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Morningstar® Document Research℠
FORM 10-K
NVIDIA CORP - NVDA
Filed: March 13, 2009 (period: January 25, 2009)
Annual report which provides a comprehensive overview of the company for the past year

Table of contents

  • Page 1
    Morningstar Document Research ® ℠FORM 10-K NVIDIA CORP - NVDA Filed: March 13, 2009 (period: January 25, 2009) Annual report which provides a comprehensive overview of the company for the past year

  • Page 2
    ... NVIDIA CORPORATION 2701 San Tomas Expressway Santa Clara, California 95050 (408) 486-2000 (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 Name of each exchange...

  • Page 3
    ... Investment Company Act of 1940. The number of shares of common stock outstanding as of March 6, 2009 was 542,453,547. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant's Proxy Statement for its 2009 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission...

  • Page 4
    ... and Related Transactions, and Director Independence Principal Accounting Fees and Services PART IV Item 15. Signatures Exhibits, Financial Statement Schedules 65 112 63 63 63 64 64 36 39 40 61 62 62 62 62 4 15 30 30 31 35 Source: NVIDIA CORP, 10-K, March 13, 2009 Powered by Morningstar...

  • Page 5
    ... four major product-line operating segments: the GPU business, the professional solutions business, or PSB, the media and communications processor, or MCP, business, and the consumer products business, or CPB. Our GPU business is comprised primarily of our GeForce products that support desktop and...

  • Page 6
    ... GPUs power PCs made by or distributed by most PC OEMs in the world for desktop PCs, notebook PCs, PCs loaded with Windows Media Center and media extenders such as the Apple TV. GPUs enhance the user experience for playing video games, editing photos, viewing and editing videos and high-definition...

  • Page 7
    ... GT for high performance mode. We also launched the GeForce 9400 and 9300 mGPUs for Intel desktop PCs. These new mGPUs set a new price/performance standard for integrated graphics by combining the power of three different chips into one highly compact and efficient GPU. 6 Source: NVIDIA CORP, 10...

  • Page 8
    Source: NVIDIA CORP, 10-K, March 13, 2009 Powered by Morningstar® Document Researchâ„

  • Page 9
    ..., compatibility and power efficiency while maintaining competitive pricing and profitability. We believe that by developing 3D graphics, HD, video and media communications solutions that provide superior performance and address the key requirements of each of the product categories we serve...

  • Page 10
    ... processor, multimedia-rich cellular phone and video game console product lines, and we plan to expand into other product lines. Our strategy to achieve this objective includes the following key elements: Build Award-Winning, Architecturally-Compatible 3D Graphics, HD Video, Media Communications...

  • Page 11
    ... Channel strategy, our sales are focused on a small number of customers. Sales to our largest customer, Hewlett-Packard Company, accounted for 11% of our total revenue for fiscal year 2009. To encourage software title developers and publishers to develop games optimized for platforms utilizing our...

  • Page 12
    ... a weak material set of die/package combination, system thermal management designs, and customer use patterns are contributing factors. We have worked with our customers to develop and have made available for download a software driver to cause the system fan to begin operation at the powering up of...

  • Page 13
    10 Source: NVIDIA CORP, 10-K, March 13, 2009 Powered by Morningstar® Document Researchâ„

  • Page 14
    ... product definition of their new products. We believe that forming these relationships and utilizing next-generation development tools to design, simulate and verify our products will help us remain at the forefront of the 3D graphics market and develop products that utilize leading-edge technology...

  • Page 15
    ... principal competitive factors in this market are performance, breadth of product offerings, access to customers and distribution channels, software support, conformity to industry standard Application Programming Interfaces, or APIs, manufacturing capabilities, processor pricing, and total system...

  • Page 16
    ... the GPU business, which is comprised primarily of our GeForce products that support desktop and notebook PCs, plus memory products; the PSB which is comprised of our NVIDIA Quadro professional workstation products and other professional graphics products, including our NVIDIA Tesla high-performance...

  • Page 17
    ...was Senior Vice President and Chief Financial Officer of Asyst Technologies, Inc., a provider of integrated hardware and software automation solutions that enhance semiconductor and flat-panel display manufacturing productivity. Mr. White served as President and Chief Executive Officer of Candescent...

  • Page 18
    ... financial markets, and extreme volatility in fixed income, credit, currency and equity markets. There could be a number of follow-on effects from the credit crisis on our business, including insolvency of key suppliers resulting in product delays; inability of customers, including channel partners...

  • Page 19
    ... properly could adversely affect our financial results. We manufacture our products based on forecasts of customer demand in order to have shorter shipment lead times and quicker delivery schedules for our customers. As a result, we may build inventories for anticipated periods of growth which do...

  • Page 20
    December 2008 PC Graphics Report from Mercury Research. This decline was driven by a combination of market migration from desktop PCs towards notebook PCs and an overall market shift in the mix of products towards lower priced products. If the overall shift in the demand from the consumer continues ...

  • Page 21
    ... principal competitive factors in this market are performance, breadth of product offerings, access to customers and distribution channels, software support, conformity to industry standard Application Programming Interface, or APIs, manufacturing capabilities, price of processors, and total system...

  • Page 22
    ... new markets, demand for our products could decrease which could cause our revenue to decline and our financial results to suffer. Our GPU and MCP products are currently used with both Intel and AMD processors. In February 2009, Intel filed suit against us, related to a patent license agreement that...

  • Page 23
    ... products in these markets decreases, our business and operating results would suffer. Our success depends in part upon continued broad adoption of our processors for 3D graphics and multimedia in desktop PC, notebook PC, workstation, high-performance computing, netbooks, PMPs, PDAs, cellular...

  • Page 24
    ... into the high-performance computing industry, a new market for us. We also offer our CUDA software development solution, which is a C language programming environment for GPUs, that allows parallel computing on the GPU by using standard C language to create programs that process large quantities...

  • Page 25
    ... and invested in other businesses that offered products, services and technologies that we believe will help expand or enhance our existing products and business. We may enter into future acquisitions of, or investments in, businesses, in order to complement or expand our current businesses or...

  • Page 26
    Source: NVIDIA CORP, 10-K, March 13, 2009 Powered by Morningstar® Document Researchâ„

  • Page 27
    ... value of publicly traded equity securities and $1.8 million related to debt securities held by us that were issued by companies that have filed for bankruptcy as of January 25, 2009. Please refer to Note 17 of these Notes to the Consolidated Financial Statements in Part IV, Item 15 of this Form 10...

  • Page 28
    ... our design is manufactured. When a yield issue is identified, the product is analyzed and tested to determine the cause. As a result, yield problems may not be identified until well into the production process. Resolution of yield problems requires cooperation by, and communication between, us and...

  • Page 29
    ... products. We believe that forming these relationships and utilizing next-generation development tools to design, simulate and verify our products will help us remain at the forefront of the 3D graphics, communications and networking segments and develop products that utilize leading-edge technology...

  • Page 30
    ... us, or a settlement of the litigation could adversely affect our cash flow and financial results. The ongoing civil actions or any new actions relating to the market for GPUs could adversely affect our business. In November 2006, we received a subpoena from the San Francisco Office of the Antitrust...

  • Page 31
    ... the direct purchasers, there can be no assurance that it will approved. If the settlement agreement is not approved we may be required to pay damages or penalties or have other remedies imposed on us that could harm our business. In addition, additional parties may bring claims against us relating...

  • Page 32
    ... sale of one or more of our products. We may also have to make royalty or other payments, or cross license our technology. If these arrangements are not concluded on commercially reasonable terms, our business could be negatively impacted. Furthermore, the indemnification of a customer may increase...

  • Page 33
    ... relating to stock option grants. Please refer to Note 12 of the Notes to Consolidated Financial Statements in Part IV, Item 15 of this Form 10-K for further information regarding these lawsuits. Such lawsuits could result in the diversion of management's time and attention away from business...

  • Page 34
    ... Financial Statements in Part IV, Item 15 of this Form 10-K for further information regarding these lawsuits. Due to changes in the potential volatility of our stock price, we may be the target of securities litigation in the future. Such lawsuits could result in the diversion of management's time...

  • Page 35
    ... public accounting firm determine that our internal control over financial reporting is not effective as defined under Section 404, investor perceptions of us may be adversely affected and could cause a decline in the market price of our stock. 29 Source: NVIDIA CORP, 10-K, March 13, 2009 Powered...

  • Page 36
    ... primarily as office buildings, one used as warehouse space, and the other two used primarily as lab space. We also entered into a lease for data center space in Santa Clara in fiscal year 2009. Outside of Santa Clara, we lease space in Marina Del Rey, San Jose and San Francisco, California; Austin...

  • Page 37
    ... on or before April 24, 2009, ordered Carlyle and CarrAmerica to file amended complaints by May 10, 2009, and set a further Case Management Conference for May 18, 2009. We continue to believe that there is no merit to Carlyle or CarrAmerica's remaining claims. Trustee Lawsuit In March 2003, the...

  • Page 38
    ...the fair market value of the "property" identified in answer to question (2)?; and (4) was the $70 million that NVIDIA paid "reasonably equivalent" to the fair market value of that property? The parties completed post-trial briefing on May 25, 2007. On April 30, 2008, the Bankruptcy Court issued its...

  • Page 39
    Source: NVIDIA CORP, 10-K, March 13, 2009 Powered by Morningstar® Document Researchâ„

  • Page 40
    ... and federal courts asserting claims concerning errors related to our historical stock option granting practices and associated accounting for stock-based compensation expense. These complaints have been filed in various courts, including the California Superior Court, Santa Clara County, the United...

  • Page 41
    ... direct purchaser class to individual purchasers that acquired graphics processing cards products directly from NVIDIA or ATI from their websites between December 4, 2002 and November 7, 2007. On September 16, 2008, we executed a settlement agreement, or the Agreement, in connection with the claims...

  • Page 42
    .... and Hewlett Packard , Sielicki v. NVIDIA Corp. and Dell, Inc., Cormier v. NVIDIA Corp. , National Business Officers Association, Inc. v. NVIDIA Corp. , and West v. NVIDIA Corp. The First Amended Complaint was filed on October 27, 2008, which no longer asserted claims against Dell, Inc. The various...

  • Page 43
    ...a weak die/packaging material set in certain versions of our previous generation MCP and GPU products and that we were revising financial guidance for our second quarter of fiscal year 2009. The Actions purport to be brought on behalf of purchasers of NVIDIA stock and assert claims for violations of...

  • Page 44
    ...of the Notes to the Consolidated Financial Statements in Part IV, Item 15 of this Form 10-K for further information regarding stock-based compensation and stock options granted under our equity incentive program. 36 Source: NVIDIA CORP, 10-K, March 13, 2009 Powered by Morningstar® Document Research...

  • Page 45
    ... 500 Index and the S & P Semiconductors Index are calculated on month-end basis. Total return is based on historical results and is not intended to indicate future performance. 1/25/2004 1/30/2005 1/29/2006 1/28/2007 1/27/2008 1/25/2009 NVIDIA Corporation $ 100.00 $ 99.09 $ 200.30 $ 272.59 $ 324.17...

  • Page 46
    ... paid cash dividends on our common stock. Our results are calculated on fiscal year-end basis and each of the S & P 500 Index and the S & P Semiconductors Index are calculated on month-end basis. Total return is based on historical results and is not intended to indicate future performance. NVIDIA...

  • Page 47
    ... and $13.4 million towards in-process research and development expense related to our purchase of Mental Images Inc. and PortalPlayer Inc., respectively, that had not yet reached technological feasibility and have no alternative future use. (D) Fiscal year 2007 included a charge of $17.5 million...

  • Page 48
    ... in Santa Clara, California. Our Internet address is www.nvidia.com. The contents of our website are not a part of this Form 10-K. Recent Developments, Future Objectives and Challenges GPU Business Our GPU business is comprised primarily of our GeForce products that support desktop and notebook PCs...

  • Page 49
    ... NVIDIA nForce and GeForce mGPU families of products address the core logic market. During fiscal year 2008, we announced a new technology named Hybrid SLI, which combines a powerful yet energy-efficient engine with our multi-GPU SLI technology. During fiscal year 2009, we shipped Hybrid SLI DirectX...

  • Page 50
    Source: NVIDIA CORP, 10-K, March 13, 2009 Powered by Morningstar® Document Researchâ„

  • Page 51
    ...chip products. These products feature enhanced multimedia functionality and deliver many times the power efficiency of competing products. We also introduced GeForce 3D Vision, a high-definition 3D stereo solution for the home. 3D Vision is a combination of high-tech wireless glasses, a high-power...

  • Page 52
    ... March 11, 2009. The tender offer applied to outstanding stock options held by employees with an exercise price equal to or greater than $17.50 per share. None of the non-employee members of our Board of Directors or our officers who file reports under Section 16(a) of the Securities Exchange Act of...

  • Page 53
    ... development and expansion and typically are designed to support our partners' activities while also promoting our products. Depending on market conditions, we may take actions to increase amounts offered under customer programs, possibly resulting in an incremental reduction of revenue at the time...

  • Page 54
    ... financial markets, and extreme volatility in fixed income, credit, currency and equity markets. There could be a number of follow-on effects from the credit crisis on our business, including inability of customers, including channel partners, to obtain credit to finance purchases of our products...

  • Page 55
    ... defects in other MCP or GPU products. Determining the amount of the $196.0 million charge related to this issue required management to make estimates and judgments based on historical experience, test data and various other assumptions including estimated field failure rates that we believe to be...

  • Page 56
    ...indirect tax effects of stock-based compensation deductions for financial and accounting reporting purposes, and specifically to recognize the full effect of the research tax credit in income from continuing operations. 46 Source: NVIDIA CORP, 10-K, March 13, 2009 Powered by Morningstar® Document...

  • Page 57
    ... cash flows involve businesses with limited financial history and developing revenue models, which increase the risk of differences between the projected and actual performance. Significant differences between these estimates and actual cash flows could materially affect our future financial...

  • Page 58
    ... the money market funds held by the International Reserve Fund; $2.5 million related to a decline in the value of publicly traded equity securities and $1.8 million related to debt securities held by us that were issued by companies that have filed for bankruptcy as of January 25, 2009. Stock-based...

  • Page 59
    48 Source: NVIDIA CORP, 10-K, March 13, 2009 Powered by Morningstar® Document Researchâ„

  • Page 60
    ... 25, 2009, January 27, 2008 and January 28, 2007 Revenue We report financial information for four major product-line operating segments to our Chief Executive Officer, who is considered to be our chief operating decision maker, as follows: the GPU business, PSB, MCP business, and CPB. Revenue in...

  • Page 61
    Source: NVIDIA CORP, 10-K, March 13, 2009 Powered by Morningstar® Document Researchâ„

  • Page 62
    ... based on the location to which the products are initially billed even if the foreign contract equipment manufacturers, or CEMs', add-in board and motherboard manufacturers' revenue is attributable to end customers in a different location. 50 Source: NVIDIA CORP, 10-K, March 13, 2009 Powered...

  • Page 63
    ..., assembly, testing and packaging, manufacturing support costs, including labor and overhead associated with such purchases, final test yield fallout, inventory and warranty provisions, and shipping costs. Cost of revenue also includes development costs for license and service arrangements. Gross...

  • Page 64
    ... related to engineering services, prototype materials and internal board requests. Other increases in research and development expenses are primarily related to costs that were driven by personnel growth, including depreciation and amortization, facilities, and computer software and equipment...

  • Page 65
    ... financial performance for fiscal year 2008. Facilities expenses and expenses related to computer software and equipment also increased as a result of the personnel growth. In order to remain competitive, we anticipate that we will continue to devote substantial resources to research and development...

  • Page 66
    ...12 of the Notes to the Consolidated Financial Statements in Part IV, Item 15 of this Form 10-K. Marketing and advertising expenses increased by $22.3 million, primarily due to increased advertising campaign related activities and trade shows in the current year. Depreciation and amortization expense...

  • Page 67
    ...the value of publicly traded equity securities and $1.8 million related to debt securities held by us that were issued by companies that have filed for bankruptcy as of January 25, 2009. Please refer to Note 17 of the Notes to the Consolidated Financial Statements in Part IV, Item 15 of this Form 10...

  • Page 68
    ...growing employee headcount, new research and development equipment, testing equipment to support our increased production requirements, technology licenses, software, intangible assets and leasehold improvements at our facilities in various international locations. In fiscal year 2007, net cash used...

  • Page 69
    ...the value of publicly traded equity securities and $1.8 million related to debt securities held by us that were issued by companies that have filed for bankruptcy as of January 25, 2009. Please refer to Note 17 of the Notes to the Consolidated Financial Statements in Part IV, Item 15 of this Form 10...

  • Page 70
    ... March 11, 2009. The tender offer applied to outstanding stock options held by employees with an exercise price equal to or greater than $17.50 per share. None of the non-employee members of our Board of Directors or our officers who file reports under Section 16(a) of the Securities Exchange Act of...

  • Page 71
    ..., software licenses, emulation equipment, computers and engineering workstations. In addition, we may continue to use cash in connection with the acquisition of new businesses or assets. For additional factors see "Item 1A. Risk Factors - Risks Related to Our Business and Industry - Our revenue may...

  • Page 72
    ... putative class action lawsuits were filed against us, asserting various claims related to the impacted MCP and GPU products. Please refer to Note 12 of the Notes to the Consolidated Financial Statements in Part IV, Item 15 of this Form 10-K for further information regarding this litigation. 59...

  • Page 73
    Source: NVIDIA CORP, 10-K, March 13, 2009 Powered by Morningstar® Document Researchâ„

  • Page 74
    .... Recently Issued Accounting Pronouncements Please see Note 1 of the Notes to the Consolidated Financial Statements in Part IV, Item 15 of this Form 10-K for a discussion of recently issued accounting pronouncements. 60 Source: NVIDIA CORP, 10-K, March 13, 2009 Powered by Morningstar...

  • Page 75
    ...the value of publicly traded equity securities and $1.8 million related to debt securities held by us that were issued by companies that have filed for bankruptcy as of January 25, 2009. Please refer to Note 17 of the Notes to the Consolidated Financial Statements in Part IV, Item 15 of this Form 10...

  • Page 76
    ... in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of January 25, 2009 based on...

  • Page 77
    ..." and "Financial Team Code of Conduct" are published on the Investor Relations portion of our web site, under Corporate Governance, at www.nvidia.com. The contents of our website are not a part of this Annual Report on Form 10-K. ITEM 11. EXECUTIVE COMPENSATION The information required by this...

  • Page 78
    ... ACCOUNTING FEES AND SERVICES The information required by this item is hereby incorporated by reference from the section entitled "Fees Billed by the Independent Registered Public Accounting Firm" in our 2009 Proxy Statement. 64 Source: NVIDIA CORP, 10-K, March 13, 2009 Powered by Morningstar...

  • Page 79
    ... 28, 2007 Notes to the Consolidated Financial Statements (a) 2. Financial Statement Schedule Schedule II Valuation and Qualifying Accounts (a) 3. Exhibits The exhibits listed in the accompanying index to exhibits are filed or incorporated by reference as a part of this Annual Report on Form 10...

  • Page 80
    ... respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 25, 2009, based on criteria established...

  • Page 81
    ... $ $ $ $ (1) Reflects a three-for-two stock split effective on September 10, 2007 and a two-for-one stock split effective on April 6, 2006. See accompanying notes to the consolidated financial statements. 67 Source: NVIDIA CORP, 10-K, March 13, 2009 Powered by Morningstar® Document Researchâ„

  • Page 82
    ...,051 3,747,671 ASSETS Current assets : Cash and cash equivalents $ Marketable securities Accounts receivable, less allowances of $18,399 and $19,693 in 2009 and 2008, respectively Inventories Prepaid expenses and other Deferred income taxes Total current assets Property and equipment, net Goodwill...

  • Page 83
    ...(34,210 ) (1) Reflects a three-for-two stock split effective on September 10, 2007 and a two-for-one stock split effective on April 6, 2006. See accompanying notes to the consolidated financial statements. 69 Source: NVIDIA CORP, 10-K, March 13, 2009 Powered by Morningstar® Document Researchâ„

  • Page 84
    ... Proceeds from sales and maturities of marketable securities Purchases of property and equipment and intangible assets Acquisition of businesses, net of cash and cash equivalents Other Net cash used in investing activities Cash flows from financing activities: Payments for stock repurchases Proceeds...

  • Page 85
    Source: NVIDIA CORP, 10-K, March 13, 2009 Powered by Morningstar® Document Researchâ„

  • Page 86
    ...: the graphics processing unit, or GPU, business, the professional solutions business, or PSB, the media and communications processor, or MCP, business, and the consumer products business, or CPB. Our GPU business is comprised primarily of our GeForce products that support desktop and notebook...

  • Page 87
    ...segment development and expansion and typically are designed to support our partners' activities while also promoting NVIDIA products. Depending on market conditions, we may take actions to increase amounts offered under customer programs, possibly resulting in an incremental reduction of revenue at...

  • Page 88
    ...of the fair values of employee stock options are calculated using a binomial model. Litigation, Investigation and Settlement Costs From time to time, we are involved in legal actions and/or investigations by regulatory bodies. We are aggressively defending our current litigation matters for which we...

  • Page 89
    ... effect of stock options outstanding is not included in the computation of diluted net income (loss) per share for periods when their effect is anti-dilutive. Cash and Cash Equivalents We consider all highly liquid investments that are readily convertible into cash and have an original maturity of...

  • Page 90
    ... specific adverse conditions related to the financial health of and business outlook for an investee, including industry and sector performance, changes in technology, operational and financing cash flow factors, and changes in an investee's credit rating. Investments that we identify as having an...

  • Page 91
    ... of future revenues, costs and cash flows from such units. The second step, if necessary, measures the amount of such impairment by applying fair value-based tests to individual assets and liabilities. Intangible Assets Intangible assets primarily represent rights acquired under technology licenses...

  • Page 92
    ...and 2008, 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 certain laboratories at our international locations. As of January 25, 2009 and January 27, 2008, our...

  • Page 93
    ... financial position, results of operations and cash flows. Note 2 - Stock-Based Compensation The statement of operations includes stock-based compensation expense and the amortization of amounts capitalized as inventory, as follows: January 25, 2009 Cost of revenue Research and development Sales...

  • Page 94
    78 Source: NVIDIA CORP, 10-K, March 13, 2009 Powered by Morningstar® Document Researchâ„

  • Page 95
    ...Scholes model. SFAS No. 123(R) requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures are estimated based on historical experience. If factors change and we employ different assumptions...

  • Page 96
    ... stock split now totals 152,767,766 shares, of our common stock may be issued pursuant to stock awards granted under the 2007 Plan or the Prior Plans. As of January 25, 2009, 29.5 million shares were available for future issuance under the 2007 Plan. Options granted to new employees generally...

  • Page 97
    ... shares were 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 authorized participation by eligible employees, including officers, in periodic offerings...

  • Page 98
    ... January 25, 2009, based on the $7.71 closing stock price of our common stock on the NASDAQ Global Select Market, which would have been received by the option holders had all in-the-money option holders exercised their options as of that date. The total number of in-the-money options outstanding and...

  • Page 99
    ... years 2008 and 2007, respectively. The weighted average exercise price of stock options excluded from the computation of diluted earnings per share was $32.05 and $20.09 for fiscal years 2008 and 2007, respectively. 83 Source: NVIDIA CORP, 10-K, March 13, 2009 Powered by Morningstar® Document...

  • Page 100
    ... these Notes to the Consolidated Financial Statements for further information regarding this litigation. Straight-Line Fair Market Amortization Value Period (In thousands) (Years) Property and equipment $ 2,433 1-2 Source: NVIDIA CORP, 10-K, March 13, 2009 Powered by Morningstar® Document Research...

  • Page 101
    Trademarks Goodwill Total $ 11,310 85,418 99,161 5 -- Source: NVIDIA CORP, 10-K, March 13, 2009 Powered by Morningstar® Document Researchâ„

  • Page 102
    ... in gaming physics technology. The combination of the graphics processing unit, or GPU, and physics engine brands is expected to enhance the visual experience of the gaming world. The aggregate purchase price consisted of total consideration of approximately $29.7 million. On November 30, 2007, we...

  • Page 103
    ... cash flows involve businesses with limited financial history and developing revenue models, which increase the risk of differences between the projected and actual performance. Significant differences between these estimates and actual cash flows could materially affect our future financial...

  • Page 104
    86 Source: NVIDIA CORP, 10-K, March 13, 2009 Powered by Morningstar® Document Researchâ„

  • Page 105
    ... of net cash outflows during fiscal year 2009 under a confidential patent licensing arrangement that we originally entered into during fiscal year 2007 and $25.0 million towards the purchase of a non-exclusive license related to advanced power management and other computing technologies that we...

  • Page 106
    ... of asset type and certain limits on our portfolio duration, as specified in our investment policy guidelines. These guidelines also limit the amount of credit exposure to any one issue, issuer or type of instrument. The following is a summary of cash equivalents and marketable securities at...

  • Page 107
    ... specific adverse conditions related to the financial health of and business outlook for an investee, including industry and sector performance, changes in technology, operational and financing cash flow factors, and changes in an investee's credit rating. Investments that we identify as having an...

  • Page 108
    ... Total inventories Property and Equipment: Land Building Test equipment Software and licenses Leasehold improvements Computer equipment Office furniture and equipment Capital leases Construction in process Accumulated depreciation and amortization Total property and equipment, net $ The increase...

  • Page 109
    ... maintenance, long term Lease deposits Investment in non-affiliates Other Total deposits and other assets Accrued Liabilities: Accrued customer programs (1) Warranty accrual (2) Accrued payroll and related expenses Accrued legal settlement (3) Deferred rent Deferred revenue Other Total accrued...

  • Page 110
    ... anticipated customer warranty, repair, return, replacement and other associated costs arising from a weak die/packaging material set in certain versions of our previous generation media and communications processor, or MCP, and GPU products used in notebook systems. All of our newly manufactured...

  • Page 111
    ...product returns at the time revenue is recognized primarily based on historical return rates. Cost of revenue includes the estimated cost of product warranties that are calculated at the point of revenue recognition. Under limited circumstances, we may offer an extended limited warranty to customers...

  • Page 112
    NVIDIA CORPORATION AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) Lease Obligations Our headquarters complex is located in Santa Clara, California and is comprised of eleven buildings that are a combination of owned and leased properties. The lease agreements for five of...

  • Page 113
    ... CORPORATION AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) On December 15, 2000, NVIDIA and one of our indirect subsidiaries entered into an Asset Purchase Agreement, or APA, to purchase certain graphics chip assets from 3dfx. The transaction closed on April 18, 2001...

  • Page 114
    ...the fair market value of the "property" identified in answer to question (2)?; and (4) was the $70 million that NVIDIA paid "reasonably equivalent" to the fair market value of that property? The parties completed post-trial briefing on May 25, 2007. On April 30, 2008, the Bankruptcy Court issued its...

  • Page 115
    ... and federal courts asserting claims concerning errors related to our historical stock option granting practices and associated accounting for stock-based compensation expense. These complaints have been filed in various courts, including the California Superior Court, Santa Clara County, the United...

  • Page 116
    ... direct purchaser class to individual purchasers that acquired graphics processing cards products directly from NVIDIA or ATI from their websites between December 4, 2002 and November 7, 2007. On September 16, 2008, we executed a settlement agreement, or the Agreement, in connection with the claims...

  • Page 117
    98 Source: NVIDIA CORP, 10-K, March 13, 2009 Powered by Morningstar® Document Researchâ„

  • Page 118
    ...a weak die/packaging material set in certain versions of our previous generation MCP and GPU products and that we were revising financial guidance for our second quarter of fiscal year 2009. The Actions purport to be brought on behalf of purchasers of NVIDIA stock and assert claims for violations of...

  • Page 119
    ...) before income taxes as follows: January 25, 2009 Tax expense computed at federal statutory rate State income taxes, net of federal tax effect Foreign tax rate differential Research tax credit In-process research and development Stock-based compensation Other Income tax expense (benefit) 100 $ (15...

  • Page 120
    ...recent accounting pronouncement, Statement of Financial Accounting Standards No. 141(R), or SFAS No. 141(R), Business Combinations, issued by the FASB in December 2007. We would also recognize an income tax benefit during the period that the realization of the deferred tax assets related to state or...

  • Page 121
    .... The Company has a tax holiday in effect for its business operations in India which will terminate in March 2010. This tax holiday provides for a lower rate of taxation on certain classes of income based on various thresholds of investment and employment in such jurisdiction. For fiscal year 2009...

  • Page 122
    ...As part of our share repurchase 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 up-front payment in exchange for the right to receive a fixed number of shares of...

  • Page 123
    ... the GPU business, which is comprised primarily of our GeForce products that support desktop and notebook PCs, plus memory products; the PSB which is comprised of our NVIDIA Quadro professional workstation products and other professional graphics products, including our NVIDIA Tesla high-performance...

  • Page 124
    ...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 25, 2009...

  • Page 125
    ...pricing the asset or liability based on the best information available under the circumstances. Financial assets and liabilities measured at fair value are summarized below: Fair value measurement at reporting date using Quoted Prices in Significant Active Markets Other for Identical Observable High...

  • Page 126
    ... cost of revenue arising from a weak die/packaging material set. (F) Included a charge of $4.0 million related to the write-off of acquired research and development expense from our acquisitions of Mental Images in fiscal year 2008. Source: NVIDIA CORP, 10-K, March 13, 2009 Powered by Morningstar...

  • Page 127
    107 Source: NVIDIA CORP, 10-K, March 13, 2009 Powered by Morningstar® Document Researchâ„

  • Page 128
    ... March 11, 2009. The tender offer applied to outstanding stock options held by employees with an exercise price equal to or greater than $17.50 per share. None of the non-employee members of our Board of Directors or our officers who file reports under Section 16(a) of the Securities Exchange Act of...

  • Page 129
    ... of future state taxable income. (5) Represents derecognition of the valuation allowance related to the derecognition of deferred tax assets for the excess tax benefits from stock-based compensation not yet realized as of January 28, 2007. 109 Source: NVIDIA CORP, 10-K, March 13, 2009 Powered by...

  • Page 130
    .... 1999 Stock Option Plan 10.13 + and Form of Agreements thereunder S-8 PortalPlayer, Inc. Amended and Restated 10.14 + 2004 Stock Incentive Plan S-8 10.15 + 2007 Equity Incentive Plan 8-K 2007 Equity Incentive Plan - Non Statutory Stock Option (Annual Grant - Board 10.16 + Service) 10-Q 2007 Equity...

  • Page 131
    ... reference. Copies of above exhibits not contained herein are available to any stockholder upon written request to: Investor Relations: NVIDIA Corporation, 2701 San Tomas Expressway, Santa Clara, CA 95050. 111 Powered by Morningstar® Document Research℠Source: NVIDIA CORP, 10-K, March 13, 2009

  • Page 132
    ... of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 13, 2009. NVIDIA Corporation By: /s/ Jen-Hsun Huang Jen-Hsun Huang President and Chief Executive Officer POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that...

  • Page 133
    .... 1999 Stock Option Plan and 10.13 + Form of Agreements thereunder S-8 PortalPlayer, Inc. Amended and Restated 10.14 + 2004 Stock Incentive Plan S-8 10.15 + 2007 Equity Incentive Plan 8-K 2007 Equity Incentive Plan - Non Statutory 10.16 + Stock Option (Annual Grant - Board Service) 10-Q 2007 Equity...

  • Page 134
    ... reference. Copies of above exhibits not contained herein are available to any stockholder upon written request to: Investor Relations: NVIDIA Corporation, 2701 San Tomas Expressway, Santa Clara, CA 95050. 114 Source: NVIDIA CORP, 10-K, March 13, 2009 Powered by Morningstar® Document Researchâ„

  • Page 135
    Source: NVIDIA CORP, 10-K, March 13, 2009 Powered by Morningstar® Document Researchâ„

  • Page 136
    ...Inc. NVIDIA Development, Inc. JAH Venture Holdings, Inc. NVIDIA International, Inc. NVIDIA US Investment Company NVIDIA Singapore Pte Ltd NVIDIA Pty Limited NVIDIA Ltd. NVIDIA GmbH NVIDIA Hong Kong Holdings Limited NVIDIA GK NVIDIA Graphics Holding Company NVIDIA Semiconductor Holding Company NVIDIA...

  • Page 137
    ... 13, 2009 relating to the financial statements, financial statement schedule and the effectiveness of internal control over financial reporting, which appears in this Form 10-K. /s/ PricewaterhouseCoopers LLP San Jose, California March 13, 2009 Source: NVIDIA CORP, 10-K, March 13, 2009 Powered by...

  • Page 138
    ..., that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: March 13, 2009 /s/ JEN-HSUN HUANG Jen-Hsun Huang President and Chief Executive Officer Source: NVIDIA CORP, 10-K, March 13, 2009 Powered by Morningstar...

  • Page 139
    ... financial information; and (b) 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 12, 2009 /s/ DAVID L. WHITE David L. White Chief Financial Officer Source: NVIDIA...

  • Page 140
    ... operations of the Company for the period covered by the Periodic Report. Date: March 13, 2009 /s/ JEN-HSUN HUANG Jen-Hsun Huang President and Chief Executive Officer A signed original of this written statement required by Section 906 of 18 U.S.C. § 1350 has been provided to NVIDIA Corporation and...

  • Page 141
    ... of operations of the Company for the period covered by the Periodic Report. Date: March 12, 2009 /s/ DAVID L. WHITE David L. White Chief Financial Officer A signed original of this written statement required by Section 906 of 18 U.S.C. § 1350 has been provided to NVIDIA Corporation and will be...