 as compared to our adjusted cost basis of approximately $239.0 million.  The value of our investment in UMC would be materially impacted if there was a significant change in the market price of the UMC shares.  See Note 6 to our condensed consolidated financial statements, included in Part 1. “Financial Information,” for additional information about our UMC investment.

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 Securities Exchange Act of 1934, as amended, 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 the Company’s 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

30

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.

We evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as of the end of the period covered by this Quarterly Report on Form 10-Q (Controls Evaluation Date), under the supervision and with the participation of management, including our CEO and CFO.  In the course of the controls evaluation, we sought to identify data errors, control problems or acts of fraud, if any, and confirm that appropriate corrective action, including process improvements were being undertaken.  Based upon that evaluation, our CEO and CFO concluded that, subject to the limitations noted above, as of the end of the period covered by this Quarterly Report, the Company’s disclosure controls and procedures are effective to provide reasonable assurance that the material information related to the Company is made known to management and that the Company’s financial statements and other disclosures in our SEC reports are reliable.

Part II.  Other Information

Item 1.  Legal Proceedings

Internal Revenue Service

The IRS audited and issued proposed adjustments to the Company for fiscal 1996 through 2001.  The Company filed petitions with the U.S. Tax Court in response to assertions by the IRS relating to fiscal 1996 through 2000.  In addition, the IRS proposed adjustments to the Company’s net operating loss for fiscal 2001. To date, all issues have been settled with the IRS except as described in the following paragraph.

On August 30, 2005 the Tax Court issued its opinion concerning whether the value of stock options must be included in the cost sharing agreement with Xilinx Ireland.  The Tax Court agreed with the Company that no amount for stock options is to be included in the cost sharing agreement.   Thus the court determined that the Company has no tax, interest, or penalties due for this issue.  The IRS has not indicated whether it will appeal the decision to the Ninth Circuit Court of Appeals.

Other than as stated above, we know of no legal proceedings contemplated by any governmental authority or agency against the Company.

Rep’tronic

The Company allowed sales representative agreements with three related European entities, Rep’tronic S.A., Rep’tronic España, and Acsis S.r.l., a Rep’tronic Company (collectively Rep’tronic) to expire pursuant to their terms on March 31, 2003.  Rep’tronic pursued claims allegedly arising from the expiration of these contracts against Xilinx Ireland and Xilinx Sarl in the High Court of Ireland, the Labor Court of Versailles (France) and the Commercial Court of Versailles (France).  The proceeding in the French Commercial Court was decided in favor of the Company in June 2005.   In November 2005, the Company settled all outstanding litigation with Rep’tronic.  The settlement payment was provided for through prior accruals through the second quarter of fiscal 2006 under SFAS 5, “Accounting for Contingencies”.

Patent Litigation

On October 17, 2005, a patent infringement lawsuit was filed by Lizy K. John (John) against Xilinx, Inc. in the U. S. District Court for the Eastern District of Texas, Marshall Division.  John seeks an injunction, unspecified damages and attorneys’ fees.  The Company filed its answer on January 2, 2006, denying John’s allegations and including a counterclaim for declaratory judgment.  John filed her reply on January 20, 2006.  As of December 31, 2005, no trial date had been set, the initial case management conference had not been scheduled, and discovery had not commenced.  Neither the likelihood, nor the amount of any potential exposure to the Company is estimable at this time.

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Other Matters

From time to time, we are involved in various disputes and litigation matters that arise in the ordinary course of business.  These include disputes and lawsuits related to intellectual property, mergers and acquisitions, licensing, contract law, distribution arrangements and employee relations matters.  Periodically, we review the status of each significant matter and assess 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, we accrue 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, we reassess the potential liability related to pending claims and litigation and may revise estimates.

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

Issuer Purchases of Equity Securities

The following table summarizes the Company’s repurchase of its common stock during the third fiscal quarter of 2006.  See Note 7 to our condensed consolidated financial statements included in Part 1. “Financial Information” for information regarding our stock repurchase plans.

Period (In thousands, except per share amounts)	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
October 2 to November 5, 2005	1,681	$	25.05	1,681	$	281,770
November 6 to December 3, 2005	1,480	$	25.05	1,480	$	244,704
December 4 to December 31, 2005	1,829	$	25.05	1,829	$	198,888
Total for the Quarter	4,990	$	25.05	4,990

During the third quarter of fiscal 2006, the Company repurchased a total of 5.0 million shares of its common stock for $125.0 million.  On April 21, 2005, we announced a repurchase program of up to $350.0 million of common stock.  Through December 31, 2005, the Company had repurchased $151.1 million of the $350.0 million of common stock approved for repurchase under the current program.  This share repurchase program has no stated expiration date.

Item 6.  Exhibits

(a)Exhibits

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.

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

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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:	February 3, 2006	/s/ Jon A. Olson
		Jon A. Olson
		Vice President, Finance and
		Chief Financial Officer
		(as principal accounting and financial
		officer and on behalf of Registrant)

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EX-31.1

Exhibit 31.1

XILINX, INC.
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Willem P. Roelandts, President, Chief Executive Officer and Chairman of the Board of Directors of Xilinx, Inc. (the “Registrant”) certify that:

1.I have reviewed this quarterly report on Form 10-Q of the Registrant;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4.The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5.The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of Registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: February 3, 2006	/s/ Willem P. Roelandts
	Willem P. Roelandts
	President, Chief Executive Officer and
	Chairman of the Board of Directors

EX-31.2

Exhibit 31.2

XILINX, INC.

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jon A. Olson, Vice President, Finance and Chief Financial Officer of Xilinx, Inc. (the “Registrant”) certify that:

1.I have reviewed this quarterly report on Form 10-Q of the Registrant;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4.The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5.The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of Registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: February 3, 2006	/s/ Jon A. Olson
	Jon A. Olson
	Vice President, Finance and
	Chief Financial Officer

EX-32.1

Exhibit 32.1

XILINX, INC.

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Xilinx, Inc. (the “Company”) on Form 10-Q for the period ended December 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Willem P. Roelandts, President, Chief Executive Officer and Chairman of the Board of Directors of the Company, certify, pursuant to Title 18, Chapter 63, Section 1350 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1)The Report fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 3, 2006	/s/ Willem P. Roelandts
	Willem P. Roelandts
	President, Chief Executive Officer and
	Chairman of the Board of Directors

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Xilinx, Inc. and will be retained by Xilinx, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

XILINX, INC.

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Xilinx, Inc. (the “Company”) on Form 10-Q for the period ended December 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jon A. Olson, Vice President, Finance and Chief Financial Officer of the Company, certify, pursuant to Title 18, Chapter 63, Section 1350 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1)The Report fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 3, 2006	/s/ Jon A. Olson
	Jon A. Olson
	Vice President, Finance and
	Chief Financial Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Xilinx, Inc. and will be retained by Xilinx, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.