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NVIDIA Reports Financial Results for Third Quarter of Fiscal 2009

SANTA CLARA, Calif., Nov. 6 /PRNewswire-FirstCall/ -- NVIDIA Corporation (Nasdaq: NVDA) today reported financial results for the third quarter of fiscal 2009 ended October 26, 2008.

(Logo: http://www.newscom.com/cgi-bin/prnh/20020613/NVDALOGO)

For the third quarter of fiscal 2009, revenue was $897.7 million compared to $1.12 billion for the third quarter of fiscal 2008, a decrease of 20 percent. For the nine months ended October 26, 2008, revenue increased to $2.94 billion compared to $2.90 billion for the nine months ended October 28, 2007, an increase of 2 percent.

During the third quarter of fiscal 2009, NVIDIA recorded an $8.3 million charge against operating expenses related to restructuring costs in connection with its workforce reduction. These pre-tax charges are comprised of severance and related expenses.

NVIDIA's results for the third quarter of fiscal 2009, computed in accordance with U.S. generally accepted accounting principles (GAAP), included net income of $61.7 million, or $0.11 per diluted share. Non-GAAP net income for the third quarter of fiscal 2009, which excludes stock-based compensation charges, a non-recurring charge against cost of revenue related to a royalty dispute, a restructuring charge against operating expenses, and the associated tax impact, was $111.4 million, or $0.20 per diluted share.

GAAP net income for the nine months ended October 26, 2008 was $117.6 million, or $0.20 per diluted share, compared to $540.7 million, or $0.89 per diluted share, for the nine months ended October 28, 2007. Non-GAAP net income for the nine months ended October 26, 2008, which excludes stock-based compensation charges, a non-recurring charge against cost of revenue related to a royalty dispute, a non-recurring warranty charge against cost of revenue, a restructuring charge against operating expenses, and the associated tax impact was $397.7 million, or $0.68 per diluted share, compared to $626.7 million, or $1.06 per diluted share, for the nine months ended October 28, 2007.

"We made good progress on multiple fronts during the quarter," said Jen-Hsun Huang, president and CEO of NVIDIA. "Improving gross margin while managing operating expenses enabled us to significantly improve our operating fundamentals. We transitioned our performance segment GPUs to 55 nanometers and are now poised to recapture lost share. We entered the fastest growing segment of the PC market with our first notebook chipset for Intel processors, and delivered on several exciting new growth initiatives -- 3-way SLI for the Intel Core i7 processor platform, Quadro CX for Adobe CS4 creative professionals and the Tesla supercomputing processor."

Third Quarter Fiscal 2009 and Recent Highlights:

-- NVIDIA introduced the GeForce 9400 and 9300 motherboard GPUs for Intel desktop PCs. The new motherboard GPUs set a new price/performance standard for integrated graphics by combining the power of three different chips into one highly compact and efficient GPU.

-- Together with Apple, NVIDIA launched the new GeForce 9400M motherboard GPU for their new lineup of Mac notebooks. The GeForce 9400M is the industry's first processor to integrate three complex chips -- the northbridge, the IO/network processor, and GeForce GPU into a single chip, and as a result, delivers up to a 5X performance increase over Intel integrated graphics in one-half the size. The MacBook and MacBook Air come standard with the 9400M. The MacBook Pro comes standard with the hybrid combination of two GeForce GPUs -- the 9400M is used for maximum battery life and a GeForce 9600M GT for high performance mode.

-- NVIDIA announced the NVIDIA Quadro CX, the industry's first accelerator for Adobe's Creative Suite 4 content creation software. Adobe CS4 software has now added optimization to take advantage of GPU technology. NVIDIA specifically designed and optimized the Quadro CX to enhance the performance of the CS4 product line and to give creative professionals the ultimate performance and productivity.

-- For design and creative professionals, NVIDIA introduced five new Quadro FX notebook GPUs that span from ultra-high performance to ultra mobility. NVIDIA also delivered the first desk side visual supercomputer with the Quadro Plex D Series. At this year's SIGGRAPH 2008, NVIDIA set a new milestone in computer graphics by demonstrating the world's first real-time fully-interactive ray tracer on the new Quadro Plex D2 system.

Conference Call and Web Cast Information

NVIDIA will conduct a conference call with analysts and investors to discuss its third quarter fiscal 2009 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) 231-2901. A live Web cast (listen-only mode) of the conference call will be held at the NVIDIA investor relations Web site http://www.nvidia.com/ir and at http;//www.streetevents.com. The Web cast will be recorded and available for replay until the Company's conference call to discuss its financial results for its fourth quarter fiscal 2009.

Non-GAAP Measures

To supplement the Company's Condensed Consolidated Statements of Income presented in accordance with GAAP, we use non-GAAP measures of certain components of financial performance. These non-GAAP measures include non-GAAP gross profit, non-GAAP net income, and non-GAAP diluted net income per share. In order for our investors to be better able to compare our current results with those of previous periods, we have shown a reconciliation of GAAP to non-GAAP financial measures. These reconciliations adjust the related GAAP financial measures to exclude stock-based compensation, a non-recurring charge against cost of revenue related to a royalty dispute, a non-recurring warranty charge against cost of revenue, a restructuring charge against operating expenses, and the associated tax impact, where applicable. We believe the presentation of our non-GAAP financial measures enhances the user's overall understanding of our historical financial performance. The presentation of our non-GAAP financial measures is not meant to be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP, and our non-GAAP measures may be different from non-GAAP measures used by other companies.

About NVIDIA

NVIDIA is the world leader in visual computing technologies and the inventor of the GPU, a high-performance processor which generates breathtaking, interactive graphics on workstations, personal computers, game consoles, and mobile devices. NVIDIA serves the entertainment and consumer market with its GeForce(R) products, the professional design and visualization market with its Quadro(R) products, and the high-performance computing market with its Tesla(TM) products. NVIDIA is headquartered in Santa Clara, California and has offices throughout Asia, Europe, and the Americas. For more information, visit http://www.nvidia.com.

Certain statements in this press release including, but not limited to, statements as to: our growth opportunities; our positioning to recapture lost share; the performance of the NVIDIA GeForce 9300, 9400 and 9400M motherboard GPUs; and the impact of Quadro CX on Adobe's Creative Suite 4 software are forward-looking statements that are subject to risks and uncertainties that could cause results to be materially different than expectations. Important factors that could cause actual results to differ materially include: development of faster or more efficient technology; the impact of technological development and competition; design, manufacturing or software defects; changes in consumer preferences or demands; changes in industry standards and interfaces; unexpected loss of performance of our products or technologies when integrated into systems; as well as other factors detailed from time to time in the reports NVIDIA files with the Securities and Exchange Commission, or SEC, including our Form 10-Q for the fiscal period ended July 27, 2008. Copies of reports filed with the SEC are posted on our website and are available from NVIDIA without charge. These forward-looking statements are not guarantees of future performance and speak only as of the date hereof, and, except as required by law, NVIDIA disclaims any obligation to update these forward-looking statements to reflect future events or circumstances.


    Copyright (C) 2008 NVIDIA Corporation. All rights reserved. NVIDIA,
GeForce, Quadro, and Tesla are registered trademarks and/or trademarks of
NVIDIA Corporation in the United States and other countries. All other company
and/or product names may be trade names, trademarks, and/or registered
trademarks of the respective owners with which they are associated. Features,
pricing, availability, and specifications are subject to change without
notice.



                                NVIDIA CORPORATION
                    CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                      (In thousands, except per share data)
                                   (Unaudited)

                                  Three Months Ended     Nine Months Ended
                               October 26, October 28, October 26, October 28,
                                   2008       2007        2008        2007

    Revenue                      $897,655  $1,115,597  $2,943,719  $2,895,130

    Cost of revenue               529,812     600,044   1,911,116   1,575,447

    Gross profit                  367,843     515,553   1,032,603   1,319,683

    Operating expenses:
      Research and development    212,360     179,529     644,100     495,802
      Sales, general and
       administrative              90,349      88,183     275,782     250,034
      Restructuring charges         8,338           -       8,338           -

        Total operating expenses  311,047     267,712     928,220     745,836

    Operating income               56,796     247,841     104,383     573,847

    Interest and other income,
     net                            4,207      18,958      23,038      47,592

    Income before income tax
     expense                       61,003     266,799     127,421     621,439

    Income tax expense (benefit)
     (A)                             (745)     31,138       9,797      80,787

    Net income                    $61,748    $235,661    $117,624    $540,652

    Basic net income per share      $0.11       $0.42       $0.21       $0.99

    Diluted net income per share    $0.11       $0.38       $0.20       $0.89

    Shares used in basic per
     share computation            543,807     554,966     551,623     547,796

    Shares used in diluted per
     share computation            564,536     612,985     590,490     605,733

    (A) The income tax expense (benefit) rate for the three and nine months
        ended October 26, 2008 was (1.2)% and 7.7%, respectively.  The income
        tax expense rate for the three and nine months ended October 28, 2007
        was 11.7% and 13.0%, respectively.



                                NVIDIA CORPORATION
              RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
                      (In thousands, except per share data)
                                   (Unaudited)

                                  Three Months Ended     Nine Months Ended
                               October 26, October 28, October 26, October 28,
                                   2008        2007       2008        2007

    GAAP gross profit            $367,843    $515,553  $1,032,603  $1,319,683
      Stock-based compensation
       expense included in cost
       of revenue (A)               3,558       2,566      10,027       8,077
      Non-recurring charge
       related to a royalty
       dispute                      4,500           -       4,500           -
      Warranty charge against
       cost of revenue arising
       from a weak die/packaging
       material set                     -           -     195,954           -
    Non-GAAP gross profit        $375,901    $518,119  $1,243,084  $1,327,760

    GAAP net income               $61,748    $235,661    $117,624    $540,652
      Stock-based compensation
       expense (A)                 38,384      32,003     120,873      98,868
      Restructuring charges         8,338           -       8,338           -
      Non-recurring charge
       related to a royalty
       dispute                      4,500           -       4,500           -
      Warranty charge against
       cost of revenue arising
       from a weak die/packaging
       material set                     -           -     195,954           -
      Income tax impact of non-
       GAAP adjustments            (1,540)     (3,491)    (49,624)    (12,853)
    Non-GAAP net income          $111,430    $264,173    $397,665    $626,667

    Diluted net income per share

      GAAP                          $0.11       $0.38       $0.20       $0.89
      Non-GAAP                      $0.20       $0.44       $0.68       $1.06

    Shares used in GAAP diluted
     net income per share
     computation                  564,536     612,985     590,490     605,733
      Cumulative impact of non-
       GAAP adjustments (B)        (3,374)    (17,927)     (9,058)    (16,716)
    Shares used in non-GAAP
     diluted net income per
     share computation            561,162     595,058     581,432     589,017

    (A) Results include stock-
     based compensation expense
     as follows (in thousands):

                                 Three Months Ended       Nine Months Ended
                               October 26, October 28, October 26, October 28,
                                   2008         2007       2008        2007

      Cost of revenue              $3,558      $2,566     $10,027      $8,077
      Research and development    $22,740     $18,650     $71,500     $57,471
      Sales, general and
       administrative             $12,086     $10,787     $39,346     $33,320

    (B) Reflects an adjustment to the diluted outstanding shares calculated
        under SFAS 123R to conform to diluted outstanding shares calculated
        under prior accounting standards (APB 25).



                               NVIDIA CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (In thousands)
                                   (Unaudited)

                                              October 26,         January 27,
                                                  2008               2008
    ASSETS

    Current assets:
      Cash, cash equivalents and
       marketable securities                    $1,304,888        $1,809,478
      Accounts receivable, net                     607,834           666,494
      Inventories                                  523,988           358,521
      Prepaid expenses and other current assets     43,389            54,336

        Total current assets                     2,480,099         2,888,829

    Property and equipment, net                    609,674           359,808
    Goodwill                                       366,286           354,057
    Intangible assets, net                         155,646           106,926
    Deposits and other assets                       37,193            38,051

        Total assets                            $3,648,898        $3,747,671

    LIABILITIES AND STOCKHOLDERS' EQUITY

    Current liabilities:
      Accounts payable                            $387,252          $492,099
      Accrued liabilities                          617,213           475,062

        Total current liabilities                1,004,465           967,161

    Other long-term liabilities                    157,358           162,598

    Stockholders' equity                         2,487,075         2,617,912

        Total liabilities and
         stockholders' equity                   $3,648,898        $3,747,671

SOURCE NVIDIA Corporation
CONTACT: Investor Relations, Michael Hara, +1-408-486-2511,
mhara@nvidia.com, or Corporate Communications, Hector Marinez,
+1-408-486-3443, hmarinez@nvidia.com, both of NVIDIA Corporation
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