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NVIDIA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Note 9 − Guarantees
FASB Interpretation No. 45, or FIN 45, Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others, requires that upon issuance of a guarantee, the guarantor must recognize a liability for
the fair value of the obligation it assumes under that guarantee. In addition, FIN 45 requires disclosures about the guarantees that an
entity has issued, including a tabular reconciliation of the changes of the entity's product warranty liabilities.
We record a reduction to revenue for estimated product returns at the time revenue is recognized primarily based on historical return
rates. The reductions to revenue for estimated product returns for fiscal years 2007, 2006 and 2005 are as follows:
Description
Balance at
Beginning
of Period Additions (1) Deductions (2)
Balance
at End
of
Period
(In thousands)
Year ended January 28, 2007 Allowance for sales
returns $ 10,239 $ 37,033 $ (32,795) $ 14,477
Year ended January 29, 2006 Allowance for sales
returns $ 11,687 $ 35,127 $ (36,575) $ 10,239
Year ended January 30, 2005 Allowance for sales
returns $ 9,421 $ 22,463 $ (20,197) $ 11,687
(1) Allowances for sales returns are charged as a reduction to revenue.
(2) Represents amounts written off against the allowance for sales returns.
In connection with certain agreements that we have executed in the past, we have at times provided indemnities to cover the
indemnified party for matters such as tax, product and employee liabilities. We have also on occasion included intellectual property
indemnification provisions in our technology related agreements with third parties. Maximum potential future payments cannot be
estimated because many of these agreements do not have a maximum stated liability. As such, we have not recorded any liability in
our consolidated financial statements for such indemnifications.
Note 10 − Stockholders' Equity
Stock Repurchase Program
On August 9, 2004 we announced that our Board had authorized a stock repurchase program to repurchase shares of our common
stock, subject to certain specifications, up to an aggregate maximum amount of $300 million. Subsequently, on March 6, 2006, we
announced that our Board had approved a $400 million increase to the original stock repurchase program. As a result of this increase,
the amount of common stock the Board has authorized to be repurchased has now been increased to a total of $700 million. The
repurchases will be made from time to time in the open market, in privately negotiated transactions, or in structured stock repurchase
programs, in compliance with the Securities Exchange Act of 1934, or the Exchange Act, Rule 10b−18, subject to market conditions,
applicable legal requirements, and other factors. The program does not obligate NVIDIA to acquire any particular amount of common
stock and the program may be suspended at any time at our discretion.
83
Source: NVIDIA CORP, 10−K, March 16, 2007