NVIDIA 2003 Annual Report Download - page 46

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NVIDIA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1—Organization and Significant Accounting Policies
Organization
NVIDIA Corporation and subsidiaries (the “Company”) designs, develops and markets 3D graphics and
media communication processors and related software for PCs, workstations and digital entertainment platforms.
The Company operates in one industry segment in the United States, Asia and Europe. In April 1998, the
Company was reincorporated as a Delaware corporation.
Reclassifications
Certain prior year balance sheet and income statement balances were reclassified to conform to the current
period presentation.
Principles of Consolidation
The consolidated financial statements include the accounts of NVIDIA Corporation and its wholly owned
subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the recorded amounts of assets and liabilities, the
disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with a maturity of three months or less at
the time of purchase to be cash equivalents. As of January 26, 2003, the Company’s cash and cash equivalents
were $347.0 million, which consists of $192.8 million invested in money market funds.
Marketable Securities
Marketable securities consist of highly liquid investments with a maturity of greater than three months when
purchased. In accordance with Statement of Financial Accounting Standards No. 115 (“SFAS No. 115”),
Accounting for Certain Investments in Debt and Equity Securities, the Company has classified all marketable
securities as available-for-sale, as the Company’s intention is to convert them into cash for operations. Such
securities are reported at fair value, with unrealized gains and losses, net of taxes, excluded from earnings and
shown separately as a component of accumulated other comprehensive income within stockholders’ equity.
Interest earned on marketable securities is included in interest income. Realized gains and losses on the sale of
marketable securities are determined using the specific-identification method.
Inventories
Inventories are stated at the lower of cost on a weighted average basis, or market. Write-downs to reduce the
carrying value of obsolete, slow moving and non-usable inventory to net realizable value are charged to cost of
revenues.
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