NVIDIA 2003 Annual Report Download - page 52

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NVIDIA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
As permitted under Statement of Financial Accounting Standards No. 123 (“SFAS No.123”), Accounting for
Stock-Based Compensation, the Company has elected to follow Accounting Principles Board Opinion No. 25 and
related Interpretations in accounting for stock-based awards to employees. Compensation cost for the Company’s
stock-based compensation plans as determined consistent with SFAS No. 123, would have decreased net income
to the pro forma amounts indicated below:
Year Ended
January 26,
2003
Year Ended
January 27,
2002
Year Ended
January 28,
2001
(in thousands, except per share data)
Net income, as reported ................................. $ 90,799 $176,924 $ 98,469
Add: Stock option exchange expense included in reported net
income, net of related tax effects ........................ 37,285 — —
Less: Compensation expense determined under fair value based
method for stock options exchanged on October 25, 2002, net
of related tax effects (167,714) — —
Less: Stock-based employee compensation expense determined
under fair value based method for all awards, net of related tax
effects ............................................... (37,698) (89,274) (30,735)
Pro forma net income (loss) .............................. $ (77,328) $ 87,650 $ 67,734
Basic net income per share .............................. $ 0.59 $ 1.24 $ 0.75
Basic net income (loss) per share—pro forma ................ $ (0.50) $ 0.61 $ 0.52
Diluted net income per share ............................. $ 0.54 $ 1.03 $ 0.62
Diluted net income (loss) per share—pro forma .............. $ (0.50) $ 0.51 $ 0.43
For the purpose of the pro forma calculation the fair value of shares purchased under the Company’s
Employee Stock Purchase Plan (the “Purchase Plan”) has been estimated at the date of purchase using the
Black-Scholes option pricing model with the following assumptions:
Year Ended
January 26,
2003
Year Ended
January 27,
2002
Year Ended
January 28,
2001
Weighted average expected life (in months) ................. 10 6 8
Risk free interest rate ................................... 3.7% 4.7% 6.2%
Volatility ............................................ 88% 83% 85%
Dividend yield ........................................ — — —
For the purpose of the pro forma calculation the weighted-average fair value of shares purchased under the
Purchase Plan during the year ended January 26, 2003, January 27, 2002 and January 28, 2001 was
approximately $14.27, $8.79 and $7.04, respectively.
50