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NVIDIA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
The pro forma information required under SFAS No. 123(R) for periods prior to fiscal 2007 as if we had applied the fair value
recognition provisions of SFAS No. 123 to awards granted under our equity incentive plans was as follows for the periods presented:
Year Ended
January 29,
2006 January 30,
2005
(In thousands, except per share
data)
Net income, as reported $ 301,176 $ 88,615
Add: Stock−based employee compensation expense
included in reported net income, net of related tax effects 6,644 17,241
Deduct: Stock−based employee compensation expense
determined under fair value−based method for all awards,
net of related tax effects (90,405) (108,430)
Pro forma net income (loss) $ 217,415 $ (2,574)
Basic net income per share − as reported $ 0.89 $ 0.27
Basic net income (loss) per share − pro forma $ 0.64 $ (0.01)
Diluted net income per share − as reported $ 0.82 $ 0.25
Diluted net income (loss) per share − pro forma $ 0.60 $ (0.01)
Impact of the adoption of SFAS No. 123(R)
We elected to adopt the modified prospective application method beginning January 30, 2006 as provided by SFAS No. 123(R).
Accordingly, during fiscal 2007, we recorded stock−based compensation expense for awards granted prior to, but not yet vested, as of
January 29, 2006, equal to the amount that would have been recognized if the fair value method required for pro forma disclosure
under SFAS No. 123 had been in effect for expense recognition purposes, adjusted for estimated forfeitures. For options granted in
fiscal 2007, we measured compensation expense under the provisions of SFAS No. 123(R). We recognized stock−based compensation
expense using the straight−line attribution method. Previously reported amounts have not been restated. The effect of stock−based
compensation expense, net of associated payroll taxes, for the year ended January 28, 2007 on net income was as follows:
Year Ended
January 28,
2007
(In thousands)
Stock−based compensation expense by type of award:
Employee stock options $ 108,654
Employee stock purchase plan 9,717
Amount capitalized as inventory (1,636)
Total stock−based compensation 116,735
Tax effect of stock−based compensation (13,995)
Net effect on net income $ 102,740
67
Source: NVIDIA CORP, 10−K, March 16, 2007