Xilinx Inc. (NASDAQ:XLNX) Q3 2015 Earnings Conference Call - Final Transcript

Jan 21, 2015 • 05:00 pm ET

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Xilinx Inc. (NASDAQ:XLNX) Q3 2015 Earnings Conference Call - Final Transcript

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Presentation
Operator
operator

Good afternoon. My name is John, and I will be your conference operator. I would like to welcome everyone to the Xilinx Third Quarter Fiscal Year 2015 Earnings Release Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions)

I would now like to turn the call over to Rick Muscha.

Executive
Rick Muscha

Thank you, and good afternoon. With me are Moshe Gavrielov, CEO and Jon Olson, CFO. We'll provide a financial and business review of the December quarter, and then we'll open the call for questions.

(Forward-Looking Cautionary Statements)

This conference call is open to all and is being webcast live. It can be accessed from our Xilinx Investor Relations Web site. Let me now turn the call over to Jon Olson.

Executive
Jon Olson

Thank you, Rick. Profitability remained strong during the quarter, but sales were lower than anticipated declining 2% during the December quarter. The primary weakness was driven by broadcast and wireless communications end-markets. 28-nanometer sales represented one of the bright spots of the quarter with sales increasing nearly 20% sequentially. All members of this product family grew with Zynq, Virtex and Artix all posting double-digit growth rates.

From an end-market perspective, sales to communications customers declined 3% sequentially with flat wired sales and a decline in wireless sales.Wireless sales were impacted by weaker sales from non-China regions, while our China wireless business increased in line with expectations. Industrial and aerospace and defense sales increased as expected with strong defense sales offsetting declines in industrial, scientific and medical.

Broadcast, consumer and automotive sales declined due to weaker broadcast sales, which were driven by weak purchasing activity from a couple of large customers. Automotive sales were better than expected as several new advanced driver assistance programs began to ramp. In terms of linearity, the month of October and November were in line with our expectations and the month of December progressively weakened. Turns

Executive
Unidentified Speaker

were 44% for the quarter.Gross margin of 69.7% was better than expected as a result of customer and product mix. Total operating expenses were $224 million, including $2 million of amortization related expenses. This was $6 million lower than guided resulting in operating income of 32%. Other income and expense was a net expense of $4 million better than forecasted, mainly due to higher interest income from our investment portfolio.

Net income for the quarter was $168 million or $0.62 per share including a $0.02 per diluted share benefit primarily related to the reinstatement of the R&D tax credit. Operating cash flow for the September quarter -- the December quarter was $291 million before $6 million in CapEx. Strong cash flow during the quarter was positively impacted by a net improvement in working capital led by the timing impact of accounts receivable. Diluted shares for the quarter were 274 million shares. This was a bit higher than forecasted as a result of the higher stock price.

There was a 7.8 million share dilutive effect