NVIDIA 2006 Annual Report Download - page 71

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NVIDIA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 − Organization and Summary of Significant Accounting Policies
Our Company
NVIDIA Corporation is the worldwide leader in programmable graphics processor technologies. Our products enhance the
end−user experience on consumer and professional computing devices. We have four major product−line operating segments:
graphics processing units, or GPUs, media and communications processors, or MCPs, Handheld GPUs, and Consumer Electronics.
Our GPU Business is composed of products that support desktop personal computers, or PCs, notebook PCs and professional
workstations; our MCP Business is composed of NVIDIA nForce products that operate as a single−chip or chipset that can off−load
system functions, such as audio processing and network communications, and perform these operations independently from the host
central processing unit, or CPU; our Handheld GPU Business is composed of products that support handheld personal digital
assistants, cellular phones and other handheld devices; and our Consumer Electronics Business is concentrated in products that support
video game consoles and other digital consumer electronics devices and is composed of our contractual arrangements with Sony
Computer Entertainment, or SCE, to jointly develop a custom GPU incorporating our next−generation GeForce GPU and SCE's
system solutions in SCE's PlayStation3, sales of our Xbox−related products, revenue from our license agreement with Microsoft
relating to the successor product to their initial Xbox gaming console, the Xbox360, and related devices, and digital media processor
products. We were incorporated in California in April 1993 and reincorporated in Delaware in April 1998. Our headquarter facilities
are in Santa Clara, California.
Fiscal year
We operate on a 52 or 53−week year, ending on the Sunday nearest January 31. Fiscal 2006 and 2004 were 52−week
years, compared to fiscal 2005 which was a 53−week year.
Reclassifications
Certain prior fiscal year balances were reclassified to conform to the current fiscal year presentation.
Principles of Consolidation
Our 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 accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent
assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates. On an on−going basis, we evaluate our estimates, including those related to
revenue recognition, accounts receivable, inventories, income taxes and contingencies. These estimates are based on historical facts
and various other assumptions that we believe are reasonable.
Cash and Cash Equivalents
We consider all highly liquid investments purchased with an original maturity of three months or less at the time of purchase to be
cash equivalents. As of January 29, 2006, our cash and cash equivalents were $551.8 million, which includes $256.6 million invested
in money market funds.
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