News Release

NVIDIA Reports Results for Second Quarter of Fiscal 2009 and Announces Increase to Stock Repurchase Program

SANTA CLARA, Calif., Aug 12, 2008 /PRNewswire-FirstCall via COMTEX News Network/ -- NVIDIA Corporation (Nasdaq: NVDA) today reported financial results for the second quarter of fiscal 2009 ended July 27, 2008.

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

For the second quarter of fiscal 2009, revenue decreased to $892.7 million compared to $935.3 million for the second quarter of fiscal 2008, a decrease of five percent. For the six months ended July 27, 2008, revenue increased to $2.05 billion compared to $1.78 billion for the six months ended July 29, 2007, an increase of 15 percent.

During the second quarter of fiscal 2009, NVIDIA recorded a $196 million charge against cost of revenue to cover anticipated customer warranty, repair, return, replacement and associated costs arising from a weak die/packaging material set in certain versions of our previous generation MCP and GPU products used in notebook systems.

NVIDIA's results for the second quarter of fiscal 2009, computed in accordance with U.S. generally accepted accounting principles (GAAP), included a net loss of $120.9 million, or a loss of $0.22 per share. Non-GAAP net income for the second quarter of fiscal 2009, which excludes stock-based compensation charges, the non-recurring warranty charge against cost of revenue, and the associated tax impact, was $74.5 million, or $0.13 per diluted share.

GAAP net income for the six months ended July 27, 2008 was $55.9 million, or $0.09 per diluted share, compared to $305.0 million, or $0.51 per diluted share, for the six months ended July 29, 2007. Non-GAAP net income for the six months ended July 27, 2008, which excludes stock-based compensation charges, the non-recurring warranty charge against cost of revenue, and the associated tax impact, was $286.2 million, or $0.49 per diluted share, compared to $362.5 million, or $0.62 per diluted share, for the six months ended July 29, 2007.

"Our Q2 financial performance was disappointing. The desktop PC market around the world weakened during the quarter. And our miscalculation of competitive price position further pressured our desktop GPU business. We have a great product line-up and, having taken the necessary pricing actions, we are strongly positioned again. Our focus now is to drive cost improvements and to further enhance our competitiveness through the many exciting initiatives we have planned for the rest of the year," said Jen-Hsun Huang, president and CEO of NVIDIA. "In contrast, the rest of our businesses did not exhibit the same dynamics as our desktop business. The notebook GPU, MCP, and Professional Solutions groups grew a combined 27 percent year-over year."

Mr. Huang added, "Though we approach the near term with caution, we remain very optimistic about the expanding universe of visual computing and the exciting growth opportunities made possible by CUDA, our general purpose parallel computing architecture."

NVIDIA also announced an increase of $1 billion to its stock repurchase program under which it may now purchase up to $2.7 billion of its common stock. Through July 27, 2008, NVIDIA has repurchased 68.0 million shares under the stock repurchase program for a total cost of $1.16 billion.

The repurchases will be made in the open market, in privately negotiated transactions, or in structured share repurchase programs, and may be made from time to time or in one or more larger repurchases. The program will be conducted in compliance with the Securities and Exchange Commission's Rule 10b-18 and applicable legal requirements and shall be subject to market conditions and other factors.

The program does not obligate NVIDIA to acquire any particular amount of common stock and the program may be modified or suspended at any time at the Company's discretion. The purchases will be funded from available working capital.

     Second Quarter Fiscal 2009 Highlights and Recent Developments:

     *    Launched multiple industry-leading products:
          o    GeForce(R) GTX 280 and 260 GPUs:  Second-generation NVIDIA(R)
               unified architecture delivers 50 percent more gaming
               performance over the NVIDIA GeForce 8800 Ultra GPU -- through
               240 processor coresi, with support for NVIDIA's PhysX(TM)
               physics engine and CUDA(TM) parallel processing across a wide
               range of  price segments.
          o    GeForce 9800 GTX+, GeForce 9800 GT, and GeForce 9500 GT GPUs:
               Provide support for NVIDIA's PhysX physics engine and  CUDA
               parallel processing across a wide range of  price segments.
          o    GeForce 9M series notebook GPUs:  Enable the world's first
               notebooks with Hybrid SLI(R) technology and NVIDIA PhysX
               technology.
          o    Tesla(TM) C1060 computing processor and S1070 computing system:
               Respectively, the world's first teraflop processor and a 1U
               system with up to four teraflops of performance.
          o    Tegra(TM) 650 and 600:  World's first single-chip heterogeneous
               computer architecture designed for low-power mobile computing
               devices.
          o    SLI for Intel Bloomfield CPU platforms:  When paired with the
               NVIDIA nForce(R) 200 SLI MCP, Intel's Bloomfield CPU and
               Tylersburg core logic chipset will deliver NVIDIA three-way SLI
               technology with up to a 2.8x performance boost over traditional
               single graphics card platforms.
     *    Appointed first two CUDA Centers of Excellence -- University of
          Illinois at Urbana-Champaign (UIUC) and University of Utah:  The
          CUDA Centers of Excellence Program recognizes and rewards schools
          for their pioneering work in parallel computing education along with
          the integration of the CUDA software environment into their
          curriculum.
     *    Announced the NVIDIA and Stanford Folding@home Partnership:  GeForce
          GPUs run Folding@home protein simulations 140 times faster than
          traditional processors, which we believe will dramatically
          accelerate the search for cures to life-threatening diseases such as
          cancer, cystic fibrosis, and Parkinson's disease.


NVIDIA will conduct a conference call with analysts and investors to discuss its second 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 third quarter fiscal 2009.

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, 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 to cover anticipated customer warranty, repair, return, replacement and associated costs and expenses arising from a weak die/packaging material set in certain versions of our previous generation MCP and GPU products used in notebook systems, 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, any statements as to: our initiatives; our growth opportunities; the expansion of visual computing; our cost improvements; costs associated with the weak die/packaging material set; enhancement of our competitive position; the timing and extent of any stock repurchases; and uses of our available funds 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: our reliance on third parties to manufacture, assemble and test our products; design, manufacturing or software defects; slower than expected growth of a target market; development of faster or more efficient GPU or CPU technology; adoption of the CPU instead of the GPU for non-graphical computational tasks; unexpected loss of performance of our products or technologies when integrated into systems; the impact of technological development and competition; fluctuations in the stock market and the price of NVIDIA stock; changes in industry standards and interfaces as well as other factors detailed from time to time in the reports NVIDIA files with the Securities and Exchange Commission including its Form 10-Q for the period ended April 27, 2008. Copies of reports filed with the SEC are posted on our Web site 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, the NVIDIA logo, GeForce, Quadro, Tesla, Tegra, SLI, PhysX, CUDA, and nForce are trademarks and/or registered trademarks of NVIDIA Corporation in the U.S. and/or other countries. Other company and product names may be trademarks of the respective companies with which they are associated.

iThe number of processor cores varies by model. GeForce GTX 280 has 240 processor cores. GeForce GTX 260 has 192 processor cores. Weighted average performance improvement is based on a comparison between the GeForce GTX 280 and the GeForce 8800 Ultra in a variety of benchmarks and resolutions.

     For further information, contact:

     Michael Hara                                 Calisa Cole
     Investor Relations                           Corporate Communications
     NVIDIA Corporation                           NVIDIA Corporation
     (408) 486-2511                               (408) 486-6263
     mhara@nvidia.com                             ccole@nvidia.com



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

                                   Three Months Ended      Six Months Ended
                                   July 27,   July 29,   July 27,    July 29,
                                     2008       2007       2008        2007


    Revenue                        $892,676  $935,253  $2,046,064  $1,779,533

    Cost of revenue                 742,759   511,261   1,381,304     975,403

    Gross profit                    149,917   423,992     664,760     804,130

    Operating expenses:
     Research and development       212,910   157,952     431,740     316,273
     Sales, general and
      administrative                 92,399    81,280     185,433     161,851

         Total operating expenses   305,309   239,232     617,173     478,124

    Operating income (loss)        (155,392)  184,760      47,587     326,006

    Interest and other income,
     net                              8,792    16,091      18,831      28,634

    Income (loss) before income
     tax expense                   (146,600)  200,851      66,418     354,640

    Income tax expense (benefit)
     (A)                            (25,671)   28,119      10,542      49,649

    Net income (loss)             $(120,929) $172,732      55,876     304,991


    Basic net income (loss) per
     share (B)                       $(0.22)    $0.32       $0.10       $0.56

    Diluted net income (loss) per
     share (B)                       $(0.22)    $0.29       $0.09       $0.51

    Shares used in basic per
     share computation (B)          555,417   547,305     555,531     544,275

    Shares used in diluted per
     share computation (B)          555,417   603,830     592,181     600,957


    (A) The income tax expense (benefit) rate for the three and six months
        ended July 27, 2008 was (17.5)% and 15.9%, respectively.  The income
        tax expense rate for the three and six months ended July 29, 2007 was
        14%.
    (B) Reflects a three-for-two stock split on September 10, 2007.



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

                                     Three Months Ended     Six Months Ended
                                    July 27,     July 29,  July 27,  July 29,
                                      2008         2007      2008      2007

    GAAP gross profit                $149,917    $423,992  $664,760  $804,130
      Stock-based compensation
       expense included in cost of
       revenue (A)                      3,333       2,702     6,469     5,511
      Warranty charge against cost
       of revenue arising from a
       weak die/packaging material
       set                            195,954           -   195,954         -
    Non-GAAP gross profit            $349,204    $426,694  $867,183  $809,641

    GAAP net income (loss)          $(120,929)   $172,732   $55,876  $304,991
      Stock-based compensation
       expense (A)                     40,365      29,460    82,489    66,865
      Warranty charge against cost
       of revenue arising from a
       weak die/packaging material
       set                            195,954           -   195,954         -
      Income tax impact of non-GAAP
       adjustments                    (40,923)     (4,125)  (48,084)   (9,362)
    Non-GAAP net income               $74,467    $198,067  $286,235  $362,494

    Diluted net income (loss) per
     share (B)

      GAAP                             $(0.22)      $0.29     $0.09     $0.51
      Non-GAAP                          $0.13       $0.34     $0.49     $0.62


    Shares used in GAAP diluted net
     income (loss) per share
     computation (B)                  555,417     603,830   592,181   600,957
      Cumulative impact of non-GAAP
       adjustments (C)                (10,251)    (15,582)  (10,811)  (16,002)
      Impact of shares used in
       computing GAAP loss to non-
       GAAP income                     34,329           -         -         -
    Shares used in non-GAAP diluted
     net income per share
     computation (B)                  579,495     588,248   581,370   584,955


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

                                      Three Months Ended    Six Months Ended
                                    July 27,     July 29,  July 27,  July 29,
                                         2008        2007      2008      2007

      Cost of revenue                  $3,333      $2,702    $6,469    $5,511
      Research and development        $24,226     $16,421   $48,760   $38,821
      Sales, general and
       administrative                 $12,806     $10,337   $27,260   $22,533


    (B) Reflects a three-for-two stock split on September 10, 2007.
    (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)


                                                  July 27,        January 27,
                                                    2008             2008
    ASSETS

    Current assets:
     Cash, cash equivalents and
      marketable securities                     $1,657,230        $1,809,478
     Accounts receivable, net                      679,416           666,494
     Inventories                                   432,279           358,521
     Prepaid expenses and other current
      assets                                        45,294            54,336

       Total current assets                      2,814,219         2,888,829

    Property and equipment, net                    599,478           359,808
    Goodwill                                       365,800           354,057
    Intangible assets, net                         145,148           106,926
    Deposits and other assets                       35,404            38,051

       Total assets                             $3,960,049        $3,747,671

    LIABILITIES AND STOCKHOLDERS' EQUITY

    Current liabilities:
     Accounts payable                             $438,892          $492,099
     Accrued liabilities                           696,124           475,062

       Total current liabilities                 1,135,016           967,161

    Other long-term liabilities                    162,118           162,598

    Stockholders' equity                         2,662,915         2,617,912

       Total liabilities and
        stockholders' equity                    $3,960,049        $3,747,671

SOURCE NVIDIA Corporation

http://www.nvidia.com