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Table of Contents NVIDIA CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Fair Value Determination
In determining the estimated fair value of the elements of the License Agreement, we assumed the highest and best use of each element from a market
participant perspective. The inputs and assumptions used in our valuation included projected revenue, royalty rates, discount rates, useful lives and income tax
rates, among others. The development of a number of these inputs and assumptions in the model required a significant amount of management judgment and
is based upon a number of factors, including the selection of industry comparables, royalty rates, market growth rates and other relevant factors. Changes in
any number of these assumptions may have had a substantial impact on the estimated fair value of each element. These inputs and assumptions represent
management’s best estimate at the time of the transaction.
Note 5 – Net Income (Loss) Per Share
The following is a reconciliation of the numerators and denominators of the basic and diluted net income (loss) per share computations for the periods
presented:
Year Ended
January 29,
2012 January 30,
2011 January 31,
2010
(In thousands, except per share data)
Numerator:
Net income (loss) $ 581,090 $ 253,146 $ (67,987)
Denominator:
Denominator for basic net income (loss) per share, weighted average shares 603,646 575,177 549,574
Effect of dilutive securities:
Equity Awards outstanding 12,725 13,507 —
Denominator for diluted net income (loss) per share, weighted average shares 616,371 588,684 549,574
Net income (loss) per share:
Basic net income (loss) per share $ 0.96 $ 0.44 $ (0.12)
Diluted net income (loss) per share $ 0.94 $ 0.43 $ (0.12)
Potentially dilutive securities excluded from income per diluted share because their effect would have been anti-
dilutive
22,617 24,646 29,313
Note 6 - 3dfx
During fiscal year 2002, we completed the purchase of certain assets from 3dfx Interactive, Inc., or 3dfx, for an aggregate purchase price of
approximately $74.2 million. On December 15, 2000, NVIDIA Corporation and one of our indirect subsidiaries entered into an Asset Purchase Agreement, or
the APA, which closed on April 18, 2001, to purchase certain graphics chip assets from 3dfx.
In October 2002, 3dfx filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Northern District of California. In March
2003, the Trustee appointed by the Bankruptcy Court to represent 3dfx’s bankruptcy estate served his complaint on NVIDIA. The Trustee’s complaint
asserted claims for, among other things, successor liability and fraudulent transfer and sought additional payments from us. In early November 2005,
NVIDIA and the Official Committee of Unsecured Creditors, or the Creditors’ Committee, agreed to a Plan of Liquidation of 3dfx, which included a
conditional settlement of the Trustee’s claims against us. This conditional settlement was subject to a confirmation process through a vote of creditors and the
review and approval of the Bankruptcy Court. The conditional settlement called for a payment by NVIDIA of approximately $30.6 million to the 3dfx estate.
Under the settlement, $5.6 million related to various administrative expenses and Trustee fees, and $25.0 million related to the satisfaction of debts and
liabilities owed to the general unsecured creditors of 3dfx. Accordingly, during the three month period ended October 30, 2005, we recorded $5.6 million as a
charge to settlement costs and $25.0 million as additional purchase price for 3dfx. The Trustee advised that he intended to object to the settlement.
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