NVIDIA 2012 Annual Report Download - page 54

Table of Contents
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 was completed during the first quarter of fiscal year 2010. 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, as amended, or the Securities Exchange Act,were eligible to participate in the tender offer. All
eligible options with exercise prices equal to or greater than $17.50 per share but less than $28.00 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 equal to or 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.
A total of 28.5 million options were tendered under the offer for an aggregate cash purchase price of $78.1 million, which was paid in exchange for the
cancellation of the eligible options. As a result of the tender offer, we incurred a charge of $140.2 million consisting of $124.1 million related to the
remaining unamortized stock based compensation expense associated with the unvested portion of the options tendered in the offer, $11.6 million related to
stock-based compensation expense resulting from amounts paid in excess of the fair value of the underlying options, plus $4.5 million related to associated
payroll taxes, professional fees and other costs.
Please refer to Note 2 of the Notes to the Consolidated Financial Statements in Part IV, Item 15 of this Form 10-K for further discussion regarding the
cash tender offer.
Stock Repurchase Program
Our Board of Directors has authorized us, subject to certain specifications, to repurchase shares of our common stock up to an aggregate maximum
amount of $2.7 billion through May 2013. 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 Rule 10b-18 of the Securities Exchange Act,
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.
We did not enter into any structured share repurchase transactions or otherwise purchase any shares of our common stock during fiscal year ended
January 29, 2012. Through January 29, 2012, 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 29, 2012, we are authorized, subject to certain specifications, to repurchase shares of our common stock up to $1.24 billion
through May 2013.
Operating Capital and Capital Expenditure Requirements
We believe that our existing cash balances and anticipated cash flows from operations will be sufficient to meet our operating, acquisition and capital
requirements for at least the next twelve months. However, there is no assurance that we will not need to raise additional equity or debt financing within this
time frame. Additional financing may not be available on favorable terms or at all and may be dilutive to our then-current stockholders. We also may require
additional capital for other purposes not presently contemplated. If we are unable to obtain sufficient capital, we could be required to curtail capital equipment
purchases or research and development expenditures, which could harm our business. Factors that could affect our cash used or generated from operations
and, as a result, our need to seek additional borrowings or capital include:
• decreased demand and market acceptance for our products and/or our customers’ products;
• inability to successfully develop and produce in volume production our next-generation products;
• competitive pressures resulting in lower than expected average selling prices; and
• new product announcements or product introductions by our competitors.
We expect to spend approximately $140.0 million to $180.0 million for capital expenditures during fiscal year 2013, primarily 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.
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