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Morningstar® Document Research℠
FORM 10-K
NVIDIA CORP - NVDA
Filed: March 18, 2010 (period: January 31, 2010)
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 18, 2010 (period: January 31, 2010) Annual report which provides a comprehensive overview of the company for the past year

  • Page 2
    ... No.) 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...

  • Page 3
    ... 8 of the Investment Company Act of 1940. The number of shares of common stock outstanding as of March 10, 2010 was 566.5 million. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant's Proxy Statement for its 2010 Annual Meeting of Stockholders to be filed with the Securities and Exchange...

  • Page 4
    ... of Security Holders PART II Item 5. Item 6. Item 7. Item 7A. Item 8. Item 9. Item 9A. Item 9B. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Selected Financial Data Management's Discussion and Analysis of Financial Condition and Results...

  • Page 5
    2 Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document Researchâ„

  • Page 6
    ... are 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. GPU Business Our GPU business is comprised primarily of our GeForce products that support desktop and notebook PCs, plus memory products. Our GPU business is focused...

  • Page 7
    ... of limited 40nm wafer foundry capacity, in addition to supplier challenges related to 40nm process manufacturing yields, we were forced to allocate our available 40nm product supply among our customers. 3 Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document Researchâ„

  • Page 8
    ... year 2010, we launched RealityServer, a combination of GPU hardware and software with the ability to stream interactive, photorealistic 3D applications to any web- connected PC, laptop, netbook or smart phone. We also launched during the year two significant enhancements to our Quadro product line...

  • Page 9
    4 Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document Researchâ„

  • Page 10
    ... and web experiences that end users currently enjoy on a PC. NVIDIA Tegra mobile products implement design techniques, both inside the chips and at the system level, which result in high performance and long battery life. These technologies enhance visual display capabilities, improve connectivity...

  • Page 11
    ... of accounting over the period that services are performed. For example, we have entered into agreements to jointly develop custom GPUs for gaming consoles and have licensed software development tools. Revolutionize computing with CUDA and Tesla. Tesla is a family of GPU computing products that...

  • Page 12
    ... who now offer high performance computing solutions with Tesla for use by their customers around the world. Researchers also use CUDA to accelerate their time-to-discovery, and popular off-the-shelf software packages are now CUDA accelerated. 6 Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by...

  • Page 13
    ...products. Our sales and marketing teams work closely with each industry's respective OEMs, ODMs, system builders, motherboard manufacturers, add-in board manufacturers and industry trendsetters, collectively referred to as our Channel, to define product features, performance, price and timing of new...

  • Page 14
    ...inventories of our products because the semiconductor industry is characterized by short lead time orders and quick delivery schedules. Our existing cash and marketable securities balances increased by 38% at the end of fiscal year 2010 when compared with the end of fiscal year 2009. We believe that...

  • Page 15
    ... help us remain at the forefront of the 3D graphics market and develop products that utilize leading-edge technology on a rapid basis. We believe this approach assists us in meeting the new design schedules of PC OEM and other manufacturers. As of January 31, 2010, we had 3,940 full-time employees...

  • Page 16
    ... 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 we signed with Intel in 2004. Intel seeks an order from the court declaring that the license does not extend to a new Intel processor...

  • Page 17
    ... of Finance and Chief Financial Officer of Sanmina-SCI Corporation, a global provider of customized, integrated electronics manufacturing services to original equipment manufacturers in the communications, enterprise computing and medical industries and various other end markets. From 2003 to 2004...

  • Page 18
    ...Her experience also includes senior roles at Hewlett-Packard Corporation. She holds a B.S degree in Electrical Engineering from Kansas State University and a B.S. degree in Biology from Santa Clara University. 11 Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document Research...

  • Page 19
    ... limited by supply constraints related to 40nm products. These supply constraints were driven by limited 40nm wafer foundry capacity as well as challenges related to 40nm process manufacturing yields. As a result, we have been forced to allocate our available 40nm product supply among our customers...

  • Page 20
    to effectively and efficiently transition to new manufacturing process technologies may adversely affect our operating results and our gross margin. 12 Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document Researchâ„

  • Page 21
    ... own manufacturing facilities) will not develop such high quality, leading-edge process technologies earlier. If our third party-foundries experience manufacturing inefficiencies, we may fail to achieve acceptable yields or experience product delivery delays. If our third-party foundries fall behind...

  • Page 22
    ... margin. Our gross margin for any period depends on a number of factors, including the mix of our products sold; average selling prices; introduction of new products; product transitions; sales discounts; unexpected pricing actions by our competitors; the cost of product components; and the yield...

  • Page 23
    ... from MCP products represented 26% of our total revenue for fiscal year 2010. In February 2009, Intel filed suit against us related to a patent license agreement that we signed with Intel in 2004. Intel seeks an order from the court declaring that the license does not extend to a new Intel processor...

  • Page 24
    Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document Researchâ„

  • Page 25
    .... In order to maintain or improve our financial results, we will need to continue to identify and develop new products as well as identify and enter new markets. As our GPUs and other processors develop and competition increases, we anticipate that product life cycles at the high end will remain...

  • Page 26
    ... used for graphics rendering. During fiscal year 2008, we introduced our NVIDIA Tesla family of products, which was our entry into the high-performance computing industry, a new market for us. During fiscal year 2010, we introduced our next generation CUDA GPU architecture, codenamed "Fermi," which...

  • Page 27
    17 Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document Researchâ„

  • Page 28
    ... year 2010, we recorded an additional net warranty charge of $95.8 million against cost of revenue to cover anticipated customer warranty, repair, return, replacement and other costs arising from a weak die/packaging material set in certain versions of our previous generation MCP and GPU products...

  • Page 29
    ...3D graphics, communications and networking segments and develop products that utilize leading-edge technology on a rapid basis. If these relationships are not successful, we may be unable to develop new products or product enhancements in a timely manner, which could result in a loss of market share...

  • Page 30
    ... builders and leading PC OEMs. If we were to lose sales to our PC OEMs, CEMs, ODMs, add-in board manufacturers and motherboard manufacturers and were unable to replace the lost sales with sales to different customers, if they were to significantly reduce the number of products they order from us, or...

  • Page 31
    ... benefits of business acquisitions or strategic investments, which could hurt our ability to grow our business, develop new products or sell our products. We have acquired and invested in other businesses that offered products, services and technologies that we believe will help expand or enhance...

  • Page 32
    Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document Researchâ„

  • Page 33
    ... on our financial condition and operating results. At January 31, 2010 and January 25, 2009, we had $1.73 billion and $1.26 billion, respectively, in cash, cash equivalents and marketable securities. Given the global nature of our business, we have invested both domestically and internationally. All...

  • Page 34
    ... year 2010, we recorded an additional net warranty charge of $95.8 million against cost of revenue to cover anticipated customer warranty, repair, return, replacement and other costs arising from a weak die/packaging material set in certain versions of our previous generation MCP and GPU products...

  • Page 35
    ... of customers, payment of lost profits, or, when it has been sought, injunctive relief. In addition, in the future, we may need to commence litigation or other legal proceedings in order to assert claims of infringement of our intellectual property; enforce our patents; protect our trade secrets...

  • Page 36
    ...a settlement of the litigation could adversely affect our cash flow and financial results. We are subject to the risks of owning real property. During fiscal year 2009, we purchased real property in Santa Clara, California that includes approximately 25 acres of land and ten commercial buildings. We...

  • Page 37
    ... 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 fiscal quarter of 2009, the trading price of our common stock declined. In September, October and November 2008, several putative class action...

  • Page 38
    ...suspension of production, excess inventory, sales limitations, criminal and civil liabilities and could impact our ability to conduct business in the countries or states that have adopted these types of regulations. While we believe that we have adequate internal control over financial reporting, if...

  • Page 39
    Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document Researchâ„

  • Page 40
    ... located in Santa Clara, California. During fiscal year 2009, we purchased property that includes approximately 25 acres of land and ten commercial buildings in Santa Clara, California for approximately $194.8 million. Our original plans for the purchased property included constructing a new campus...

  • Page 41
    ...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. The parties subsequently filed a stipulation requesting that the District Court vacate the May 18, 2009 Case Management Conference date and other...

  • Page 42
    ... 2, 2007, NVIDIA terminated the settlement agreement on grounds that the Bankruptcy Court had failed to proceed toward confirmation of the Creditors' Committee's plan. A non-jury trial began on March 21, 2007 on valuation issues in the Trustee's constructive fraudulent transfer claims against NVIDIA...

  • Page 43
    ... years from the date of the European Union resolution, Rambus must now offer a license to memory controller manufacturers, sellers and or companies that integrate memory controllers into other products. The license terms are set forth in a license made available on Rambus' website. NVIDIA can choose...

  • Page 44
    ... arising from 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...

  • Page 45
    ...against NVIDIA Corporation, seeking declaratory and injunctive relief relating to a licensing agreement that the parties signed in 2004. The lawsuit was filed in Delaware Chancery Court. Intel seeks an order from the Court declaring that the license does not extend to certain NVIDIA chipset products...

  • Page 46
    ... Consolidated Financial Statements in Part IV, Item 15 of this Form 10-K for further information regarding stock-based compensation related to our March 2009 stock option purchase and related to equity awards granted under our equity incentive programs. 33 Source: NVIDIA CORP, 10-K, March 18, 2010...

  • Page 47
    ...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. 1/30/2005 1/29/2006 1/28/2007 1/27/2008 1/25/2009 1/31/2010 NVIDIA Corporation $ 100.00 $ 202.14 $ 275.09 $ 327.14 $ 101.09...

  • Page 48
    .../2007 1/27/2008 1/25/2009 1/31/2010 $ 2,098.00 $2,495.00 $ 771.00 $1,539.00 $ 132.89 $ 129.82 $ 81.43 $75.88 $ 79.67 $ 45.49 $106.07 $71.41 $ 112.96 *$100 invested on 1/21/99 in stock or 12/31/98 in index, including reinvestment of dividends. Indexes calculated on month-end basis...

  • Page 49
    ...; a benefit of $8.0 million received from an insurance provider as reimbursement for some of the claims towards the warranty cost arising from a weak die/packaging material set; $18.9 million for a non-recurring charge resulting from the termination of a development contract related to a new campus...

  • Page 50
    36 Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document Researchâ„

  • Page 51
    ...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 During fiscal year 2010, we introduced our next generation CUDA GPU architecture, codenamed "Fermi". We...

  • Page 52
    ... software that transforms PC games into full stereoscopic 3D experiences. Over 420 games now support NVIDIA 3D Vision. Tender Offer During the first quarter of fiscal year 2010, we announced that our Board of Directors approved a cash tender offer for certain employee stock options. The tender offer...

  • Page 53
    ... year 2010, we recorded an additional net warranty charge of $95.8 million against cost of revenue to cover anticipated customer warranty, repair, return, replacement and other costs arising from a weak die/packaging material set in certain versions of our previous generation MCP and GPU products...

  • Page 54
    ... and add-in card partners that are earmarked for market 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...

  • Page 55
    ...estimated manufacturing yield levels and market conditions. If actual market conditions are less favorable than those projected by management, or if our future product purchase commitments to our suppliers exceed our forecasted future demand for such products, additional future inventory write-downs...

  • Page 56
    ... 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 MCP and GPU products used in notebook systems. The MCP and GPU products that were impacted were included in a number of...

  • Page 57
    ... of discounted cash flows involve businesses with limited financial history and developing revenue models, which increases the risk of differences between the projected and actual performance. The long-term financial forecasts that we utilize represent the best estimate that we have at this time and...

  • Page 58
    ...employee service period.We recognize stock-based compensation expense using the straight-line attribution method. We estimate the fair value of employee stock options on the date of grant using a binomial model and we use the closing trading price of our common stock on the date of grant as the fair...

  • Page 59
    ... the fair value of shares issued under our employee stock purchase plan during the fiscal year ended January 31, 2010, using the following assumptions: Weighted average expected life of stock options (in years) Risk free interest rate Volatility Dividend yield 0.5-2.0 0.2-1.0% 53%-73% - Accounting...

  • Page 60
    ... to calendar year 2008 as reported in the November PC Graphics 2009 Report from Mercury Research. The very slight increase in sales of our desktop GPU products resulted from an increase in unit volume in fiscal year 2010, which was driven by a strong unit sales recovery during the fourth quarter...

  • Page 61
    ...CEMs', add-in board and motherboard manufacturers' revenue is attributable to end customers in a different location. Revenue from significant customers, those representing 10% or more of total revenue for the respective dates, is summarized as follows: January 31, 2010 Year Ended January 25, 2009 12...

  • Page 62
    ...purchases, final test yield fallout, inventory and warranty provisions and shipping costs. Cost of revenue also includes development costs for license, service arrangements and stock-based compensation related to personnel associated with manufacturing. Gross margin is the percentage of gross profit...

  • Page 63
    ... in the margins of our AMD and Intel-based products. During fiscal year 2009, gross margins declined primarily due to a charge against cost of revenue to cover anticipated customer warranty, repair, return, replacement and associated costs arising from a weak die/packaging material set in certain...

  • Page 64
    ... 2010 of $90.5 million related to a tender offer that closed in March 2009, offset by a reduction in ongoing stock-based compensation expense of $36.7 million resulting from the cancellation of stock options pursuant to the tender offer. Compensation and benefits related to research and development...

  • Page 65
    ... lease for a data center in Santa Clara, California during fiscal year 2010. Interest income decreased to $42.5 million in fiscal year 2009 from $64.2 million in fiscal year 2008 primarily due to the result of lower average balances of cash, cash equivalents and marketable securities and lower...

  • Page 66
    ...31, 2010, we had $1.73 billion in cash, cash equivalents and marketable securities, an increase of $472.8 million from the end of fiscal year 2009. Our portfolio of cash equivalents and marketable securities is managed by several financial institutions. Our investment policy requires the purchase of...

  • Page 67
    ... international locations. Investing activities for capital expenditures in fiscal year 2009 also included payment of approximately $183.8 million for purchase of a property in Santa Clara, California, that includes approximately 25 acres of land and ten commercial buildings. Our original plans...

  • Page 68
    ... the money market funds held by the Reserve International Liquidity Fund, Ltd., or 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 had filed for...

  • Page 69
    ...or write-offs and/or defer revenue on certain sales transactions which could negatively impact our financial results. Cash Tender Offer During fiscal year 2010, our Board of Directors approved a cash tender offer for certain employee stock options. The tender offer commenced on February 11, 2009 and...

  • Page 70
    ...for property development, leasehold improvements, 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...

  • Page 71
    ... and replacement costs from the weak die/packaging material set and our remaining accrual balance was $88.1 million. In September, October and November 2008, several putative class action lawsuits were filed against us, asserting various claims related to the impacted MCP and GPU products. Please...

  • Page 72
    57 Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document Researchâ„

  • Page 73
    ...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, to obtain credit to finance purchases of our products and/or customer, including...

  • Page 74
    ... 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 31, 2010 based on the criteria set forth in Internal Control - Integrated Framework...

  • Page 75
    ...of our "Code" and "Financial Team Code" 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. 60 Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar...

  • Page 76
    ... Persons", "Review of Transactions with Related Persons" and "Information about the Board of Directors and Corporate Governance - Independence of the Members of the Board of Directors" in our 2010 Proxy Statement. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES The information required by this item...

  • Page 77
    ... EXHIBITS, FINANCIAL STATEMENT SCHEDULE Consolidated Financial Statements Report of Independent Registered Public Accounting Firm, PricewaterhouseCoopers LLP Consolidated Statements of Operations for the years ended January 31, 2010, January 25, 2009 and January 27, 2008 Consolidated Balance Sheets...

  • Page 78
    ..., on the financial statement schedule, and on the Company's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and...

  • Page 79
    ... average shares used in diluted per share computation (1) (1) Reflects a three-for-two stock split effective on September 10, 2007. $ $ $ $ $ See accompanying notes to the consolidated financial statements. 64 Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document...

  • Page 80
    NVIDIA CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data) January 31, 2010 447,221 1,281,006 374,963 330,674 38,214 8,752 2,480,830 571,858 369,844 120,458 42,928 3,585,918 January 25, 2009 $ 417,688 837,702 ASSETS Current assets : Cash and cash...

  • Page 81
    ...) Total Comprehensive Income (Loss) Issuance of common stock from stock plans Stock repurchase Tax benefit from stock-based compensation Stock-based compensation related to employees Balances, January 25, 2009 Comprehensive Income (Loss): - - - - (3,920) - (3,920 ) - - - - (249) - (30...

  • Page 82
    ...(Loss) Issuance of common stock from stock plans Stock repurchase Tax benefit from stock-based compensation Stock-based compensation related to employees Tender offer Charges related to stock option purchase-tender offer Balances, January 31, 2010 (1) - - - - 9,417 - 9,417 - - - - (1,110...

  • Page 83
    ... 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 related to stock option purchase Payments related to...

  • Page 84
    See accompanying notes to the consolidated financial statements. 67 Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document Researchâ„

  • Page 85
    ... facilities are in Santa Clara, California. Our Internet address is www.nvidia.com. The contents of our website are not a part of these Notes to the consolidated financial statements. All references to "NVIDIA," "we," "us," "our" or the "Company" mean NVIDIA Corporation and its subsidiaries...

  • Page 86
    ... and add-in card partners that are earmarked for market 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...

  • Page 87
    Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document Researchâ„

  • Page 88
    ... on a straight-line basis over the lease period and accrue for rent expense incurred, but not paid. Product Warranties We generally offer limited warranty to end-users that ranges from one to three years for products in order to repair or replace products for any manufacturing defects or hardware...

  • Page 89
    ..., our cash and cash equivalents were $447.2 million and $417.7 million, respectively, which include $81.4 million and $14.6 million invested in money market funds for fiscal year 2010 and fiscal year 2009, respectively. Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document...

  • Page 90
    71 Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document Researchâ„

  • Page 91
    ...of cash equivalents, marketable securities and accounts receivable. Our investment policy requires the purchase of top-tier investment grade securities, the diversification of asset type and includes certain limits on our portfolio duration. All marketable securities are held in our name, managed by...

  • Page 92
    72 Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document Researchâ„

  • Page 93
    ... wafer fabrication, assembly, testing and packaging, manufacturing support costs, including labor and overhead associated with such purchases, final test yield fallout, inventory provisions and shipping costs. We write down our inventory for estimated lower of cost or market, obsolescence or...

  • Page 94
    ... in Santa Clara, California and certain laboratories at our international locations were $10.6 million and $9.5 million, respectively. Adoption of New Accounting Pronouncements Business Combinations In the first quarter of fiscal year 2010, we adopted new accounting guidance issued by the Financial...

  • Page 95
    74 Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document Researchâ„

  • Page 96
    .... This new guidance is effective for interim and annual reporting periods beginning after December 15, 2009, except for the requirement to provide level 3 activity of purchases, sales, issuances, and settlements on a gross basis, which is effective for fiscal years beginning after December 15, 2010...

  • Page 97
    ... trading price of our common stock on the date of grant as the fair value of awards of restricted stock units, or RSUs. We calculate the fair value of our employee stock purchase plan using the Black-Scholes model. In addition to the stock-based compensation expense related to our cash tender offer...

  • Page 98
    Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document Researchâ„

  • Page 99
    ... based on historical experience. The fair value of stock options granted under our stock option plans and shares issued under our employee stock purchase plan have been estimated at the date of grant with the following assumptions: January 31, 2010 Year Ended January 25, January 27, 2009 2008 (Using...

  • Page 100
    ... authorized yet unissued shares under the 1999 Plan were cancelled upon completion of PortalPlayer's initial public offering. Each option we assumed in connection with our acquisition of PortalPlayer was converted into the right to purchase that number of shares of NVIDIA common stock determined...

  • Page 101
    78 Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document Researchâ„

  • Page 102
    ... 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 103
    ... 31, 2010 was 48.1 million shares and 35.1 million shares, respectively. (2) Please refer to Note 2 of these Notes to the Consolidated Financial Statements for further discussion regarding the cash tender offer for certain employee stock options that our Board of Directors approved in February 2009...

  • Page 104
    ... at January 25, 2009 Cash payments Balance at January 31, 2010 $ $ 186 (186) - Restructuring and other expenses for fiscal year 2009 also included a non-recurring charge of $18.9 million associated with the termination of a development contract related to a new campus construction project that has...

  • Page 105
    ... from stock options outstanding of 11.9 million for fiscal year 2008. The weighted average exercise price of stock options excluded from the computation of diluted earnings per share was $32.05 for fiscal year 2008. 82 Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document...

  • Page 106
    ... information regarding this litigation. Fair Market Value (In thousands) $ 2,433 11,310 85,418 $ 99,161 Straight-Line Amortization Period (Years) 1-2 5 - Property and equipment Trademarks Goodwill Total 83 Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document Researchâ„

  • Page 107
    ...-line basis over their respective useful lives. As of January 31, 2010, the estimated fair values of the purchase price allocated to assets we acquired and liabilities we assumed on the acquisition date were as follows: Fair Market Values Cash and cash equivalents Marketable securities Accounts...

  • Page 108
    ...of appropriate market comparables. The amount of goodwill allocated to our 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 segments as of January 31, 2010 was...

  • Page 109
    NVIDIA CORPORATION AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 9 - Amortizable Intangible Assets The components of our amortizable intangible assets are as follows: January 31, 2010 Gross Carrying Amount Technology licenses Acquired intellectual property Patents ...

  • Page 110
    NVIDIA CORPORATION AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) The following is a summary of cash equivalents and marketable securities at January 31, 2010 and January 25, 2009: Amortized Cost Debt securities of United States government agencies $ Corporate debt ...

  • Page 111
    Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document Researchâ„

  • Page 112
    ...million, offset by $3.4 million of gross unrealized losses. The amortized cost and estimated fair value of cash equivalents and marketable securities which are primarily debt instruments, are classified as available-for-sale at January 31, 2010 and January 25, 2009 and are shown below by contractual...

  • Page 113
    ...798 $ Estimated Useful Life (Years) (A) 3-25 3 3-5 (B) 3 5 (C) (D) Inventories: Raw materials Work in-process Finished goods Total inventories Property and Equipment: Land Building Test equipment Software and licenses Leasehold improvements Computer equipment Office furniture and equipment Capital...

  • Page 114
    ... regarding the nature of accrued customer programs and their accounting treatment related to our revenue recognition policies and estimates. (2) Please refer to Note 12 of the Notes to these Consolidated Financial Statements for discussion regarding the warranty accrual. (3) Please refer to Note...

  • Page 115
    ... class action lawsuits were filed against us, asserting various claims related to the impacted MCP and GPU products. Please refer to Note 13 of these Notes to the Consolidated Financial Statements for further information regarding this litigation. 91 Source: NVIDIA CORP, 10-K, March 18, 2010...

  • Page 116
    ... from a weak die/packaging material set. 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...

  • Page 117
    NVIDIA CORPORATION AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) Lease Obligations Our headquarters complex is located in Santa Clara, California and includes eight buildings that are leased properties. The lease agreements for five of the eight leased properties expire...

  • Page 118
    ... CORPORATION AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) Litigation 3dfx 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...

  • Page 119
    ... 2, 2007, NVIDIA terminated the settlement agreement on grounds that the Bankruptcy Court had failed to proceed toward confirmation of the Creditors' Committee's plan. A non-jury trial began on March 21, 2007 on valuation issues in the Trustee's constructive fraudulent transfer claims against NVIDIA...

  • Page 120
    ... years from the date of the European Union resolution, Rambus must now offer a license to memory controller manufacturers, sellers and or companies that integrate memory controllers into other products. The license terms are set forth in a license made available on Rambus' website. NVIDIA can choose...

  • Page 121
    96 Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document Researchâ„

  • Page 122
    ... arising from 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...

  • Page 123
    ...against NVIDIA Corporation, seeking declaratory and injunctive relief relating to a licensing agreement that the parties signed in 2004. The lawsuit was filed in Delaware Chancery Court. Intel seeks an order from the Court declaring that the license does not extend to certain NVIDIA chipset products...

  • Page 124
    ... to employer stock option plans Income tax expense (benefit) Income (loss) before income taxes consists of the following: January 31, 2010 Domestic Foreign $ $ (245,137) 162,843 (82,294) $ 177 438 6,966 7,581 (22,013) - 866 (21,147) (741) (14,307) Year Ended January 25, 2009 (In thousands...

  • Page 125
    ... to state and certain foreign deferred tax assets that management determined not likely to be realized due, in part, to projections of future taxable income and potential utilization limitations of tax attributes acquired as a result of stock ownership changes. To the extent realization of the...

  • Page 126
    100 Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document Researchâ„

  • Page 127
    .... We are subject to taxation by a number of taxing authorities both in the United States and throughout the world. As of January 31, 2010, the material tax jurisdictions that are subject to examination include the United States, Hong Kong, Taiwan, China, India, and Germany and include our fiscal...

  • Page 128
    ... Financial Statements for further information regarding stock-based compensation related to our March 2009 stock option purchase and related to equity awards granted under our equity incentive programs. Convertible Preferred Stock As of January 31, 2010 and January 25, 2009, there were no shares...

  • Page 129
    ... related to video game consoles and other digital consumer electronics devices. In addition to these operating segments, we have the "All Other" category that includes human resources, legal, finance, general administration, corporate marketing expenses, charges related to the stock option purchase...

  • Page 130
    ... United States Taiwan China India Europe Other Asia Pacific Other Americas Total long-lived assets Revenue from significant customers, those representing 10% or more of total revenue for the respective dates, is summarized as follows: January 31, 2010 Year Ended January 25, 2009 12 % 9% 7% 7% 8% 11...

  • Page 131
    ... Sheet. Includes $65.5 million in Cash Equivalents and $252.3 million in Marketable Securities on the Consolidated Balance Sheet. For our money market funds that were held by the International Reserve Fund at January 31, 2010, we assessed the fair value of the money market funds by considering the...

  • Page 132
    ... the Securities Exchange Act of 1934, as amended, 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...

  • Page 133
    ...recurring charge related to a termination of development contract related to a new campus construction project we have put on hold. (F) Included $8.0 million benefit from an insurance provider as reimbursement for some claims against us towards the cost arising from a weak die/packaging material set...

  • Page 134
    NVIDIA CORPORATION AND SUBSIDIARIES SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS Balance at Beginning of Period Description Year ended January 31, 2010 Allowance for doubtful accounts Sales return allowance Deferred tax valuation allowance Year ended January 25, 2009 Allowance for doubtful ...

  • Page 135
    ... Description Schedule/Form 2.1 Agreement and Plan of Merger by and among 8-K NVIDIA Corporation, Partridge Acquisition, Inc. and PortalPlayer, Inc. dated 11/6/06 3.1 3.2 3.3 4.1 4.2 10.1 Amended and Incorporation Restated Certificate of S-8 10-Q 8-K File Number 0-23985 Exhibit 2.1 Filing Date 11...

  • Page 136
    ... 2007 Equity Incentive Plan - Restricted Stock Unit Grant Notice and Restricted Stock Unit Purchase Agreement 10.23+ 10.24+ 10.25+ 10.26 10.27 10.28 10.29 10.30 Fiscal Year 2009 Variable Compensation Plan Fiscal Year 2010 Variable Compensation Plan David L. White Offer Letter, dated January 28, 2009...

  • Page 137
    ... Extension Presentation Linkbase Document * Filed herewith. + Management contract or compensatory plan or arrangement. # In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release Nos. 33-8238 and 34-47986, Final Rule: Management's Reports on Internal Control Over Financial Reporting...

  • Page 138
    ... or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 17, 2010. NVIDIA Corporation /s/ Jen-Hsun Huang Jen-Hsun Huang President and Chief Executive Officer By: POWER OF ATTORNEY...

  • Page 139
    ... Description Schedule/Form 2.1 Agreement and Plan of Merger by and among 8-K NVIDIA Corporation, Partridge Acquisition, Inc. and PortalPlayer, Inc. dated 11/6/06 3.1 3.2 3.3 4.1 4.2 10.1 Amended and Incorporation Restated Certificate of S-8 10-Q 8-K File Number 0-23985 Exhibit 2.1 Filing Date 11...

  • Page 140
    ... 2007 Equity Incentive Plan - Restricted Stock Unit Grant Notice and Restricted Stock Unit Purchase Agreement 10.23+ 10.24+ 10.25+ 10.26 10.27 10.28 10.29 10.30 Fiscal Year 2009 Variable Compensation Plan Fiscal Year 2010 Variable Compensation Plan David L. White Offer Letter, dated January 28, 2009...

  • Page 141
    ... Extension Presentation Linkbase Document * Filed herewith. + Management contract or compensatory plan or arrangement. # In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release Nos. 33-8238 and 34-47986, Final Rule: Management's Reports on Internal Control Over Financial Reporting...

  • Page 142
    Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document Researchâ„

  • Page 143
    NVIDIA CORPORATION CERTIFICATE OF STOCK OPTION GRANT 2007 EQUITY INCENTIVE PLAN Summary of Grant Award: Granted to: Grant Number: Social Security Number/Global ID: Grant Date(mm/dd/yyyy): Expiration Date(mm/dd/yyyy): Shares Granted: Grant Price: Grant Type: Exhibit 10.20 Vesting Schedule: Number ...

  • Page 144
    ...422 of the Internal Revenue Code of 1986, as amended (the "Code"). 2. The exercise price of this Option is set forth on the Certificate and is equal to the Fair Market Value of the Common Stock on the date of grant of this Option. 3. Subject to the limitations contained herein this Option shall vest...

  • Page 145
    ... to pay the exercise price under one of the following alternatives: (i) Payment in cash or check at the time of exercise; (ii) Payment pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the issuance of Common Stock subject to this Option...

  • Page 146
    ... hereunto set their hands as of the date the Certificate is accepted on the Website. NVIDIA CORPORATION Jen-Hsun Huang President and Chief Executive Officer GRANTEE (Acceptance designated electronically at the Website.) Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document...

  • Page 147
    Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document Researchâ„

  • Page 148
    NVIDIA CORPORATION CERTIFICATE OF STOCK OPTION GRANT 2007 EQUITY INCENTIVE PLAN Summary of Grant Award: Granted to: Grant Number: Social Security Number/Global ID: Grant Date(mm/dd/yyyy): Expiration Date(mm/dd/yyyy): Shares Granted: Grant Price: Grant Type: Exhibit 10.21 Vesting Schedule: Number ...

  • Page 149
    ... policy on part-time employee vesting, with such modification made in the sole discretion of the Company. (b) If your Continuous Service terminates at any time as a result of your death, this Option shall become immediately fully vested and exercisable. Source: NVIDIA CORP, 10-K, March 18, 2010...

  • Page 150
    ... to pay the exercise price under one of the following alternatives: (i) Payment in cash or check at the time of exercise; (ii) Payment pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the issuance of Common Stock subject to this Option...

  • Page 151
    ... hereunto set their hands as of the date the Certificate is accepted on the Website. NVIDIA CORPORATION Jen-Hsun Huang President and Chief Executive Officer GRANTEE (Acceptance designated electronically at the Website.) Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document...

  • Page 152
    Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document Researchâ„

  • Page 153
    Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document Researchâ„

  • Page 154
    ... Company, and (ii) the following agreements only: OTHER AGREEMENTS: NVIDIA CORPORATION PARTICIPANT: By: Signature Title: Date: ATTACHMENTS: Signature Date: 1 Restricted Stock Unit Agreement, 2007 Equity Incentive Plan Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document...

  • Page 155
    ...the terms of the Plan shall control. The details of your Award, in addition to those set forth in the Grant Notice and the Plan, are as follows. 1. GRANT OF THE AWARD. This Award represents the right to be issued on a future date the number of shares of the Company's Common Stock as indicated in the...

  • Page 156
    ... such delivery date shall instead fall on the next following business day. (b) Notwithstanding the foregoing, in the event that you are subject to the Company's policy permitting employees, contractors or consultants to sell shares only during certain "window" periods, in effect from time to time or...

  • Page 157
    ... other term or condition of employment or affiliation; (iii) confer any right or benefit under this Agreement or the Plan unless such right or benefit has specifically accrued under the terms of this Agreement or Plan; or (iv) deprive the Company or an Affiliate of the right to terminate you at will...

  • Page 158
    ... to a previously established Company-approved 10b5-1 plan, or (iv) withholding shares of Common Stock from the shares of Common Stock issued or otherwise issuable to you in connection with the Award with a Fair Market Value (measured as of the date shares of Common Stock are issued to pursuant...

  • Page 159
    ...acknowledge receipt of the Company's policy permitting certain individuals to sell shares only during certain "window" periods and the Company's insider trading policy, in effect from time to time. 13. NOTICES. Any notices provided for in your Award or the Plan shall be given in writing and shall be...

  • Page 160
    ... except as such plan otherwise expressly provides. The Company expressly reserves its rights to amend, modify, or terminate any of the Company's or any Affiliate's employee benefit plans. 18. CHOICE OF LAW. The interpretation, performance and enforcement of this Agreement will be governed by the law...

  • Page 161
    ATTACHMENT II NVIDIA CORPORATION 2007 EQUITY INCENTIVE PLAN . Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document Researchâ„

  • Page 162
    Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document Researchâ„

  • Page 163
    ...Limited NVIDIA GK NVIDIA Graphics Holding Company NVIDIA Semiconductor Holding Company NVIDIA Graphics Private Limited NVIDIA Semiconductor Shanghai Co. Ltd. NVIDIA BVI Holdings Limited NVIDIA Semiconductor Shenzhen Holding Company NVIDIA Semiconductor Shenzhen Co., Ltd. NVIDIA Hong Kong Development...

  • Page 164
    Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document Researchâ„

  • Page 165
    ... of NVIDIA Corporation of our report dated March 17, 2010 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 17, 2010 Source...

  • Page 166
    Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document Researchâ„

  • Page 167
    ...involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: March 17, 2010 /s/ JEN-HSUN HUANG Jen-Hsun Huang President and Chief Executive Officer Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document...

  • Page 168
    Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document Researchâ„

  • Page 169
    ... 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 17, 2010 /s/ DAVID L. WHITE David L. White Executive Vice President and Chief Financial Officer Source: NVIDIA CORP, 10-K, March 18...

  • Page 170
    Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document Researchâ„

  • Page 171
    ...Title 18 of the United States Code (18 U.S.C. § 1350), Jen-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 10-K for the year ended January 31, 2010, to which this...

  • Page 172
    Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document Researchâ„

  • Page 173
    ... the United States Code (18 U.S.C. § 1350), David L. White, the Executive Vice President and 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 10-K for the year ended January 31, 2010, to which...

  • Page 174
    Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document Researchâ„

  • Page 175
    Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document Researchâ„

  • Page 176
    _____ Created by Morningstar® Document Researchâ„ http://documentresearch.morningstar.com Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document Researchâ„