NVIDIA 2009 Annual Report Download - page 70

Our accounts receivable are highly concentrated and make us vulnerable to adverse changes in our customers' businesses, and to
downturns in the industry and the worldwide economy. One customer accounted for approximately 18% of our accounts receivable
balance at January 25, 2009. While we strive to limit our exposure to uncollectible accounts receivable using a combination of credit
insurance and letters of credit, difficulties in collecting accounts receivable could materially and adversely affect our financial
condition and results of operations. These difficulties are heightened during periods when economic conditions worsen. We continue
to work directly with more foreign customers and it may be difficult to collect accounts receivable from them. We maintain an
allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. This
allowance consists of an amount identified for specific customers and an amount based on overall estimated exposure. If the financial
condition of our customers were to deteriorate, resulting in an impairment in their ability to make payments, additional allowances
may be required, we may be required to defer revenue recognition on sales to affected customers, and we may be required to pay
higher credit insurance premiums, any of which could adversely affect our operating results. In the future, we may have to record
additional reserves or write-offs and/or defer revenue on certain sales transactions which could negatively impact our financial results.
Cash Tender Offer
On February 11, 2009, we announced that our Board of Directors approved a cash tender offer for certain employee stock
options. The tender offer commenced on February 11, 2009 and expired at 12:00 midnight (Pacific Time) on 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 1934, including our former Chief Financial Officer, Marvin D. Burkett, were eligible to participate in the Offer. All
eligible options with exercise prices less than $28.00 per share, but not less than $17.50 per share were eligible to receive a cash
payment of $3.00 per option in exchange for the cancellation of the eligible option. All eligible options with exercise prices greater
than $28.00 per share were eligible to receive a cash payment of $2.00 per option in exchange for the cancellation of the eligible
option. Please refer to Note 19 for further discussion regarding the cash tender offer for certain employee stock options that our Board
of Directors approved in February 2009.
Stock Repurchase Program
During fiscal year 2005, we announced that our Board of Directors, or 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. During fiscal year 2007, the Board further approved an increase of $400 million to the original stock repurchase program. In
fiscal year 2008, we announced a stock repurchase program under which we may purchase up to an additional $1.0 billion of our
common stock over a three year period through May 2010. On August 12, 2008, we announced that our Board further authorized an
additional increase of $1.0 billion to the stock repurchase program. As a result of these increases, we have an ongoing authorization
from the Board, subject to certain specifications, to repurchase shares of our common stock up to an aggregate maximum amount of
$2.7 billion through May 2010.
The repurchases will be made from time to time in the open market, in privately negotiated transactions, or in structured stock
repurchase programs, and may be made in one or more larger repurchases, 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. 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 our common stock upon execution of the agreement, and a potential incremental
number of shares of our common stock, within a pre-determined range, at the end of the term of the agreement.
During the three months ended January 25, 2009, we did not enter into any structured share repurchase transactions or
otherwise purchase any shares of our common stock. During fiscal year 2009, we entered into structured share repurchase transactions
to repurchase 29.3 million shares for $423.6 million, which we recorded on the trade date of the transactions. Through fiscal year
2009, we have repurchased an aggregate of 90.9 million shares under our stock repurchase program for a total cost of
$1.46 billion. As of January 25, 2009, we are authorized, subject to certain specifications, to repurchase shares of our common stock
up to an additional amount of $1.24 billion through May 2010.
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Source: NVIDIA CORP, 10-K, March 13, 2009 Powered by Morningstar® Document Research℠