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NVIDIA Reports Financial Results for First Quarter Fiscal Year 2010

Company grows revenue 38 percent and reduces inventory days from 144 to 64 compared with prior quarter

SANTA CLARA, Calif., May 7 /PRNewswire-FirstCall/ -- NVIDIA Corporation today reported financial results for the first quarter of fiscal 2010 ended April 26, 2009.

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

For the first quarter of fiscal 2010, revenue was $664.2 million compared with $1.2 billion for the first quarter of fiscal 2009, a decrease of 42 percent.

During the first quarter of fiscal 2010, NVIDIA recorded a non-recurring charge of $140.2 million in connection with a previously announced cash tender offer to purchase employee stock options. This charge represents stock-based compensation expense associated with the stock options that were tendered, plus associated payroll taxes and professional fees.

NVIDIA's results for the first quarter of fiscal 2010, computed in accordance with U.S. generally accepted accounting principles (GAAP), included a net loss of $201.3 million, or $0.37 per share. Non-GAAP net loss for the first quarter of fiscal 2010, which excludes recurring stock-based compensation charges, the non-recurring charge related to the tender offer, and the associated tax impact of these items, was $46.7 million, or $0.09 per share.

"We made good progress managing expenses and significantly reducing inventory, while continuing to invest in our growth strategies," said Jen-Hsun Huang, president and CEO of NVIDIA. "The GPU is ever-more central to our computing experience. There is a rapidly growing number of applications that rely on the GPU, and the industry is gearing up to launch the next generation operating systems that adopt GPU computing."


    First Quarter Fiscal 2010 and Recent Highlights:

    --  Revenue grew 38 percent sequentially from fourth quarter fiscal 2009.
        Inventory decreased from 144 to 64 days sequentially.
    --  NVIDIA grew share, for the second consecutive quarter, in the total
        desktop standalone GPU segment from 63 percent to 69 percent from the
        fourth quarter of calendar 2008 to the first quarter of calendar 2009,
        as reported in Mercury Research's First Quarter PC Graphics Report
        2009.
    --  NVIDIA and Acer set a new standard for small PCs with the introduction
        of the world's first NVIDIA(R) ION(TM) platform, the Acer AspireRevo.
        No larger than a typical hardcover book, the AspireRevo is a fully
        capable desktop with advanced graphics and impressive multimedia
        features.
    --  NVIDIA released its OpenCL(TM) driver and software development kit to
        developers participating in its OpenCL software Early Access Program.
        NVIDIA is the first company to release OpenCL drivers to developers.
    --  NVIDIA was first to demonstrate DirectX Compute on Microsoft Windows 7
        at the Game Developers Conference.  The upcoming DirectX Compute API
        for Vista and Windows 7 supports NVIDIA's current DX10 GPUs, as well
        as the company's future DX11 GPUs.
    --  NVIDIA demonstrated the NVIDIA Tegra(TM) 600 Series computer-on-a-chip
        that enables an always-on, always-connected HD netbook that can go
        days between battery charges.
    --  NVIDIA launched five new consumer applications accelerated by the
        CUDA(TM) architecture on NVIDIA GPUs - Super LoiloScope Mars (video
        editing); ArcSoft SimHD (DVD image enhancement); Nero Move It and
        Cyberlink MediaShow Espresso (video format conversion); and Motion DSP
        vReveal (real-time video quality enhancement).
    --  NVIDIA and GeoStar, a leading Chinese geophysical services provider,
        unveiled the launch of a new Tesla-based hardware and seismic software
        suite that dramatically accelerates the performance of complex seismic
        data computation for oil and gas companies in China.
    --  NVIDIA and BNP Paribas' Corporate and Investment Banking division
        recently replace 500 traditional CPU cores with a smaller cluster
        consisting of CPU servers and two Tesla S1070 systems, which require
        one-tenth the power.  Taking into account the dramatic acceleration
        achieved using Tesla GPUs, the division is using 190-times less
        electricity than before.

    --  NVIDIA announced that Harvard University has been recognized as a CUDA
        Center of Excellence for its commitment to teaching GPU Computing and
        its integration of CUDA-enabled GPUs for a host of science and
        engineering research projects.

Conference Call and Web Cast Information

NVIDIA will conduct a conference call with analysts and investors to discuss its first quarter fiscal 2010 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) 231-2900. A live Web cast (listen-only mode) of the conference call will be held at the NVIDIA investor relations Web site www.nvidia.com/ir and at 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 second quarter fiscal 2010.

Non-GAAP Measures

To supplement the Company's Condensed Consolidated Statements of Operations and Condensed Consolidated Balance Sheets 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 operating expenses, non-GAAP net income (loss), non-GAAP net income (loss) per share, and free cash flow. 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 a non-recurring charge related to previously-announced tender offer, recurring stock-based compensation charges, 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. 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 www.nvidia.com.

Certain statements in this press release including, but not limited to, statements as to: the impact of the GPU on the computing experience; and the impact and benefits of our products and technologies, 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-K for the fiscal year ended January 25, 2009. 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
                                            --------------
                                           April 26,   April 27,
                                              2009        2008
                                              ----        ----


    Revenue                               $664,231  $1,153,388

    Cost of revenue                        463,123     638,545
    Cost of revenue related to stock
     option purchase (A)                    11,412           -
                                            ------         ---

    Gross profit                           189,696     514,843

    Operating expenses:
      Research and development             211,341     218,830
      Sales, general and administrative     80,491      93,034
      Stock option purchase (A)            128,829           -
                                           -------         ---

          Total operating expenses         420,661     311,864
                                           -------     -------

    Operating income (loss)               (230,965)    202,979

    Interest and other income, net           6,144      10,039
                                             -----      ------

    Income (loss) before income tax
     expense                              (224,821)    213,018

    Income tax expense (benefit) (B)       (23,483)     36,213
                                           -------      ------

    Net income (loss)                    $(201,338)   $176,805
                                         =========    --------


    Basic net income (loss) per share       $(0.37)      $0.32
                                            ======       =====

    Diluted net income (loss) per share     $(0.37)      $0.30
                                            ======       =====

    Shares used in basic per share
     computation                           542,307     555,673

    Shares used in diluted per share
     computation                           542,307     591,989


    --
    (A) The $140,241 stock option purchase charge for the three months ended
        April 26, 2009 relates to personnel associated with cost of revenue
        (for manufacturing personnel), research and development, and sales,
        general and administrative of $11,412, $90,456, and $38,373,
        respectively, pursuant to a tender offer to purchase certain
        outstanding employee stock options.
    (B) The income tax expense (benefit) rate for the three months ended April
        26, 2009 and April 27, 2008 was (10.4)% and 17.0%, respectively.



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


                                                        Three Months
                                                           Ended
                                                      --------------
                                                   April 26,  April 27,
                                                      2009       2008
                                                      ----       ----

    GAAP gross profit                               $189,696   $514,843
      as a percent of GAAP revenue                      28.6%      44.6%

      Stock-based compensation expense included
       in cost of revenue (A)                          2,230      3,136
      Stock option purchase charge related to
       cost of revenue (B)                            11,412          -
                                                      ------        ---
    Non-GAAP gross profit                           $203,338   $517,979
                                                    ========   ========
      as a percent of GAAP revenue                      30.6%      44.9%

    GAAP operating expenses                         $420,661   $311,864
      Stock-based compensation expense (A)           (31,883)   (38,988)
      Stock option purchase charge related to
       operating expenses (B)                       (128,829)         -
                                                    --------        ---
    Non-GAAP operating expenses                     $259,949   $272,876
                                                    ========   ========

    GAAP net income (loss)                         $(201,338)  $176,805
      Stock-based compensation expense (A)            34,113     42,124
      Stock option purchase charge (B)               140,241          -
      Income tax impact of non-GAAP adjustments      (19,690)    (7,161)
                                                     -------     ------
    Non-GAAP net income (loss)                      $(46,674)  $211,768
                                                    ========   ========

    Diluted net income (loss) per share

      GAAP                                            $(0.37)     $0.30
                                                      ======      =====
      Non-GAAP                                        $(0.09)     $0.36
                                                      ======      =====


    Shares used in GAAP diluted net income (loss)
     per share computation                           542,307    591,989
      Cumulative impact of non-GAAP adjustments
       (C)                                                 -    (10,653)
                                                         ---    -------
    Shares used in non-GAAP diluted net income
     (loss) per share computation                    542,307    581,336
                                                     =======    =======

    GAAP net cash flow provided by operating
     activities                                     $142,128   $145,245
      Purchase of property and equipment and
       intangible assets                             (20,777)  (202,173)
                                                     -------   --------
    Free cash flow                                  $121,351   $(56,928)
                                                    ========   ========


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

                                                        Three Months
                                                           Ended
                                                      --------------
                                                     April 26,  April 27,
                                                       2009       2008
                                                       ----       ----

      Cost of revenue                                 $2,230     $3,136
      Research and development                       $21,270    $24,534
      Sales, general and administrative              $10,613    $14,454

    (B) During the three-months ended April 26, 2009, the Company completed a
        tender offer to purchase an aggregate of 28.5 million outstanding
        stock options for a total cash payment of $78.1 million.  As a result
        of the tender offer the Company incurred a charge of $140.2 million,
        consisting of the remaining unamortized stock-based compensation
        expenses associated with the unvested portion of the options tendered
        in the offer, stock-based compensation expense resulting from amounts
        paid in excess of the fair value of the underlying options, plus
        associated payroll taxes and professional fees.  The $140.2 million
        stock option purchase charge for the three months ended April 26, 2009
        relates to personnel associated with cost of revenue (for
        manufacturing personnel), research and development, and sales, general
        and administrative of $11.4 million, $90.5 million, and $38.3 million,
        respectively.
    (C) 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)


                                                       April 26, January 25,
                                                        2009        2009
                                                        ----        ----
    ASSETS

    Current assets:
      Cash, cash equivalents and marketable
       securities                                   $1,338,147  $1,255,390
      Accounts receivable, net                         304,393     318,435
      Inventories                                      327,259     537,834
      Prepaid expenses and other current assets         50,885      56,299
                                                        ------      ------

        Total current assets                         2,020,684   2,167,958

    Property and equipment, net                        601,053     625,798
    Goodwill                                           369,844     369,844
    Intangible assets, net                             142,446     147,101
    Deposits and other assets                           44,677      40,026
                                                        ------      ------

        Total assets                                $3,178,704  $3,350,727
                                                    ==========  ==========

    LIABILITIES AND STOCKHOLDERS' EQUITY

    Current liabilities:
      Accounts payable                                $226,114    $218,864
      Accrued liabilities and other current
       liabilities                                     476,058     559,727
                                                       -------     -------


        Total current liabilities                      702,172     778,591

    Other long-term liabilities                        132,305     151,850
    Capital lease obligations, long term                25,351      25,634

    Stockholders' equity                             2,318,876   2,394,652
                                                     ---------   ---------

        Total liabilities and stockholders' equity  $3,178,704  $3,350,727
                                                    ==========  ==========



SOURCE NVIDIA Corporation
CONTACT: Michael Hara, Investor Relations, +1-408-486-2511, mhara@nvidia.com, or Robert Sherbin, Corporate Communications, +1-408-566-5150, rsherbin@nvidia.com, both of NVIDIA Corporation
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Web Site: http://www.nvidia.com