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FORM 10−K
NVIDIA CORP − NVDA
Filed: March 16, 2007 (period: January 28, 2007)
Annual report which provides a comprehensive overview of the company for the past year

Table of contents

  • Page 1
    FORM 10âˆ'K NVIDIA CORP âˆ' NVDA Filed: March 16, 2007 (period: January 28, 2007) Annual report which provides a comprehensive overview of the company for the past year

  • Page 2
    ... SUPPLEMENTARY DATA CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE CONTROLS AND PROCEDURES ITEM 9A. ITEM 9B. OTHER INFORMATION PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE ITEM 11. EXECUTIVE COMPENSATION ITEM 12. SECURITY OWNERSHIP...

  • Page 3
    EXâˆ'21.1 (FY 2007 SUBSIDIARIES) EXâˆ'23.1 (FY 2007 PWC CONSENT) EXâˆ'31.1 (FY 2007 302 CERTIFICATION OF CEO) EXâˆ'31.2 (FY 2007 302 CERTIFICATION OF CFO) EXâˆ'32.1 (FY 2007 906 CERTIFICATION OF CEO) EXâˆ'32.2 (FY2007 906 CERTIFICATION OF CFO)

  • Page 4
    ... 2701 San Tomas Expressway Santa Clara, California 95050 (408) 486âˆ'2000 (Address, including zip code, and telephone number, including area code, of principal executive offices) Securities registered pursuant to Section 12(b) of the Act: Title of each class Common Stock, $0.001 par value per share...

  • Page 5
    ... closing sales price of the registrant's common stock as reported by the NASDAQ Global Select Market, on July 30, 2006). Shares of common stock held by each current executive officer and director and by each person who is known by the registrant to own 5% or more of the outstanding common stock have...

  • Page 6
    ...and Supplementary Data Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Controls and Procedures Other Information PART III Item 10. Item 11. Item 12. Item 13. Item 14. Directors, Executive Officers and Corporate Governance Executive Compensation Security Ownership...

  • Page 7
    ... concentrated in products that support video game consoles and other digital consumer electronics devices. We were incorporated in California in April 1993 and reincorporated in Delaware in April 1998. Our headquarter facilities are in Santa Clara, California. Our Internet address is www.nvidia.com...

  • Page 8
    ... Digital Video Disc, or HD DVD, or Bluâˆ'ray movies. In November 2006, we launched the GeForce 8800, the industry's first GPU to support the new Microsoft DirectX 10 Application Programming Interface, or API. DirectX 10 is a new API for the Microsoft Windows Vista operating system, or Vista...

  • Page 9
    ... result in high performance and long battery life. These technologies enhance visual display capabilities, improve connectivity, and minimize chip and systemâˆ'level power consumption. NVIDIA GoForce products can be found in multimedia cellular phones, PDAs, and other handheld devices. In March 2006...

  • Page 10
    ..., nonâˆ'linear video editing, scientific and medical visualization, general purpose business and financial trading. NVIDIA Quadro products are fully certified by several software developers for professional workstation applications and are designed to deliver the graphics performance and precision...

  • Page 11
    ... our PC OEMs, ODMs, system builders, motherboard and addâˆ'in board manufacturers, and cellular phone and consumer electronics OEMs, to build products that deliver stateâˆ'ofâˆ'theâˆ'art features, performance, compatibility and power efficiency while maintaining competitive pricing and profitability...

  • Page 12
    ... leading supplier of performance GPUs, MCPs, and handheld GPUs for PCs, handheld devices and consumer electronics platforms. Our sales and marketing teams work closely with each industry's respective OEMs, ODMs, system integrators, motherboard manufacturers, addâˆ'in board manufacturers and industry...

  • Page 13
    ...customers from our thirdâˆ'party warehouse in Hong Kong. Generally, these manufacturers assemble and test the boards based on our design kit and test specifications, and then ship the products to retailers, system integrators or OEMs as motherboard and addâˆ'in board solutions. Inventory and Working...

  • Page 14
    ...in this market are performance, breadth of product offerings, access to customers and distribution channels, backwardâˆ'forward software support, conformity to industry standard APIs manufacturing capabilities, price of processors and total system costs of addâˆ'in boards or motherboards. We believe...

  • Page 15
    ... PDAs, 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 revenue from our contractual arrangements with SCE to jointly develop a custom GPU...

  • Page 16
    ... Officer, Senior Vice President and Corporate Controller. Mr. Burkett holds B.S. and M.B.A. degrees from the University of Arizona. Ajay K. Puri joined NVIDIA in December 2005 as Senior Vice President, Worldwide Sales. Prior to NVIDIA, he held positions in sales, marketing, and general management...

  • Page 17
    ...of the Board, with the assistance of outside legal counsel, was conducting a review of our stock option practices covering the time from NVIDIA's initial public offering in 1999, our fiscal year 2000, through June 2006. The Audit Committee reached the conclusion that incorrect measurement dates were...

  • Page 18
    ... dependent on the performance of our executive officers and key employees. None of our executive officers or employees is bound by an employment agreement, meaning our relationships with our executive officers and employees are at will. We do not have "key person" life insurance policies on any of...

  • Page 19
    ... lost revenue, cause a loss in market share or damage our reputation. Because we order materials in advance of anticipated customer demand our ability to reduce our inventory purchase commitments quickly in response to any revenue shortfalls is limited. Substantially all of our sales are made on the...

  • Page 20
    ... and future products chosen for hardware components or subassemblies designed by PC OEMs, ODMs, and addâˆ'in board and motherboard manufacturers, will aid our future success. Our OEM, ODM, and addâˆ'in board and motherboard manufacturers' customers typically introduce new system configurations as...

  • Page 21
    ..., technologies developed by others may render our processors nonâˆ'competitive or obsolete or result in our holding excess inventory, any of which would harm our business. We could suffer a loss of market share if our products contain significant defects. Products as complex as those we offer may...

  • Page 22
    ...relationships with employees and customers, or the loss of any of our key employees or of our target's key employees, as a result of the integration of new businesses and management personnel In addition, the consideration for any future acquisition could be paid in cash, shares of our common stock...

  • Page 23
    ... for the PlayStation3 and all derivatives, including nextâˆ'generation digital consumer electronics devices. In addition, we are licensing software development tools for creating shaders and advanced graphics capabilities to SCE. During fiscal 2007, we recognized $92.9 million of revenue from our...

  • Page 24
    ...this market are performance, breadth of product offerings, access to customers and distribution channels, backwardâˆ'forward software support, conformity to industry standard application programming interfaces, manufacturing capabilities, price of processors and total system costs of addâˆ'in boards...

  • Page 25
    ... States, including offices in Taiwan, Japan, Korea, China, Hong Kong, India, France, Russia, Germany, Finland and England. During fiscal 2007, we added 934 international employees to our international operations. As a result of our acquisition of PortalPlayer, we acquired land and a building under...

  • Page 26
    ... improved standards, features or performance. If our customers, OEMs, ODMs, addâˆ'inâˆ'card and motherboard manufacturers, system builders and consumer electronics companies, do not continue to design products that require more advanced or efficient processors and/or the market does not continue to...

  • Page 27
    ... the complaints differ, they generally purport to assert federal and state antitrust claims based on alleged price fixing, market allocation, and other alleged antiâˆ'competitive agreements between us and Advanced Micro Devices, Inc., or AMD, as a result of its acquisition of ATI Technologies, Inc...

  • Page 28
    ... property or otherwise gain access to our trade secrets or intellectual property. Our failure to effectively protect our intellectual property could harm our business. We have licensed technology from third parties for incorporation in our digital media processors and for defensive reasons...

  • Page 29
    ... agreed to indemnify them for certain claims of infringement arising out of the sale of our products to these customers. An unfavorable ruling could include significant damages, invalidation of a patent or family of patents, indemnification of customers, payment of lost profits, or, when it has been...

  • Page 30
    ... to develop and sell graphics chips and to license certain technology to Microsoft and its licensees for use in the Xbox. Under the agreement, if an individual or corporation makes an offer to purchase shares equal to or greater than 30% of the outstanding shares of our common stock, Microsoft may...

  • Page 31
    ... Our headquarters complex is located on a leased site in Santa Clara, California and is comprised of six buildings. Additionally, we lease three other buildings in Santa Clara with one used as warehouse space and the other two used as lab space. Outside of Santa Clara, we lease space in Austin and...

  • Page 32
    ... federal courts asserting claims concerning errors related to our historical stock option granting practices and associated accounting for stockâˆ'based compensation expense. These complaints have been filed in various courts, including the California Superior Court, Santa Clara County, the United...

  • Page 33
    ... the complaints differ, they generally purport to assert federal and state antitrust claims based on alleged price fixing, market allocation, and other alleged antiâˆ'competitive agreements between us and Advanced Micro Devices, Inc., or AMD, as a result of its acquisition of ATI Technologies, Inc...

  • Page 34
    ...program, we have entered into and we may continue to enter into structured share repurchase transactions with financial institutions. These agreements generally require that we make an upâˆ'front payment in exchange for the right to receive a fixed number of shares of our common stock upon execution...

  • Page 35
    ... performance. Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans of Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1) Source: NVIDIA CORP, 10âˆ'K, March 16, 2007

  • Page 36
    NVIDIA Corporation S & P 500 S & P Semiconductors $ $ $ 1/25/2002 100 100 100 1/24/2003 $ 15.53 $ 76.98 $ 44.26 29 1/25/2004 $ 35.27 $ 103.6 $ 88.1 1/30/2005 $ 34.95 $ 110.05 $ 66.21 1/29/2006 $ 70.64 $ 121.47 $ 76.56 1/28/2007 $ 96.14 $ 139.11 $ 72.09 Source: NVIDIA CORP, 10âˆ'K, March 16, ...

  • Page 37
    ...352,404 391,504 January 28, 2007 Consolidated Balance Sheet Data: Cash, cash equivalents and marketable securities Total assets Capital lease obligations, less current portion Other longâˆ'term debt Total stockholders' equity Cash dividends declared per common share Year Ended January 29, January 30...

  • Page 38
    ... deciding to purchase, hold or sell shares of our common stock. Overview Our Company NVIDIA Corporation is the worldwide leader in programmable graphics processor technologies. Our products are designed to enhance the endâˆ'user experience on consumer and professional computing devices. We have...

  • Page 39
    ... and pixel shading processors, the GeForce 8800 has 128 stream processors, operating at 1.35GHz, that can process either vertex or pixel shader programs. GeForce 8800 is also the world's first DX10 GPU. DX10 is a new Application Programming Interface, or API, for Microsoft Windows Vista, or Vista...

  • Page 40
    ... our application processors and GPUs. We expect SOCs such as these to power next generation smart phone and PMP devices. Consumer Electronics Business We record license revenue from our initial agreement with SCE to jointly develop a custom GPU for SCE's PlayStation 3 computer entertainment system...

  • Page 41
    ... of fiscal 2007, together with selected financial statement items for earlier years, to correct errors related to accounting for stockâˆ'based compensation expense. In June 2006, the Audit Committee of the Board of NVIDIA, or the Audit Committee, began a review of our stock option practices based...

  • Page 42
    ... conditions of the stock plans from which the grants were issued. For example, two grants were made to officers of NVIDIA by the chief executive officer under delegated authority; however, under the terms of the applicable plan, the option grant should have been made by our Board or the Compensation...

  • Page 43
    35 Source: NVIDIA CORP, 10âˆ'K, March 16, 2007

  • Page 44
    ... that are earmarked for market segment development and expansion and typically are designed to support our partners' activities while also promoting NVIDIA products. If market conditions decline, we may take actions to increase amounts offered under customer programs, possibly resulting in an...

  • Page 45
    ... actual market conditions are more favorable, we may have higher gross margins when products are sold. Sales to date of such products have not had a significant impact on our gross margin. As of January 28, 2007, our inventory reserve was $39.7 million. As a percentage of our gross inventory balance...

  • Page 46
    ... appropriate for the term of our employee stock options. The dividend yield assumption is based on the history and expectation of dividend payouts. We began segregating options into groups for employees with relatively homogeneous exercise behavior in order to calculate the best estimate of fair...

  • Page 47
    ... value of the shares issued under the employee stock purchase plan has been estimated using the following assumptions during year ended January 28, 2007: Weighted average expected life of stock options (in years) Risk free interest rate Volatility Dividend yield 0.5 âˆ' 2.0 1.6% âˆ' 5.2% 30% âˆ' 47...

  • Page 48
    ...The overall increase in MCP business revenue is primarily due to sales of newer NVIDIA nForce4 products, NVIDIA nForce5 products, integrated AMDâˆ'based desktop products, and integrated Intelâˆ'based desktop products, which began shipping after the second quarter of fiscal 2007. In addition, revenue...

  • Page 49
    ... to which the products are initially billed even if the foreign contract equipment manufacturers, or CEMs', addâˆ'in board and motherboard manufacturers' revenue is attributable to end customers in a different location. The increase in the percentage of revenue from sales to customers outside of the...

  • Page 50
    ... an increase in unit sales of highâˆ'end feature cellular phone and PDA products which generally have higher gross margins than our previous Handheld GPU products. Consumer Electronics Business. The gross margin of our Consumer Electronics Business increased during fiscal 2007 as compared to fiscal...

  • Page 51
    ... 2007. Inâˆ'process research and development expense, or IPR&D, increased by $14.0 million as a result of our acquisitions of PortalPlayer and Hybrid Graphics during fiscal 2007. Depreciation and amortization increased $1.6 million due to emulation hardware and software programs that were purchased...

  • Page 52
    ... increased litigation activity during fiscal 2006 related to 3dfx Interactive, Inc., or 3dfx, and American Video Graphics, LP, or AVG. In addition there were increases of $2.9 million in facility expense due primarily to the expansion of our international sites and $2.6 million in other general and...

  • Page 53
    ... and development equipment, hardware equipment, technology licenses, software, intangible assets and leasehold improvements at our headquarters facility in Santa Clara, California and at our international sites. In addition, we used cash of $12.1 million for our acquisition of a private company and...

  • Page 54
    ...expectations of securities analysts or investors, our stock price could decline." 3dfx Asset Purchase On December 15, 2000, NVIDIA Corporation and one of our indirect subsidiaries entered into an agreement, which closed on April 18, 2001, to purchase certain graphics chip assets from 3dfx. Under the...

  • Page 55
    ... for the Northern District of California. In March 2003, we were served with a complaint filed by the Trustee appointed by the Bankruptcy Court which sought, among other things, payments from us as additional purchase price related to our purchase of certain assets of 3dfx. In early November 2005...

  • Page 56
    ... raising their prices in order to continue doing business with us. To date, we have not engaged in any currency hedging activities, although we may do so in the future. Fluctuations in currency exchange rates could harm our business in the future. 48 Source: NVIDIA CORP, 10âˆ'K, March 16, 2007

  • Page 57
    ... reporting. Inherent Limitations on Effectiveness of Controls Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls, will prevent all error and all fraud. A control system, no matter...

  • Page 58
    ... incorporated by reference. The full text of our "Worldwide Code of Conduct" and "Financial Team Code of Conduct" are published on the Investor Relations portion of our web site, under Corporate Governance, at www.nvidia.com. ITEM 11. EXECUTIVE COMPENSATION The information required by this item is...

  • Page 59
    ... MATTERS Ownership of NVIDIA Securities The information required by this item is hereby incorporated by reference from the section entitled "Security Ownership of Certain Beneficial Owners and Management" in our 2007 Proxy Statement. Equity Compensation Plan Information Information concerning...

  • Page 60
    ... Statements Report of Independent Registered Public Accounting Firm, PricewaterhouseCoopers LLP Consolidated Statements of Income for the years ended January 28, 2007, January 29, 2006, and January 30, 2005 Consolidated Balance Sheets as of January 28, 2007, and January 29, 2006 Consolidated...

  • Page 61
    ...: We have completed integrated audits of NVIDIA Corporation's consolidated financial statements and of its internal control over financial reporting as of January 28, 2007, in accordance with the standards of the Public Company Accounting Oversight Board (United States). Our opinions, based on...

  • Page 62
    ... to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. PricewaterhouseCoopers LLP San Jose, CA March 15, 2007 54 Source: NVIDIA CORP, 10âˆ'K, March 16...

  • Page 63
    ...: Research and development Sales, general and administrative Settlement costs Total operating expenses Income from operations Interest income Interest expense Other income (expense), net Income before income tax expense Income tax expense Income before change in accounting principle Cumulative...

  • Page 64
    NVIDIA CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data) January 28, 2007 ASSETS Current assets: Cash and cash equivalents Marketable securities Accounts receivable, less allowances of $15,749 and $10,837 in 2007 and 2006, respectively ...

  • Page 65
    ... for net losses included in net income, net of ($38) tax effect Net income Balances, January 30, 2005 334,179,090 338 815,882 Issuance of common stock from stock plans 21,663,492 22 127,475 Stock repurchase (12,804,340 Tax benefit from stockâˆ'based compensation 24,868 Cancellation of shares (83...

  • Page 66
    ...) Impact of change in accounting principle, net of ($379) tax effect 704 704) Net income 448,834 448,834 448,834 Balances, January 28, 2007 360,988,504 $ 388 $ 1,295,650 $ âˆ' $(487,120)$ 1,436 $ 1,196,565 $ 2,006,919 $ 452,227 (1) Reflects a twoâˆ'forâˆ'one stock split effective on April 6, 2006...

  • Page 67
    ...assets Accounts payable Accrued liabilities and other longâˆ'term liabilities Net cash provided by operating activities Cash flows from investing activities: Purchases of marketable securities Proceeds from sales and maturities of marketable securities Acquisition of businesses, net of cash and cash...

  • Page 68
    ... 28, 2007 Other nonâˆ'cash activities: Unrealized gains/losses from marketable securities Deferred stockâˆ'based compensation Acquisition of business âˆ' goodwill adjustment Assets acquired by assuming related liabilities Acquisition of business âˆ' stock option conversion Application of customer...

  • Page 69
    ... 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...

  • Page 70
    ... that are earmarked for market segment development and expansion and typically are designed to support our partners' activities while also promoting NVIDIA products. If market conditions decline, we may take actions to increase amounts offered under customer programs, possibly resulting in an...

  • Page 71
    ... the lease period and have accrued for rent expense incurred, but not paid. Product Warranties We generally offer limited warranty to endâˆ'users that range from one to three years for products in order to repair or replace products for any manufacturing defects or hardware component failures. Cost...

  • Page 72
    ... of cash equivalents, marketable securities and trade accounts receivable. Our investment policy requires the purchase of topâˆ'tier investment grade securities, the diversification of asset type and certain limits on our portfolio duration. All marketable securities are held in our name, managed by...

  • Page 73
    ... years 2006 and 2007, we recorded asset retirement obligations to return the leasehold improvements to their original condition upon lease termination at our headquarters facility in Santa Clara, California and our leasehold improvements at our international sites. At January 28, 2007 and January 29...

  • Page 74
    ... 30, 2007 2006 2005 (In thousands, except per share data) Numerator: Net income Denominator: Denominator for basic net income per share, weighted average shares Effect of dilutive securities: Stock options outstanding Denominator for diluted net income per share, weighted average shares Net income...

  • Page 75
    ... No. 123(R), we applied Accounting Principles Board Opinion No. 25, or APB No. 25, Accounting for Stock Issued to Employees, and related interpretations to account for our stockâˆ'based employee compensation plans. As such, compensation expense was recorded if on the date of grant the current fair...

  • Page 76
    ... type of award: Employee stock options Employee stock purchase plan Amount capitalized as inventory Total stockâˆ'based compensation Tax effect of stockâˆ'based compensation Net effect on net income 67 $ $ 108,654 9,717 (1,636) 116,735 (13,995) 102,740 Source: NVIDIA CORP, 10âˆ'K, March 16, 2007

  • Page 77
    ... Consolidated Statement of Cash Flows resulted in cash used from operations of $0.2 million and cash provided from financing activities of $0.2 million for the year ended January 28, 2007. As of January 29, 2006, we had unearned stockâˆ'based compensation related to stock options of $167.9 million...

  • Page 78
    ... 75% âˆ' 80% âˆ'âˆ' Weighted average expected life of stock options (in years) Risk free interest rate Volatility Dividend yield Weighted average expected life of stock options (in years) Risk free interest rate Volatility Dividend yield 69 Employee Stock Purchase Plan Year Ended Year Ended Year...

  • Page 79
    ... exceptional executives, senior management and worldâˆ'class employees. We believe that properly structured equity compensation aligns the longâˆ'term interests of stockholders and employees by creating a strong, direct link between employee compensation and stock appreciation, as stock options are...

  • Page 80
    ... of January 28, 2007. Pursuant to the 1998 Plan, the exercise price for incentive stock options is at least 100% of the fair market value on the date of grant or for employees owning in excess of 10% of the voting power of all classes of stock, 110% of the fair market value on the date of grant. For...

  • Page 81
    ... January 28, 2007, 18,857,690 shares have been issued under the Purchase Plan and 33,142,310 shares are available for future issuance. The Purchase Plan is intended to qualify as an "employee stock purchase plan" under Section 423 of the Internal Revenue Code. Under the Purchase Plan, the Board has...

  • Page 82
    ... options at January 28, 2007, based on the $31.47 closing stock price of our common stock on the NASDAQ Global Select Market, which would have been received by the option holders had all option holders exercised their options as of that date. The total number of inâˆ'theâˆ'money options outstanding...

  • Page 83
    NVIDIA CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The following table summarizes information about stock options outstanding as of January 28, 2007: Options Outstanding Weighted Average Weighted Remaining Average Number Contractual Exercise Outstanding Life ...

  • Page 84
    ... our common stock, with such reduction calculated by dividing the cash payment by $25.00 per share. If 3dfx could not certify that all of its debts and liabilities had been provided for, or could not be satisfied, for less than $25.0 million, we would not be obligated under the agreement to pay any...

  • Page 85
    ... 2007: ULi Fair Market Values Cash and cash equivalents Marketable Securities Accounts receivable Inventories Other assets Property and equipment Inâˆ'process research and development Goodwill Intangible assets: Existing technology Customer relationships Trademark Nonâˆ'compete agreements Total...

  • Page 86
    ... 3 years âˆ' âˆ' Property and equipment Intangible assets: Existing technology Customer relationships Trademark Nonâˆ'compete agreements The amount of the IPR&D represents the value assigned to research and development projects of Hybrid Graphics and PortalPlayer that had commenced but had not yet...

  • Page 87
    ... gross carrying amount of acquired intellectual property as of January 28, 2007 as compared to January 29, 2006 is primarily related to $3.1 million, $8.4 million and $11.6 million of intangible assets that resulted from our acquisitions of ULi, Hybrid Graphics and PortalPlayer, respectively, during...

  • Page 88
    ... & its agencies United States corporate notes, bonds and obligations Equity Securities Money market Total Classified as: Cash equivalents Marketable securities Total $ 153,471 113,576 59,729 277,641 2,491 467,198 1,074,106 January 28, 2007 Unrealized Unrealized Gain Loss (In thousands) $ 92 $ (450...

  • Page 89
    ... value of cash equivalents and marketable securities classified as availableâˆ'forâˆ'sale at January 28, 2007 and January 29, 2006 by contractual maturity are shown below. All of our marketable securities are debt instruments with the exception of $5.8 million of publicly traded equity securities at...

  • Page 90
    ...our buildâˆ'up of inventory levels of several of our MCP and memory products to meet forecasted sales demand. January 28, January 29, 2007 2006 ... life or the remaining lease term. (C) Construction in process represents assets that are not in service as of the balance sheet date. 81 Source: NVIDIA ...

  • Page 91
    ... recorded under capital leases have been fully amortized. January 28, January 29, 2007 2006 (In thousands) Accrued Liabilities: Accrued customer programs Deferred revenue Customer advances Taxes payable Accrued payroll and related expenses Deferred rent Accrued legal settlement Other Total accrued...

  • Page 92
    ... privately negotiated transactions, or in structured stock repurchase programs, in compliance with the Securities Exchange Act of 1934, or the Exchange Act, Rule 10bâˆ'18, subject to market conditions, applicable legal requirements, and other factors. The program does not obligate NVIDIA to acquire...

  • Page 93
    ... million. Capital Purchase Obligations At January 28, 2007, we had outstanding capital purchase obligations totaling $4.8 million. Lease Obligations Our headquarters complex is located on a leased site in Santa Clara, California and is comprised of six buildings. The related leases expire in fiscal...

  • Page 94
    ... a California state court complaint filed by the landlord of 3dfx's Austin, Texas commercial real estate lease, Carlyle Fortran Trust. The landlords' complaints both asserted claims for, among other things, interference with contract, successor liability and fraudulent transfer and seek to recover...

  • Page 95
    ... federal courts asserting claims concerning errors related to our historical stock option granting practices and associated accounting for stockâˆ'based compensation expense. These complaints have been filed in various courts, including the California Superior Court, Santa Clara County, the United...

  • Page 96
    ... the complaints differ, they generally purport to assert federal and state antitrust claims based on alleged price fixing, market allocation, and other alleged antiâˆ'competitive agreements between us and Advanced Micro Devices, Inc., or AMD, as a result of its acquisition of ATI Technologies, Inc...

  • Page 97
    ...2007 Tax expense computed at federal statutory rate State income taxes, net of federal tax effect Foreign tax rate differential Research tax credit Inâˆ'process research and development Stock...29, 2007 2006 (In thousands) Deferred tax assets: Net operating loss carryforwards Accruals and reserves, not...

  • Page 98
    ... PDAs, 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 revenue from our contractual arrangements with SCE to jointly develop a custom GPU...

  • Page 99
    ...the products are initially billed even if our customers' revenue is attributable to end customers that are located in a different location. The following tables summarize information pertaining to our revenue from customers based on invoicing address in different geographic regions: January 28, 2007...

  • Page 100
    ..., is summarized as follows: January 28, 2007 Accounts Receivable: Customer A Customer B Note 15 âˆ' Settlement Costs Settlement costs were $14.2 million for fiscal 2006. The settlement costs are associated with two litigation matters, 3dfx and American Video Graphics, LP, or AVG. AVG is settled...

  • Page 101
    ... quarters ended January 28, 2007. Fiscal 2007 Quarters Ended Jan. 28, 2007 Oct. 29, 2006 July 30, 2006 April 30, 2006 (B) (C) (In thousands, except per share data) Statement of Operations Data: Revenue Cost of revenue Gross profit Income before change in accounting principle Net income Basic income...

  • Page 102
    ... as a reduction to revenue. Allowances for doubtful accounts are charged to expenses. (4) Additions to allowance for doubtful accounts includes $471 related to our acquisitions of ULi Electronics, Inc., Hybrid Graphics Ltd. and PortalPlayer, Inc. 93 Source: NVIDIA CORP, 10âˆ'K, March 16, 2007

  • Page 103
    ... Form of Indemnity Agreement between NVIDIA Corporation and each of its directors and officers 1998 Equity Incentive Plan, as amended 1998 Equity Incentive Plan ISO, as amended 1998 Equity Incentive Plan NSO, as amended Certificate of Stock Option Grant 1998 Employee Stock Purchase Plan Offering, as...

  • Page 104
    ... C Lease dated April 4, 2000 between NVIDIA Corporation Sâˆ'3/A and Sobrato Interests III for Building D NVIDIA Corporation Fiscal Year 2007 Variable Compensation Plan NVIDIA Corporation 2000 NonStatutory Equity Incentive Plan NSO PortalPlayer, Inc. 1999 Stock Option Plan and Form of Agreements...

  • Page 105
    ... J. MILLER William J. Miller /s/ A. BROOKE SEAWELL A. Brooke Seawell Title President, Chief Executive Officer and Director (Principal Executive Officer) Chief Financial Officer (Principal Financial and Accounting Officer) Director Director Director Director Director Director Director 96 By: Date...

  • Page 106
    ... Form of Indemnity Agreement between NVIDIA Corporation and each of its directors and officers 1998 Equity Incentive Plan, as amended 1998 Equity Incentive Plan ISO, as amended 1998 Equity Incentive Plan NSO, as amended Certificate of Stock Option Grant 1998 Employee Stock Purchase Plan Offering, as...

  • Page 107
    ... C Lease dated April 4, 2000 between NVIDIA Corporation Sâˆ'3/A and Sobrato Interests III for Building D NVIDIA Corporation Fiscal Year 2007 Variable Compensation Plan NVIDIA Corporation 2000 NonStatutory Equity Incentive Plan NSO PortalPlayer, Inc. 1999 Stock Option Plan and Form of Agreements...

  • Page 108
    ...NVIDIA Corporation NVIDIA International Holdings, Inc. 100% NVIDIA Development, Inc. 100% NVIDIA US Holding Company 100% NVIDIA International, Inc. 100% NVIDIA US Investment Company 100% NVIDIA Singapore Pte Ltd 100% NVIDIA Pty Limited 100% NVIDIA Ltd. 100% NVIDIA GmbH 100% NVIDIA Hong Kong Holdings...

  • Page 109
    ...Company 100% NVIDIA Semiconductor Shenzhen Co., Ltd. 100% NVIDIA Hong Kong Development Limited 100% Hybrid Graphics Oy 100% NVIDIA Holding Oy 100% NVIDIA Dutch Cooperatief U.A. 100% PortalPlayer LLC 100% PortalPlayer USA, Inc. 100% PortalPlayer (India) Private Limited 100% PortalPlayer International...

  • Page 110
    ... schedule, management's assessment of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting, which appears in this Form 10âˆ'K. /s/ PricewaterhouseCoopers LLP San Jose, California March 15, 2007 Source: NVIDIA CORP, 10...

  • Page 111
    ... or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: March 15, 2007 /s/ JENâˆ'HSUN HUANG _____ Jenâˆ'Hsun Huang President and Chief Executive Officer Source: NVIDIA CORP, 10âˆ'K, March 16...

  • Page 112
    ...any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: March 15, 2007 /s/ MARVIN D. BURKETT _____ Marvin D. Burkett Chief Financial Officer Source: NVIDIA CORP, 10âˆ'K, March 16...

  • Page 113
    ...18 of the United States Code (18 U.S.C. § 1350), Jenâˆ'Hsun Huang, the President and Chief Executive Officer of NVIDIA Corporation (the "Company"), hereby certifies that, to the best of his knowledge: 1. The Company's annual report on Form 10âˆ'K for the period ended January 28, 2007, to which this...

  • Page 114
    ... of the United States Code (18 U.S.C. § 1350), Marvin D. Burkett, the Chief Financial Officer of NVIDIA Corporation (the "Company"), hereby certifies that, to the best of his knowledge: 1. The Company's annual report on Form 10âˆ'K for the period ended January 28, 2007, to which this Certification...