Delaware
|
94-3177549
|
(State
or Other Jurisdiction of
|
(I.R.S.
Employer
|
Incorporation
or Organization)
|
Identification
No.)
|
|
|
Page
|
|
PART
I: FINANCIAL INFORMATION
|
|
Item
1.
|
Financial
Statements (Unaudited)
|
|
|
Condensed
Consolidated Balance Sheets as of April 30, 2006 and January 29,
2006
|
1
|
|
Condensed
Consolidated Statements of Income for the three months ended April
30,
2006 and May 1, 2005
|
2
|
|
Condensed
Consolidated Statements of Cash Flows for the three months ended
April 30,
2006 and May 1, 2005
|
3
|
|
Notes
to Condensed Consolidated Financial Statements
|
4
|
|
|
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
19
|
|
|
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
29
|
|
|
|
Item
4.
|
Controls
and Procedures
|
29
|
|
|
|
|
PART
II: OTHER INFORMATION
|
|
Item
1.
|
Legal
Proceedings
|
30
|
|
|
|
Item
1A.
|
Risk
Factors
|
30
|
|
|
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
44
|
|
|
|
Item
3.
|
Defaults
Upon Senior Securities
|
44
|
|
|
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
44
|
|
|
|
Item
5.
|
Other
Information
|
44
|
|
|
|
Item
6.
|
Exhibits
|
45
|
|
|
|
Signature
|
|
46
|
|
|
April
30,
|
|
January
29,
|
|
||
|
|
2006
|
|
2006
|
|
||
ASSETS
|
|
|
|
|
|
||
Current
assets:
|
|
|
|
|
|
||
Cash
and cash equivalents
|
|
$
|
487,763
|
|
$
|
551,756
|
|
Marketable
securities
|
|
|
467,290
|
|
|
398,418
|
|
Accounts
receivable, net
|
|
|
391,270
|
|
|
318,186
|
|
Inventories
|
|
|
346,366
|
|
|
254,792
|
|
Prepaid
expenses and other current assets
|
|
|
28,545
|
|
|
24,387
|
|
Deferred
income taxes
|
|
|
1,393
|
|
|
1,393
|
|
Total
current assets
|
|
|
1,722,627
|
|
|
1,548,932
|
|
|
|
|
|
|
|
|
|
Property
and equipment, net
|
|
|
180,206
|
|
|
178,152
|
|
Deposits
and other assets
|
|
|
31,028
|
|
|
27,477
|
|
Goodwill
|
|
|
204,603
|
|
|
145,317
|
|
Intangible
assets, net
|
|
|
22,989
|
|
|
15,421
|
|
|
|
$
|
2,161,453
|
|
$
|
1,915,299
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
298,147
|
|
$
|
179,395
|
|
Accrued
liabilities
|
|
|
236,239
|
|
|
259,264
|
|
Total
current liabilities
|
|
|
534,386
|
|
|
438,659
|
|
|
|
|
|
|
|
|
|
Deferred
income tax liabilities
|
|
|
8,260
|
|
|
8,260
|
|
Other
long-term liabilities
|
|
|
10,156
|
|
|
10,624
|
|
Commitments
and contingencies - see Note 11 and Note 13
|
|
|
|
|
|
|
|
Stockholders’
equity:
|
|
|
|
|
|
|
|
Preferred
stock
|
|
|
--
|
|
|
--
|
|
Common
stock
|
|
|
371
|
|
|
360
|
|
Additional
paid-in capital
|
|
|
907,097
|
|
|
798,071
|
|
Deferred
compensation
|
|
|
--
|
|
(1,676
|
)
|
|
Treasury
stock
|
|
|
(262,142
|
)
|
|
(212,142
|
)
|
Accumulated
other comprehensive loss, net
|
|
|
(2,451
|
)
|
|
(1,957
|
)
|
Retained
earnings
|
|
|
965,776
|
|
|
875,100
|
|
Total
stockholders' equity
|
|
|
1,608,651
|
|
|
1,457,756
|
|
|
|
$
|
2,161,453
|
|
$
|
1,915,299
|
|
|
|
Three
Months Ended
|
|
||||
|
|
April
30,
|
|
May
1,
|
|
||
|
|
2006
|
|
2005
|
|
||
|
|
|
|
|
|
||
Revenue
|
|
$
|
681,807
|
|
$
|
583,846
|
|
Cost
of revenue (A)
|
|
|
393,050
|
|
|
373,693
|
|
Gross
profit
|
|
|
288,757
|
|
|
210,153
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Research
and development (A)
|
|
|
122,404
|
|
|
85,913
|
|
Sales,
general and administrative (A)
|
|
|
65,668
|
|
|
48,058
|
|
Total
operating expenses
|
|
|
188,072
|
|
|
133,971
|
|
Operating
income
|
|
|
100,685
|
|
|
76,182
|
|
Interest
income
|
|
|
8,808
|
|
|
3,895
|
|
Interest
expense
|
|
|
(1
|
)
|
|
(10
|
)
|
Other
income (expense), net
|
|
|
(244
|
)
|
|
488
|
|
Income
before income tax expense
|
|
|
109,248
|
|
|
80,555
|
|
Income
tax expense
|
|
|
18,572
|
|
|
16,111
|
|
Net
income
|
|
$
|
90,676
|
|
$
|
64,444
|
|
Basic
net income per share
|
|
$
|
0.26
|
|
$
|
0.19
|
|
Diluted
net income per share
|
|
$
|
0.23
|
|
$
|
0.18
|
|
Shares
used in basic per share computation
|
|
|
347,937
|
|
|
337,294
|
|
Shares
used in diluted per share computation
|
|
|
390,370
|
|
|
360,984
|
|
(A)
Results for the three months ended April 30, 2006 include stock-based
compensation expense as follows:
|
||
Cost
of revenue
|
$
1,143
|
|
Research
and development
|
13,628
|
|
Sales,
general and administrative
|
8,278
|
|
Total
stock-based compensation expense
|
$23,049
|
|
Three
Months Ended
|
||||||
|
April
30,
|
May
1,
|
|||||
|
2006
|
2005
|
|||||
Cash
flows from operating activities:
|
|
|
|||||
Net
income
|
$
|
90,676
|
$
|
64,444
|
|||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|||||||
In-process
research and development
|
602
|
-
|
|||||
Depreciation
and amortization
|
24,031
|
24,897
|
|||||
Stock-based
compensation
|
23,049
|
285
|
|||||
Bad
debt expense (recovery)
|
255
|
(341
|
)
|
||||
Excess
tax benefits from stock-based compensation
|
(6,470
|
)
|
-
|
||||
Changes
in operating assets and liabilities:
|
|||||||
Accounts
receivable
|
(64,135
|
)
|
49,430
|
||||
Inventories
|
(87,958
|
)
|
7,759
|
||||
Prepaid
expenses and other current assets
|
(3,332
|
)
|
(2,050
|
)
|
|||
Deposits
and other assets
|
(3,406
|
)
|
(1,644
|
)
|
|||
Accounts
payable
|
107,729
|
(56,077
|
)
|
||||
Accrued
liabilities
|
(30,645
|
)
|
2,876
|
||||
Net
cash provided by operating activities
|
50,396
|
89,579
|
|||||
Cash
flows from investing activities:
|
|||||||
Purchases
of marketable securities
|
(92,344
|
)
|
(56,411
|
)
|
|||
Sales
and maturities of marketable securities
|
22,523
|
65,304
|
|||||
Purchases
of property and equipment and intangible assets
|
(20,667
|
)
|
(13,504
|
)
|
|||
Acquisition
of businesses, net of cash and cash equivalents
|
(67,026
|
)
|
-
|
||||
Net
cash used in investing activities
|
(157,514
|
)
|
(4,611
|
)
|
|||
Cash
flows from financing activities:
|
|||||||
Common
stock issued under employee stock plans
|
86,655
|
36,011
|
|||||
Stock
repurchase
|
(50,000
|
)
|
(48,467
|
)
|
|||
Other
|
-
|
(20
|
)
|
||||
Excess
tax benefits from stock-based compensation
|
6,470
|
-
|
|||||
Net
cash provided by (used in) financing activities
|
43,125
|
(12,476
|
)
|
||||
Change
in cash and cash equivalents
|
(63,993
|
)
|
72,492
|
||||
Cash
and cash equivalents at beginning of period
|
551,756
|
208,512
|
|||||
Cash
and cash equivalents at end of period
|
$
|
487,763
|
$
|
281,004
|
|||
|
|||||||
Supplemental
disclosures of cash flow information:
|
|||||||
Cash
paid for interest
|
$
|
-
|
$
|
10
|
|||
Cash
paid for income taxes, net
|
$
|
24,645
|
$
|
901
|
|||
|
|||||||
Other
non-cash activities:
|
|||||||
Application
of customer advance to accounts receivable
|
$
|
-
|
$
|
8,062
|
|||
Unrealized
losses from marketable securities
|
$
|
824
|
$
|
556
|
|||
Deferred
compensation
|
$
|
1,676
|
$
|
3
|
Three
Months Ended
|
||||
May
1, 2005
|
||||
(In
thousands, except per share data)
|
||||
Net
income, as reported
|
$
|
64,444
|
||
Add:
Stock-based employee compensation expense included in reported net
income,
net of related tax effects
|
228
|
|||
Deduct:
Stock-based employee compensation expense determined under fair value
based method for all awards, net of related tax effects
|
(16,846
|
)
|
||
Pro
forma net income
|
$
|
47,826
|
||
Basic
net income per share - as reported
|
$
|
0.19
|
||
Basic
net income per share - pro forma
|
$
|
0.14
|
||
Diluted
net income per share - as reported
|
$
|
0.18
|
||
Diluted
net income per share - pro forma
|
$
|
0.13
|
Three
Months Ended
|
||||
April
30, 2006
|
||||
(In
thousands, except per share data)
|
||||
Stock-based
compensation expense by type of award:
|
||||
Employee
stock options
|
$
|
22,457
|
||
Employee
stock purchase plan
|
1,601
|
|||
Amount
capitalized as inventory
|
(1,009
|
)
|
||
Total
stock-based compensation
|
23,049
|
|||
Tax
effect of stock-based compensation
|
(2,596
|
)
|
||
Net
effect on net income
|
$
|
20,453
|
||
Effect
on net income per share:
|
||||
Basic
|
$
|
0.06
|
||
Diluted
|
$
|
0.05
|
Three
Months Ended
|
||||
April
30, 2006
|
||||
(In
thousands)
|
||||
Cash
flows from operations
|
$
|
(6,470
|
)
|
|
Cash
flows from financing activities
|
$
|
6,470
|
Stock
Options
|
Employee
Stock Purchase Plan
|
||||||
|
Three
Months Ended
|
Three
Months Ended
|
|||||
|
April
30,
|
May
1,
|
April
30,
|
May
1,
|
|||
|
2006
|
2005
|
2006
|
2005
|
|||
|
(Using
a binomial model)
|
(Using
the Black-Scholes model)
|
|||||
Expected
life (in years)
|
3.6
- 5.1
|
3.6
- 5.1
|
0.5
- 2.0
|
0.5
- 2.0
|
|||
Risk
free interest rate
|
4.7%
|
4.0%
|
1.6%
- 4.6%
|
1.6%
- 1.8%
|
|||
Volatility
|
39%
- 41%
|
37%
- 48%
|
30%
- 45%
|
41%
|
|||
Dividend
yield
|
--
|
--
|
--
|
--
|
· |
Initial
Grants. Initial
stock option grants of 90,000 are automatically made to each non-employee
director who is elected or appointed to our Board on the date of
election
or appointment.
|
· |
Annual
Grants—Board Members. On
August 1st of each year, each non-employee director is automatically
granted an option to purchase 30,000 shares. These options begin
to vest
quarterly on the second anniversary of the date of grant and will
be fully
vested on the third anniversary of the date of grant.
|
· |
Annual
Grants—Committee Members. On
August 1st of each year, each non-employee director who is a member
of a committee of the Board is automatically granted an option to
purchase
10,000 shares. These options vest in full on the first anniversary
of the
date of the grant. Beginning in fiscal year 2007, Board members will
no
longer receive a Committee grant for serving as a member of the Nominating
and Corporate Governance Committee.
|
Options
Available for Grant
|
Options
Outstanding
|
Weighted
Average Exercise Price Per Share
|
Weighted
Average Remaining Contractual Term (in years)
|
Aggregate
Intrinsic Value
|
||||||||||||
Balances,
January 29, 2006
|
31,310,976
|
87,958,480
|
$
|
9.50
|
||||||||||||
Authorized
|
-
|
-
|
-
|
|||||||||||||
Granted
|
(5,884,805
|
)
|
5,884,805
|
27.28
|
||||||||||||
Exercised
|
-
|
(9,445,011
|
)
|
7.93
|
||||||||||||
Cancelled
|
605,184
|
(605,184
|
)
|
11.43
|
||||||||||||
Balances,
April 30, 2006
|
26,031,355
|
83,793,090
|
$
|
10.91
|
4.3
|
$
|
1,534,251,478
|
|||||||||
Vested
and expected to vest at April 30, 2006
|
80,625,294
|
$
|
10.79
|
4.3
|
$
|
1,485,924,168
|
||||||||||
Options
exercisable at April 30, 2006
|
45,769,764
|
$
|
8.06
|
4.0
|
$
|
968,488,206
|
During
the three months ended April 30, 2006:
|
||||
Weighted
average grant date fair value of options granted
|
$
|
10.86
per share
|
||
Total
fair value of shares vested
|
$
|
18.0
million
|
||
Total
intrinsic value of options exercised
|
$
|
161.8
million
|
||
Total
cash received from employees as a result of employee stock option
exercises
|
$
|
74.9
million
|
||
Tax
benefits realized as a result of employee stock option
exercises
|
$
|
9.0
million
|
Three
Months Ended
|
|||||
April
30,
|
May
1,
|
||||
2006
|
2005
|
||||
(In
thousands, except per share data)
|
|||||
Numerator:
|
|||||
Numerator
for basic and diluted net income per share
|
$
|
90,676
|
$
|
64,444
|
|
Denominator:
|
|||||
Denominator
for basic net income per share, weighted average shares
|
347,937
|
337,294
|
|||
Effect
of dilutive securities:
|
|||||
Weighted
average effect of dilutive securities
|
42,433
|
23,690
|
|||
Denominator
for diluted net income per share, weighted average shares
|
390,370
|
360,984
|
|||
Net
income per share:
|
|||||
Basic
net income per share
|
$
|
0.26
|
$
|
0.19
|
|
Diluted
net income per share
|
$
|
0.23
|
$
|
0.18
|
Fair
Market Value
|
Straight-Line Depreciation/Amortization
Period
|
||||||
(In
thousands)
|
|||||||
Cash
|
$
|
21,551
|
|
||||
Accounts
receivable
|
8,148
|
--
|
|||||
Inventories
|
2,607
|
--
|
|||||
Other
assets
|
888
|
--
|
|||||
Property
and equipment
|
1,097
|
4
- 55 months
|
|||||
Goodwill
|
32,287
|
--
|
|||||
Intangible
assets:
|
|
||||||
Existing
technology
|
2,490
|
3
years
|
|||||
Customer
relationships
|
653
|
3
years
|
|||||
Total
assets acquired
|
69,721
|
|
|||||
Current
liabilities
|
(15,765
|
)
|
--
|
||||
Acquisition
related expenses
|
(881
|
)
|
--
|
||||
Total
liabilities assumed
|
(16,646
|
)
|
|
||||
Net
assets acquired
|
$
|
53,075
|
|
Fair
Market Value
|
Straight-Line Depreciation/Amortization
Period
|
||||||
(In
thousands)
|
|||||||
Cash
|
$
|
1,180
|
|
||||
Accounts
receivable
|
1,056
|
--
|
|||||
Other
assets
|
74
|
--
|
|||||
Property
and equipment
|
238
|
1
month - 3 years
|
|||||
In-process
research and development
|
602
|
--
|
|||||
Goodwill
|
26,983
|
--
|
|||||
Intangible
assets:
|
|
||||||
Existing
technology
|
5,179
|
3
years
|
|||||
Customer
relationships
|
2,650
|
3
years
|
|||||
Trademark
|
482
|
3
years
|
|||||
Non-compete
agreements
|
72
|
3
years
|
|||||
Total
assets acquired
|
38,516
|
|
|||||
Current
liabilities
|
(1,301
|
)
|
--
|
||||
Acquisition
related expenses
|
(242
|
)
|
--
|
||||
Long-term
liabilities
|
(301
|
)
|
--
|
||||
Total
liabilities assumed
|
(1,844
|
)
|
|||||
Net
assets acquired
|
$
|
36,672
|
Description
|
|
Balance
at Beginning of Period
|
|
Additions
(1)
|
|
Deductions
(2)
|
|
Balance
at End of Period
|
|
||||
|
|
(In
thousands)
|
|
||||||||||
Three
months ended April 30, 2006
|
|
|
|
|
|
|
|
|
|
||||
Allowance
for sales returns
|
|
$
|
10,239
|
|
$
|
11,775
|
|
$
|
(10,448
|
)
|
$
|
11,566
|
|
Three
months ended May 1, 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance
for sales returns
|
|
$
|
11,687
|
|
$
|
5,931
|
|
$
|
(6,813
|
)
|
$
|
10,805
|
|
|
|
Three
Months Ended
|
|
||||
|
|
April
30,
|
|
May
1,
|
|
||
|
|
2006
|
|
2005
|
|
||
|
|
(In
thousands)
|
|
||||
Net
income
|
|
$
|
90,676
|
|
$
|
64,444
|
|
Net
change in unrealized losses on available-for-sale securities
|
|
|
(811
|
)
|
|
(719
|
)
|
Tax
effect of the change in unrealized losses on available-for-sale
securities
|
|
|
325
|
|
|
144
|
|
Reclassification
adjustments for net realized (gains) losses on available-for-sale
securities included in net income
|
|
|
(13
|
)
|
|
163
|
|
Tax
effect of reclassification adjustments for net realized (gains) losses
on
available-for-sale securities included in net income
|
|
|
5
|
|
(33
|
)
|
|
Total
comprehensive income
|
|
$
|
90,182
|
|
$
|
63,999
|
|
|
|
Fair
Market Value
|
|
Straight-Line
Amortization Period
|
|
||
|
|
(In
thousands)
|
|
(Years)
|
|
||
Property
and equipment
|
|
$
|
2,433
|
|
|
1-2
|
|
Trademarks
|
|
|
11,310
|
|
|
5
|
|
Goodwill
|
|
|
85,418
|
|
|
--
|
|
Total
|
|
$
|
99,161
|
|
|
|
|
|
|
April
30, 2006
|
|
January
29, 2006
|
|
||||||||||||||
|
|
Gross
Carrying Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying Amount
|
|
Gross
Carrying Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying Amount
|
|
||||||
|
|
(In
thousands)
|
|
||||||||||||||||
Technology
licenses
|
|
$
|
21,586
|
|
$
|
(14,573
|
)
|
$
|
7,013
|
|
$
|
21,586
|
|
$
|
(13,595
|
)
|
$
|
7,991
|
|
Patents
|
|
|
23,750
|
|
|
(20,939
|
)
|
|
2,811
|
|
|
23,750
|
|
|
(19,911
|
)
|
|
3,839
|
|
Acquisition-related
|
|
|
38,612
|
|
|
(25,861
|
)
|
|
12,751
|
|
|
27,086
|
|
|
(24,516
|
)
|
|
2,570
|
|
Trademarks
|
|
|
11,310
|
|
|
(11,310
|
)
|
|
-
|
|
|
11,310
|
|
|
(10,807
|
)
|
|
503
|
|
Other
|
|
|
1,494
|
|
|
(1,080
|
)
|
|
414
|
|
|
1,494
|
|
|
(976
|
)
|
|
518
|
|
Total
intangible assets
|
|
$
|
96,752
|
|
$
|
(73,763
|
)
|
$
|
22,989
|
|
$
|
85,226
|
|
$
|
(69,805
|
)
|
$
|
15,421
|
|
|
|
|
April
30,
|
|
January
29,
|
|
||
|
|
|
2006
|
|
2006
|
|
||
(in
thousands)
|
||||||||
3dfx
|
|
|
$
|
75,326
|
|
$
|
75,326
|
|
MediaQ
|
|
|
52,913
|
|
|
52,913
|
|
|
ULi
|
|
|
32,287
|
|
|
-
|
|
|
Hybrid
Graphics
|
|
|
26,983
|
-
|
||||
Other
|
|
|
17,094
|
17,078
|
||||
Total
goodwill
|
|
|
$
|
204,603
|
|
$
|
145,317
|
|
|
April
30,
|
January
29,
|
|||||
2006
|
2006
|
||||||
Inventories:
|
(In
thousands)
|
||||||
Raw
materials
|
$
|
29,513
|
$
|
25,743
|
|||
Work
in-process
|
120,845
|
107,847
|
|||||
Finished
goods
|
196,008
|
121,202
|
|||||
Total
inventories
|
$
|
346,366
|
$
|
254,792
|
|
|
April
30,
|
|
January
29,
|
|
||
|
|
2006
|
|
2006
|
|
||
Accrued
Liabilities:
|
|
(In
thousands)
|
|
||||
Accrued
customer programs
|
|
$
|
75,827
|
|
$
|
90,056
|
|
Deferred
revenue
|
|
|
6,805
|
|
|
217
|
|
Taxes
payable
|
|
|
53,253
|
|
|
58,355
|
|
Accrued
payroll and related expenses
|
|
|
38,511
|
|
|
53,080
|
|
Deferred
rent
|
|
|
11,996
|
|
|
11,879
|
|
Accrued
legal settlement
|
|
|
30,600
|
|
|
30,600
|
|
Other
|
|
|
19,247
|
|
|
15,077
|
|
Total
accrued liabilities
|
|
$
|
236,239
|
|
$
|
259,264
|
|
April
30,
|
January
29,
|
||||||
|
|
2006
|
|
2006
|
|
||
Other
Long-term Liabilities:
|
|
(In
thousands)
|
|
||||
Asset
retirement obligations
|
|
$
|
6,477
|
|
$
|
6,440
|
|
Other
long-term liabilities
|
|
|
3,679
|
|
|
4,184
|
|
Total
other long-term liabilities
|
|
$
|
10,156
|
|
$
|
10,624
|
|
|
|
GPU
|
|
MCP
|
|
Handheld
GPU
|
|
Consumer
Electronics
|
|
All
Other
|
|
Consolidated
|
|
||||||
|
|
(In
thousands)
|
|
||||||||||||||||
Three
Months Ended April 30, 2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Revenue
|
|
$
|
452,431
|
|
$
|
118,384
|
|
$
|
30,721
|
|
$
|
26,162
|
|
$
|
54,109
|
|
$
|
681,807
|
|
Depreciation
and amortization expense
|
|
$
|
8,455
|
|
$
|
4,153
|
|
$
|
3,589
|
|
$
|
84
|
|
$
|
7,619
|
|
$
|
23,900
|
|
Operating
income (loss)
|
|
$
|
128,858
|
|
$
|
2,983
|
|
$
|
(1,424
|
)
|
$
|
19,372
|
|
$
|
(49,104
|
)
|
$
|
100,685
|
|
Three
Months Ended May 1, 2005:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
409,926
|
|
$
|
71,805
|
|
$
|
7,762
|
|
$
|
58,078
|
|
$
|
36,275
|
|
$
|
583,846
|
|
Depreciation
and amortization expense
|
|
$
|
8,895
|
|
$
|
3,246
|
|
$
|
3,175
|
|
$
|
360
|
|
$
|
7,641
|
|
$
|
23,317
|
|
Operating
income (loss)
|
|
$
|
78,132
|
|
$
|
6,923
|
|
$
|
(15,860
|
)
|
$
|
28,941
|
|
$
|
(21,954
|
)
|
$
|
76,182
|
|
|
|
Three
Months Ended
|
|
||||
|
|
April
30,
|
|
May
1,
|
|
||
|
|
2006
|
|
2005
|
|
||
Revenue:
|
|
(In
thousands)
|
|
||||
United
States
|
|
$
|
77,372
|
|
$
|
97,805
|
|
Other
Americas
|
|
|
27,590
|
|
|
922
|
|
China
|
|
|
179,720
|
|
|
68,743
|
|
Taiwan
|
|
|
227,574
|
|
|
297,699
|
|
Other
Asia Pacific
|
|
|
111,218
|
|
|
54,831
|
|
Europe
|
|
|
58,333
|
|
|
63,846
|
|
Total
revenue
|
|
$
|
681,807
|
|
$
|
583,846
|
|
|
Three
Months Ended
|
||
|
April
30,
|
|
May
1,
|
|
2006
|
|
2005
|
Revenue:
|
|
|
|
Customer
A
|
6%
|
|
17%
|
Customer
B
|
14%
|
|
1%
|
Customer
C
|
7%
|
|
11%
|
Customer
D
|
9%
|
|
14%
|
|
Three
Months Ended
|
||||||
|
April
30,
|
May
1,
|
|||||
|
2006
|
2005
|
|||||
Revenue
|
100.0
|
%
|
100.0
|
%
|
|||
Cost
of revenue
|
57.6
|
64.0
|
|||||
Gross
profit
|
42.4
|
36.0
|
|||||
Operating
expenses:
|
|
|
|||||
Research
and development
|
18.0
|
14.7
|
|||||
Sales,
general and administrative
|
9.6
|
8.2
|
|||||
Total
operating expenses
|
27.6
|
22.9
|
|||||
Operating
income
|
14.8
|
13.1
|
|||||
Interest
and other income, net
|
1.2
|
0.7
|
|||||
Income
before income tax expense
|
16.0
|
13.8
|
|||||
Income
tax expense
|
2.7
|
2.8
|
|||||
Net
income
|
13.3
|
%
|
11.0
|
%
|
|
|
Three
Months Ended
|
|
|
|
|
|
||||||
|
|
April
30,
|
|
May
1,
|
|
$
|
|
%
|
|
||||
|
|
2006
|
|
2005
|
|
Change
|
|
Change
|
|
||||
Research
and Development:
|
|
(in
millions)
|
|
||||||||||
Salaries
and benefits
|
|
$
|
68.0
|
|
$
|
48.9
|
|
$
|
19.1
|
|
|
39
|
%
|
Computer
software and lab equipment
|
|
|
12.9
|
|
|
10.9
|
|
|
2.0
|
|
|
18
|
%
|
New
product development
|
|
|
7.5
|
|
|
6.8
|
|
|
0.7
|
|
|
10
|
%
|
Facility
expense
|
|
|
8.1
|
|
|
7.8
|
|
|
0.3
|
|
|
4
|
%
|
Depreciation
and amortization
|
|
|
15.0
|
|
|
14.3
|
|
|
0.7
|
|
|
5
|
%
|
Stock-based
compensation
|
|
|
13.6
|
|
|
-
|
|
|
13.6
|
|
|
-
|
|
License
and development project costs
|
|
|
(5.8
|
)
|
|
(4.7
|
)
|
|
(1.1
|
)
|
|
23
|
%
|
Other
|
|
|
3.1
|
|
1.9
|
|
|
1.2
|
|
63
|
%
|
||
Total
|
|
$
|
122.4
|
|
$
|
85.9
|
|
$
|
36.5
|
|
|
42
|
%
|
Research
and development as a percentage of net revenue
|
|
|
18
|
%
|
|
15
|
%
|
|
|
|
|
|
|
|
|
Three
Months Ended
|
|
|
|
|
|
||||||
|
|
April
30,
|
|
May
1,
|
|
$
|
|
%
|
|
||||
|
|
2006
|
|
2005
|
|
Change
|
|
Change
|
|
||||
Sales,
General and Administrative:
|
|
(in
millions)
|
|
||||||||||
Salaries
and benefits
|
|
$
|
32.8
|
|
$
|
26.2
|
|
$
|
6.6
|
|
|
25
|
%
|
Advertising
and promotions
|
|
|
14.5
|
|
|
12.1
|
|
|
2.4
|
|
20
|
%
|
|
Legal
and accounting fees
|
|
|
4.2
|
|
|
4.9
|
|
|
(0.7
|
)
|
|
(14
|
)%
|
Facility
expense
|
|
|
4.0
|
|
|
3.1
|
|
|
0.9
|
|
|
29
|
%
|
Depreciation
and amortization
|
|
|
7.9
|
|
|
8.0
|
|
|
(0.1
|
)
|
|
(1
|
)%
|
Stock-based
compensation
|
|
|
8.3
|
|
|
-
|
|
|
8.3
|
|
-
|
||
Other
|
|
|
(6.0
|
)
|
|
(6.2
|
)
|
|
0.2
|
|
(3
|
)%
|
|
Total
|
|
$
|
65.7
|
|
$
|
48.1
|
|
$
|
17.6
|
|
|
37
|
%
|
Sales,
general and administrative as a percentage of net revenue
|
|
|
10
|
%
|
|
8
|
%
|
|
|
|
|
|
|
· |
decreased
demand and market acceptance for our products and/or our customers’
products;
|
· |
inability
to successfully develop and produce in volume production our
next-generation products;
|
· |
competitive
pressures resulting in lower than expected average selling prices;
and
|
· |
new
product announcements or product introductions by our competitors.
|
· |
if
there were a sudden and significant decrease in demand for our products;
|
· |
if
there were a higher incidence of inventory obsolescence because of
rapidly
changing technology and customer requirements;
|
·
|
if
we fail to estimate customer demand properly for our older products
as our
newer products are introduced; or
|
· |
if
our competition were to take unexpected competitive pricing actions.
|
· |
anticipate
the features and functionality that customers and consumers will
demand;
|
· |
incorporate
those features and functionalities into products that meet the exacting
design requirements of OEMs, ODMs, and add-in board and motherboard
manufacturers;
|
· |
price
our products competitively; and
|
· |
introduce
products to the market within the limited design cycle for OEMs,
ODMs, and
add-in board and motherboard manufacturers.
|
· |
proper new
product definition;
|
· |
timely
completion and introduction of new product designs;
|
· |
the
ability of third-party manufacturers to effectively manufacture our
new
products in a timely manner;
|
· |
dependence
on third-party subcontractors for assembly, testing and packaging
of our
products and in meeting product delivery schedules and maintaining
product
quality;
|
· |
the
quality of any new products;
|
· |
differentiation
of new products from those of our competitors;
|
· |
market
acceptance of our products and our customers' products; and
|
· |
availability
of adequate quantity and configurations of various types of memory
products.
|
· |
difficulty
in combining the technology, products, operations or workforce of
the
acquired business with our
business;
|
· |
disruption
of our ongoing businesses:
|
· |
difficulty
in realizing the potential financial or strategic benefits of the
transaction;
|
· |
diversion
of management’s attention from our
business;
|
· |
difficulty
in maintaining uniform standards, controls, procedures and
policies;
|
· |
disruption
of or delays in ongoing research and development
efforts;
|
· |
diversion
of capital and other resources;
|
· |
assumption
of liabilities;
|
· |
diversion
of resources and unanticipated expenses resulting from litigation
arising from potential or actual business acquisitions or
investments;
|
· |
difficulties
in entering into new markets in which we have limited or no experience
and
where competitors in such markets have stronger positions; and
|
· |
impairment
of relationships with employees and customers, or the loss of any
of our
key employees or of our target’s key employees, as a result of the
integration of new businesses and management personnel.
|
· |
suppliers
of GPUs, including MCPs that incorporate 3D graphics functionality
as part
of their existing solutions, such as ATI, Intel, Silicon Integrated
Systems, Inc., or SIS, VIA Technologies, Inc., or VIA, and XGI Technology
Inc.;
|
· |
suppliers
of discrete MCPs that incorporate a combination of networking, audio,
communications and input/output, or I/O, functionality as part of
their
existing solutions, such as ATI Technologies, Inc., or ATI, Broadcom
Corporation, or Broadcom, Intel, SIS, and VIA;
and
|
· |
suppliers
of GPUs or GPU intellectual property that incorporate advanced graphics
functionality as part of their existing solutions, such as ATI, Bitboys,
Broadcom, Fujitsu Limited, Imagination Technologies Ltd., NEC Corporation,
Qualcomm Incorporated, Renesas Technology Corp., Seiko-Epson, Texas
Instruments Incorporated, and Toshiba America,
Inc.
|
· |
international
economic and political conditions;
|
· |
unexpected
changes in, or impositions of, legislative or regulatory requirements;
|
· |
labor
issues in foreign countries;
|
· |
cultural
differences in the conduct of
business;
|
· |
inadequate
local infrastructure;
|
· |
delays
resulting from difficulty in obtaining export licenses for certain
technology, tariffs, quotas and other trade barriers and
restrictions;
|
· |
transportation
delays;
|
· |
longer
payment cycles;
|
· |
difficulty
in collecting accounts
receivable;
|
· |
fluctuations
in currency exchange rates;
|
· |
imposition
of additional taxes and
penalties;
|
· |
different
legal standards with respect to protection of intellectual property;
|
· |
the
burdens of complying with a variety of foreign laws; and
|
· |
other
factors beyond our control, including terrorism, civil unrest, war
and
diseases such as severe acute respiratory syndrome and the Avian
flu.
|
· |
commercial
significance of our operations and our competitors’ operations in
particular countries and
regions;
|
· |
location
in which our products are manufactured;
|
· |
our
strategic technology or product directions in different countries;
and
|
· |
degree
to which intellectual property laws exist and are meaningfully enforced
in
different jurisdictions.
|
· |
assert
claims of infringement;
|
· |
enforce
our patents
|
· |
protect
our trade secrets or know-how; or
|
· |
determine
the enforceability, scope and validity of the propriety rights of
others.
|
· |
the
jurisdictions in which profits are determined to be earned and taxed;
|
· |
adjustments
to estimated taxes upon finalization of various tax returns;
|
· |
changes
in available tax credits;
|
· |
changes
in share-based compensation expense;
|
· |
changes
in tax laws, the interpretation of tax laws either in the United
States or
abroad or the issuance of new interpretative accounting guidance
related
to uncertain transactions and calculations where the tax treatment
was
previously uncertain; and
|
· |
the
resolution of issues arising from tax audits with various tax
authorities.
|
· |
the
ability of the board of directors to create and issue preferred stock
without prior stockholder
approval;
|
· |
the
prohibition of stockholder action by written consent;
|
· |
a
classified board of directors; and
|
· |
advance
notice requirements for director nominations and stockholder proposals.
|
|
Total
Number of Shares Purchased
|
|
Average
Price Paid per Share
|
|
Total
Number of Shares Purchased as Part of Publicly Announced Plans of
Programs
|
|
Approximate
Dollar Value of Shares that May Yet Be Purchased Under the Plans
or
Programs (1)
|
|
|||||
January
30, 2006 through February 26, 2006
|
|
|
-
|
|
$
|
-
|
|
|
-
|
|
$
|
86,846,554
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February
27, 2006 through March 26, 2006
|
|
|
-
|
|
$
|
-
|
|
|
-
|
|
$
|
486,846,554
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March
27, 2006 through April 30, 2006
|
|
|
2,079,440
|
(3)
|
$
|
24.04
|
|
|
2,079,440
|
(3)
|
$
|
436,846,554
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,079,440
|
|
$
|
24.04
|
(2)
|
|
2,079,440
|
|
|
|
|
EXHIBIT
INDEX
|
||||||
Exhibit
No.
|
Exhibit
Description
|
Form
|
File
Number
|
Exhibit
|
Filing
Date
|
Filed
Herewith
|
3.3
|
Bylaws
of NVIDIA Corporation, Amended and Restated as of March 7,
2006
|
10-K
|
0-23985
|
3.3
|
3/16/06
|
|
10.1
|
Form
of Indemnity Agreement 8-k between NVIDIA Corporation and each of
its
directors and officers
|
8-K
|
0-23985
|
10.1
|
3/07/06
|
|
10.2
|
1998
Equity Incentive Plan, as amended
|
8-K
|
0-23985
|
10.2
|
3/13/06
|
|
10.3+
|
NVIDIA
Corporation Fiscal Year 2007 Variable Compensation Plan
|
8-K
|
0-23985
|
10.1
|
4/03/06
|
|
10.4+
|
1998
Non-Employee Directors’ Stock Option Plan, as amended
|
8-K
|
0-23985
|
10.2
|
4/03/06
|
|
31.1
|
Certification
of Chief Executive Officer as required by Rule 13a-14(a) of the Securities
Exchange Act of 1934, as amended
|
*
|
||||
31.2
|
Certification
of Chief Financial Officer as required by Rule 13a-14(a) of the Securities
Exchange Act of 1934, as amended
|
*
|
||||
32.1#
|
Certification
of Chief Executive Officer as required by Rule 13a-14(b) of the Securities
Exchange Act of 1934, as amended
|
*
|
||||
32.2#
|
Certification
of Chief Financial Officer as required by Rule 13a-14(b) of the Securities
Exchange Act of 1934, as amended
|
*
|
EXHIBIT
INDEX
|
||||||
Exhibit
No.
|
Exhibit
Description
|
Form
|
File
Number
|
Exhibit
|
Filing
Date
|
Filed
Herewith
|
3.3
|
Bylaws
of NVIDIA Corporation, Amended and Restated as of March 7,
2006
|
10-K
|
0-23985
|
3.3
|
3/16/06
|
|
10.1
|
Form
of Indemnity Agreement 8-k between NVIDIA Corporation and each of
its
directors and officers
|
8-K
|
0-23985
|
10.1
|
3/07/06
|
|
10.2
|
1998
Equity Incentive Plan, as amended
|
8-K
|
0-23985
|
10.2
|
3/13/06
|
|
10.3+
|
NVIDIA
Corporation Fiscal Year 2007 Variable Compensation Plan
|
8-K
|
0-23985
|
10.1
|
4/03/06
|
|
10.4+
|
1998
Non-Employee Directors’ Stock Option Plan, as amended
|
8-K
|
0-23985
|
10.2
|
4/03/06
|
|
31.1
|
Certification
of Chief Executive Officer as required by Rule 13a-14(a) of the Securities
Exchange Act of 1934, as amended
|
*
|
||||
31.2
|
Certification
of Chief Financial Officer as required by Rule 13a-14(a) of the Securities
Exchange Act of 1934, as amended
|
*
|
||||
32.1#
|
Certification
of Chief Executive Officer as required by Rule 13a-14(b) of the Securities
Exchange Act of 1934, as amended
|
*
|
||||
32.2#
|
Certification
of Chief Financial Officer as required by Rule 13a-14(b) of the Securities
Exchange Act of 1934, as amended
|
*
|