NVIDIA 2015 Annual Report Download - page 119

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Interest Income and Interest Expense
Interest income consists of interest earned on cash, cash equivalents and 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 $28.1 million, $17.1 million and $19.9 million in fiscal years 2015, 2014 and 2013, respectively.
The increase in fiscal year 2015 compared to fiscal year 2014 was primarily due to higher average cash balances as we
invested the proceeds from the convertible notes we issued in December 2013 in interest bearing securities. The decrease
in fiscal year 2014 compared to fiscal year 2013 was primarily due to the result of lower average cash balances as we
liquidated a portion of our investment portfolio to fund an accelerated share repurchase transaction during the second quarter
of fiscal year 2014.
Interest expense was $46.1 million, $10.4 million and $3.3 million in fiscal years 2015, 2014 and 2013, respectively.
The increases in fiscal years 2015 and 2014 compared to fiscal years 2014 and 2013, respectively, were primarily due to
coupon interest and debt discount amortization related to the convertible notes we issued in December 2013.
Other Income and Expense
Other income and expense primarily consists of realized gains and losses from the sale of marketable securities, sales
or impairments of investments in non-affiliated companies, and the impact of changes in foreign currency rates.
Net other income (expense) was $13.9 million, $7.4 million and $(2.8) million in fiscal years 2015, 2014 and 2013,
respectively. The increase for fiscal year 2015 compared to fiscal year 2014 was primarily due to a gain from the sale of a
non-affiliated investment, partially offset by the recognition of an impairment loss of a non-affiliated investment during the
second quarter of fiscal year 2015 and losses from foreign currency remeasurement. The increase in other income for fiscal
year 2014 compared to fiscal year 2013 was primarily due to an increase in gains from foreign currency remeasurements
and a gain from the sale of a non-affiliated investment.
Income Taxes
We recognized income tax expense of $124.2 million, $70.3 million and $99.5 million during fiscal years 2015, 2014
and 2013, respectively. Income tax expense as a percentage of income before taxes, or our annual effective tax rate, was
16.5%, 13.8%, and 15.0% in fiscal years 2015, 2014 and 2013, respectively. The difference in the effective tax rates amongst
the three years was primarily due to an increase in the amount of earnings subject to United States tax in fiscal year 2015
and a higher percentage of research tax credit benefit in fiscal year 2014.
Our effective tax rate on income before tax for the fiscal years was lower than the United States federal statutory rate
of 35% due to income earned in jurisdictions, including British Virgin Islands, Hong Kong, China, Taiwan and United
Kingdom, where the tax rate is lower, favorable recognition of the U.S. federal research tax credit and release of tax reserves
as a result of the expiration of statutes of limitations in certain non-U.S. jurisdictions for which we had not previously
recognized related tax benefits.
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.