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2016
NVIDIA CORPORATION
ANNUAL REVIEW
NOTICE OF ANNUAL MEETING
PROXY STATEMENT
FORM 10K

Table of contents

  • Page 1
    2016 NVIDIA CORPORATION ANNUAL REVIEW NOTICE OF ANNUAL MEETING PROXY STATEMENT FORM 10-K

  • Page 2

  • Page 3
    A ONE-OF-A-KIND COMPANY NVIDIA is dedicated to creating products that are loved by the most demanding computer users in the world-gamers, designers, and scientists. We are the pioneers of GPU-accelerated computing. Our company is united by a core belief that excellence and mastery of our craft are...

  • Page 4
    ... and soul of PC gaming. More than 100 million gamers around the world play on GeForce. NVIDIA GameWorks technologies were integrated in 12 blockbuster titles in 2015. Our discrete GPU market share approached 80 percent, with the GeForce GTX 970 the most popular graphics card on Steam, the online...

  • Page 5
    ... advanced gaming, it's the best Android TV box on the market. And it will only get better with our regular software updates and a growing app catalog. GeForce NOW is our "Net ï¬,ix for games." The game-streaming service delivers an incredible GeForce GTX experience to SHIELD devices. With SHIELD, we...

  • Page 6
    ..., and many other industries. VR requires "If we had unlimited GPU horsepower in everybody's computers that would make our lives much easier." - Palmer Luckey, Founder, Oculus powerful GPUs, and our NVIDIA VRWorks software helps headset makers and game developers create amazing VR experiences.

  • Page 7
    ... it to more people. With NVIDIA GRID, enterprise workers can access any app on any device anywhere. More than 500 companies, including 11 of the Fortune 100, have deployed it. At VMworld 2015, we demonstrated GRID's capabilities-7.4 billion pixels worth of virtualized desktops filled our "Tower of...

  • Page 8
    ... with a single algorithm. EVERY INDUSTRY WANTS INTELLIGENCE Organizations engaged with NVIDIA on deep learning Higher Education Internet Life Sciences Development Tools Finance Media & Entertainment Government Manufacturing Defense Automotive Gaming Oil & Gas Other 3409 1549 100 2013 2014 2015

  • Page 9

  • Page 10
    ... starting next year in its Drive Me autonomous-car pilot program. networks; and DriveNet, our reference deep neural network. Global automakers such as Audi, BMW, Daimler, and Ford; Japanese robot taxi developer ZMP; and Toyota-partner Preferred Networks are using NVIDIA DRIVE to develop autonomous...

  • Page 11
    ...NVIDIA Jetson TX1, the first embedded computer designed to process deep neural networks, delivers an astounding 1 teraï¬,ops of performance in a credit card-sized module. Such power will enable autonomous machines to learn on their own. Walking, obstacle-avoiding robot developed by General Electric...

  • Page 12
    DEAR NVIDIANS AND STAKEHOLDERS, A ONE-OF-A-KIND COMPANY -AN EXTRAORDINARY YEAR NVIDIA is dedicated to creating products that are loved by the most demanding computer users in the world-gamers, designers, and scientists. Our company is united by a core belief that excellence and mastery of our craft...

  • Page 13
    ...We exited the mobile market this year and stopped building modems. We were one of the first entrants to mobile computing. We saw the mobile device becoming our most personal computers-always connected, and eventually replacing music players, GPS devices, cameras, readers, portable game consoles, and...

  • Page 14
    ...,000 volunteer hours. Many chose to support education programs and activities that, in total, benefited more than 64,000 children. This reï¬,ects the spirit of our employees, benefiting the less fortunate and bringing us closer together as a team. An annual tradition across our offices is Project...

  • Page 15
    ... 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 31, 2016. Copies of reports filed with the SEC are posted on the company's website and are available from NVIDIA without charge...

  • Page 16
    [THIS PAGE INTENTIONALLY LEFT BLANK]

  • Page 17
    ... for the Annual Meeting of Stockholders to be held on May 18, 2016. This Notice, our Proxy Statement, our Annual Report on Form 10-K and our Stockholder Letter are available at www.nvidia.com/proxy. By Order of the Board of Directors David M. Shannon Secretary Santa Clara, California April 7, 2016

  • Page 18
    ...Compensation Table for Fiscal Years 2016, 2015 and 2014 Grants of Plan-Based Awards For Fiscal Year 2016 Outstanding Equity Awards as of January 31, 2016 Option Exercises and Stock Vested in Fiscal Year 2016 Employment, Severance and Change-In-Control Arrangements Potential Payments Upon Termination...

  • Page 19
    ... 500 SEC Stretch Operating Plan SY PSUs Target Compensation Plan NVIDIA Corporation 1998 Employee Stock Purchase Plan NVIDIA Corporation Amended and Restated 2007 Equity Incentive Plan NVIDIA Corporation Amended and Restated 2012 Employee Stock Purchase Plan 2015 Annual Meeting of Stockholders 2016...

  • Page 20
    Threshold Compensation Plan TSR PwC Variable Cash Plan Threshold goal attainment under the Variable Cash Plan, SY PSUs and MY PSUs Total stockholder return PricewaterhouseCoopers LLP The Company's variable cash compensation plan 2

  • Page 21
    ... independent registered public accounting firm for Fiscal 2017 . . Approval of an amendment and restatement of our Amended and Restated 2007 Equity Incentive Plan. Approval of an amendment and restatement of our Amended and Restated 2012 Employee Stock Purchase Plan ... Page Number Board (for more...

  • Page 22
    ... University Managing Director, Sutter Hill Ventures President & CEO, NVIDIA Corporation Chief Marketing Officer, National Football League Managing Partner, Square Wave Ventures Chairman & Managing Director, Makena Capital Management Independent Consultant Independent Consultant Venture Partner, New...

  • Page 23
    ... of risk and risk management Stock ownership guidelines for our directors and executive officers 75% or better attendance by each Board member at meetings of the Board and applicable committees Independent Lead Director 11 out of 12 Board members independent At least annual Board and committee self...

  • Page 24
    ...risk," performancebased compensation as a percentage of total target pay Percentage of Average Other NEO Pay 9% 38% 4% 51% Component Performance Metric Variable Cash Plan Annual revenue SY PSUs Annual Non-GAAP Operating Income MY PSUs 3-year TSR relative to the S&P 500 Percentage of CEO Pay 11% 51...

  • Page 25
    ... common stock outstanding and entitled to vote, meaning that 272,274,330 shares must be represented at the 2016 Meeting or by proxy to have a quorum. A list of stockholders entitled to vote at the 2016 Meeting will be available at our headquarters, 2701 San Tomas Expressway, Santa Clara, California...

  • Page 26
    ...our 2007 Plan and to amend and restate our 2012 ESPP. We strongly encourage you to vote. Note that under the rules of the national stock exchanges, any NVIDIA stockholder whose shares are held in street name by a member brokerage firm may revoke a proxy and vote his or her shares at the 2016 Meeting...

  • Page 27
    ... your shares using his best judgment. Vote Results. Preliminary voting results will be announced at the 2016 Meeting. Final voting results will be published in a current report on Form 8-K, which will be filed with the SEC by May 24, 2016. Proxy Materials An SEC rule allows companies like NVIDIA to...

  • Page 28
    ... your proposal must be submitted in writing by December 8, 2016 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 Exchange Act. However, if we do not hold our 2017...

  • Page 29
    ... University Managing Director, Sutter Hill Ventures President & CEO, NVIDIA Corporation Chief Marketing Officer, National Football League Managing Partner, Square Wave Ventures Chairman & Managing Director, Makena Capital Management Independent Consultant Independent Consultant Venture Partner, New...

  • Page 30
    ...(including as an investor in other companies) Marketing and brand management Public company board experience Experience with emerging technologies and new business models Legal expertise Diversity, including gender and ethnic background Academia experience Desirability as a member of any committees...

  • Page 31
    ... Financial/Financial Community Public Company Board Emerging Technologies and Business Models Marketing and Brand Management Legal Burgess Coxe Drell Gaither Huang Hudson Jones McCaffery Miller Perry Seawell Stevens Our Director Nominees The biographies below include information, as of the date of...

  • Page 32
    ....D. from the University of California Berkeley and an AB degree in Mathematics and Physics from Wellesley College. An accomplished researcher and educator, Dr. Drell brings to the Board expert leadership in guiding innovation in science and technology. Managing Director, Sutter Hill Ventures Age: 78...

  • Page 33
    ... Age: 58 Director Since: 2013 Committees: CC Dawn Hudson has served as Chief Marketing Officer for the National Football League since October 2014. Previously, she served from 2009 to 2014 as vice chairman of The Parthenon Group, an advisory firm focused on strategy consulting. She was president and...

  • Page 34
    ... held companies and non-profits. He was a director of KB Home, a homebuilding company, from 2003 until 2015. Mr. McCaffery is a Trustee of the Rhodes Scholarship Trust. Mr. McCaffery holds a BA degree from the Woodrow Wilson School of Public and International Affairs at Princeton University, a BA...

  • Page 35
    ... issues facing public companies, and a deep understanding of accounting principles and financial reporting. His financial expertise qualifies him to serve as an "audit committee financial expert" within the meaning of SEC rules and his significant financial community experience gives the Board an...

  • Page 36
    ... the drivers of structural change and high-growth opportunities. He provides valuable insight regarding corporate strategy development and the analysis of acquisitions and divestitures. His significant financial community experience gives the Board an understanding of the methods by which companies...

  • Page 37
    ... financial experts" under SEC rules. Board Leadership Structure We believe that all members of our Board should have an equal voice in the affairs and the management of the Company. Consistent with this philosophy, while our Bylaws and Corporate Governance Policies allow for the appointment...

  • Page 38
    ... 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 presentations, programs...

  • Page 39
    ... Code of Conduct that applies to our executive officers, directors and members of our finance, accounting and treasury departments. The Code of Conduct and the Financial Team Code of Conduct are available under Corporate Governance in the Investor Relations section of our website at www.nvidia.com...

  • Page 40
    ... written communications addressed to 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...

  • Page 41
    ... Information The Board met six times during Fiscal 2016, and 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 challenges facing NVIDIA. We expect each Board member...

  • Page 42
    ...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 CEO and other executive officers; Reviews and approves corporate performance goals and objectives relevant...

  • Page 43
    ...the average total annual compensation, both cash and equity, paid by technology peer companies of similar size and market capitalization to their non-employee directors. We refer to this as the 2015 Program. We do not pay any additional fees for serving as a chairperson or member of Board committees...

  • Page 44
    ... such plans in the event that an acquiring company does not assume or substitute for such outstanding stock awards. Fiscal 2016 Compensation The following table provides information regarding Fiscal 2016 compensation for non-employee directors: Director Compensation for Fiscal 2016 Fees Earned or...

  • Page 45
    The following table provides information regarding the aggregate number of RSUs and stock options held by each of our non-employee directors as of January 31, 2016: Name Robert K. Burgess ...Tench Coxe ...Persis S. Drell...James C. Gaither ...Dawn Hudson...Harvey C. Jones ...RSUs 10,283 5,142 23,300...

  • Page 46
    ... for a description of the terms of the 2007 Plan, related to a change-in-control of NVIDIA. During Fiscal 2016, we have granted RSUs to our non-employee directors, and RSUs and PSUs to our executive officers. See the section above titled Director Compensation and the section below titled Executive...

  • Page 47
    Security Ownership of Certain Beneficial Owners and Management The following table sets forth information as of January 31, 2016 as to shares of our common stock beneficially owned by each of our NEOs, each of our directors, all of our directors and executive officers as a group, and all known by us...

  • Page 48
    ...,998 shares. FMR is located at 245 Summer Street, Boston, Massachusetts 02210. This information is based solely on a Schedule 13G/A, dated February 10, 2016, filed with the SEC on February 11, 2016 by The Vanguard Group, Inc., or Vanguard, reporting its beneficial ownership as of December 31, 2015...

  • Page 49
    (14) This information is based solely on a Schedule 13G/A, dated February 11, 2016, filed with the SEC on February 12, 2016 by PRIMECAP Management Company, or PRIMECAP, reporting its beneficial ownership as of December 31, 2015. The Schedule 13G/A reports that PRIMECAP has sole voting power with ...

  • Page 50
    ... as disclosed in the CD&A, the compensation tables and the related narrative disclosure contained in this proxy statement. In response to our stockholders' preference, our Board has adopted a policy of providing for annual "say-on-pay" votes. This vote is not intended to address any specific item of...

  • Page 51
    ... Vice President, Chief Administrative Officer and Secretary Executive Vice President, Operations Table of Contents to Compensation Discussion and Analysis Page Page Executive Summary...34 Fiscal 2016 Components of Pay ...40 Executive Compensation Goals...35 Changes to Fiscal 2016 Compensation ...40...

  • Page 52
    ... only earned if we achieve multiple corporate financial metrics. Fiscal 2016 Enhancements We value stockholder feedback and maintain an annual outreach program to ensure that our stockholders view our pay practices as well-structured. Despite strong stockholder support of our executive compensation...

  • Page 53
    ... NEOs own shares of our common stock with values that are significant to them, they will have an incentive to act to maximize longer-term stockholder value instead of short-term gain. Therefore, equity compensation comprises a significant portion of the total target value of the annual compensation...

  • Page 54
    ..." policy for the recovery of performance-based cash and equity compensation Make internal comparisons among executive officers when determining compensation Have three or more independent non-employee directors serve on the CC What We Don't Do Have employment contracts or severance agreements with...

  • Page 55
    ... directly to NVIDIA (although NVIDIA does pay the cost of Exequity's services on behalf of the CC) The amount of fees paid to Exequity by NVIDIA as a percentage of Exequity's total revenue Exequity's policies and procedures that are designed to prevent conflicts of interest Any business or personal...

  • Page 56
    ...that LSI Corporation was removed and Avago Technologies was added following its acquisition of LSI. The chart below reflects trailing twelve months annual revenue and trailing twelve months average market capitalization for NVIDIA and the median of our Fiscal 2016 peer group as of December 2014 when...

  • Page 57
    ... of compensation paid to similarly situated executives at our peer companies based on the data gathered from the Radford Global Technology Survey Internal pay equity-an NEO's responsibilities, the scope of each NEO's position and the complexity of the department or function the NEO manages, relative...

  • Page 58
    ... Earned Annual N/A Annual 200% of Variable Compensation Target Long-term because of 4year vesting schedule For our CEO, 150% of his For our CEO, 150% of his 100% of grant Target Compensation Plan Target Compensation Plan SY PSU amount MY PSU amount Ultimate value delivered depends on stock price...

  • Page 59
    ... in Fiscal 2015, and earned in Fiscal 2016 when Ms. Kress reached her second anniversary of employment. Represents the cash payable under the Variable Cash Plan upon achievement of Target Compensation Plan performance on the Non-GAAP Operating Income goal for Fiscal 2015 and on the revenue goal for...

  • Page 60
    ... of our annual performance which Cash Plan drives value and contributes to long-term success of the Company • Our executive team focuses on growth in the Company's specialized markets where our technologies did not previously exist; revenue growth in these new markets is the best predictor of...

  • Page 61
    Objectives of Fiscal 2016 Compensation Program Demonstrate our commitment to stockholder engagement and consideration by implementing changes to our executive compensation program based on their feedback Increase focus on "at-risk" pay, particularly long-term PSUs that only become eligible to vest ...

  • Page 62
    ... corporate performance. To determine actual shares awarded to achieve the target equity opportunity value, the CC reviewed the 90-day trailing average of our stock price, as opposed to our stock price on the grant date, to smooth for any daily volatility to inform it on the number of shares...

  • Page 63
    ... of the date of grant), subject to each NEO's continued service with us. For SY PSUs and MY PSUs, the target numbers of shares awarded to each NEO for Fiscal 2016 represented the numbers of shares eligible to vest upon achievement of Target Compensation Plan performance on the Fiscal 2016 Non-GAAP...

  • Page 64
    ... between Threshold and Target Compensation Plan and between Target Compensation Plan and Stretch Operating Plan, payouts would be determined using straight-line interpolation. Our CEO's SY PSU and MY PSU payouts were capped at 150% of Target Compensation Plan to help manage internal pay equity. 46

  • Page 65
    ... close of Fiscal 2016, the CC met and reviewed our financial results against the variable compensation targets set at the beginning of the year: _____ (1) For achievement of Non-GAAP Operating Income between $724 million and $872 million, the number of SY PSUs eligible to vest would be equal to an...

  • Page 66
    ... achievement of revenue between $4,750 million and $5,280 million, the payout would be equal to an amount linearly interpolated between the Target Compensation Plan and Stretch Operating Plan amounts. Achievement of the MY PSU goals will be determined after January 28, 2018, the ending date of the...

  • Page 67
    ... Stretch Operating Plan number of SY PSUs became eligible to vest over a four-year period beginning on the date of grant, with 25% vesting on March 16, 2016. Market position of target total compensation was set at the median as a result of the CC's objective to balance internal pay equity with other...

  • Page 68
    ... end of the market due to responsibility and scope increase as head of worldwide field operations. The target total compensation increase for Fiscal 2016 was structured primarily in the form of performance-based equity, to further align Mr. Puri's interests with stockholders and long-term company...

  • Page 69
    ...,500 RSUs. Total target compensation was set at the higher end of the market due to responsibility and scope increase as head of human resources, legal and intellectual property licensing. The target total compensation increase for Fiscal 2016 was structured entirely in the form of performance-based...

  • Page 70
    ... COMPENSATION PRACTICES, POLICIES AND PROCEDURES Stock Ownership Guidelines The Board believes that executive officers should hold a significant equity interest in NVIDIA. Our Corporate Governance Policies require our CEO to hold a number of shares of our common stock with a value equal to six times...

  • Page 71
    ... under the Internal Revenue Code. Our CC intends to continue to compensate our NEOs in a manner consistent with the best interests of NVIDIA and our stockholders. Our CC also considers the impact of Section 409A of the Internal Revenue Code, and in general, our executive plans and programs are...

  • Page 72
    ... CC, members from the Company's legal, human resources and finance departments, collectively Management, and Exequity, the independent consultant engaged by the CC, performed an assessment of the Company's compensation programs and policies for Fiscal 2016 as generally applicable to our employees to...

  • Page 73
    ...the reported grant date fair value assumes the probable outcome of the conditions at Target Compensation Plan, determined in accordance with applicable accounting standards. Based on the performance that was actually achieved for SY PSUs in Fiscal 2016, the grant date fair values of all stock awards...

  • Page 74
    ... to the stock awards with performance-based vesting conditions, the reported grant date fair value assumes the probable outcome of the conditions at Target Compensation Plan, determined in accordance with applicable accounting standards. Represents range of possible shares able to be earned with...

  • Page 75
    ...Kress and Shoquist in the first quarter of Fiscal 2016 pursuant to the 2007 Plan. The CC approved these grants on March 16, 2015 for grant on March 18, 2015, the same day that semi-annual grants were made to all of our other eligible employees. Represents RSUs granted to Messrs. Puri and Shannon and...

  • Page 76
    ...,531 303,152 404,202 320,374 2,379,813 384,431 585,800 4,217,760 878,700 - Equity Incentive Plan Awards: Number of Unearned Shares That Have Not Vested 110,000 7,500 7,500 (10) Name Jen-Hsun Huang ... Option Exercise Price ($) (1) 10.20 15.94 18.10 10.56 17.62 14.465 14.46 13.71 12...

  • Page 77
    ...the date of grant which is the exercise price of stock option grants made pursuant to our 2007 Plan. Calculated by multiplying the number of RSUs or PSUs by the closing price ($29.29) of NVIDIA's common stock on January 29, 2016, the last trading day before the end of our Fiscal 2016, as reported by...

  • Page 78
    ...Represents the number of shares based on achieving Target performance goals. The number of PSUs that will be earned, if at all, is based on our TSR relative to the S&P 500 from January 26, 2015 through January 28, 2018. If the pre-established performance goal is achieved, the shares earned will vest...

  • Page 79
    ... was equal to the closing price of our common stock as reported by NASDAQ on the date of grant. The value realized was determined without considering any taxes that may have been owed. The value realized on vesting represents the number of shares acquired on vesting multiplied by the fair market...

  • Page 80
    ...closing price of our common stock on January 29, 2016, the last trading day of Fiscal 2016, as reported by NASDAQ, and the exercise price of the option. The estimated benefit amount of unvested RSUs and unvested PSUs was calculated by multiplying the number of RSUs or PSUs held by the applicable NEO...

  • Page 81
    ... to the Board of Directors that the Compensation Discussion and Analysis be included in the Annual Report on Form 10-K of NVIDIA for the year ended January 31, 2016 and in this proxy statement. COMPENSATION COMMITTEE Robert K. Burgess, Chairperson Tench Coxe Persis S. Drell Dawn Hudson Harvey...

  • Page 82
    ... financial statements and annual report, reviews of SEC registration statements and related consents, and fees related to statutory audits of some of our international entities. Audit-related fees consisted of accounting consultation in connection with a build-to-suit operating lease financing...

  • Page 83
    ... and permissible non-audit services rendered by our independent registered public accounting firm. The policy generally permits pre-approvals of specified permissible services in the defined categories of audit services, audit-related services and tax services up to specified amounts. Preapproval...

  • Page 84
    ... registered public accounting firm. The Audit Committee approves audit fees and non-audit services provided by and fees paid to the independent registered public accounting firm. NVIDIA has an internal audit function that reports to the Audit Committee. This function is responsible for objectively...

  • Page 85
    ... Plan Information The number of shares issuable upon exercise of outstanding stock options, RSUs and PSUs, the weighted-average exercise price of outstanding stock options, and the number of stock awards remaining for future issuance under each of our equity compensation plans as of January 31, 2016...

  • Page 86
    ... 2007 Plan that may qualify as "performance-based compensation" within the meaning of Section 162(m) of the Internal Revenue Code. Section 162(m) of the Internal Revenue Code disallows a deduction to any publicly held corporation and its affiliates for certain compensation paid to "covered employees...

  • Page 87
    ... Stock Options...Total Shares Available for Grant under the Existing 2007 Plan ...Total Shares Available for Grant under Other Equity Plans (1) ...Total Common Stock Outstanding ...Closing Price of Common Stock as Reported on NASDAQ Global Select Market _____ (1) As of March 21, 2016 (Record Date...

  • Page 88
    ...Common Stock Outstanding on First Day of Fiscal 2016 ...Common Stock Repurchased under Stock Repurchase Program...Common Stock Outstanding at Last Day of Fiscal 2016 ...Forecasted Utilization Rates In evaluating whether to approve the 2007 Plan, our CC reviewed certain management forecasts of equity...

  • Page 89
    ... been if we had not repurchased any shares in our stock repurchase program. 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 utilization of various equity awards due to the unpredictability of the...

  • Page 90
    ... (iii) 10,000,000 shares (the total number of additional shares that our stockholders approved at our 2014 Annual Meeting of Stockholders); and (iv) 18,800,000 newly requested shares. The "Prior Plans" are our 1998 Equity Incentive Plan, our 1998 Non-Employee Directors' Stock Option Plan, our 2000...

  • Page 91
    ... vesting, and the fair market value applicable to a stock award. The Plan Administrator may also delegate to one or more officers the authority to designate employees who are not officers to be recipients of certain stock awards and the number of shares subject to such stock awards. Under any such...

  • Page 92
    ...'s termination of continuous service is prohibited by applicable securities laws or would subject the participant to short-swing liability under the Exchange Act. In no event may a stock option be exercised after its original expiration date. Acceptable forms of consideration for the purchase of...

  • Page 93
    ... in the applicable restricted stock unit award agreement, restricted stock units that have not vested will be forfeited upon a participant's termination of continuous service. Dividend equivalents may be credited in respect of shares of our common stock covered by a restricted stock unit award...

  • Page 94
    ... that common stock authorized under the 2007 Plan may be used in payment of performance cash awards. In granting a performance award intended to qualify as "performance-based compensation" under Section 162(m) of the Internal Revenue Code, the CC will set a period of time, or a performance period...

  • Page 95
    ... amortization; total stockholder return; return on equity or average stockholder's equity; return on assets, investment, or capital employed; stock price; gross profit margin; operating income margin; cash flow from operating activities (including cash flow from operating activities per share); free...

  • Page 96
    ...(es) and number of securities and price per share of stock subject to outstanding stock awards. Corporate Transaction; 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 2007 Plan and described...

  • Page 97
    ... following which we are the surviving corporation but the shares of our common stock outstanding immediately prior to such transaction are converted or exchanged into other property by virtue of the transaction. For purposes of the 2007 Plan, a change in control generally will be deemed to occur in...

  • Page 98
    ... 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 99
    ... not subject to set benefits or amounts under the terms of the 2007 Plan. However, our Board's current policy establishes the number of shares subject to initial and annual stock awards that will be granted to our non-employee directors under the 2007 Plan. The Board's current policy with respect to...

  • Page 100
    ... with the Board's current policy as described under Director Compensation above. The number of shares subject to such awards is determined on the basis of the average fair market value of our common stock over the 60-day period ending the business day prior to the 2016 Meeting and, therefore...

  • Page 101
    ...Debora Shoquist Executive Vice President, Operations...All Current Executive Officers as a Group...All Current Non-Executive Directors as a Group...All Current and Former Employees as a Group (including all current non-executive officers)...Each Nominee for Director: Robert K. Burgess ...Tench Coxe...

  • Page 102
    ...by our stockholders at the 2016 Meeting. Summary of Changes The 2012 ESPP contains the following material change from the existing 2012 ESPP: • Increased Shares Authorized for Issuance. The aggregate maximum number of shares of our common stock authorized for issuance under the 2012 ESPP is 77,932...

  • Page 103
    ......Stockholder Approval - May 2016 ...Employee Purchases ...Shares Available for Purchase - Ending Balance ...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 under the 2012 ESPP due to the...

  • Page 104
    ... in such terminated offering will be automatically enrolled in a new offering beginning on the first trading day of such new purchase period. Eligibility. Generally, each employee (including officers) employed by us, by any of our parent or subsidiary companies designated by the Plan Administrator...

  • Page 105
    ... period, an agreement authorizing contributions as specified by the Plan Administrator, which may be up to 15% of such employee's earnings during the applicable period. Purchase Price. The purchase price per share at which shares of our common stock are sold on each purchase date during an offering...

  • Page 106
    ... corporation but the shares of our common stock outstanding immediately prior to such transaction are converted or exchanged into other property by virtue of the transaction. Plan Amendments and Termination. The Plan Administrator may amend or terminate the 2012 ESPP at any time. However, purchase...

  • Page 107
    ... of the fair market value of the shares as of the beginning of the offering period over the purchase price (determined as of the beginning of the offering period). Any further gain or any loss will be taxed as a long-term capital gain or loss. New Plan Benefits Participation in the 2012 ESPP will be...

  • Page 108
    ...various groups indicated, the number of shares of our common stock that have been purchased under the existing 2012 ESPP since its initial approval by our stockholders in 2012 through March 21, 2016. Existing 2012 ESPP Name and position Jen-Hsun Huang Chief Executive Officer and President ...Colette...

  • Page 109
    ... A WRITTEN REQUEST FOR AN ADDITIONAL COPY OF THE ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED JANUARY 31, 2016 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...

  • Page 110
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  • Page 111
    ... Restricted Stock Unit Awards, (v) Stock Appreciation Rights, (vi) Performance Stock Awards, (vii) Performance Cash Awards, and (viii) Other Stock Awards. (d) Purpose. The Company, by means of the Plan, seeks to secure and retain the services of the group of persons eligible to receive Awards as set...

  • Page 112
    ... his or her then-outstanding Award without his or her written consent. To amend the Plan in any respect the Board deems necessary or advisable, including, without limitation, relating to Incentive Stock Options and certain nonqualified deferred compensation under Section 409A of the Code and/or to...

  • Page 113
    ... Code and the related guidance thereunder, or (C) to comply with other applicable laws. (ix) Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests of the Company and that are not in conflict with the provisions of the Plan...

  • Page 114
    ... were approved at the Company's 2014 Annual Meeting of Stockholders, and (iv) 18,800,000 shares that were approved at the Company's 2016 Annual Meeting of Stockholders. For clarity, the 2007 Plan Reserve in this Section 3(a) is a limitation on the number of shares of Common Stock that may be issued...

  • Page 115
    ... under the Prior Plans) will be 250,000,000 shares of Common Stock. (d) Section 162(m) Limitations. Subject to the provisions of Section 9(a) relating to Capitalization Adjustments, at such time as the Company may be subject to the applicable provisions of Section 162(m) of the Code, no Participant...

  • Page 116
    ... receipt of irrevocable instructions to pay the aggregate 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...

  • Page 117
    ... form of legal consideration that may be acceptable to the Board and specified in the applicable Award Agreement. (d) Exercise and Payment of a SAR. To exercise any outstanding SAR, the Participant must provide written notice of exercise to the Company in compliance with the provisions of the Stock...

  • Page 118
    ... within such period of time ending on the earlier of (i) the date 90 days following the termination of the Participant's Continuous Service, or (ii) the expiration of the term of the Option or SAR as set forth in the Award Agreement. If, after termination of Continuous Service, the Participant does...

  • Page 119
    ...the Company in accordance with a vesting schedule to be determined by the Board; provided, however, that in all cases, in the event a Participant's Continuous Service terminates as a result of his or her death, then the Restricted Stock Award will become fully vested as of the date of termination of...

  • Page 120
    ... 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 in the applicable...

  • Page 121
    ... will become fully vested as of the date of termination of Continuous Service. 7. Covenants of the Company. (a) Availability of Shares. During the terms of the Stock Awards, the Company will keep available at all times the number of shares of Common Stock reasonably required to satisfy such...

  • Page 122
    ... Employee's employment contract, if any), (ii) the service of a Consultant pursuant to the terms of such Consultant's agreement with the Company or an Affiliate, or (iii) the service of a Director pursuant to the Bylaws of the Company or an Affiliate, and any applicable provisions of the corporate...

  • Page 123
    ... 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 the payment of cash, upon...

  • Page 124
    ... Agreement specifically provides otherwise), if the shares of Common Stock are publicly traded, and if a Participant holding an Award that constitutes "deferred compensation" under Section 409A of the Code is a "specified employee" for purposes of Section 409A of the Code, no distribution or payment...

  • Page 125
    ... 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 126
    ... of vested 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...

  • Page 127
    ... Securities Act. The Board will have the authority to determine the time or times at which "parent" or "subsidiary" status is determined within the foregoing definition. (b) "Award" means a Stock Award or a Performance Cash Award. (c) "Award Agreement" means a written agreement between the Company...

  • Page 128
    ...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 convertible...

  • Page 129
    ... Revenue Code of 1986, as amended, including any applicable regulations and guidance thereunder. (i) "Committee" means a committee of one (1) or more Directors to whom authority has been delegated by the Board in accordance with Section 2(c). (j) "Common Stock" means the common stock of the Company...

  • Page 130
    ... Date" means June 21, 2007, which was the date of the 2007 Annual Meeting of Stockholders of the Company at which this Plan was approved by the Company's stockholders. (t) "Employee" means any person employed by the Company or an Affiliate. However, service solely as a Director, or payment of a fee...

  • Page 131
    ... 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" means a written agreement between the Company and an...

  • Page 132
    ..., and (g) amortization; (2) total stockholder return; (3) return on equity or average stockholder's equity; (4) return on assets, investment, or capital employed; (5) stock price; (6) gross profit margin; (7) operating income margin; (8) cash flow from operating activities (including cash flow from...

  • Page 133
    ... or exchange of shares or other similar corporate change, or any distributions to common stockholders other than regular cash dividends; (13) to exclude the effects of the award of bonuses under the Company's bonus plans; (14) to exclude any impairment of long-lived assets including goodwill...

  • Page 134
    ...Stock Award Agreement will be subject to the terms and conditions of the Plan. (ccc) "Subsidiary" 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...

  • Page 135
    ... number of shares of Common Stock equal to the Returning Shares will immediately be added to the Share Reserve as and when such a share becomes a Returning Share, up to a maximum number set forth in Section 3(a) below. (ii) (b) The Plan provides a means by which Eligible Employees of the Company...

  • Page 136
    ...(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 137
    ... at the Company's 2016 Annual Meeting of Stockholders, (ii) 12,500,000 shares that were approved at the Company's 2014 Annual Meeting of Stockholders, (iii) 32,000,000 shares that were approved at the Company's 2012 Annual Meeting of Stockholders, (iv) the number of shares subject to the 1998 Plan...

  • Page 138
    ... to structure an Offering so that if the Fair Market Value of the shares of Common Stock on the first Trading Day of a new Purchase Period within that Offering is less than or equal to the Fair Market Value of the shares of Common Stock on the Offering Date, then (i) that Offering will terminate...

  • Page 139
    ... 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 completing and delivering to the Company, within the time...

  • Page 140
    .... Exercise of Purchase Rights. (a) On each Purchase Date, each Participant's accumulated Contributions will be applied to the purchase of shares of Common Stock, up to the maximum number of shares of Common Stock permitted by the Plan and the applicable Offering, at the purchase price specified in...

  • Page 141
    ... 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 142
    ... 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 143
    ...Stock Purchase Plans may be granted to Eligible Employees. (b) "Affiliate" means any branch or representative office of a Related Corporation, as determined by the Board, whether now or hereafter existing. (c) "Board" means the Board of Directors of the Company. (d) "Capitalization Adjustment" means...

  • Page 144
    ... to participate set forth in the Plan. (q) "Employee" means any person, including an Officer or Director, who is treated as an employee in the records of the Company or a Related Corporation (including an Affiliate). However, service solely as a Director, or payment of a fee for such services, will...

  • Page 145
    ... of the Company or a Related Corporation within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder. (y) "Participant" means an Eligible Employee who holds an outstanding Purchase Right. (z) "Plan" means this NVIDIA Corporation Amended and Restated 2012...

  • Page 146
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  • Page 147
    ... 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 Common Stock, $0.001 par value per share Name...

  • Page 148
    ...14. Directors, Executive Officers and Corporate Governance ...Executive Compensation ...Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters...Certain Relationships and Related Transactions, and Director Independence ...Principal Accounting Fees and Services...

  • Page 149
    ... may be updated from time to time on NVIDIA's investor relations website. Forward-Looking Statements This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934...

  • Page 150
    ... multi-core CPUs with audio, video and input/output capabilities. Headquartered in Santa Clara, California, NVIDIA was incorporated in California in April 1993 and reincorporated in Delaware in April 1998. Our Businesses Our two reportable segments - GPU and Tegra Processor - are based on a single...

  • Page 151
    Businesses GPU Tegra Processor · NVIDIA Visual Computing Platforms and Brands GeForce for PC gaming Quadro for design professionals working in computer-aided design, video editing, special effects and other creative applications Tesla for deep learning and accelerated computing, leveraging the ...

  • Page 152
    ... computer-aided design, architectural design, consumer-products manufacturing, medical instrumentation and aerospace Digital Content Creation - including professional video editing and post production, special effects for films and broadcast-television graphics Enterprise Graphics Virtualization...

  • Page 153
    ... applications - such as games, movie and photo editing and design software - to be accessed by any device, anywhere. We believe that the user experience in virtual desktop infrastructures should be indistinguishable from physical environments and, accordingly, leverage our research and development...

  • Page 154
    ...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 155
    ... kit and test specifications, and then ship our products to retailers, system builders or OEMs as motherboard and add-in board solutions. Working Capital We focus considerable attention on managing our inventories and other working-capital-related items. We manage inventories by communicating with...

  • Page 156
    ...competitive factors in this market are performance, breadth of product offerings, access to customers and partners and distribution channels, software support, conformity to industry standard Application Programming Interfaces, manufacturing capabilities, processor pricing and total system costs. We...

  • Page 157
    ... 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 including as Director of Coreware, the business unit responsible...

  • Page 158
    ... company, as President of the Personal Computer Hard Disk Drive Division, and at HewlettPackard Corp. Ms. Shoquist holds a B.S. degree in Electrical Engineering from Kansas State University and a B.S. degree in Biology from Santa Clara University. Available Information Our annual reports on Form...

  • Page 159
    ... into a specialized platform company, targeting markets where visual computing is essential and valued. Our business strategy is dependent on creating products and services that anticipate customer requirements and emerging industry trends. We cannot assure you that our new strategic direction will...

  • Page 160
    ... warranty, support and repair or replacement costs, cause us to lose market share, and divert the attention of our engineering personnel from our product development efforts to find and correct the issue. In addition, an error or defect in new products or releases or related software drivers...

  • Page 161
    ... results, stock price and reputation. We depend on third parties and their technology to manufacture, assemble, test and/or package our products, which reduces our control over product quantity and quality, development, enhancement and product delivery schedule and could harm our business. We...

  • Page 162
    ... in revenue and an increase in our costs and expenses. Any of these business disruptions could require substantial expenditures and recovery time in order to fully resume operations. Our corporate headquarters, and a portion of our research and development activities, are located in California, and...

  • Page 163
    ... of new products and services, process node transitions, product transitions, sales discounts, pricing actions by our competitors, the cost of product components and the yield of wafers produced by the foundries that manufacture our products. We are focused on improving our gross margin and...

  • Page 164
    States and Other Americas. Revenue from sales to customers outside of the United States and Other Americas accounted for 79% of total revenue for fiscal year 2016 and 75% of total revenue for both fiscal year 2015 and 2014. The global nature of our business subjects us to a number of risks and ...

  • Page 165
    ... primarily on a combination of patents, trademarks, trade secrets, employee and third-party nondisclosure agreements, licensing arrangements, and the laws of the countries in which we operate to protect our intellectual property in the United States and internationally. The laws of certain foreign...

  • Page 166
    ... on our business and results of operations. We are subject to risks associated with development and construction of our headquarters building under an operating lease financing arrangement. In fiscal year 2016, we began to construct a new headquarters building in Santa Clara, California, which is...

  • Page 167
    ...our default under the operative agreements entered into with a syndicate of banks that are participants to the operating lease financing arrangement to finance development and construction of our headquarters. We have pledged our assets that relate to the new headquarters building in order to secure...

  • Page 168
    ... in Santa Clara. Outside of Santa Clara, we lease space in Austin, Texas and a number of regional facilities in other U.S. locations, which are used as research and development centers and/or sales and administrative offices. Outside of the United States, we own a building in Hyderabad, India, which...

  • Page 169
    ... in the best interests of our shareholders and are in compliance with all laws and agreements of NVIDIA applicable to the declaration and payment of cash dividends. In fiscal year 2016, based upon our earnings and profits, 100% of our dividend payments were considered to be a return of capital for...

  • Page 170
    ... Annual Report on Form 10-K for further discussion regarding our equity incentive plans. Stock Performance Graphs The following graph compares the cumulative total shareholder return for our common stock, the S&P 500 Index and the S&P Semiconductors Index for the five years ended January 31, 2016...

  • Page 171
    ... Trademark Holdings LLC. © 2016 S&P Dow Jones Indices LLC, its affiliates and/or its licensors. All rights reserved. 1/30/2011 NVIDIA Corporation ...$ S&P 500 ...$ S&P Semiconductors ...$ 100.00 100.00 100.00 $ $ $ 1/29/2012 62.75 104.22 102.04 $ $ $ 1/27/2013 52.55 121.71 91.20 $ $ $ 1/26/2014...

  • Page 172
    ... for the ten years ended January 31, 2016. The graph assumes that $100 was invested on January 29, 2006 in our common stock and in each of the S&P 500 Index and the S&P Semiconductors Index. Total return assumes reinvestment of dividends in each of the indices indicated. Total return is based on...

  • Page 173
    ..., less current portion...Convertible debt conversion obligation...Total shareholders' equity...Cash dividends declared and paid per common share 5,037 7,370 1,413 - 10 87 4,469 0.3950 January 25, 2015 (B) Year Ended January 26, 2014 (B,C) January 27, 2013 (B) January 29, 2012 (D) (In millions...

  • Page 174
    ... in this Annual Report on Form 10-K, before deciding to purchase, hold or sell shares of our common stock. Overview Our Company and Our Businesses NVIDIA is the world leader in visual computing. NVIDIA has transformed into a specialized platform company that targets four large markets - Gaming...

  • Page 175
    ... for OEMs, partially offset by an increase in Tegra products for automotive and development services. License revenue from our patent license agreement with Intel remained flat at $264 million for fiscal year 2016. Gross margin for fiscal year 2016 was a record 56.1%, up 60 basis points from the...

  • Page 176
    ...Our management has discussed the development and selection of these critical accounting policies and estimates with the Audit Committee of our Board of Directors. The Audit Committee has reviewed our disclosures relating to our critical accounting policies and estimates in this Annual Report on Form...

  • Page 177
    ... of revenue and related cost of revenue until the distributors resell the product and, in some cases, when customer return rights lapse. 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 178
    ... inventory purchase commitments in a timely manner in response to customer cancellations or deferrals. The overall net effect on our gross margin from inventory provisions and sales of items previously written down was an unfavorable impact of 1.6%, 0.6% and 0.1% in fiscal years 2016, 2015 and 2014...

  • Page 179
    ... of discounted cash flow 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 180
    ... target established by our Compensation Committee in the beginning of each fiscal year. The number of shares of our stock to be received at vesting ranges from 0% to 200% of the target amount. We use the closing trading price of our common stock on the date of grant, minus a dividend yield discount...

  • Page 181
    ... of revenue. Year Ended January 25, 2015 100.0% 44.5 55.5 29.0 10.3 - 39.3 16.2 0.6 (1.0) 0.3 16.1 2.6 13.5% Revenue ...Cost of revenue ...Gross profit ...Operating expenses:...Research and development ...Sales, general and administrative ...Restructuring and other charges ...Total operating...

  • Page 182
    ... offset by an increase in sales of Tegra products serving automotive systems of almost 75%. Revenue also grew from development services and sales of SHIELD devices. Tegra Processor business revenue increased by 45% in fiscal year 2015 compared to fiscal year 2014. This increase was driven by...

  • Page 183
    ... development costs for license and service arrangements and stock-based compensation related to personnel associated with manufacturing. Gross margin is the percentage of gross profit to revenue. Our overall gross margin was 56.1%, 55.5% and 54.9% for fiscal years 2016, 2015 and 2014, respectively...

  • Page 184
    ...-down of Icera modem operations and other organization efficiencies, partially offset by increases in employee compensation and related costs, including stock-based compensation expense. Research and development expenses remained relatively flat during fiscal year 2015 compared to fiscal year 2014...

  • Page 185
    ... of deep learning, self-driving cars, and gaming. Our operating expenses for fiscal year 2016 included $131 million of restructuring and other charges, as follows: Year Ended January 31, 2016 (In millions) Employee severance and related costs ...$ Tax subsidy impairment ...Fixed assets impairment...

  • Page 186
    ...increase in the amount of earnings subject to United States tax in fiscal years 2016 and 2015, partially offset by a net income tax benefit related to the Icera modem restructuring in fiscal year 2016, and a higher percentage of research tax credit benefit in fiscal year 2014. Our effective tax rate...

  • Page 187
    ... additional information. As of January 31, 2016 and January 25, 2015, we had $5.04 billion and $4.62 billion, respectively, in cash, cash equivalents and marketable securities. Our investment policy requires the purchase of high grade investment securities and the diversification of asset types and...

  • Page 188
    ...of this Annual Report on Form 10-K for further discussion. Capital Return to Shareholders During fiscal year 2016, we repurchased a total of 25 million shares for $587 million and paid $213 million in cash dividends to our shareholders, equivalent to $0.085 per share for the three months ended April...

  • Page 189
    ...software licensing arrangements in the operating lease category. (3) Excludes operating lease payments that we expect to make under an operating lease financing arrangement following construction of a new headquarters building in Santa Clara, California, which is currently targeted for completion in...

  • Page 190
    ...charges related to the wind-down of our Icera modem operations. The $23 million represents the remaining balance of the restructuring liability as of January 31, 2016. Off-Balance Sheet Arrangements During fiscal year 2016, we began to construct a new headquarters building in Santa Clara, California...

  • Page 191
    ..., the fair value of the Notes changes primarily when the market price of our stock fluctuates. During fiscal year 2016, we began to construct a new headquarters building in Santa Clara, California, which is currently targeted for completion in the fourth quarter of fiscal year 2018. We are financing...

  • Page 192
    ... (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act) were effective to provide reasonable assurance. Management's Annual Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate...

  • Page 193
    ... text of our "Code" and "Financial Team Code" are published on the Investor Relations portion of our website, 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 194
    ... titled "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 2016 Proxy Statement. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES The information required by this item is...

  • Page 195
    ..., 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 31, 2016, January 25, 2015, and January 26, 2014...Consolidated Statements...

  • Page 196
    ...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 197
    ...Year Ended January 25, 2015 $ 4,682 2,083 2,599 1,360 480 - 1,840 759 28 (46) 14 755 124 631 January 31, 2016 Revenue ...$ Cost of revenue ...Gross profit ...Operating expenses: Research and development...Sales, general and administrative...Restructuring and other charges...Total operating expenses...

  • Page 198
    ... CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In millions) Year Ended January 25, 2015 $ 631 $ January 31, 2016 Net income ...$ Other comprehensive income (loss), net of tax: Net change in unrealized gains (losses) on available-for-sale securities...Net change in fair value of interest rate...

  • Page 199
    ...31, 2016; 759 shares issued and 545 outstanding as of January 25, 2015...Additional paid-in capital ...Treasury stock, at cost (242 shares in 2016 and 214 shares in 2015)...Accumulated other comprehensive income (loss)...Retained earnings...Total shareholders' equity...Total liabilities, convertible...

  • Page 200
    ... stock from stock plans...Tax withholding related to vesting of restricted stock units ...Share repurchase ...Discount on convertible notes...Purchase of convertible note hedges Proceeds from the sale of common stock warrants ...Deferred tax asset associated with convertible notes ...Cash dividends...

  • Page 201
    ......Amortization of debt discount...Net gain on sale and disposal of long-lived assets and investments Deferred income taxes...Tax benefit from stock-based compensation...Other...Changes in operating assets and liabilities, net of effects of acquisitions: Accounts receivable ...Inventories...Prepaid...

  • Page 202
    Year Ended January 31, 2016 Supplemental disclosures of cash flow information: Cash paid for income taxes, net ...$ Cash paid for interest ...$ Non-cash investing and financing activities: Assets acquired by assuming related liabilities...$ Goodwill adjustment related to previously acquired business...

  • Page 203
    ...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 year 2016 was a 53-week year with the extra week in the fiscal fourth quarter and fiscal years 2015 and 2014 were 52-week years. Principles of...

  • Page 204
    ... support our partners' activities while also promoting NVIDIA products. We account for MDFs as a reduction of revenue and apply a breakage factor to certain types of MDF programs. We also record a reduction to revenue by establishing a sales return allowance for estimated product returns at the time...

  • Page 205
    ...requisite employee service period. 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, and performance stock units that are based on our corporate financial performance targets, or...

  • Page 206
    ... and liabilities are remeasured into United States 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...

  • Page 207
    ... with maturities of greater than three months when purchased. 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...

  • Page 208
    ... fabrication, assembly, testing and packaging, manufacturing support costs, including labor and overhead 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...

  • Page 209
    ... We account for asset retirement obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. As of January 31, 2016 and January 25, 2015, our asset retirement obligations to return the leasehold improvements at our headquarters facility...

  • Page 210
    ... service contract assets and related service contract expense in our consolidated financial statements. In May 2014, the FASB issued an accounting standards update that creates a single source of revenue guidance under U.S. GAAP for all companies, in all industries, effective for annual reporting...

  • Page 211
    ..., as follows: Year Ended January 25, 2015 (In millions) $ 12 88 58 $ 158 January 31, 2016 Cost of revenue ...$ Research and development ...Sales, general and administrative ...Total...$ 15 115 74 204 January 26, 2014 $ 11 83 42 136 $ Stock-based compensation capitalized in inventories was not...

  • Page 212
    ... under our stock option plans and shares issued under our ESPP have been estimated with the following assumptions: January 31, 2016 Stock Options Weighted average expected life (in years)...Risk-free interest rate...Volatility ...Dividend yield Year Ended January 25, 2015 2.4-3.5 1.8%-3.0% 28%-37...

  • Page 213
    ... service, with 25% vesting on the anniversary of the hire date in the case of new hires or the anniversary of the date of grant in the case of grants to existing employees and 6.25% vesting at the end of each quarterly period thereafter. Stock options previously granted under the 2007 Plan generally...

  • Page 214
    ... for future issuance under our equity incentive plans. The total intrinsic value of options exercised was $75 million, $62 million and $14 million for fiscal years 2016, 2015 and 2014, respectively. Upon exercise of an option, we issue new shares of stock. The total fair value of options vested...

  • Page 215
    ... for the periods presented: Year Ended January 25, 2015 January 31, 2016 Numerator: Net income...$ Denominator: Denominator for basic net income per share, weighted average shares Effect of dilutive securities: Equity awards outstanding...Assumed conversion of 1% Convertible Senior Notes Due...

  • Page 216
    ..., certain assumptions about our expected future operating performance, such as revenue growth rates, operating margins, risk-adjusted discount rates, and future economic and market conditions. The market method of determining the fair value of our reporting units requires us to use judgment in the...

  • Page 217
    ... CORPORATION AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 5 - Amortizable Intangible Assets The components of our amortizable intangible assets are as follows: January 31, 2016 Gross Carrying Amount Acquisition-related intangible assets ...$ Patents and licensed...

  • Page 218
    ... ...Asset-backed securities ...Mortgage backed securities issued by United States government-sponsored enterprises...Money market funds ...Foreign government bonds...Total...$ Classified as: Cash equivalents ...Marketable securities ...Total...2,185 750 534 453 274 132 85 4,413 January 25, 2015...

  • Page 219
    ...between Levels 1 and 2 assets for the year ended January 31, 2016. Level 3 assets are based on unobservable inputs to the valuation methodology and include our own data about assumptions market participants would use in pricing the asset or liability based on the best information available under the...

  • Page 220
    ... (3) ...Money market funds (5)...Liabilities Current liability: 1.00% Convertible Senior Notes Due 2018 (6) .. Other noncurrent liability: Interest rate swap (7)...Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 2 Level 1 Fair Value at January 31, 2016 January 25, 2015 (In millions...

  • Page 221
    ......$ Work in-process...Finished goods...Total inventories ...$ 105 103 210 418 $ 157 92 234 483 January 25, 2015 (In millions) $ As of January 31, 2016, we had outstanding inventory purchase obligations totaling $391 million. January 31, 2016 Property and Equipment: Land ...$ Building ...Test...

  • Page 222
    ... In August 2015, we entered into an interest rate swap for a portion of the operating lease financing arrangement for our new headquarters building, which entitles us to pay amounts based on a fixed interest rate in exchange for receipt of amounts based on variable interest rates. The objective of...

  • Page 223
    ... 2014 and July 2015. We had determined that the battery in these tablets can overheat, posing a fire hazard. The recall did not affect any other NVIDIA products. During fiscal year 2016, we recorded a $26 million charge against cost of revenue to cover anticipated customer warranty, repair, return...

  • Page 224
    ... 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...

  • Page 225
    ... following table presents the interest expense for the contractual interest and the accretion of debt discount: January 31, 2016 Contractual coupon interest expense ...$ Amortization of debt discount ...Total interest expense related to Notes...$ Year Ended January 25, 2015 15 28 43 January 26, 2014...

  • Page 226
    ... 31, 2016, we had outstanding capital purchase obligations totaling $36 million. Lease Obligations Our headquarters complex is located in Santa Clara, California and includes eight buildings that are leased properties. Future minimum lease payments related to headquarters operating leases total $69...

  • Page 227
    ... ...2019 ...Total ...$ Present value of minimum lease payments ...$ Current portion ...$ Long-term portion ...$ Operating Lease Financing Arrangement In fiscal year 2016, we began to construct a new headquarters building in Santa Clara, California, which is currently targeted for completion in the...

  • Page 228
    ... Cases On September 4, 2014, NVIDIA filed complaints against Qualcomm, Inc., or Qualcomm, and various Samsung entities in both the United States International Trade Commission, or ITC, and the United States District Court for the District of Delaware alleging infringement of seven patents relating...

  • Page 229
    ... distribution operations in the United States, we do not believe that the possible entry of these orders will have a significant impact to our business. The target date for the final determination by the ITC is April 25, 2016, followed by the Presidential Review Period ending June 24, 2016. NVIDIA...

  • Page 230
    ... to employer stock option plans...Income tax expense...$ Income before income tax consists of the following: Year Ended January 25, 2015 (In millions) $ 174 581 $ 755 (43) $ 1 25 (17) 134 - - 134 12 129 8 1 17 26 84 - (1) 83 15 124 $ 8 1 19 28 17 - (2) 15 27 70 January 31, 2016 January 26, 2014...

  • Page 231
    ...primarily due to an increase in the amount of earnings subject to United States tax in fiscal years 2016 and 2015, partially offset by a net income tax benefit related to the Icera modem restructuring in fiscal year 2016, and a higher percentage of research tax credit benefit in fiscal year 2014. 85

  • Page 232
    ... the period. Our deferred tax assets do not include the excess tax benefit related to stock-based compensation that are a component of our federal and state net operating loss and research tax credit carryforwards in the amount of $416 million as of January 31, 2016. Consistent with prior years, the...

  • Page 233
    ... under examination include the state of California for fiscal years 2011 through 2012, and India, Taiwan, France and Germany for fiscal years 2003 through 2015. Note 14 - Shareholders' Equity Share Repurchase Program Beginning August 2004, our Board of Directors authorized us, subject to certain...

  • Page 234
    ... for further information regarding stock-based compensation related to equity awards granted under our equity incentive programs. Convertible Preferred Stock As of January 31, 2016 and January 25, 2015, there were no shares of preferred stock outstanding. Common Stock We are authorized to issue...

  • Page 235
    ...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 assets, other acquisitionrelated costs, product warranty charge...

  • Page 236
    ...consist of property and equipment and deposits and other assets, and exclude goodwill and intangible assets. January 31, 2016 Long-lived assets: United States...$ India...Taiwan ...China...Europe...Other Asia Pacific...Total long-lived assets ...$ January 25, 2015 467 48 52 28 52 1 648 (In millions...

  • Page 237
    ... more of total revenue for the respective dates, is summarized as follows: Year Ended January 25, 2015 11% 9% January 31, 2016 Revenue: Customer A...Customer B ...Revenue from both customers was attributable to the GPU business. 11% 9% January 26, 2014 11% 10% Accounts receivable from significant...

  • Page 238
    NVIDIA CORPORATION AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) Year Ended January 31, 2016 (In millions) Employee severance and related costs ...$ Fixed assets impairment...Tax subsidy impairment...Facilities and related... Icera operations to be substantially complete....

  • Page 239
    ...24 0.24 January 31, 2016 April 26, 2015 January 25, 2015 Statement of Income Data: Revenue...Cost of revenue ...Gross profit ...Net income ...Net income per share: Basic...Diluted 1,251 552 699 193 0.35 0.35 Fiscal Year 2015 Quarters Ended October 26, July 27, 2014 2014 (In millions, except per...

  • Page 240
    ...2016 Allowance for doubtful accounts .. Sales return allowance ...Deferred tax valuation allowance.. Year ended January 25, 2015 Allowance for doubtful accounts .. Sales return allowance ...Deferred tax valuation allowance.. Year ended January 26, 2014 Allowance for doubtful accounts .. Sales return...

  • Page 241
    ... Convertible Senior Note due 2018 (included in Exhibit 4.3) Form of Indemnity Agreement between NVIDIA Corporation and each of its directors and officers Amended and Restated 2007 Equity Incentive Plan 2007 Equity Incentive Plan - Non Statutory Stock Option (Annual Grant - Board Service (2007)) 2007...

  • Page 242
    ... Grant - Board Service) Amended and Restated 2007 Equity Incentive Plan - Non-Employee Director Deferred Restricted Stock Unit Grant Notice and Deferred Restricted Stock Unit Agreement (2015) Amended and Restated 2007 Equity Incentive Plan - Non-Employee Director Deferred Restricted Stock Unit Grant...

  • Page 243
    ... any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference. Copies of above exhibits not contained herein are available to any shareholder upon written request to: Investor Relations: NVIDIA Corporation, 2701 San Tomas...

  • Page 244
    ... 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 16, 2016. NVIDIA Corporation By: /s/ Jen-Hsun Huang Jen-Hsun Huang President and Chief Executive Officer POWER OF ATTORNEY KNOW...

  • Page 245
    ... Dawn Hudson /s/ MICHAEL MCCAFFERY Michael McCaffery /s/ PERSIS DRELL Persis Drell Director March 16, 2016 Director March 16, 2016 Director March 16, 2016 Director March 16, 2016 Director March 16, 2016 Director March 16, 2016 Director March 16, 2016 Director March 16, 2016 Director...

  • Page 246
    ... Convertible Senior Note due 2018 (included in Exhibit 4.3) Form of Indemnity Agreement between NVIDIA Corporation and each of its directors and officers Amended and Restated 2007 Equity Incentive Plan 2007 Equity Incentive Plan - Non Statutory Stock Option (Annual Grant - Board Service (2007)) 2007...

  • Page 247
    ... Grant - Board Service) Amended and Restated 2007 Equity Incentive Plan - Non-Employee Director Deferred Restricted Stock Unit Grant Notice and Deferred Restricted Stock Unit Agreement (2015) Amended and Restated 2007 Equity Incentive Plan - Non-Employee Director Deferred Restricted Stock Unit Grant...

  • Page 248
    ... any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference. Copies of above exhibits not contained herein are available to any shareholder upon written request to: Investor Relations: NVIDIA Corporation, 2701 San Tomas...

  • Page 249
    ... San Tomas Expressway Santa Clara, California 95050 [email protected] Mark L. Perry Advisor Third Rock Ventures Brooke Seawell Venture Partner New Enterprise Associates GENERAL LEGAL COUNSEL Cooley LLP 3175 Hanover Street Palo Alto, California 94304 Mark A. Stevens Managing Partner S-Cubed Capital

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    NVIDIA CORPORATION 2701 San Tomas Expressway, Santa Clara, California 95050 www.nvidia.com © 2016 NVIDIA Corporation. All rights reserved. NVIDIA, the NVIDIA logo, GeForce, Quadro, Tesla, GeForce NOW, Iray, Jetson, NVIDIA DRIVE, NVIDIA DIGITS, NVIDIA GameWorks, NVIDIA GRID, NVIDIA SHIELD, and ...