While the rest of the industry was moving towards layoffs and shaking-off excessive inventory, Xilinx was busy innovating, collaborating, and introducing new products to market. Unlike many of our counterparts, Xilinx viewed the downturn as an opportunity to focus on research and development, streamline operations, and deliver new products that would change the FPGA landscape.

This last year, Xilinx decisively separated itself from our competition. For the first time in our history, we secured over 50% of the PLD market share and are bigger than all other public PLD companies combined. We avoided layoffs and were ranked by Fortune magazine as the sixth best company to work for.

Through the power of innovation and partnerships, Xilinx also took the FPGA-based value chain to a new level. By teaming with technology leaders in silicon fabrication, design automation, system level tools, IP, and design services, we delivered a complete value chain and strengthened our position as a strategic partner for our customers. Delivering this complete value chain enables the fastest innovation while reducing total development and system costs for our customers. It also reduces time to market and increases time in market for our customer's products.

In March 2002, through partnering with industry leaders IBM, WindRiver Systems, and Conexant, Xilinx delivered the Virtex-II Pro™ programmable system solution. The solution is the first of its kind and is the most flexible tool ever invented for a designer. The Virtex-II Pro FPGA includes programmable logic fabric with high-speed embedded PowerPC processors and integrated 3.125 gigabit RocketIO™ serial transceivers supported by leading design tools. Recent additions to the family and lower price points have now made the Virtex-II Pro solution the de-facto standard for all programmable logic users.

The Virtex-II Pro solution responds to the issues facing design teams and their corporations. By delivering both high-performance processing and high bandwidth connectivity on a single device, many design challenges associated with integration, high-speed interfacing, high performance processing, and new design methodologies are effectively solved. The rapid rate of change in technology and standards demands a solution that is completely flexible and reduces inventory risks and NRE costs - the Virtex-II Pro solution delivers.

Xilinx is a company built on delivering maximum customer value and ongoing innovation throughout all of our product lines. In this last year alone, Xilinx revamped all of its products from the new Spartan®-IIE cost-optimized FPGA solution to the CoolRunner®-II RealDigital CPLD solution, the Virtex-II Pro platform for programmable systems, and the Virtex®-II EasyPath solution for cost management. We also introduced the world's fastest and most productive software tool suite with our ISE 4.2i software release, numerous intellectual property cores, and the technical training necessary to decrease time-to-knowledge for the rapid assimilation of this new technology. We continue to focus on raising the bar by adding more value in every category of the value chain.

Through the years, Xilinx has evolved into a solutions company rather than remaining just a chip company. We can only be better tomorrow than we are today by working closely with our customers and anticipating their needs. Xilinx's job is to continue to expand our capabilities and our partnerships, so we can continue to be a strategic partner for our client companies.

Xilinx is an innovation engine and our employees are the keys to our innovation. Such innovation requires personnel policies that allow employees to make their own decisions and take risks. Our company values and corporate culture promote teamwork and very open communication. We know that keeping employees satisfied leads directly to innovation, customer satisfaction, and ultimately, increased profits. Our employees are inspired and know they make a real difference.

This unique work environment has resulted in breakthrough technology, marketing and community achievements. For example, Xilinx continues to support local schools through our Stock for Students program and made a $1 million donation to the American Red Cross. Also, Xilinx was the first semiconductor company to simulcast training in North America and Europe through industry events like Programmable World 2002.

With a combination of innovative products, world-class partners, inspired employees and the recognition of the balance between business and community, our clients have taken Xilinx solutions, management, and employees to heart. This is a reminder that good people ultimately do come in first when they are inspired and empowered to be leaders.