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NVIDIA Reports Financial Results for Fourth Quarter and Fiscal Year 2009

SANTA CLARA, Calif., Feb. 10 /PRNewswire-FirstCall/ -- NVIDIA Corporation today reported financial results for the fourth quarter of fiscal 2009 and the fiscal year ended January 25, 2009.

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

For the fourth quarter of fiscal 2009, revenue was $481.1 million compared to $1.2 billion for the fourth quarter of fiscal 2008, a decrease of 60 percent. For the twelve months ended January 25, 2009, revenue was $3.4 billion compared to $4.1 billion for the twelve months ended January 27, 2008, a decrease of 16 percent.

NVIDIA's results for the fourth quarter of fiscal 2009, computed in accordance with U.S. generally accepted accounting principles (GAAP), included a net loss of $147.7 million, or $0.27 per share. Non-GAAP net loss for the fourth quarter of fiscal 2009, which excludes stock-based compensation charges, a benefit from insurance proceeds received, a non-recurring charge against operating expenses related to termination of a development agreement, a restructuring credit against operating expenses, and the associated tax impact of these items, was $94.4 million, or $0.18 per share.

GAAP net loss for the twelve months ended January 25, 2009 was $30.0 million, or $0.05 per share, compared to net income of $797.6 million, or $1.31 per diluted share, for the twelve months ended January 27, 2008. Non-GAAP net income for the twelve months ended January 25, 2009, 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 benefit from insurance proceeds received, a non-recurring charge against operating expenses related to termination of a development agreement, a restructuring charge against operating expenses, and the associated tax impact of these items, was $303.3 million, or $0.53 per diluted share, compared to $919.3 million, or $1.56 per diluted share, for the twelve months ended January 27, 2008.

"The environment is clearly difficult and uncertain. Our first priority is to set an operating expense level that balances cash conservation while allowing us to continue to invest in initiatives that are of great importance to the market and in which we believe we have industry leadership. We have initiatives in all areas to reduce operating expenses," said Jen-Hsun Huang, president and CEO of NVIDIA. "Although fiscal 2009 was extremely difficult, it was one of our best years of innovation. We made many important advances in graphics processing with PhysX and 3D Vision, GPU computing with CUDA and Tesla, and mobile computing with ION and Tegra. I am pleased with the excellent achievements we made in each of these important areas."

Fourth Quarter Fiscal 2009 Highlights:

-- NVIDIA announced the NVIDIA Ion(TM) Platform, which combines the highly acclaimed GeForce(R) 9400 GPU with the Intel Atom CPU. The combination enables the smallest premium PC experience available today, making it ideal for the exploding category of mini-notebooks and compact PCs.

-- NVIDIA introduced GeForce(R) 3D Vision(TM), the world's first high- definition 3D stereo solution for the home. 3D Vision is a combination of high-tech wireless glasses, a high-power infrared (IR) emitter and advanced software that automatically transforms hundreds of PC games into full stereoscopic 3D experiences.

-- NVIDIA unveiled the GPU-based Tesla(TM) Personal Supercomputer, which delivers the equivalent computing power of a cluster, at 1/100th of the price and in a form factor of a standard desktop workstation.

-- NVIDIA announced that Electronic Arts, THQ and 2K Games, a publishing label of Take-Two Interactive Software, have licensed NVIDIA PhysX(R) technology as a development platform which will be available for use by each of the company's studios worldwide.

-- NVIDIA announced it is working closely with Wipro to provide CUDA(TM) professional services to their joint customers worldwide. Wipro's Product Engineering Services group will accelerate the development efforts of companies with vast software portfolios seeking to exploit parallel computing with the GPU.

-- NVIDIA announced that National Taiwan University (NTU), one of the world's leading research universities, has been named as Asia's first CUDA Center of Excellence. NTU joins previously recognized CUDA Centers of Excellence, the University of Illinois at Urbana-Champaign and University of Utah.

Conference Call and Web Cast Information

NVIDIA will conduct a conference call with analysts and investors to discuss its fourth quarter and fiscal year 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 first quarter fiscal 2010.

Non-GAAP Measures

To supplement the Company's Condensed Consolidated Statements of Operations 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 (loss), and non-GAAP net income (loss) 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 (credit) against operating expenses, a non-recurring charge against operating expenses related to termination of a development agreement, a benefit from insurance proceeds received, in-process research & development charges related to acquisitions, and the associated tax impact of these items, 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 (Nasdaq: NVDA) 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 cash conservative efforts; our priorities, initiatives, innovations, advancements and achievements; and the benefits of the NVIDIA Ion Platform, NVIDIA 3D Vision and the Tesla Personal Supercomputer, 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 October 26, 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) 2009 NVIDIA Corporation. All rights reserved. NVIDIA, the NVIDIA logo, GeForce, Quadro, Tesla, PhysX, GeForce 3D Vision, CUDA, ION and Tegra 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 OPERATIONS
                    (In thousands, except per share data)
                                 (Unaudited)


                                 Three Months Ended     Twelve Months Ended
                               January 25, January 27, January 25, January 27,
                                  2009        2008        2009        2008


    Revenue                      $481,140  $1,202,730  $3,424,859  $4,097,860

    Cost of revenue               339,474     653,133   2,250,590   2,228,580

    Gross profit                  141,666     549,597   1,174,269   1,869,280

    Operating expenses:
     Research and development     211,779     195,835     855,879     691,637
     Sales, general and
      administrative               86,440      91,263     362,222     341,297
     Restructuring charges and
      other                        18,530           -      26,868           -

         Total operating
          expenses                316,749     287,098   1,244,969   1,032,934

    Operating income (loss)      (175,083)    262,499     (70,700)    836,346

    Interest and other income,
     net                            4,708      17,403      27,746      64,995

    Income (loss) before income
     tax                         (170,375)    279,902     (42,954)    901,341

    Income tax expense
     (benefit) (A)                (22,710)     22,909     (12,913)    103,696

    Net income (loss)           $(147,665)    256,993    $(30,041)   $797,645


    Basic net income (loss) per
     share                         $(0.27)      $0.46      $(0.05)      $1.45

    Diluted net income (loss)
     per share                     $(0.27)      $0.42      $(0.05)      $1.31

    Shares used in basic per
     share computation            537,595     557,143     548,126     550,108

    Shares used in diluted per
     share computation            537,595     609,173     548,126     606,732


    (A) The income tax (benefit) rate for the three and twelve months ended
        January 25, 2009 was (13.3) % and (30.0)%, respectively. The income
        tax expense rate for the three and twelve months ended January 27,
        2008 was 8.2% and 11.5%, respectively.



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


                            Three Months Ended        Twelve Months Ended
                         January 25,  January 27, January 25,   January 27,
                             2009         2008        2009         2008

    GAAP gross profit     $141,666     $549,597   $1,174,269   $1,869,280
      Stock-based
       compensation
       expense
       included in
       cost of
       revenue (A)           1,912        2,809       11,939       10,886
      Insurance claim
       proceeds (B)         (6,665)           -       (6,665)           -
      Non-recurring
       charge related to
       a royalty dispute         -            -        4,500            -
      Warranty charge
       against cost of
       revenue arising
       from a weak
       die/packaging
       material set              -            -      195,954            -
    Non-GAAP gross
     profit               $136,913     $552,406   $1,379,997   $1,880,166

    GAAP net income
     (loss)              $(147,665)    $256,993     $(30,041)    $797,645
      Stock-based
       compensation
       expense (A)          41,833       34,497      162,706      133,365
      Non-recurring charge
       related to a royalty
       dispute                   -            -        4,500            -
      Insurance claim
       proceeds (B)         (8,000)           -       (8,000)           -
      Non-recurring
       charges
       related to
       contract
       termination (C)      18,912            -       18,912            -
      Restructuring
       charges                (382)           -        7,956            -
      Warranty charge
       against
       cost of
       revenue arising
       from a weak
       die/packaging
       material set              -            -      195,954            -
      In process
       research &
       development charge
       related
       to acquisitions           -        4,000            -        4,000
      Income tax
       impact of non-
       GAAP adjustments        939       (2,902)     (48,685)     (15,755)
    Non-GAAP net
     income (loss)        $(94,363)    $292,588     $303,302     $919,255

    Diluted net income
     (loss) per
     share

      GAAP                  $(0.27)       $0.42       $(0.05)       $1.31
      Non-GAAP              $(0.18)       $0.49        $0.53        $1.56


    Shares used in
     GAAP diluted net
     income (loss)
     per share
     computation           537,595      609,173      548,126      606,732
      Cumulative impact
       of non-GAAP
       adjustments (D)           -      (15,837)      (7,348)     (16,148)
      Impact of shares
       used in computing
       GAAP loss to
       non-GAAP income           -            -       31,466            -
    Shares used in
     non-GAAP diluted
     net income (loss)
     per share
     computation           537,595      593,336      572,244      590,584



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


                            Three Months Ended         Twelve Months Ended
                          January 25, January 27,   January 25, January 27,
                             2009        2008          2009         2008

    Cost of revenue         $1,912       $2,809      $11,939      $10,886
    Research and
     development           $26,507      $19,146      $98,007      $76,617
    Sales, general
     and administrative    $13,414      $12,542      $52,760      $45,862

    (B) Excludes benefit of $8.0 million received during the three months
        ended January 25, 2009 from insurance providers as reimbursement for
        some of the claims against us towards the warranty cost arising from a
        weak die/packaging material set.  These insurance claim proceeds have
        been allocated to sales, general and administrative expenses to the
        extent of legal expenses incurred of $1.3 million and the remainder of
        $6.7 million has been allocated to cost of revenue.
    (C) Excludes $18.9 million for a non-recurring charge incurred during the
        three months ended January 25, 2009 resulting from the termination of
        a development contract related to a new campus construction project we
        have put on hold.
    (D) 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)


                                                 January 25,       January 27,
                                                    2009              2008
    ASSETS

    Current assets:
     Cash, cash equivalents and
      marketable securities                     $1,255,390        $1,809,478
     Accounts receivable, net                      318,435           666,494
     Inventories                                   537,834           358,521
     Prepaid expenses and other current
      assets                                        56,299            54,336

       Total current assets                      2,167,958         2,888,829

    Property and equipment, net                    625,798           359,808
    Goodwill                                       369,844           354,057
    Intangible assets, net                         147,101           106,926
    Deposits and other assets                       40,026            38,051

       Total assets                             $3,350,727        $3,747,671

    LIABILITIES AND STOCKHOLDERS' EQUITY

    Current liabilities:
     Accounts payable                             $218,864          $492,099
     Accrued liabilities and other
      current liabilities                          559,727           475,062


       Total current liabilities                   778,591           967,161

    Other long-term liabilities                    151,850           162,598
    Capital lease obligations, long term            25,634                 -

    Stockholders' equity                         2,394,652         2,617,912

       Total liabilities and
        stockholders' equity                    $3,350,727        $3,747,671

SOURCE NVIDIA Corporation
CONTACT: Michael Hara, Investor Relations, +1-408-486-2511,
mhara@nvidia.com, or Hector Marinez, Corporate Communications,
+1-408-486-3443, hmarinez@nvidia.com, both of NVIDIA Corporation
Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20020613/NVDALOGO
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PRN Photo Desk photodesk@prnewswire.com
Web site: http://www.nvidia.com

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding NVIDIA Corporation's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.