NVIDIA 2004 Annual Report Download - page 43

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For the purpose of the pro forma calculation the fair value of shares purchased under our Employee Stock Purchase Plan, or the
Purchase Plan, has been estimated at the date of purchase using the Black−Scholes option pricing model with the following
assumptions:
Year Ended Year Ended Year Ended
January 25, January 26, January 27,
2004 2003 2002
Weighted average expected life of stock options (in
months) 9 10 6
Risk free interest rate 1.7% 3.7% 4.7%
Volatility 80% 88% 83%
Dividend yield −− −− −−
47
NVIDIA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
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 25, 2004, January 26, 2003 and January 27, 2002 was approximately $3.76, $14.27 and $8.79, respectively.
Net Income Per Share
Basic net income per share is computed using the weighted average number of common shares outstanding during the period. Diluted
net income per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding
during the period, using the as−if−converted method for the convertible debentures and the treasury stock method for stock options.
Under the as−if−converted method and the treasury stock method, the convertible debentures and the effect of stock options
outstanding, respectively, are not included in the computation of diluted net income per share for periods when their effect is
anti−dilutive. The following is a reconciliation of the numerators and denominators of the basic and diluted net income per share
computations for the periods presented.
Year Ended Year Ended Year Ended
January 25, January 26, January 27,
2004 2003 2002
(In thousands, except per share data)
Numerator:
Numerator for basic and diluted net income per share $ 74,419 $ 90,799 $ 176,924
Denominator:
Denominator for basic net income per share, weighted average shares 160,924 153,513 143,015
Effect of dilutive securities:
Stock options outstanding 11,783 14,880 28,059
Denominator for diluted net income per share, weighted average shares 172,707 168,393 171,074
Net income per share:
Basic net income per share $ 0.46 $ 0.59 $ 1.24
Diluted net income per share $ 0.43 $ 0.54 $ 1.03
Diluted net income per share does not include the effect of the following anti−dilutive common equivalent shares:
Year Ended Year Ended Year Ended
January 25, January 26, January 27,
2004 2003 2002
(In thousands)
Stock options outstanding 7,906 5,892 2,504
Convertible subordinated debentures (equivalent common shares upon
assumed conversion) −− 6,472 6,472