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NVIDIA CORPORATION
2014 ANNUAL REVIEW
NOTICE OF ANNUAL MEETING
PROXY STATEMENT AND FORM 10K

Table of contents

  • Page 1
    NVIDIA CORPORATION 2014 ANNUAL REVIEW NOTICE OF ANNUAL MEETING PROXY STATEMENT AND FORM 10 K

  • Page 2
    ...'s largest industries. Today, NVIDIA is positioned to grow in a world where visual computing is central to how people interact with technology. We focus our expertise on applications and markets where visual computing is deeply valued - Gaming; Design and Visualization; HPC and Data Centers; and...

  • Page 3

  • Page 4
    ...Call of Duty: Ghosts hit $1 billion in sales in just 24 hours. The League of Legends Championship had 32 million viewers, nearly twice as many as the final game of the World Series. Gaming is thriving. And GeForce has evolved into the world's leading gaming platform. We are focused on imagining and...

  • Page 5
    We aim to create an end-to-end platform that defines next-gen PC gaming. At its heart is GeForce Experience. 2014 ANNUAL REPORT 3

  • Page 6
    ...depict the boats' progress, speed and relative positions. > Adobe Creative Cloud, a powerful set of content-creation applications, was released, fully optimized for NVIDIA GPUs. It delivers huge acceleration for video production, motion graphics, photo editing and more. > For the fifth year running...

  • Page 7
    "Our entire VFX workstation infrastructure is built around NVIDIA hardware. Every movie we've helped to make, from Iron Man 3 to War Horse, from Skyfall to Gravity, has benefited from NVIDIA GPUs." Steve MacPherson, CTO, Framestore 2014 ANNUAL REPORT 5

  • Page 8
    ... shell, a key to its resistance. > IBM and NVIDIA began collaborating on GPU-accelerated versions of IBM's wide portfolio of enterprise software applications, and optimizing joint-processing capabilities of Tesla with IBM POWER processors. > The fully virtualized enterprise data center is becoming...

  • Page 9
    ... molecular dynamics to new energy-efficient fuels to climate modeling. Dr. Adam Gazzaley, Director of Neuroscience Imaging Center, University of California, San Francisco 2014 ANNUAL REPORT " 7 "With GPUs, we can now record brain activity in real-time, opening new opportunities for diagnostics...

  • Page 10
    ... in massive data centers. It started with phones. But soon, all computing devices will be reimagined, from TVs to game consoles to cars. We are focused on the markets and devices where our visual computing expertise can make a contribution. > We unveiled Tegra K1, a 192-core super chip, bringing our...

  • Page 11
    "Tegra K1 opens a new chapter for Audi to deliver revolutionary supercomputing advances to the car, paving the way to piloted driving experiences." Ricky Hudi, Chief Executive Engineer of Electrics/Electronics, Audi AG 2014 ANNUAL REPORT 9

  • Page 12
    ...position as the world leader in visual computing. We returned $1.07 billion to shareholders through a combination of share repurchases and cash dividends. We also completed a $1.5 billion convertible debt offering, which we expect to use for stock repurchases, dividend payments and general corporate...

  • Page 13
    ... GPUs. Automotive. We have a long history with the auto industry, where designers and engineers rely on Quadro-powered workstations to do their best work. Our latest visual computing developments focus on the core technology inside the car. Today, NVIDIA powers the digital cockpits and infotainment...

  • Page 14
    .... Making a contribution is one of the core values that bind together our 8,800 employees in 24 countries around the world. We do much of this work through the NVIDIA Foundation, one of the corporate world's few fully employee-run philanthropic initiatives. Compute the Cure is a broad program...

  • Page 15
    ...; unexpected loss of performance of our products or technologies when integrated into systems; as well as other factors detailed from time to time in the reports NVIDIA files with the Securities and Exchange Commission, or SEC, including its Form 10-K for the fiscal period ended January 26, 2014...

  • Page 16
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  • Page 17
    NOTICE OF 2014 ANNUAL MEETING OF STOCKHOLDERS Date and time: Location: Virtual meeting: Items of business: Friday, May 23, 2014 at 10:30 a.m. Pacific Time NVIDIA Headquarters, Building E 2800 Scott Boulevard, Santa Clara, California 95050 You may also vote at the meeting via the Internet by visiting...

  • Page 18
    ... Year 2015 ...Fees Billed by the Independent Registered Public Accounting Firm ...Report of the Audit Committee of the Board of Directors ...Equity Compensation Plan Information ...Proposal 4-Approval of an Amendment and Restatement of our Amended and Restated 2007 Equity Incentive Plan . Proposal...

  • Page 19
    ... data centers; automotive and smart devices. During the year, NVIDIA made significant progress in its visual computing strategy, making targeted investments to position itself solidly for the long term. In our GPU business segment, we: • Announced and shipped a new family of high-end Kepler-based...

  • Page 20
    ... intellectual property, or IP, and licensing, we: • • Initiated an IP licensing initiative designed to bring GPU technology to new markets and generate revenue from markets previously inaccessible to NVIDIA Grew patent assets to approximately 7,000 The strategy of adding value through a focus...

  • Page 21
    ...will" employees of NVIDIA We do not offer change-in-control benefits to our executive officers, except for the change-in-control vesting acceleration provisions in our equity plans that are applicable to all of our employees if an acquiring company does not assume or substitute our outstanding stock...

  • Page 22
    ... and Restated 2007 Equity Incentive Plan ...FOR Approval of an amendment and restatement of our 2012 Employee Stock Purchase Plan...FOR Board Recommendation Election of Directors (Proposal 1) Our Nominating and Corporate Governance Committee performs an annual assessment of each director nominee to...

  • Page 23
    ... and restatement of our 2012 Employee Stock Purchase Plan, or the 2012 Purchase Plan, to increase the share reserve under our 2012 Purchase Plan by 12,500,000 shares. The Board recommends a vote FOR this proposal because our 2012 Purchase Plan is an important employee benefit and is essential...

  • Page 24
    ... In Person. Our 2014 Annual Meeting will take place in Building E of our headquarters located at 2800 Scott Boulevard, Santa Clara, California 95050. Our principal executive offices are located at 2701 San Tomas Expressway, Santa Clara, California 95050, and our telephone number is (408) 486...

  • Page 25
    ... who own our common stock at the close of business on March 25, 2014 (other than those who previously requested electronic or paper delivery) a Notice containing instructions on how to access our proxy materials, including our proxy statement and our fiscal year 2014 annual report, and how to...

  • Page 26
    ... record date, there were 557,305,798 shares of common stock outstanding and entitled to vote. A list of stockholders entitled to vote at the 2014 Annual Meeting will be available at our headquarters, 2701 San Tomas Expressway, Santa Clara, California for 10 days prior to the 2014 Annual Meeting. If...

  • Page 27
    ... of the outstanding shares entitled to vote at the close of business on March 25, 2014 are represented at the 2014 Annual Meeting either in person or by proxy. On the record date, there were 557,305,798 shares of common stock outstanding and entitled to vote, meaning that 278,652,900 shares must be...

  • Page 28
    ... LLP as our independent registered public accounting firm for fiscal year 2015 Approval of an amendment and restatement of our Amended and Restated 2007 Equity Incentive Plan Approval of an amendment and restatement of our 2012 Employee Stock Purchase Plan Vote Required for Approval...

  • Page 29
    ... 11, 2014 to NVIDIA Corporation, 2701 San Tomas Expressway, Santa Clara, California 95050, Attention: Secretary and must comply with all applicable requirements of Rule 14a-8 promulgated under the Securities Exchange Act of 1934, as amended. However, in the event that we do not hold our 2015 Annual...

  • Page 30
    ... Managing Director, Sutter Hill Ventures President & Chief Executive Officer, NVIDIA Corporation Vice Chairman, The Parthenon Group Managing Partner, Square Wave Ventures Independent Consultant Advisor, Third Rock Ventures Venture Partner, New Enterprise Associates Managing Partner, S-Cubed Capital...

  • Page 31
    ... reporting processes is important because it assists our directors in understanding, advising and overseeing our financial reporting and internal controls. Public Company Board Experience. Directors who have served on boards of directors of other public companies have corporate governance experience...

  • Page 32
    ... as executive chairman for his final year. Previously, he held key executive positions from 1984 to 1991 at Silicon Graphics, Inc. (SGI), a graphics and computing company; from 1991 to 1995, served as chief executive officer and a board member of Alias Research, Inc., a publicly traded 3D software...

  • Page 33
    ... since served as president, chief executive officer, and a member of the board of directors. Under his direction, NVIDIA has become the world's leading visual-computing company and a key player in the fields of mobile and high-performance computing. Mr. Huang held a variety of positions from 1985 to...

  • Page 34
    ..., he held various positions at Control Data Corp., a supplier of computer hardware, software and services, including executive vice president and president, information services. He was on the board of directors of Overland Storage, Inc., a supplier of data storage products from 2006 to 2009; and of...

  • Page 35
    ... family office investment firm, since 2012. He was a managing partner from 1993 to 2011 of Sequoia Capital, a venture capital investment firm, where he had been an associate for the preceding four years. Previously, he held technical sales and marketing positions at Intel Corp., and was a member of...

  • Page 36
    .... Our Lead Director has significant responsibilities, which are set forth in our Corporate Governance Policies, and include, in part: • • Determining an appropriate schedule of Board meetings, seeking to ensure that the independent members of the Board can perform their duties responsibly while...

  • Page 37
    ..., board meetings and involvement of senior management, chief executive officer performance evaluation, and board committees and compensation. Our Corporate Governance Policies may be viewed under Corporate Governance in the Investor Relations section of our website at www.nvidia.com. Executive...

  • Page 38
    ... designed to familiarize new directors with our businesses, strategies, and policies and to assist new directors in developing the skills and knowledge required for their service on the Board. Continuing education programs for directors may include a combination of internally developed materials and...

  • Page 39
    ... David M. Shannon, our Secretary, at NVIDIA Corporation, 2701 San Tomas Expressway, Santa Clara, California 95050. All stockholder communications we receive that are addressed to the Board will be compiled by our Secretary. If no particular director is named, letters will be forwarded, depending on...

  • Page 40
    ... Information The Board met thirteen times during fiscal year 2014. In addition, during fiscal year 2014, the Board held a two day meeting, during which the Board discussed the strategic direction of NVIDIA, explored and discussed new business opportunities and the product roadmap, and addressed...

  • Page 41
    ...overall compensation strategy and policies; Reviews and recommends to the Board the compensation of our Board members; Reviews and approves the compensation and other terms of employment of our chief executive officer and other executive officers; Reviews and approves corporate performance goals and...

  • Page 42
    ... number of shares subject to each stock option grant had a fair value (calculated using a binomial option pricing model, based on the average closing market price over the 60 calendar days ending two business days before the 2013 Annual Meeting, as determined in accordance with Financial Accounting...

  • Page 43
    ... a stock option to purchase 85,551 shares as the equity portion of compensation for his service on the Board and committees with an exercise price of $14.63 per share, which was the closing price of our common stock as reported by NASDAQ on May 16, 2013. The grant date fair value per share for...

  • Page 44
    ... for his service on the Board and committees (a) a stock option to purchase 42,775 shares with an exercise price of $14.63 per share, which was the closing price of our common stock as reported by NASDAQ on May 16, 2013, and (b) an RSU grant for 8,653 shares. The grant date fair value per share for...

  • Page 45
    ...a description of the terms of the NVIDIA Corporation 1998 Equity Incentive Plan, or 1998 Plan, and the Amended 2007 Plan, related to a change-in-control of NVIDIA. We have granted stock options and restricted stock units to our executive officers and our non-employee directors. See the section below...

  • Page 46
    ... Owners and Management The following table sets forth information as of January 26, 2014 as to shares of our common stock beneficially owned by each of our directors, each of the executive officers named in the Summary Compensation Table, all of our directors and executive officers as a group...

  • Page 47
    ... than 1 percent of the outstanding shares of our common stock. (1) This table is based upon information provided to us by our executive officers and directors. Information about principal stockholders, other than percentages of beneficial ownership, is based solely on Schedules 13G or 13G/ A filed...

  • Page 48
    ... dispositive power with respect to 36,818,302 shares. Vanguard is located at 100 Vanguard Boulevard, Malvern, Pennsylvania 19355. This information is based solely on a Schedule 13G, dated March 5, 2014, filed with the SEC on March 7, 2014 by PRIMECAP Management Company, or PRIMECAP, reporting its...

  • Page 49
    ... SEC rules. At the 2011 Annual Meeting, our stockholders indicated their preference that NVIDIA solicit a non-binding advisory approval of the compensation of the named executive officers, commonly referred to as a "say-on-pay vote," every year. The Board has adopted a policy that is consistent with...

  • Page 50
    ... programs to key financial metrics that we believe drive value and contribute to the long-term success of NVIDIA. In setting fiscal year 2014 executive officer compensation, our Compensation Committee reflected on the votes cast on our say-on-pay proposal for fiscal year 2013. At our 2013 Annual...

  • Page 51
    ... in a dynamic, competitive market. We seek to accomplish this goal in ways that align with our business objectives, our performance and the long-term interests of our stockholders. We design our executive compensation program to position NVIDIA competitively among the companies against which we...

  • Page 52
    ..." employees of NVIDIA. We do not offer change-in-control benefits to our executive officers, except for the change-in-control vesting acceleration provisions in our equity plans that are applicable to all of our employees if an acquiring company does not assume or substitute our outstanding stock...

  • Page 53
    ... Kress who joined NVIDIA in September 2013 and has until March 2015 to comply with these guidelines. As shown above under Security Ownership of Certain Beneficial Owners and Management, as of January 26, 2014, based on the closing price of our common stock of $15.56 on the last trading day of fiscal...

  • Page 54
    ... with the level of responsibility-for example, because the CEO has overall responsibility for our entire company, his total compensation opportunity is significantly greater, as is his percentage of performance-based compensation; (ii) internal pay equity-that is, we assess an executive officer...

  • Page 55
    ... Data In late fiscal year 2013, Exequity and our human resources department recommended, and our Compensation Committee approved, our peer companies for fiscal year 2014 which are companies that (i) we generally think we compete with for executive talent, (ii) have an established business, market...

  • Page 56
    ... program for our executive officers are: annual base salary; short-term variable cash compensation; and long-term equity incentive compensation (granted in the form of stock options, PSUs, RSUs, or a combination of awards). In addition, we paid a signing bonus to our recently hired CFO and offered...

  • Page 57
    ...account internal pay equity with Messrs. Puri and Shannon. (3) Variable Cash Compensation Variable cash compensation, administered under our Variable Plan, is designed to align executive compensation with the executive officer's individual performance and our annual corporate financial performance...

  • Page 58
    ..., based in part on the factors described above, and in part on internal pay equity, our compensation budget, historical total cash opportunity levels and that the target performance goal for our fiscal year 2014 Variable Plan was set at a level where target performance would result in our executives...

  • Page 59
    .... Under the fiscal year 2014 Variable Plan, no amount of the Corporate Component would be earned unless the Company exceeded the Threshold level of performance of $425 million. The Maximum payout on the Corporate Component was two times our executive officers' Corporate Target Amount if at least...

  • Page 60
    ... achievements in fiscal year 2014, including achieving record gross margins and returning over $1 billion in capital to stockholders; assisted in a smooth transition of Ms. Kress as the Company's new CFO; and continued development of the Company's long-term capital return program. As a result of...

  • Page 61
    ... price per share (the closing price of our common stock on the grant date) over a specified period of time. Stock options provide value to our executive officers only if the market price of our common stock appreciates over the stock option term and only if the executive officer remains with NVIDIA...

  • Page 62
    ... financial performance. The Compensation Committee also believes it should tie our executive compensation programs to our key financial metrics in the short-term which it believes drives value and contributes to the long-term success of the Company. In addition, given that fiscal year 2014 was...

  • Page 63
    ...eligible to participate in these programs on the same basis as our other employees. Like all of our full-time employees, our executive officers are eligible to participate in our Employee Stock Purchase Plan and our 401(k) plan. Effective January 1, 2013, we implemented a company match under our 401...

  • Page 64
    ...our equity incentive plans on the same terms and conditions as our other employees. As described in greater detail below under the heading Employment, Severance and Change-in-Control Arrangements, the vesting of all of the stock options or RSUs held by our employees, including our executive officers...

  • Page 65
    ... sixth business day of the month following the new employee's start date. New hire grants to executive officers are made as part of our monthly process that includes grants to all recently hired employees. The exercise price of all new hire grants is equal to the closing price of our common stock on...

  • Page 66
    ...an expense over the requisite employee service period. For accounting purposes, we use a binomial option pricing model to estimate the fair value of each stock option grant and the closing price of our common stock on the date of grant, minus a dividend yield discount, as the fair value of RSUs. 48

  • Page 67
    ... encourages our employees to focus on the long-term performance of NVIDIA. Annual variable pay is not awarded below the executive level; We design our variable cash compensation programs for executives so that payouts are based on achievement of both individual and corporate performance targets. We...

  • Page 68
    ...titled "Stock-Based Compensation" in our Annual Report on Form 10-K for fiscal year 2014, filed with the SEC on March 13, 2014. With regard to Mr. Huang's stock award with performance-based vesting conditions, the reported grant date fair value assumes the probable outcome of the performance-related...

  • Page 69
    ...Kress' appointment as our Executive Vice President and Chief Financial Officer, Ms. Burns resumed her position as Vice President, Finance in September 2013. Represents match of contributions to our 401(k) savings plan, which we provide to all eligible employees. Represents a discretionary cash award...

  • Page 70
    ...Under the Amended 2007 Plan, the exercise price may be paid in cash, in shares of our common stock valued at fair market value on the exercise date or through a cashless exercise procedure involving a same-day sale of the purchased shares. All stock option grants are subject to service based vesting...

  • Page 71
    ... semi-annual grants were made to all of our other eligible employees. Represents the closing price of our common stock as reported by NASDAQ on March 20, 2013. Represents stock options granted to our named executive officers in the third quarter of fiscal year 2014 pursuant to the Amended 2007 Plan...

  • Page 72
    ...following table presents information regarding outstanding equity awards held by our named executive officers as of January 26, 2014. As of January 26, 2014, none of our named executive officers held unearned equity incentive or stock awards. Option Awards Number of Securities Underlying Unexercised...

  • Page 73
    ....20 15.94 18.10 10.56 17.62 14.465 14.46 13.71 12.62 16.00 - - - - - - - (1) (1) (1) (1) (1) (1) (1) (1) (1) (1) (1) (1) 3/18/2014 9/16/2014 3/17/2015 9/15/2015 3/16/2016 9/14/2020 3/15/2021 9/20/2021 3/20/2022 9/18/2022 3/19/2023 9/17/2023 - - - - - - - - - - - - - - - - - - - 3,125 4,688 6,250...

  • Page 74
    ...common stock as reported by NASDAQ on the date of grant which is the exercise price of stock option grants made pursuant to our Amended 2007 Plan. In connection with the settlement of the stockholder derivative lawsuits relating to our historical stock option practices, effective May 7, 2009, NVIDIA...

  • Page 75
    ... that the RSU will be fully vested on March 15, 2017. Calculated by multiplying the number of RSUs by the closing price ($15.56) of NVIDIA's common stock on January 26, 2014, the last trading day before the end of our fiscal year 2014, as reported by NASDAQ. The RSU will vest as to 25% on September...

  • Page 76
    ...and the sales price of the shares of common stock. The value realized was determined without considering any taxes that may have been owed. The exercise price of each such stock option was equal to the closing price of our common stock as reported by NASDAQ on the date of grant. The number of shares...

  • Page 77
    ... amount of unvested options was calculated by multiplying the number of in-the-money unvested options held by the applicable named executive officer by the difference between the closing price of our common stock on January 24, 2014, the last trading day of fiscal year 2014, as reported by NASDAQ...

  • Page 78
    ... is an officer or employee of NVIDIA, and none of our executive officers serve as a director or member of a compensation committee of any entity that has one or more executive officers serving as a member of our Board or Compensation Committee. Compensation Committee Report The Compensation...

  • Page 79
    ... as our independent registered public accounting firm for our fiscal year ending January 25, 2015. Stockholder ratification of the Audit Committee's selection of PwC is not required by our Bylaws or any other governing documents or laws. As a matter of good corporate governance, we are submitting...

  • Page 80
    ... control over financial reporting, reviews of our quarterly financial statements and annual report, reviews of SEC registration statements and related consents, fees related to statutory audits of some of our international entities and comfort letter fees related to the convertible note offering...

  • Page 81
    ... registered public accounting firm. Management is responsible for the financial reporting process, the preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States, or GAAP, the system of internal control over financial reporting...

  • Page 82
    Based on the Audit Committee's review and discussions, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in the Annual Report on Form 10-K of NVIDIA for the fiscal year ended January 26, 2014. AUDIT COMMITTEE Mark L. Perry, ...

  • Page 83
    ...Amended 2007 Plan (which is intended as the successor to and continuation of our 1998 Plan, our 1998 Non-Employee Directors' Stock Option Plan, our 2000 Nonstatutory Equity Incentive Plan and the PortalPlayer, Inc. 2004 Stock Incentive Plan) and our 2012 Employee Stock Purchase Plan. Of these shares...

  • Page 84
    ... by 0.3601 and then rounding up to the nearest whole cent. Vesting schedules and expiration dates did not change. Under the 1999 Plan, options generally vest as to 25% of the shares one year after the date of grant and as to 1/48th of the shares each month thereafter and expire ten years from the...

  • Page 85
    ... at levels determined appropriate by our Compensation Committee. The Amended and Restated 2007 Plan will also allow us to utilize a broad array of equity and performance cash incentives in order to secure and retain the services of our employees, consultants and directors, and to provide long term...

  • Page 86
    ... the Amended and Restated 2007 Plan is 187,767,766 shares, which is an increase of 10,000,000 shares over the number of shares of our common stock authorized for issuance under the Amended 2007 Plan. With respect to performance-based awards (including performance-based stock and cash awards that...

  • Page 87
    ...-Average Remaining Term of Outstanding Stock Options...Total Shares Available for Grant under the Amended 2007 Plan ...Total Shares Available for Grant under Other Equity Plans ...Total Common Stock Outstanding ...Closing Price of Common Stock as Reported on NASDAQ Global Select Market Burn Rate The...

  • Page 88
    ... activity under our stock repurchase program. As of January 26, 2014, we are authorized, subject to certain specifications, to repurchase shares of our common stock up to $1.25 billion through January 2016. Gross Burn Rate is calculated as: shares subject to options and full value awards granted...

  • Page 89
    ... make public forecasts as to our total shares outstanding and utilization of various equity awards due to the unpredictability of the underlying assumptions and estimates. In particular, the forecasts set forth above in this Proposal 4 include embedded assumptions regarding option exercise, employee...

  • Page 90
    .... All of our approximately 8,847 employees, nine non-employee directors and 443 consultants as of March 25, 2014 are eligible to participate in the Amended and Restated 2007 Plan and may receive all types of awards other than incentive stock options. Incentive stock options may be granted under the...

  • Page 91
    ... any vested stock options for up to 90 days after the date the service relationship ends. Under the Amended and Restated 2007 Plan, the stock option term may be extended in the event that exercise of the stock option following termination of service is prohibited by applicable securities laws or...

  • Page 92
    ... a stock option granted under the Amended and Restated 2007 Plan other than by will or the laws of descent and distribution or pursuant to a domestic relations order or an official marital settlement agreement. However, to the extent permitted under the terms of the applicable stock option agreement...

  • Page 93
    ..., to be paid in whole or in part in cash or other property. In addition, to the extent permitted by applicable law and the applicable award agreement, the Plan Administrator may determine that common stock authorized under the Amended and Restated 2007 Plan may be used in payment of performance cash...

  • Page 94
    ... in revenue or product revenue; (13) expenses and cost reduction goals; (14) improvement in or attainment of expense levels; (15) improvement in or attainment of working capital levels; (16) economic value added (or an equivalent metric); (17) market share; (18) share price performance; (19) debt...

  • Page 95
    ... number of securities and price per share of stock subject to outstanding stock awards. Corporate Transactions; Change in Control. Except as otherwise stated in a stock award agreement, in the event of a corporate transaction or a change in control (as defined in the Amended and Restated 2007 Plan...

  • Page 96
    ...equal to their fair market value on the date of exercise of the stock option, and the participant's capital gain holding period for those shares will begin on that date. Subject to the requirement of reasonableness, the provisions of Section 162(m) of the Code and the satisfaction of a tax reporting...

  • Page 97
    ... recognize ordinary income equal to the excess, if any, of the fair market value of the stock on the date it becomes vested over any amount paid by the recipient in exchange for the stock. A recipient may, however, file an election with the Internal Revenue Service, within 30 days following his or...

  • Page 98
    ...The Board's current policy with respect to stock awards granted to non-employee directors is described under Director Compensation above. Amended and Restated 2007 Plan Name and position Dollar value Number of shares subject to stock awards Jen-Hsun Huang (1) * Chief Executive Officer and President...

  • Page 99
    ... currently outstanding) under the 2007 Plan since its approval by our stockholders in 2007, and under the Amended 2007 Plan since its approval by our stockholders in 2012, through March 25, 2014. 2007 Plan and Amended 2007 Plan Name and position Jen-Hsun Huang Chief Executive Officer and President...

  • Page 100
    ... Restatement of our 2012 Employee Stock Purchase Plan Summary of Proposal We are asking our stockholders to approve an amendment and restatement of the NVIDIA Corporation 2012 Employee Stock Purchase Plan, or the 2012 Purchase Plan, at the 2014 Annual Meeting. The 2012 Purchase Plan was originally...

  • Page 101
    ... 2012 Purchase Plan from the reserve of the NVIDIA Corporation 1998 Employee Stock Purchase Plan, the predecessor of the 2012 Purchase Plan. Note Regarding Forecasts and Forward-Looking Statements We do not as a matter of course make public forecasts as to our total shares outstanding and purchases...

  • Page 102
    ...granted thereunder. The Plan Administrator has the power, subject to the provisions of the Amended and Restated 2012 Purchase Plan, to determine the provisions of each offering of rights to purchase our common stock, and whether employees of any of our parent or subsidiary companies will be eligible...

  • Page 103
    ... would own, directly or indirectly, stock possessing 5% or more of the total combined voting power or value of all classes of our stock or of any of our parent or subsidiary companies, including any stock which such employee may purchase under all outstanding purchase rights and options. In addition...

  • Page 104
    ...will be applied to the purchase of shares of our common stock within 10 business days prior to the corporate transaction, and such outstanding purchase rights will terminate immediately thereafter. For purposes of the Amended and Restated 2012 Purchase Plan, a corporate transaction generally will be...

  • Page 105
    ... the beginning of the offering period over the purchase price. Any further gain or any loss will be taxed as a long-term capital gain or loss. New Plan Benefits Participation in the Amended and Restated 2012 Purchase Plan will be voluntary and each eligible employee will make his or her own decision...

  • Page 106
    ...the various groups indicated, the number of shares of our common stock that have been purchased under the 2012 Purchase Plan since its approval by our stockholders in 2012 through March 25, 2014. 2012 Employee Stock Purchase Plan Name and position Jen-Hsun Huang Chief Executive Officer and President...

  • Page 107
    ...-K FOR THE FISCAL YEAR ENDED JANUARY 26, 2014 TO: INVESTOR RELATIONS, NVIDIA CORPORATION, 2701 SAN TOMAS EXPRESSWAY, SANTA CLARA, CALIFORNIA 95050. WE WILL ALSO FURNISH A COPY OF ANY EXHIBIT TO THE ANNUAL REPORT ON FORM 10-K IF SPECIFICALLY REQUESTED IN WRITING. NVIDIA and the NVIDIA logo are either...

  • Page 108
    [THIS PAGE INTENTIONALLY LEFT BLANK]

  • Page 109
    ...2014] Termination Date: March 21, 2022 1. General. (a) Successor and Continuation of Prior Plans. The Plan is intended as the successor to and continuation of the NVIDIA Corporation 1998 Equity Incentive Plan (the "1998 Plan"), the NVIDIA Corporation 1998 Non-Employee Directors' Stock Option Plan...

  • Page 110
    ...its administration. The Board, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan or in any Stock Award Agreement or in the written terms of a Performance Cash Award, in a manner and to the extent it will deem necessary or expedient to make the Plan or Award...

  • Page 111
    ...the Company wishes to comply with Section 162(m) of the Code, and/or (B) delegate to a Committee who need not be Non-Employee Directors the authority to grant Stock Awards to eligible persons who are not then subject to Section 16 of the Exchange Act. (ii) (d) Delegation to Officers. The Board may...

  • Page 112
    ... the Plan, or (ii) cancel any outstanding Options or Stock Appreciation Rights that have an exercise price or strike price greater than the current Fair Market Value in exchange for cash or other Stock Awards under the Plan, unless the stockholders of the Company have approved such an action within...

  • Page 113
    ... Common Stock, including shares repurchased by the Company on the open market or otherwise. 4. Eligibility. (a) Eligibility for Specific Stock Awards. Incentive Stock Options may be granted only to employees of the Company or a "parent corporation" or "subsidiary corporation" thereof (as such terms...

  • Page 114
    ... exercise price to the Company from the sales proceeds; if an option is a Nonstatutory Stock Option, by a "net exercise" arrangement pursuant to which the Company will reduce the number of shares of Common Stock issuable upon exercise by the largest whole number of shares with a Fair Market Value...

  • Page 115
    ... Fair Market Value (on the date of the exercise of the SAR) of a number of shares of Common Stock equal to the number of Common Stock equivalents in which the Participant is vested under such SAR, and with respect to which the Participant is exercising the SAR on such date, over (B) the strike price...

  • Page 116
    ... to exercise such Option or SAR as of the date of termination of Continuous Service), but only within such period of time ending on the earlier of (i) the date 12 months following such termination of Continuous Service, or (ii) the expiration of the term of the Option or SAR as set forth in the...

  • Page 117
    ...the Board will determine in its sole discretion, so long as Common Stock awarded under the Restricted Stock Award Agreement remains subject to the terms of the Restricted Stock Award Agreement. Dividends. A Restricted Stock Award Agreement may provide that any dividends paid on Restricted Stock will...

  • Page 118
    ... of any such credited dividend equivalents that are not converted into additional shares will be subject to all of the same terms and conditions of the underlying Restricted Stock Unit Award Agreement to which they relate. Termination of Participant's Continuous Service. Except as otherwise provided...

  • Page 119
    ...to be paid in whole or in part in cash or other property. In addition, to the extent permitted by applicable law and the applicable Award Agreement, the Board or the Committee, as applicable, may determine that Common Stock authorized under this Plan may be used in payment of Performance Cash Awards...

  • Page 120
    ...) documenting the corporate action constituting the grant contain terms (e.g., exercise price, vesting schedule or number of shares) that are inconsistent with those in the Award Agreement as a result of a clerical error in the papering of the Award Agreement, the corporate records will control and...

  • Page 121
    ... any agreement or document delivered electronically, filed publicly at www.sec.gov (or any successor website thereto) or posted on the Company's intranet. (j) Deferrals. To the extent permitted by applicable law, the Board, in its sole discretion, may determine that the delivery of Common Stock or...

  • Page 122
    ... Stock Options pursuant to Section 3(d); (iii) the class(es) and maximum number of securities that may be awarded to any person pursuant to Sections 3(e) and 6(c)(i), and (iv) the class(es) and number of securities and price per share of stock subject to outstanding Stock Awards. The Board will make...

  • Page 123
    ... and outstanding shares of Common Stock not subject to the Company's right of repurchase), upon advance written notice by the Company of at least five (5) business days to the holders of such Stock Awards, will terminate if not exercised (if applicable) prior to the effective time of the Corporate...

  • Page 124
    ... (including an option and stock award agreement subject to the terms of the Prior Plans, which terms remain applicable as to outstanding options and stock awards thereunder), in the event of a Change in Control in which the surviving corporation or acquiring corporation (or its parent company) does...

  • Page 125
    ..., stock dividend, dividend in property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or any similar equity restructuring transaction, as that term is used in Financial Accounting Standards Board Accounting Standards...

  • Page 126
    ... Board then still in office, such new member will, for purposes of this Plan, be considered as a member of the Incumbent Board. (iii) (iv) For purposes of determining voting power under the term Change in Control, voting power will be calculated by assuming the conversion of all equity securities...

  • Page 127
    ... the Company is the surviving corporation but the shares of Common Stock outstanding immediately preceding the merger, consolidation or similar transaction are converted or exchanged by virtue of the merger, consolidation or similar transaction into other property, whether in the form of securities...

  • Page 128
    ... of the Exchange Act) that, as of the Effective Date as set forth in Section 11, is the Owner, directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the combined voting power of the Company's then outstanding securities. (x) "Fair Market Value" means, as...

  • Page 129
    ...is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder. (dd) "Option" means an Incentive Stock Option or a Nonstatutory Stock Option to purchase shares of Common Stock granted pursuant to the Plan. (ee) "Option Agreement...

  • Page 130
    ... in revenue or product revenue; (13) expenses and cost reduction goals; (14) improvement in or attainment of expense levels; (15) improvement in or attainment of working capital levels; (16) economic value added (or an equivalent metric); (17) market share; (18) share price performance; (19) debt...

  • Page 131
    ...terms and conditions of Section 6(c)(i). (qq) "Plan" means this NVIDIA Corporation Amended and Restated 2007 Equity Incentive Plan. (rr) "Prior Plans" means the NVIDIA Corporation 1998 Equity Incentive Plan, the NVIDIA Corporation 1998 NonEmployee Directors' Stock Option Plan, the NVIDIA Corporation...

  • Page 132
    ..." means, with respect to the Company, (i) any corporation of which more than fifty percent (50%) of the outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, stock of any other class or classes...

  • Page 133
    ...[May __, 2014] 1. General; Purpose. (a) The Plan is intended as the successor to and continuation of the NVIDIA Corporation 1998 Employee Stock Purchase Plan (the "1998 Plan"). From and after 12:01 a.m. Pacific Standard Time on the Effective Date, no additional rights to purchase shares of Common...

  • Page 134
    ...(iii) (iv) (v) (vi) (vii) Generally, to exercise such powers and to perform such acts as it deems necessary or expedient to promote the best interests of the Company and its Related Corporations and to carry out the intent that the 423 Component be treated as an Employee Stock Purchase Plan. B-2

  • Page 135
    ... authorized but unissued or reacquired Common Stock, including shares repurchased by the Company on the open market. 4. Grant of Purchase Rights; Offering. (a) The Board may from time to time grant or provide for the grant of Purchase Rights to Eligible Employees under an Offering on Offering Dates...

  • Page 136
    ... Employee's rights to purchase stock of the Company or any Related Corporation to accrue at a rate which exceeds $25,000 of Fair Market Value of such stock (determined at the time such rights are granted, and which, with respect to the Plan, will be determined as of their respective Offering Dates...

  • Page 137
    ... on the Offering Date; or an amount equal to (85%) of the Fair Market Value of the shares of Common Stock on the applicable Purchase Date. (ii) 7. Participation; Withdrawal; Termination. (a) An Eligible Employee may elect to authorize payroll deductions as the means of making Contributions by...

  • Page 138
    ... pursuant to the Securities Act and the Plan is in material compliance with all applicable laws. If on a Purchase Date the shares of Common Stock are not so registered or the Plan is not in such compliance, no Purchase Rights will be exercised on such Purchase Date, and the Purchase Date will be...

  • Page 139
    ... shares of Common Stock within ten business days prior to the Corporate Transaction under the outstanding Purchase Rights, and the Purchase Rights will terminate immediately after such purchase. 12. Amendment, Termination or Suspension of the Plan. (a) The Board may amend the Plan at any time...

  • Page 140
    ... or after the date the Plan is adopted (or if required under Section 12(a) above, materially amended) by the Board. 15. Miscellaneous Provisions. (a) Proceeds from the sale of shares of Common Stock pursuant to Purchase Rights will constitute general funds of the Company. (b) A Participant will not...

  • Page 141
    ... in property other than cash, large nonrecurring cash dividend, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or other similar equity restructuring transaction, as that term is used in Financial Accounting Standards Board Accounting...

  • Page 142
    ..." means any Related Corporation selected by the Board as eligible to participate in the 423 Component. (n) "Director" means a member of the Board. (o) "Effective Date" means the effective date of this Plan document, which is the date of the 2012 Annual Meeting of Shareholders of the Company provided...

  • Page 143
    ...Eligible Employee who holds an outstanding Purchase Right. (z) "Plan" means this NVIDIA Corporation 2012 Employee Stock Purchase Plan, including both the 423 and Non-423 Components, as amended from time to time. (aa) "Purchase Date" means one or more dates during an Offering selected by the Board on...

  • Page 144
    Directions to Our Headquarters-Building E FROM HIGHWAY 101 Take the San Tomas/Montague Exit ... Scott Boulevard is the first office building on the left Turn left into 2800 Scott Boulevard FROM INTERSTATE 280 Take the Saratoga Ave/Saratoga Exit towards Santa Clara Stay on Saratoga Avenue for about...

  • Page 145
    ... 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 Common Stock, $0.001 par value per share Name of each exchange...

  • Page 146
    ... With Accountants on Accounting and Financial Disclosure ...Controls and Procedures...Other Information...PART III Item 10. Item 11. Item 12. Directors, Executive Officers and Corporate Governance ...Executive Compensation ...Security Ownership of Certain Beneficial Owners and Management and Related...

  • Page 147
    ... it is made clear that the term means only the parent company. © 2014 NVIDIA Corporation. All rights reserved. NVIDIA, the NVIDIA logo, GeForce, NVIDIA Fermi, ICERA, Kepler, Quadro, Tesla, Tegra, NVIDIA GRID are trademarks and/or registered trademarks of NVIDIA Corporation in the U.S. and other...

  • Page 148
    ... create value. Our target markets are gaming, design and visualization, high performance computing, or HPC, and data center, and automotive and smart devices. We deploy business models we believe are best suited for each application, whether IP, chips, systems, or NVIDIA-branded devices and services...

  • Page 149
    ... such as televisions, monitors, set-top boxes, gaming devices and cars. SHIELD, our Android gaming device based on Tegra, contains proprietary NVIDIA-developed software and system technologies and leverages our deep partnerships with game developers. Headquartered in Santa Clara, California, we were...

  • Page 150
    Businesses GPU NVIDIA Brands and Product Lines GeForce for consumer desktop and notebook PCs Quadro for professionals working in computer-aided design, video editing, special effects and other applications Tesla for supercomputing and big data applications GRID to provide the power of NVIDIA ...

  • Page 151
    ..., NVIDIA GRID hardware and software can significantly improve the end-user experience NVIDIA brands for this market include Quadro GPUs for workstations and GRID for enterprise VDI. NVIDIA Quadro GPUs enhance the productivity of designers by improving performance and adding functionality...

  • Page 152
    ...to define product features, performance, price and timing of new products. Members of our sales team have a high level of technical expertise and product and industry knowledge to support the competitive and complex design win process. We also employ a highly skilled team of application engineers to...

  • Page 153
    ..., such as Advanced Semiconductor Engineering, Inc., JSI Logistics Ltd., King Yuan Electronics Co., Ltd. and Siliconware Precision Industries Company Ltd. to perform assembly, testing and packaging of most of our products. We purchase substrates from IbidenCo., Ltd., Nanya Technology Corporation, and...

  • Page 154
    ... meeting the new design schedules of PC OEMs and other manufacturers. We believe in leveraging our significant R&D depth and scale to create differentiated products. As of January 26, 2014, we had 6,384 full-time employees engaged in research and development. During fiscal years 2014, 2013 and 2012...

  • Page 155
    ... on a combination of patents, trademarks, trade secrets, employee and third-party nondisclosure agreements and licensing arrangements to protect our intellectual property in the United States and internationally. Our currently issued patents have expiration dates from April 2014 to September...

  • Page 156
    ... as its President, Chief Executive Officer and a member of the Board of Directors since its inception. From 1985 to 1993, Mr. Huang was employed at LSI Logic Corporation, a computer chip manufacturer, where he held a variety of positions, most recently as Director of Coreware, the business unit...

  • Page 157
    ... from Harvard Business School. David M. Shannon serves as Executive Vice President, Chief Administrative Officer and Secretary of NVIDIA. In this role, he is responsible for NVIDIA's legal and human resources functions, as well as intellectual property licensing. Mr. Shannon joined NVIDIA in August...

  • Page 158
    ... may offer additional products, services or other incentives that we may not be able to match. In addition, many of our competitors operate and maintain their own fabrication facilities and have longer operating histories, greater name recognition, larger customer bases, and greater sales, marketing...

  • Page 159
    ...as twice per year, typically based on spring and fall design cycles or in connection with trade shows. Accordingly, when our customers are making their design decisions, our existing products must have competitive performance levels or we must timely introduce new products in order to be included in...

  • Page 160
    ...to achieve acceptable yields or experience product delivery delays. For example, due to capacity constraints at TSMC of our 28 nanometer Kepler GPUs in the first quarter of fiscal year 2013, we were unable to fulfill customer demand for our high-end desktop GPU products, and as our sales mix shifted...

  • Page 161
    ...operations. Our customer base includes companies in a wide range of end-user markets, but we generate a significant amount of revenue from sales to consumers of communications- and PC-related products. Within these end-user markets, a large portion of our revenue is generated from sales to consumers...

  • Page 162
    ..., our profitability could be adversely affected due to our higher expense levels. Our past growth has placed, and any future long-term growth is expected to continue to place, a significant strain on our management personnel, systems and resources. To implement our current business and product plans...

  • Page 163
    ...or if our competition were to take unexpected competitive pricing actions. • • • • • Any inability to sell products to which we have devoted resources could harm our business. In addition, cancellation or deferral of customer purchase orders could result in our holding excess inventory...

  • Page 164
    ... standards, controls, procedures and policies; difficulty integrating the target's accounting, management information, human resources and other administrative systems; diversion of capital and other resources; assumption of liabilities; incurring acquisition-related costs or amortization costs for...

  • Page 165
    ... decline in stock price and market capitalization, reduced estimates of future cash flows and slower growth rates in our industry or in any of our reporting units. Estimates of future cash flows are based on an updated long-term financial outlook of our operations. However, actual performance in the...

  • Page 166
    ... in product cost. Any product shortages or quality assurance problems could increase the costs of manufacture, assembly or testing of our products, which could cause our gross margin to decline. We rely on third-party vendors to supply software development tools to us for the development of our new...

  • Page 167
    ... margin. In addition, an error or defect in new products or releases or related software drivers after commencement of commercial shipments could result in failure to achieve market acceptance or loss of design wins. Also, we may be required to reimburse customers, including our customers' costs...

  • Page 168
    ... a majority of our principal IT data centers are located in California, making our operations vulnerable to natural disasters or other business disruptions occurring in this geographical area. The manufacture of product components, the final assembly of our products and other critical operations are...

  • Page 169
    ... take such actions or are unsuccessful in doing so. We rely primarily on a combination of patents, trademarks, trade secrets, employee and third-party nondisclosure agreements, and licensing arrangements to protect our intellectual property in the United States and internationally. We have numerous...

  • Page 170
    ... our employees have misappropriated or divulged their former employers' trade secrets or confidential information. An unfavorable ruling in any such intellectual property related litigation could include significant damages, invalidation of a patent or family of patents, indemnification of customers...

  • Page 171
    ...fiscal year 2009, we purchased real property in Santa Clara, California that includes approximately 36 acres of land and twelve commercial buildings and eventually expect to break ground on a new building for a corporate headquarters campus in Santa Clara. We also own real property in India. We have...

  • Page 172
    ... for stock options, restricted stock units and our employee stock purchase plan using the fair value of those awards in accordance with U.S. GAAP. Stock-based compensation expense was $136.3 million, $136.7 million and $136.4 million for fiscal years 2014, 2013 and 2012, respectively, related to...

  • Page 173
    ..., requires our management to report on, and our independent registered public accounting firm to audit, the effectiveness of our internal control structure and procedures for financial reporting. We have an ongoing program to perform the system and process evaluation and testing necessary to comply...

  • Page 174
    ...our chief financial officer or our independent registered 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...

  • Page 175
    ...centers and/or sales and administrative offices primarily in Asia Pacific regions and Europe. We own real property in Santa Clara, California that includes approximately 36 acres of land and twelve commercial buildings. We expect to eventually build a new building for a corporate headquarters campus...

  • Page 176
    ... year ended January 27, 2013 Fourth Quarter ...Third Quarter ...Second Quarter ...First Quarter...Dividend Policy Prior to fiscal year 2013, we had never declared or paid any dividend on shares of our common stock. On November 8, 2012, we announced the initiation of a quarterly cash dividend program...

  • Page 177
    ... 2013, we announced the intention to return $1.0 billion to shareholders in fiscal year 2015 in the form of share repurchases and cash dividends. The repurchases will be made from time to time in the open market, in privately negotiated transactions, or in structured stock repurchase programs...

  • Page 178
    ... stock or 1/31/09 in index, including reinvestment of dividends. Indexes calculated on month-end basis. Copyright© 2014 S&P, a division of The McGraw-Hill Companies Inc. All rights reserved. 1/25/2009 NVIDIA Corporation ...$ S&P 500 ...$ S&P Semiconductors ...$ 100.00 100.00 100.00 $ $ $ 1/31/2010...

  • Page 179
    ... to indicate future performance. *$100 invested on 1/25/04 in stock or 1/31/04 index, including reinvestment of dividends. Indexes calculated on month-end basis. Copyright© 2014 S&P, a division of The McGraw-Hill Companies Inc. All rights reserved. 1/25/04 NVIDIA Corporation ...$ 100.00 S&P 500...

  • Page 180
    ... and marketable securities ...Total assets...Long-term debt ...Capital lease obligations, less current portion...Total stockholders' equity...Cash dividends declared and paid per common share...$ 4,671,810 $ 7,250,894 $ 1,356,375 $ 17,500 $ 4,456,398 $ 0.310 January 27, 2013 (D) Year Ended January...

  • Page 181
    ... described elsewhere in this Annual Report on Form 10-K, before deciding to purchase, hold or sell shares of our common stock. Overview Our Company NVIDIA is a visual computing company. In a world increasingly filled with visual displays, our graphics technologies let our customers interact with the...

  • Page 182
    ...multiple end markets. It comprises four primary product lines: GeForce for desktop and notebook PCs; Quadro for professional workstations; Tesla for high-performance servers and workstations; and NVIDIA GRID for server graphics solutions. It also includes other related products, licenses and revenue...

  • Page 183
    ... to repurchase of shares of our common stock and pay cash dividends pursuant to our recently announced fiscal year 2015 capital return program, and for general corporate purposes. Please refer to Note 11 of the Notes to the Consolidated Financial Statements in Part IV, Item 15 of this Annual Report...

  • Page 184
    ... revenue and related cost of revenue until the distributors resell the product, as the level of returns cannot be reasonably estimated. Our customer programs primarily involve rebates, which are designed to serve as sales incentives to resellers of our products in various target markets. We account...

  • Page 185
    ... require significant customization of our intellectual property components, we generally recognize the related revenue over the period that services are performed. For most license and service arrangements, we determine progress to completion based on actual direct labor hours incurred to date as...

  • Page 186
    ... must make commitments to purchase inventory based on forecasts of future customer demand. In doing so, we must account for our third-party manufacturers' lead times and constraints. We also adjust to other market factors, such as product offerings and pricing actions by our competitors, new product...

  • Page 187
    ...the tax position. Our policy is to include interest and penalties related to unrecognized tax benefits as a component of income tax expense. Please refer to Note 13 of the Notes to the Consolidated Financial Statements in Part IV, Item 15 of this Annual Report on Form 10-K for additional information...

  • Page 188
    ... information, growth rates, terminal or residual values, discount rates and comparable multiples from publicly traded companies in our industry and require us to make certain assumptions and estimates regarding industry economic factors and the future profitability of our business. When performing...

  • Page 189
    ... value of employee stock options on the date of grant using a binomial model. We use the closing trading price of our common stock on the date of grant, minus a dividend yield discount, as the fair value of awards of restricted stock units, or RSUs. The fair value of our employee stock purchase plan...

  • Page 190
    ... rate, expected stock price volatility, dividend yield, actual and projected employee stock option exercise behaviors, vesting schedules and death and disability probabilities We also segregate options into groups of employees with relatively homogeneous exercise behavior in order to calculate...

  • Page 191
    ... is as follows: GPU Business. GPU business revenue for fiscal year 2014 increased by 7% to $3.47 billion when compared to $3.25 billion for fiscal year 2013. This growth was largely attributable to strength in our high-end GeForce GTX GPUs which grew 18% driven by gaming market segment demand. The...

  • Page 192
    ..., 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, service arrangements and stock-based compensation related to...

  • Page 193
    ... of our GPU business increased during fiscal year 2013 when compared to fiscal year 2012. This was primarily due to a richer product mix of our Kepler-based high-end 28 nanometer GeForce desktop products and our Quadro products. Memory margins strengthened on improved market pricing. These favorable...

  • Page 194
    ... license fees and other revenues related to game consoles, which typically have higher gross margins than our Tegra products, offset by a higher mix of revenue from sales of our Tegra products, which grew substantially during the year. Operating Expenses Year Ended January 26, 2014 January 27, 2013...

  • Page 195
    ... marketable securities. Interest expense is primarily comprised of coupon interest and debt discount amortization related to the convertible notes issued in the fourth quarter of fiscal year 2014. Interest income was $17.1 million, $19.9 million and $19.1 million in fiscal years 2014, 2013 and 2012...

  • Page 196
    ... Financial Statements in Part IV, Item 15 of this Annual Report on Form 10-K for additional information. Liquidity and Capital Resources January 26, 2014 Cash and cash equivalents...$ Marketable securities...Cash, cash equivalents, and marketable securities ...$ January 27, 2013 (In millions) 1,151...

  • Page 197
    ... as convertible debt issuances or capital leases, and equity-related activities such as stock repurchases and dividend payments. Cash provided by financing activities increased in fiscal year 2014 due primarily to the net proceeds of $1.48 billion we received from the convertible note offering that...

  • Page 198
    ...to repurchase of shares of our common stock and pay cash dividends pursuant to our recently announced fiscal year 2015 capital return program, and for general corporate purposes. The Notes are unsecured, unsubordinated obligations of the Company, which pay interest in cash semi-annually at a rate of...

  • Page 199
    .... We have announced our intention to return $1.0 billion to shareholders in fiscal year 2015 in the form of share repurchasesand dividends. As part of our capital return program, during February 2014 we entered into an acceleratedshare repurchase agreement to purchase $500.0 million in shares of our...

  • Page 200
    ... years 2014, 2013 and 2012, we had no material off-balance sheet arrangements as defined in Regulation S-K 303(a)(4)(ii). Adoption of New and Recently Issued Accounting Pronouncements Please see Note 1 of the Notes to the Consolidated Financial Statements in Part IV, Item 15 of this Annual Report on...

  • Page 201
    ... decline in fair value of our publicly traded debt or equity investments is judged to be other-thantemporary. We may suffer losses in principal if we are forced to sell securities that decline in securities market value due to changes in interest rates. However, because any debt securities we hold...

  • Page 202
    ...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 26, 2014 based on the criteria set forth in Internal Control - Integrated Framework (1992...

  • Page 203
    ...text 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. ITEM 11. EXECUTIVE COMPENSATION The information required by this...

  • Page 204
    ...NVIDIA Securities The information required by this item is hereby incorporated by reference from the section entitled "Security Ownership of Certain Beneficial Owners and Management" in our 2014 Proxy Statement. Equity Compensation Plan Information Information regarding our equity compensation plans...

  • Page 205
    PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULE Page (a) 1. Consolidated Financial Statements Report of Independent Registered Public Accounting Firm, PricewaterhouseCoopers LLP ...Consolidated Statements of Income for the years ended January 26, 2014, January 27, 2013, and January 29, 2012 ...

  • Page 206
    ...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 perform the...

  • Page 207
    NVIDIA CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) Year Ended January 27, 2013 $ 4,280,159 2,053,816 2,226,343 1,147,282 430,822 1,578,104 648,239 19,908 (3,294) (2,814) 662,039 99,503 562,536 January 26, 2014 Revenue ...$ Cost of revenue......

  • Page 208
    NVIDIA CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands) Year Ended January 27, 2013 $ 562,536 $ January 26, 2014 Net income Other comprehensive income (loss), net of tax: Net change in unrealized gains (losses) on available-for-sale securities, net of tax ...

  • Page 209
    ... stock, $.001 par value; 2,000,000,000 shares authorized; 735,242,458 shares issued and 567,996,734 outstanding in 2014; 720,153,197 shares issued and 616,756,134 outstanding in 2013...Additional paid-in capital ...Treasury stock, at cost (167,245,724 shares in 2014 and 103,397,063 shares in 2013...

  • Page 210
    ... of common stock from stock plans ...Tax withholding related to vesting of restricted stock units Stock repurchase...Cash dividends declared and paid ($0.075 per common share) Tax benefit from stock-based compensation ...Stock-based compensation ...Balances, January 27, 2013 ...Other comprehensive...

  • Page 211
    ..., net...Purchase of convertible note hedges ...Proceeds from the sale of common stock warrants ...Proceeds from issuance of common stock under employee stock plans ...Payments related to repurchases of common stock...Dividends paid...Tax benefit from stock-based compensation...Payments under capital...

  • Page 212
    ... cash flow information: Cash (received) paid for income taxes, net...$ Cash paid for interest on capital lease obligations...$ Non-cash investing and financing activities: Change in unrealized gains (losses) from marketable securities ...$ Assets acquired by assuming related liabilities ...$ (5,104...

  • Page 213
    ...," "we," "us," "our" or the "Company" mean NVIDIA Corporation and its subsidiaries, except where it is made clear that the term means only the parent company. Fiscal Year We operate on a 52- or a 53-week year, ending on the last Sunday in January. Fiscal years 2014, 2013 and 2012 were 52-week years...

  • Page 214
    ... require significant customization of our intellectual property components, we generally recognize the related revenue over the period that services are performed. For most license and service arrangements, we determine progress to completion based on actual direct labor hours incurred to date as...

  • Page 215
    ... fair value of employee stock options on the date of grant using a binomial model. We use the closing trading price of our common stock on the date of grant, minus a dividend yield discount, as the fair value of awards of restricted stock units. The fair value of our employee stock purchase plan is...

  • Page 216
    ... dollars at end-of-period exchange rates. Non-monetary assets and liabilities such as property and equipment, and equity are remeasured at historical exchange rates. Revenue and expenses are remeasured at average exchange rates in effect during each period, except for those expenses related to the...

  • Page 217
    .... We generally classify our marketable securities at the date of acquisition as available-for-sale. These securities are reported at fair value with the related unrealized gains and losses included in accumulated other comprehensive income, a component of stockholders' equity, net of tax. Any...

  • Page 218
    ... associated with such purchases, final test yield fallout, and shipping costs, as well as the cost of purchased memory products and other component parts. We charge cost of sales for inventory provisions to write down our inventory to the lower of cost or estimated market value or to completely...

  • Page 219
    ... assets primarily represent rights acquired under technology licenses, patents, acquired intellectual property, trademarks and customer relationships and are subject to an annual impairment test. We currently amortize our intangible assets with definitive lives over periods ranging from one to ten...

  • Page 220
    ... 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, minus a dividend yield discount, as the fair value of awards of RSUs. We estimate the fair value of shares to be issued our employee stock purchase plan...

  • Page 221
    ...; therefore, the fair value of RSUs is discounted by the dividend yield. For awards granted on or subsequent to November 8, 2012, we use a dividend yield at grant date based on the per share dividends declared during the most recent quarter. Additionally, for employee stock option and RSU awards, we...

  • Page 222
    ... 28%-37% 39%-49% 46%-65% 1.9%-2.4% 2.4% - Year Ended January 27, 2013 January 26, 2014 Employee Stock Purchase Plan Weighted average expected life (in years)...Risk-free interest rate...Volatility ...Dividend yield ...Equity Incentive Program January 29, 2012 (Using the Black-Scholes model...

  • Page 223
    ...to 15%. The price of common stock purchased under the ESPP Plans will be equal to 85% of the lower of the fair market value of the common stock on the commencement date of each offering period and the purchase date of each offering period. During fiscal years 2014, 2013 and 2012, employees purchased...

  • Page 224
    ... $15.56 closing stock price of our common stock on the NASDAQ Global Select Market on January 24, 2014, the last trading day of fiscal year 2014, 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...

  • Page 225
    NVIDIA CORPORATION AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) The total intrinsic value of options exercised was $14.4 million, $21.1 million and $105.3 million for fiscal years 2014, 2013 and 2012, respectively. Upon exercise of an option, we issue new shares of ...

  • Page 226
    ...$25.0 million related to the satisfaction of debts and liabilities owed to the general unsecured creditors of 3dfx. Accordingly, during the three month period ended October 30, 2005, we recorded $5.6 million as a charge to settlement costs and $25.0 million as additional purchase price for 3dfx. The...

  • Page 227
    ... information, growth rates, terminal or residual values, discount rates and comparable multiples from publicly traded companies in our industry and require us to make certain assumptions and estimates regarding industry economic factors and the future profitability of our business. When performing...

  • Page 228
    ... our publicly traded debt or equity investments is judged to be other-than-temporary. We may suffer losses in principal if we are forced to sell securities that decline in market value due to changes in interest rates. However, because any debt securities we hold are classified as "availablefor-sale...

  • Page 229
    ... general market conditions, the duration and extent to which fair value is below cost, and our intent and ability to hold an investment for a sufficient period of time to allow for recovery in value. We also consider specific adverse conditions related to the financial health of and business outlook...

  • Page 230
    ...when the fair value is obtained from real time quotes for transactions in active exchange markets involving identical assets. Our availablefor- sale securities are classified as having Level 2 inputs. Our Level 2 assets are valued utilizing a market approach where the market prices of similar assets...

  • Page 231
    ... at fair value are summarized below: Fair Value Measurement at Reporting Date Using Quoted Prices in Significant Active Markets Other for Identical Observable Assets Inputs January 26, 2014 Debt securities of United States government agencies (1) ...$ Corporate debt securities (2)...Mortgage backed...

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    NVIDIA CORPORATION AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) January 26, 2014 Property and Equipment: Land ...$ Building ...Test equipment...Software and licenses ...Leasehold improvements ...Computer equipment ...Office furniture and equipment...Capital leases ......

  • Page 233
    ... to revenue for estimated 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...

  • Page 234
    ... the product of the last reported sale price of our common stock and the conversion rate on each such trading day; or (3) upon the occurrence of specified corporate events. On or after August 1, 2018 to the close of business on the second scheduled trading day immediately preceding the maturity date...

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    ... of debt issuance costs...Total interest expense related to Notes...$ (In thousands) 2,500 4,600 34 7,134 $ As of January 26, 2014, the fair value of the Notes was approximately $1,528.4 million. The 2018 Notes are classified within Level 2 as they are not actively traded in markets. Note...

  • Page 236
    ... 26, 2014 and January 27, 2013, we had outstanding capital purchase obligations totaling $41.3 million and $44.8 million, respectively. Lease Obligations Our headquarters complex is located in Santa Clara, California and includes eight buildings that are leased properties. The lease agreements for...

  • Page 237
    NVIDIA CORPORATION AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) Capital lease obligations include building and office equipment lease obligations. The building lease relates to our data center in Santa Clara, California. Future minimum lease payments under the building...

  • Page 238
    ... 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 Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as...

  • Page 239
    NVIDIA CORPORATION AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) On January 22, 2010, Plaintiffs filed a Consolidated Amended Class Action Complaint for Violations of the Federal Securities Laws, asserting claims for violations of Section 10(b), Rule 10b-5, and Section ...

  • Page 240
    ... as follows: Year Ended January 27, 2013 January 26, 2014 Tax expense computed at federal statutory rate...$ State income taxes, net of federal tax effect ...Foreign tax rate differential ...U.S. federal R&D tax credit ...Stock-based compensation...Tax expense related to intercompany transaction...

  • Page 241
    ... 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 operations. As of January 26, 2014, we had a federal net operating loss carryforward of $601.8 million, combined state...

  • Page 242
    ... a long-term liability if we anticipate payment or receipt of cash for income taxes during a period beyond a year. Our policy is to include interest and penalties related to unrecognized tax benefits as a component of income tax expense. As of January 26, 2014, January 27, 2013, and January 29, 2012...

  • Page 243
    ... 2016. In November 2013, we announced the intention to return $1.0 billion to shareholders in fiscal year 2015 in the form of share repurchases and cash dividends. During February 2014, as part of our stock repurchase program, we entered into an accelerated share repurchase agreement, or ASR, with...

  • Page 244
    ... business for purposes of making operating decisions or assessing financial performance. The revenue includes primarily patent licensing revenue and the expenses include corporate infrastructure and support costs, stock-based compensation costs, amortization of acquisition-related intangible...

  • Page 245
    ...allocated to reporting segments...Unallocated corporate operating expenses and other expenses ...Stock-based compensation ...Acquisition-related costs, net ...Other non-recurring expenses and benefits ...Total...$ 264,000 $ Year Ended January 27, 2013 (In thousands) 264,000 $ January 29, 2012 220...

  • Page 246
    ... location. The following tables summarize information pertaining to our revenue from customers based on invoicing address in different geographic regions: Year Ended January 27, 2013 (In thousands) $ 780,493 1,356,838 783,573 263,488 799,430 296,337 $ 4,280,159 January 26, 2014 Revenue: China...

  • Page 247
    ...) The following table sets forth our unaudited consolidated financial results, for the last eight fiscal quarters: Fiscal Year 2014 Quarters Ended October 27, July 28, 2013 2013 (In thousands, except per share data) Statement of Income Data: Revenue...Cost of revenue ...Gross profit ...Net income...

  • Page 248
    ...Event During February 2014, as part of our stock repurchase program, we entered into an accelerated share repurchase agreement, or ASR, with an investment bank, under which we prepaid $500.0 million to purchase shares of our common stock and received 20.6 million shares. Upon final settlement of the...

  • Page 249
    ... allowance for sales returns estimated at the time revenue is recognized primarily based on historical return rates and is charged as a reduction to revenue. (3) Represents change in valuation allowance primarily related to state and certain foreign deferred tax assets that management has determined...

  • Page 250
    ...2007 Equity Incentive Plan 2007 Equity Incentive Plan - Non Statutory Stock Option (Annual Grant - Board Service (2007)) Filing Date 2.1 3.1 3.2 3.3 3.4 4.1 4.2 8-K S-8 10-Q 8-K 8-K 0-23985 333-74905 0-23985 0-23985 0-23985 2.1 4.1 3.1 3.1 3.1 11/9/2006 3/23/1999 8/21/2008 5/24/2011 11/14/2013...

  • Page 251
    ... 2007 Equity Incentive Plan - Non Statutory Stock Option (Initial Grant - Board Service) 2012 Employee Stock Purchase Plan Fiscal Year 2014 Variable Compensation Plan Fiscal Year 2013 Variable Compensation Plan Offer Letter between NVIDIA Corporation and Colette Kress, dated September 13, 2013...

  • Page 252
    .../7/2010 Patent Cross License Agreement dated as of January 10, 2011, between NVIDIA 8-K 0-23985 Corporation and Intel Corporation 10.1 1/10/2011 Master Confirmation and Supplemental Confirmation between NVIDIA Corporation and Goldman, Sachs & Co., dated May 14, 2013 10-Q 0-23985 10.3 5/22/2013 Base...

  • Page 253
    ... 33-8238 and 34-47986, Final Rule: Management's Reports on Internal Control Over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports, the certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Annual Report on Form 10-K and will not be...

  • Page 254
    ... 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 12, 2014. NVIDIA Corporation /s/ Jen-Hsun Huang By: Jen-Hsun Huang President and Chief Executive Officer POWER OF ATTORNEY KNOW...

  • Page 255
    ... MARK L. PERRY Director March 12, 2014 Mark L. Perry /s/ WILLIAM J. MILLER Director March 12, 2014 William J. Miller /s/ A. BROOKE SEAWELL Director March 12, 2014 A. Brooke Seawell /s/ ROBERT BURGESS Director March 12, 2014 Robert Burgess /s/ DAWN HUDSON Director March 12, 2014 Dawn Hudson 111

  • Page 256
    ... Form of Indemnity Agreement between NVIDIA Corporation and each of its directors and officers 1998 Equity Incentive Plan, as amended 1998 Equity Incentive Plan ISO, as amended 1998 Equity Incentive Plan NSO, as amended Certificate of Stock Option Grant 1998 Employee Stock Purchase Plan, as amended...

  • Page 257
    ...(2009)) 2007 Equity Incentive Plan - Non-Statutory Stock Option (Annual Grant - Board Service (2011)) 2007 Equity Incentive Plan - Non-Statutory Stock Option (Initial Grant - Board Service (2011)) Amended and Restated 2007 Equity Incentive Plan - Non-Employee Director Stock Option Grant (2012 Annual...

  • Page 258
    .../7/2010 Patent Cross License Agreement dated as of January 10, 2011, between NVIDIA 8-K 0-23985 Corporation and Intel Corporation 10.1 1/10/2011 Master Confirmation and Supplemental Confirmation between NVIDIA Corporation and Goldman, Sachs & Co., dated May 14, 2013 10-Q 0-23985 10.3 5/22/2013 Base...

  • Page 259
    ... 33-8238 and 34-47986, Final Rule: Management's Reports on Internal Control Over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports, the certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Annual Report on Form 10-K and will not be...

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    CORPORATE INFORMATION BOARD OF DIRECTORS Jen-Hsun Huang Co-Founder, President and Chief Executive Officer NVIDIA Corporation Robert K. Burgess Independent Consultant Tench Coxe Managing Director, Sutter Hill Ventures James C. Gaither Managing Director, Sutter Hill Ventures Dawn Hudson Vice Chairman...

  • Page 264
    ... trademarks and/or registered trademarks of NVIDIA Corporation in the U.S. and other countries. Other company and product names may be trademarks of the respective companies with which they are associated. © 2014 Respawn Entertainment. All other trademarks are property of their respective owners.