NVIDIA Reports Financial Results for Third Quarter Fiscal 2014

NVIDIA's outlook for the fourth quarter of fiscal 2014 is as follows:

  • Revenue is expected to be $1.05 billion, plus or minus two percent.

  • GAAP and non-GAAP margins are expected to be approximately 54.2 percent and 54.5 percent, respectively.

  • GAAP operating expenses are expected to be approximately $450 million; non-GAAP operating expenses are expected to be approximately $410 million.

  • GAAP and non-GAAP tax rates are expected to be 16 percent, plus or minus one percent. This estimate excludes any discrete tax events that may occur during the quarter, which, if realized, may increase or decrease our actual effective tax rates in the quarter.

Diluted shares for the fourth quarter are expected to be approximately 578.5 million.

CFO Commentary and Earnings Presentation
Commentary on the quarter by Colette Kress, NVIDIA chief financial officer, and a presentation, are available at www.nvidia.com/ir.

Conference Call and Webcast Information
NVIDIA will conduct a conference call with analysts and investors to discuss its third quarter fiscal 2014 financial results and current financial prospects today at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). To listen to the call, please dial (212) 231-2922. A live webcast (listen-only mode) of the conference call will be accessible at the NVIDIA investor relations web site www.nvidia.com/ir and at www.streetevents.com. The webcast will be recorded and available for replay until the company's conference call to discuss its financial results for its fourth quarter fiscal 2014.

Non-GAAP Measures
To supplement NVIDIA's Condensed Consolidated Statements of Operations and Condensed Consolidated Balance Sheets presented in accordance with GAAP, the company uses non-GAAP measures of certain components of financial performance. These non-GAAP measures include non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP income tax expense, non-GAAP net income, non-GAAP net income, or earnings, per share, and free cash flow. In order for NVIDIA's investors to be better able to compare its current results with those of previous periods, the company has shown a reconciliation of GAAP to non-GAAP financial measures. These reconciliations adjust the related GAAP financial measures to exclude stock-based compensation, amortization of acquisition-related intangible assets, other acquisition-related costs or credits, a restructuring charge, a legal settlement, a contribution expense, and the associated tax impact of these items, where applicable. Free cash flow is calculated as GAAP net cash provided by operating activities less purchases of property and equipment and intangible assets. NVIDIA believes the presentation of its non-GAAP financial measures enhances the user's overall understanding of the company's historical financial performance. The presentation of the company's non-GAAP financial measures is not meant to be considered in isolation or as a substitute for the company's financial results prepared in accordance with GAAP, and our non-GAAP measures may be different from non-GAAP measures used by other companies.

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                             NVIDIA CORPORATION                             
                 CONDENSED CONSOLIDATED STATEMENTS OF INCOME                
                    (In thousands, except per share data)                   
                                 (Unaudited)                                
                                                                            
                             Three Months Ended        Nine Months Ended    
                         ------------------------- -------------------------
                          October 27,  October 28,  October 27,  October 28,
                             2013         2012         2013         2012    
                         ------------ ------------ ------------ ------------
                                                                            
Revenue                  $  1,053,967 $  1,204,110 $  2,985,944 $  3,173,257
Cost of revenue               469,552      567,452    1,337,423    1,532,516
                         ------------ ------------ ------------ ------------
Gross profit                  584,415      636,658    1,648,521    1,640,741
Operating expenses                                                          
  Research and                                                                    
      development                                340,294            284,180            999,193            849,275
    Sales,  general  and                                                                                                                
      administrative                          103,133            100,261            320,025            326,800
                                                  ------------  ------------  ------------  ------------
        Total  operating                                                                                                                  
          expenses                                  443,427            384,441        1,319,218        1,176,075
                                                  ------------  ------------  ------------  ------------
Operating  income                            140,988            252,217            329,303            464,666
Interest  and  other                                                                                                                    
  income,  net                                            496                1,411              12,063              11,265
                                                  ------------  ------------  ------------  ------------
Income  before  income  tax                                                                                                        
  expense                                            141,484            253,628            341,366            475,931
Income  tax  expense                          22,750              44,548              48,293              87,368
                                                  ------------  ------------  ------------  ------------
Net  income                              $        118,734  $        209,080  $        293,073  $        388,563
                                                  ============  ============  ============  ============
                                                                                                                                                        
Basic  net  income  per                                                                                                                
  share                                      $              0.20  $              0.34  $              0.49  $              0.63
                                                  ============  ============  ============  ============
Diluted  net  income  per                                                                                                            
  share                                      $              0.20  $              0.33  $              0.49  $              0.62
                                                  ============  ============  ============  ============
                                                                                                                                                        
Shares  used  in  basic  per                                                                                                        
  share  computation                        580,870            622,352            594,363            619,043
Shares  used  in  diluted                                                                                                            
  per  share  computation                588,752            628,845            600,108            625,973
                                                                                                                                                        
                                                                                                                                                        
                                                                                                                                                        
                                                          NVIDIA  CORPORATION                                                          
                                        CONDENSED  CONSOLIDATED  BALANCE  SHEETS                                      
                                                              (In  thousands)                                                              
                                                                  (Unaudited)                                                                
                                                                                                                                                        
                                                                                                        October  27,    January  27,
                                                                                                              2013                  2013        
                                                                                                      ------------  ------------
ASSETS                                                                                                                                            
                                                                                                                                                        
Current  assets:                                                                                                                          
    Cash,  cash  equivalents  and  marketable  securities  $    3,032,954  $    3,727,883
    Accounts  receivable,  net                                                            447,631            454,252
    Inventories                                                                                      380,319            412,467
    Prepaid  expenses  and  other  current  assets                          188,937            180,656
                                                                                                      ------------  ------------
        Total  current  assets                                                            4,049,841        4,775,258
                                                                                                                                                        
Property  and  equipment,  net                                                          595,418            576,144
Goodwill                                                                                                643,179            641,030
Intangible  assets,  net                                                                    320,589            312,332
Other  assets                                                                                        102,346            107,481
                                                                                                      ------------  ------------
        Total  assets                                                                      $    5,711,373  $    6,412,245
                                                                                                      ============  ============
                                                                                                                                                        
LIABILITIES  AND  STOCKHOLDERS'  EQUITY                                                                                
                                                                                                                                                        
Current  liabilities:                                                                                                                
    Accounts  payable                                                                  $        333,283  $        356,428
    Accrued  liabilities  and  other  current                                                                          
      liabilities                                                                                    652,644            619,795
                                                                                                      ------------  ------------
        Total  current  liabilities                                                      985,927            976,223
                                                                                                                                                        
Other  long-term  liabilities                                                          387,784            589,321
Capital  lease  obligations,  long  term                                          17,015              18,998
Stockholders'  equity                                                                    4,320,647        4,827,703
                                                                                                      ------------  ------------
        Total  liabilities  and  stockholders'  equity          $    5,711,373  $    6,412,245
                                                                                                      ============  ============
                                                                                                                                                        
                                                                                                                                                        
                                                                                                                                                        
                                                          NVIDIA  CORPORATION                                                          
                      RECONCILIATION  OF  GAAP  TO  NON-GAAP  FINANCIAL  MEASURES                        
                                      (In  thousands,  except  per  share  data)                                        
                                                                (Unaudited)                                                                  
                                                                                                                                                        
                                                    Three  Months  Ended                        Nine  Months  Ended      
                                    ---------------------------------    ----------------------  
                                        October        July  28,        October          October          October    
                                      27,  2013            2013          28,  2012        27,  2013        28,  2012    
                                    ----------    ---------    ----------    ----------    ----------  
                                                                                                                                                        
GAAP  gross  profit  $    584,415    $  545,538    $    636,658    $1,648,521    $1,640,741  
  GAAP  gross                                                                                                                                  
    margin                                55.4%            55.8%              52.9%              55.2%              51.7%
    Stock-based                                                                                                                              
      compensation                                                                                                                          
      expense                                                                                                                                    
      included  in                                                                                                                            
      cost  of                                                                                                                                    
      revenue  (A)                  3,090            2,168              2,489              7,911              7,664  
    Legal                                                                                                                                          
      settlement                            -            2,290                      -              2,290                      -  
                                    ----------    ---------    ----------    ----------    ----------  
Non-GAAP  gross                                                                                                                            
  profit                      $    587,505    $  549,996    $    639,147    $1,658,722    $1,648,405  
                                    ==========    =========    ==========    ==========    ==========  
  Non-GAAP  gross                                                                                                                          
    margin                                55.7%            56.3%              53.1%              55.6%              51.9%
                                                                                                                                                        
GAAP  operating                                                                                                                            
  expenses                  $    443,427    $  440,004    $    384,441    $1,319,218    $1,176,075  
    Stock-based                                                                                                                              
      compensation                                                                                                                          
      expense                                                                                                                                    
      included  in                                                                                                                            
      operating                                                                                                                                
      expense  (A)              (31,209)      (30,227)        (30,580)        (92,180)        (93,229)
    Amortization  of                                                                                                                      
      acquisition-                                                                                                                          
      related                                                                                                                                    
      intangible                                                                                                                              
      assets                          (4,906)        (3,980)          (4,402)        (12,801)        (12,809)
    Other                                                                                                                                          
      acquisition-                                                                                                                          
      related  costs                                                                                                                        
      or  credits  (B)                329          (4,984)          (4,666)          (9,601)        (14,631)
    Contribution                                                                                                                            
      expense  (C)                          -                    -                      -                      -          (20,127)
    Restructuring                                                                                                                          
      charge                          (2,235)                  -                      -            (2,235)                    -  
                                    ----------    ---------    ----------    ----------    ----------  
Non-GAAP                                                                                                                                        
  operating                                                                                                                                    
  expenses                  $    405,406    $  400,813    $    344,793    $1,202,401    $1,035,279  
                                    ==========    =========    ==========    ==========    ==========  
                                                                                                                                                        
GAAP  net  income      $    118,734    $    96,448    $    209,080    $    293,073    $    388,563  
    Total  pre-tax                                                                                                                          
      impact  of  non-                                                                                                                      
      GAAP                                                                                                                                          
      adjustments                41,111          43,649            42,137          127,018          148,460  
    Income  tax                                                                                                                                
      impact  of  non-                                                                                                                      
      GAAP                                                                                                                                          
      adjustments                (6,055)        (6,767)          (5,755)        (19,170)        (23,583)
                                    ----------    ---------    ----------    ----------    ----------  
Non-GAAP  net                                                                                                                                
  income                      $    153,790    $  133,330    $    245,462    $    400,921    $    513,440  
                                    ==========    =========    ==========    ==========    ==========  
                                                                                                                                                        
Diluted  net                                                                                                                                  
  income  per  share                                                                                                                      
    GAAP                        $          0.20    $        0.16    $          0.33    $          0.49    $          0.62  
                                    ==========    =========    ==========    ==========    ==========  
    Non-GAAP                $          0.26    $        0.23    $          0.39    $          0.67    $          0.82  
                                    ==========    =========    ==========    ==========    ==========  
                                                                                                                                                        
Shares  used  in                                                                                                                            
  diluted  net                                                                                                                                
  income  per  share                                                                                                                      
  computation                  588,752        592,006          628,845          600,108          625,973  
                                                                                                                                                        
Metrics:                                                                                                                                        
    GAAP  net  cash                                                                                                                          
      flow  provided                                                                                                                        
      by  operating                                                                                                                          
      activities          $    162,315    $    96,469    $    181,485    $    434,434    $    373,163  
    Purchase  of                                                                                                                              
      property  and                                                                                                                          
      equipment  and                                                                                                                        
      intangible                                                                                                                              
      assets                        (38,159)      (84,986)        (44,684)      (188,812)      (135,551)
                                    ----------    ---------    ----------    ----------    ----------  
    Free  cash  flow    $    124,156    $    11,483    $    136,801    $    245,622    $    237,612  
                                    ==========    =========    ==========    ==========    ==========  
                                                                                                                                                        
                                                                                                                                                        
----------------------------------------------------------------------------
                                                                                                                                                        
(A)  Excludes                                                                                                                                
  stock-based                                                                                                                                
  compensation  as                                                                                                                        
  follows:                                  Three  Months  Ended                        Nine  Months  Ended      
                                    ---------------------------------    ----------------------  
                                        October        July  28,        October          October          October    
                                      27,  2013            2013          28,  2012        27,  2013        28,  2012    
                                    ----------    ---------    ----------    ----------    ----------  
    Cost  of  revenue  $        3,090    $      2,168    $        2,489    $        7,911    $        7,664  
    Research  and                                                                                                                            
      development        $      20,902    $    18,555    $      20,056    $      61,392    $      60,148  
    Sales,  general                                                                                                                        
      and                                                                                                                                            
      administrative  $      10,307    $    11,672    $      10,524    $      30,788    $      33,081  
                                                                                                                                                        
                                                                                                                                                        
(B)  Consists  of  transaction  costs,  compensation  charges,  and  other  credits    
  related  to  acquisitions.                                                                                                      
                                                                                                                                                        
(C)  Net  present  value  of  a  $25  million  charitable  contribution  pledged  on      
  June  12,  2012  to  Stanford  Hospital  and  Clinic,  payable  over  ten  years.          
                                                                                                                                                        
----------------------------------------------------------------------------
                                                                                                                                                        
                                                                                                                                                        
                                                                                                                                                        
                                                          NVIDIA  CORPORATION                                                          
                                  RECONCILIATION  OF  GAAP  TO  NON-GAAP  OUTLOOK                                  
                                                                                                                                                        
                                                                                                                    Q4  FY2014  Outlook  
                                                                                                                    -----------------  
                                                                                                                                                        
GAAP  gross  margin                                                                                                            54.2%
    Impact  of  stock-based  compensation  (A)                                                                0.3%
                                                                                                                    -----------------  
Non-GAAP  gross  margin                                                                                                    54.5%
                                                                                                                    =================  
                                                                                                                                                        
                                                                                                                    Q4  FY2014  Outlook  
                                                                                                                    -----------------  
                                                                                                                        (In  millions)      
                                                                                                                                                        
GAAP  operating  expenses                                                                      $                      450.0  
    Stock-based  compensation  expense  included  in  operating                                        
      expense                                                                                                                        (30.8)
    Amortization  of  acquisition-related  intangible  assets                                (4.9)
    Other  acquisition-related  costs  (B)                                                                    (4.3)
                                                                                                                                                        
                                                                                                                    -----------------  
Non-GAAP  operating  expenses                                                              $                      410.0  
                                                                                                                    =================  
                                                                                                                                                        
----------------------------------------------------------------------------
(A)  Represents  $2.7  million  of  stock-based  compensation  expense  included  in  
  cost  of  revenue.                                                                                                                      
                                                                                                                                                        
(B)  Consists  of  transaction  costs  and  compensation  charges  related  to              
  acquisitions.                                                                                                                            
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