NVIDIA 2016 Annual Report Download - page 226

NVIDIA CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
80
Note Hedges and Warrants
The net proceeds from the Notes were approximately $1.48 billion after payment of the initial purchaser's discount.
Concurrently with the offering of the Notes, we entered into Note Hedges with a strike price equal to the initial conversion
price of the Notes, or $20.1630 per share. Adjusting for dividends paid through January 31, 2016, the conversion price of
the Notes has been adjusted to $20.1204 per share. The Note Hedges allow us to receive shares of our common stock and/
or cash related to the excess conversion value that we would deliver and/or pay, respectively, to the holders of the Notes
upon conversion. We paid $167 million for the Note Hedges.
In addition, concurrent with the offering of the Notes and the purchase of the Note Hedges, we entered into a separate
warrant transaction, or the Warrants, with an initial strike price to the holders of the Warrants of $27.1425 per share. Under
the terms of the Warrants, the strike price is adjusted upon the occurrence of certain events, including our cash dividends
or distributions that deviate from $0.085 per share. Accordingly, as of January 31, 2016, the strike price was adjusted to
$27.0851 per share, reflecting adjustments for our dividend increases made to that date. The Warrants are net share settled
and cover, subject to customary antidilution adjustments, 74 million shares of our common stock. We received $59
million for the Warrants transaction.
The $108 million net cost of the Note Hedges offset by the proceeds from the Warrants was included as a net reduction
to additional paid-in capital in the shareholders’ equity section of our Consolidated Balance Sheets.
Note 12 - Commitments and Contingencies
Inventory Purchase Obligations
As of January 31, 2016, we had outstanding inventory purchase obligations totaling $391 million.
Capital Purchase Obligations
As of January 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 million over the remaining terms of the
leases, including predetermined rent escalations, and are included in the future minimum lease payment schedule below.
In addition to the commitment of our headquarters, we have other domestic and international office facilities under
operating leases expiring through fiscal year 2026. We also include non-cancelable obligations under certain software
licensing arrangements as operating leases.