[x]
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
|
For the quarterly period ended
July 27, 2008
|
[_]
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
|
For
the transition period from _____ to
______
|
Delaware
|
94-3177549
|
(State
or Other Jurisdiction of
|
(I.R.S.
Employer
|
Incorporation
or Organization)
|
Identification
No.)
|
Large
accelerated filer x
|
Accelerated
filer o
|
Non-accelerated
filer o (Do
not check if a smaller reporting company)
|
Smaller
reporting company o
|
Page
|
|||||
|
|||||
|
|
3 | |||
|
3 | ||||
|
4 | ||||
|
5 | ||||
|
6 | ||||
|
|
26 | |||
|
|
39 | |||
|
|
40 | |||
|
|||||
|
|
40 | |||
|
|
40 | |||
|
|
56 | |||
|
|
56 | |||
|
|
57 | |||
|
|
57 | |||
|
|
58 | |||
|
59 |
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
July 27,
2008
|
|
July
29,
2007
|
July 27,
2008
|
July
29,
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
|
||||||||||||
Income
(loss) from operations
|
(155,392
|
)
|
184,760
|
47,587
|
326,006
|
|||||||||||
Interest
income
|
12,081
|
15,625
|
26,404
|
28,833
|
||||||||||||
Other
income (expense), net
|
(3,289
|
)
|
466
|
(7,573
|
)
|
(199
|
)
|
|||||||||
Income
(loss) before income tax expense
|
(146,600
|
)
|
200,851
|
66,418
|
354,640
|
|||||||||||
Income
tax expense (benefit)
|
(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
|
$
|
(0.22
|
)
|
$
|
0.32
|
$ |
0.10
|
$
|
0.56
|
|||||||
Shares
used in basic per share computation (1)
|
555,417
|
547,305
|
555,531
|
544,275
|
||||||||||||
Diluted
net income (loss) per share
|
$
|
(0.22
|
)
|
$
|
0.29
|
$ |
0.09
|
$
|
0.51
|
|||||||
Shares
used in diluted per share computation (1)
|
555,417
|
603,830
|
592,181
|
600,957
|
(1)
|
Reflects
a three-for-two stock split effective on September 10,
2007.
|
July
27,
2008
|
January
27,
2008
|
|||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$
|
719,143
|
$
|
726,969
|
||||
Marketable
securities
|
938,087
|
1,082,509
|
||||||
Accounts
receivable, net
|
679,416
|
666,494
|
||||||
Inventories
|
432,279
|
358,521
|
||||||
Prepaid
expenses and other
|
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
|
||||||
Commitments
and contingencies - see Note 12
|
||||||||
Stockholders’
equity:
|
||||||||
Preferred
stock
|
-
|
-
|
||||||
Common
stock
|
625
|
619
|
||||||
Additional
paid-in capital
|
1,776,698
|
1,654,681
|
||||||
Treasury
stock, at cost
|
(1,163,528
|
)
|
(1,039,632
|
)
|
||||
Accumulated
other comprehensive income (loss)
|
(966
|
)
|
8,034
|
|||||
Retained
earnings
|
2,050,086
|
1,994,210
|
||||||
Total stockholders'
equity
|
2,662,915
|
2,617,912
|
||||||
Total
liabilities and stockholders' equity
|
$
|
3,960,049
|
$
|
3,747,671
|
||||
Six
Months Ended
|
||||||||
July
27,
2008
|
July 29,
2007
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
income
|
$
|
55,876
|
$
|
304,991
|
||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
Depreciation
and amortization
|
87,664
|
63,226
|
||||||
Stock-based
compensation expense related to employees
|
81,423
|
66,865
|
||||||
Payments
under patent licensing arrangement
|
(26,680
|
)
|
(20,723
|
)
|
||||
Deferred
income taxes
|
5,547
|
39,277
|
||||||
Other
|
3,145
|
185
|
||||||
Changes
in operating assets and liabilities, net of effects of
acquisitions:
|
||||||||
Accounts
receivable
|
(12,373
|
)
|
10,950
|
|||||
Inventories
|
(73,139
|
)
|
78,489
|
|||||
Prepaid
expenses and other current assets
|
9,136
|
(842
|
)
|
|||||
Deposits
and other assets
|
(491
|
)
|
2,437
|
|||||
Accounts
payable
|
(87,730
|
)
|
50,685
|
|||||
Accrued
liabilities and other long-term liabilities
|
183,824
|
21,337
|
||||||
Net cash provided by
operating activities
|
226,202
|
616,877
|
||||||
Cash
flows from investing activities:
|
||||||||
Proceeds
from sales and maturities of marketable securities
|
810,508
|
374,661
|
||||||
Purchases
of marketable securities
|
(678,704
|
)
|
(455,909
|
)
|
||||
Purchases
of property and equipment and intangible assets
|
(255,687
|
)
|
(46,980
|
)
|
||||
Acquisition
of businesses, net of cash and cash equivalents
|
(27,948
|
)
|
-
|
|||||
Proceeds
from sale of investment in non-affiliates
|
3,218
|
-
|
||||||
Purchases
of investment in non-affiliates
|
(1,500
|
)
|
-
|
|||||
Net cash used in investing
activities
|
(150,113
|
)
|
(128,228
|
)
|
||||
Cash
flows from financing activities:
|
||||||||
Payments
for stock repurchases
|
(123,896
|
)
|
(249,386
|
)
|
||||
Proceeds
from issuance of common stock under employee stock
plans
|
39,981
|
131,068
|
||||||
Net cash used in financing
activities
|
(83,915
|
)
|
(118,318
|
)
|
||||
Change
in cash and cash equivalents
|
(7,826
|
)
|
370,331
|
|||||
Cash
and cash equivalents at beginning of period
|
726,969
|
544,414
|
||||||
Cash
and cash equivalents at end of period
|
$
|
719,143
|
$
|
914,745
|
||||
Supplemental
disclosures of cash flow information:
|
||||||||
Cash
paid for income taxes, net
|
$
|
4,459
|
$
|
3,505
|
||||
Other
non-cash activities:
|
||||||||
Assets
acquired by assuming related liabilities
|
$
|
68,408
|
$
|
-
|
||||
Unrealized
losses from marketable securities
|
$
|
11,252
|
$
|
564
|
Three Months Ended
|
Six
Months Ended
|
|||||||||||||||
July 27,
2008
|
July 29,
2007
|
July 27,
2008
|
July
29,
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
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
July 27,
2008
|
July 29,
2007
|
July 27,
2008
|
July 29,
2007
|
|||||||||||||
(Using
a binomial model)
|
||||||||||||||||
Expected
life (in years)
|
3.7
-5.0
|
3.8
- 5.2
|
3.6-5.7
|
3.8
- 5.8
|
||||||||||||
Risk
free interest rate
|
2.9%
- 3.7
|
%
|
5.0
|
%
|
2.6%
- 3.7
|
%
|
4.6%
- 5.0
|
%
|
||||||||
Volatility
|
52%
- 63
|
%
|
37%
- 40
|
%
|
52%
- 68
|
%
|
37%
- 45
|
%
|
||||||||
Dividend
Yield
|
-
|
-
|
-
|
-
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
July 27,
2008
|
July 29,
2007
|
July 27,
2008
|
July 29,
2007
|
|||||||||||||
(Using
a Black-Scholes model)
|
||||||||||||||||
Expected
life (in years)
|
-
|
-
|
0.5
- 2.0
|
0.5
- 2.0
|
||||||||||||
Risk
free interest rate
|
-
|
-
|
1.6%
- 1.8
|
%
|
3.5%
- 5.2
|
%
|
||||||||||
Volatility
|
-
|
-
|
68
|
%
|
38%
- 47
|
%
|
||||||||||
Dividend
Yield
|
-
|
-
|
-
|
-
|
Options
Available for Grant
|
Options
Outstanding
|
Weighted
Average Exercise Price Per Share
|
||||||||||
Balances,
January 27, 2008
|
44,044,004
|
90,581,073
|
$
|
13.18
|
||||||||
Granted
|
(9,656,565
|
)
|
9,656,565
|
$
|
18.30
|
|||||||
Exercised
|
-
|
(4,494,733
|
)
|
$
|
4.81
|
|||||||
Cancelled
|
1,035,615
|
(1,035,615
|
)
|
$
|
22.25
|
|||||||
Balances,
July 27, 2008
|
35,423,054
|
94,707,290
|
$
|
14.00
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
July 27,
2008
|
July 29,
2007
|
July 27,
2008
|
July 29,
2007
|
|||||||||||||
(In
thousands, except per share data)
|
||||||||||||||||
Numerator:
|
||||||||||||||||
Net
income (loss)
|
$
|
(120,929
|
)
|
$
|
172,732
|
$
|
55,876
|
$
|
304,991
|
|||||||
Denominator:
|
||||||||||||||||
Denominator
for basic net income per share, weighted average shares
|
555,417
|
547,305
|
555,531
|
544,275
|
||||||||||||
Effect
of dilutive securities:
|
||||||||||||||||
Stock
options outstanding
|
-
|
56,525
|
36,650
|
56,682
|
||||||||||||
Denominator
for diluted net income (loss) per share, weighted average
shares
|
555,417
|
603,830
|
592,181
|
600,957
|
||||||||||||
Net
income per share:
|
||||||||||||||||
Basic
net income (loss) per share
|
$
|
(0.22
|
)
|
$
|
0.32
|
$
|
0.10
|
$
|
0.56
|
|||||||
Diluted
net income (loss) per share
|
$
|
(0.22
|
)
|
$
|
0.29
|
$
|
0.09
|
$
|
0.51
|
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
|
Mental
Images
|
Ageia
|
|||||||
Fair
Market Values
|
(In
thousands)
|
|||||||
Cash
and cash equivalents
|
$
|
988
|
$
|
1,744
|
||||
Marketable
securities
|
-
|
28
|
||||||
Accounts
receivable
|
1,462
|
911
|
||||||
Prepaid
and other current assets
|
214
|
3,825
|
||||||
Property
and equipment
|
1,212
|
166
|
||||||
In-process
research and development
|
4,000
|
-
|
||||||
Goodwill
|
58,271
|
16,558
|
||||||
Intangible
assets:
|
||||||||
Existing technology
|
14,400
|
13,450
|
||||||
Customer relationships
|
6,500
|
170
|
||||||
Patents
|
5,000
|
-
|
||||||
Trademark
|
1,200
|
900
|
||||||
Total
assets acquired
|
93,247
|
37,752
|
||||||
Current
liabilities
|
(1,177
|
)
|
(6,994
|
)
|
||||
Acquisition
related costs
|
(1,208
|
)
|
(1,038
|
)
|
||||
Long-term
liabilities
|
(2,542
|
)
|
-
|
|||||
Total
liabilities assumed
|
(4,927
|
)
|
(8,032
|
)
|
||||
Purchase
price allocation
|
$
|
88,320
|
$
|
29,720
|
Mental
Images
|
Ageia
|
||||||
(Straight-line
depreciation/amortization period)
|
|||||||
Property
and equipment
|
2
-5 years
|
1-2
years
|
|||||
Intangible
assets:
|
|||||||
Existing
technology
|
4-5
years
|
4
years
|
|||||
Customer
relationships
|
4-5
years
|
5
years
|
|||||
Patents
|
5
years
|
-
|
|||||
Trademark
|
5
years
|
5
years
|
July 27,
2008
|
January 27,
2008
|
|||||||
(In
thousands)
|
||||||||
PortalPlayer
|
$
|
104,473
|
$
|
104,473
|
||||
3dfx
|
75,326
|
75,326
|
||||||
Mental
Images
|
58,271
|
63,086
|
||||||
MediaQ
|
35,167
|
35,167
|
||||||
ULi
|
31,115
|
31,115
|
||||||
Hybrid
Graphics
|
27,906
|
27,906
|
||||||
Ageia
|
16,558
|
-
|
||||||
Other
|
16,984
|
16,984
|
||||||
Total
goodwill
|
$
|
365,800
|
$
|
354,057
|
July
27, 2008
|
January 27, 2008
|
|||||||||||||||||||||||
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Net Carrying
Amount
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Net Carrying
Amount
|
|||||||||||||||||||
(In
thousands)
|
||||||||||||||||||||||||
Technology
licenses
|
$ | 112,263 | $ | (28,128 | ) | $ | 84,135 | $ | 94,970 | $ | (32,630 | ) | $ | 62,340 | ||||||||||
Acquired
intellectual property
|
75,880 | (26,242 | ) | 49,638 | 77,900 | (41,030 | ) | 36,870 | ||||||||||||||||
Patents
|
17,183 | (5,808 | ) | 11,375 | 35,348 | (27,632 | ) | 7,716 | ||||||||||||||||
Other
|
- | - | - | 1,494 | (1,494 | ) | - | |||||||||||||||||
Total
intangible assets
|
$ | 205,326 | $ | (60,178 | ) | $ | 145,148 | $ | 209,712 | $ | (102,786 | ) | $ | 106,926 |
July 27,
2008
|
January 27,
2008
|
|||||||
Inventories:
|
(In
thousands)
|
|||||||
Raw
materials
|
$
|
27,549
|
$
|
31,299
|
||||
Work
in-process
|
176,099
|
107,835
|
||||||
Finished
goods
|
228,631
|
219,387
|
||||||
Total
inventories
|
$
|
432,279
|
$
|
358,521
|
July 27,
2008
|
January 27,
2008
|
Estimated
Useful Life
|
||||||||
(In
thousands)
|
(Years)
|
|||||||||
Property
and Equipment:
|
||||||||||
Test
equipment
|
$
|
225,546
|
$
|
186,774
|
3
|
|||||
Land
|
208,908
|
38,442
|
(A)
|
|||||||
Software
and licenses
|
190,145
|
246,725
|
3 -
5
|
|||||||
Computer
equipment
|
138,588
|
137,642
|
3
|
|||||||
Leasehold
improvements
|
118,335
|
103,353
|
(B
)
|
|||||||
Office
furniture and equipment
|
31,675
|
28,220
|
5
|
|||||||
Building
|
29,199
|
4,104
|
25
|
|||||||
Construction
in process
|
9,990
|
8,258
|
(C
)
|
|||||||
952,386
|
753,518
|
|||||||||
Accumulated
depreciation and amortization
|
(352,908
|
)
|
(393,710
|
) |
|
|||||
Total property and
equipment, net
|
$
|
599,478
|
$
|
359,808
|
July 27,
2008
|
January 27,
2008
|
|||||||
Accrued
Liabilities:
|
(In
thousands)
|
|||||||
Accrued
customer programs (1)
|
$
|
297,545
|
$
|
271,869
|
||||
Warranty
accrual (2)
|
187,131
|
5,707
|
||||||
Accrued
payroll and related expenses
|
91,276
|
122,284
|
||||||
Accrued
costs related to purchase of property
|
37,948
|
-
|
||||||
Accrued
legal settlement (3)
|
30,600
|
30,600
|
||||||
Deferred
rent
|
12,273
|
11,982
|
||||||
Deferred
revenue
|
10,823
|
5,856
|
||||||
Taxes
payable
|
7,317
|
7,766
|
||||||
Other
|
21,211
|
18,998
|
||||||
Total
accrued liabilities
|
$
|
696,124
|
$
|
475,062
|
July 27,
2008
|
January 27,
2008
|
|||||||
Other Long-term
Liabilities:
|
(In
thousands)
|
|||||||
Deferred
income tax liability
|
$
|
88,956
|
$
|
86,900
|
||||
Income
taxes payable, long term
|
47,886
|
44,235
|
||||||
Asset
retirement obligation
|
6,597
|
6,470
|
||||||
Other
long-term liabilities
|
18,679
|
24,993
|
||||||
Total
other long-term liabilities
|
$
|
162,118
|
$
|
162,598
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
July 27,
2008
|
July 29,
2007
|
July 27,
2008
|
July 29,
2007
|
|||||||||||||
(In
thousands)
|
||||||||||||||||
Balance at
beginning of period
|
$
|
25,100
|
$
|
19,063
|
$
|
24,432
|
$
|
17,958
|
||||||||
Additions (1),(4)
|
203,743
|
8,468
|
213,293
|
13,448
|
||||||||||||
Deductions (2),(5)
|
(23,752
|
)
|
(6,837
|
)
|
(32,634
|
)
|
(10,712
|
)
|
||||||||
Balance at
end of period (3)
|
$
|
205,091
|
$
|
20,694
|
$
|
205,091
|
$
|
20,694
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
July 27,
2008
|
July 29,
2007
|
July 27,
2008
|
July 29,
2007
|
|||||||||||||
(In
thousands)
|
||||||||||||||||
Net
income (loss)
|
$
|
(120,929
|
)
|
$
|
172,732
|
$
|
55,876
|
$
|
304,991
|
|||||||
Net
change in unrealized gains (losses) on available-for-sale securities, net
of tax
|
(2,545
|
)
|
320
|
(8,176
|
)
|
241
|
||||||||||
Reclassification
adjustments for net realized gains (losses) on available-for-sale
securities included in net income (loss), net of tax
|
30
|
(18
|
)
|
(824
|
)
|
(90
|
)
|
|||||||||
Total
comprehensive income (loss)
|
$
|
(123,444
|
)
|
$
|
173,034
|
$
|
46,876
|
$
|
305,142
|
GPU
|
PSB
|
MCP
|
CPB
|
All
Other
|
Consolidated
|
||||||||||||||||||||
(In
thousands)
|
|||||||||||||||||||||||||
Three
Months Ended July 27, 2008:
|
|||||||||||||||||||||||||
Revenue
|
$
|
503,489
|
$
|
179,653
|
$
|
166,781
|
$
|
34,625
|
$
|
8,128
|
$
|
892,676
|
|||||||||||||
Depreciation
and amortization expense
|
$
|
13,826
|
$
|
5,241
|
$
|
7,756
|
$
|
4,600
|
$
|
14,440
|
$
|
45,863
|
|||||||||||||
Operating
income (loss)
|
$
|
(41,595
|
)
|
$
|
83,686
|
$
|
(107,072
|
)
|
$
|
(6,359
|
)
|
$
|
(84,052
|
)
|
$
|
(155,392
|
)
|
||||||||
Three
Months Ended July 29, 2007:
|
|||||||||||||||||||||||||
Revenue
|
$
|
579,034
|
$
|
127,321
|
$
|
161,058
|
$
|
62,182
|
$
|
5,658
|
$
|
935,253
|
|||||||||||||
Depreciation
and amortization expense
|
$
|
8,932
|
$
|
1,960
|
$
|
6,844
|
$
|
5,004
|
$
|
9,710
|
$
|
32,450
|
|||||||||||||
Operating
income (loss)
|
$
|
167,828
|
$
|
66,363
|
$
|
12,401
|
$
|
2,767
|
$
|
(64,599
|
)
|
$
|
184,760
|
||||||||||||
Six
Months Ended July 27, 2008:
|
|||||||||||||||||||||||||
Revenue
|
$
|
1,204,978
|
$
|
383,080
|
$
|
361,874
|
$
|
77,090
|
$
|
19,042
|
$
|
2,046,064
|
|||||||||||||
Depreciation
and amortization expense
|
$
|
26,540
|
$
|
9,866
|
$
|
15,426
|
$
|
9,518
|
$
|
26,081
|
$
|
87,431
|
|||||||||||||
Operating
income (loss)
|
$
|
127,452
|
$
|
194,014
|
$
|
(103,492
|
)
|
$
|
(10,209
|
)
|
$
|
(160,178
|
)
|
$
|
47,587
|
||||||||||
Six
Months Ended July 29, 2007:
|
|||||||||||||||||||||||||
Revenue
|
$
|
1,062,529
|
$
|
268,194
|
$
|
309,808
|
$
|
129,408
|
$
|
9,594
|
$
|
1,779,533
|
|||||||||||||
Depreciation
and amortization expense
|
$
|
17,217
|
$
|
4,147
|
$
|
13,437
|
$
|
11,099
|
$
|
18,872
|
$
|
64,772
|
|||||||||||||
Operating
income (loss)
|
$
|
292,245
|
$
|
135,670
|
$
|
20,240
|
$
|
12,935
|
$
|
(135,084
|
)
|
$
|
326,006
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
July 27,
2008
|
July 29,
2007
|
July 27,
2008
|
July 29,
2007
|
|||||||||||||
(In
thousands)
|
||||||||||||||||
Revenue:
|
||||||||||||||||
Taiwan
|
$
|
272,078
|
$
|
316,974
|
$
|
663,706
|
$
|
589,957
|
||||||||
China
|
269,266
|
297,458
|
636,692
|
535,743
|
||||||||||||
Other
Asia Pacific
|
171,000
|
138,830
|
338,854
|
248,616
|
||||||||||||
Europe
|
81,519
|
89,318
|
213,473
|
170,868
|
||||||||||||
United
States
|
77,464
|
72,524
|
171,295
|
174,390
|
||||||||||||
Other
Americas
|
21,349
|
20,149
|
22,044
|
59,959
|
||||||||||||
Total
revenue
|
$
|
892,676
|
$
|
935,253
|
$
|
2,046,064
|
$
|
1,779,533
|
Three Months Ended
|
Six
Months Ended
|
||||||||||||||||||
July 27,
2008
|
July 29,
2007
|
July 27,
2008
|
July 29,
2007
|
||||||||||||||||
Revenue:
|
|||||||||||||||||||
Customer
A
|
13
|
%
|
5
|
%
|
11
|
%
|
5
|
%
|
|||||||||||
Customer
B
|
9
|
%
|
12
|
%
|
10
|
%
|
11
|
%
|
July 27,
2008
|
January 27,
2008
|
||||||
Accounts
Receivable:
|
|||||||
Customer
A
|
11
|
%
|
12
|
%
|
Fair
value measurement at reporting date using
|
||||||||||||
Quoted Prices in
Active Markets for Identical Assets
|
Significant
Other Observable Inputs
|
|||||||||||
July
27, 2008
|
(Level
1)
|
(Level
2)
|
||||||||||
(In
thousands)
|
||||||||||||
Asset-backed
Securities (1)
|
$
|
68,811
|
$
|
-
|
$
|
68,811
|
||||||
Commercial
paper (2)
|
397,504
|
-
|
397,504
|
|||||||||
Corporate
debt securities (3)
|
280,061
|
-
|
280,061
|
|||||||||
Debt
securities issued by United States Treasury (1)
|
55,977
|
-
|
55,977
|
|||||||||
Other
Debt securities issued by U.S. Government agencies
(4)
|
434,899
|
-
|
434,899
|
|||||||||
Mortgage-backed
securities issued by Government-sponsored entities
(1)
|
124,120
|
-
|
124,120
|
|||||||||
Money
market funds (5)
|
125,991
|
125,991
|
-
|
|||||||||
Equity
securities (1)
|
1,358
|
-
|
1,358
|
|||||||||
Total
assets
|
$
|
1,488,721
|
$
|
125,991
|
$
|
1,362,730
|
Three Months Ended
|
Six
Months Ended
|
||||||||||||
July 27,
2008
|
July 29,
2007
|
July 27,
2008
|
July 29,
2007
|
||||||||||
Revenue
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
|||||
Cost
of revenue
|
83.2
|
54.7
|
67.5
|
54.8
|
|||||||||
Gross
profit
|
16.8
|
45.3
|
32.5
|
45.2
|
|||||||||
Operating
expenses:
|
|||||||||||||
Research
and development
|
23.9
|
16.9
|
21.1
|
17.8
|
|||||||||
Sales,
general and administrative
|
10.4
|
8.7
|
9.1
|
9.1
|
|||||||||
Total
operating expenses
|
34.3
|
25.6
|
30.2
|
26.9
|
|||||||||
Operating
income (loss)
|
(17.5
|
)
|
19.7
|
2.3
|
18.3
|
||||||||
Interest
and other income, net
|
|
1.0
|
1.7
|
0.9
|
1.6
|
||||||||
Income
(loss) before income tax expense (benefit)
|
(16.5
|
)
|
21.4
|
3.2
|
19.9
|
||||||||
Income
tax expense (benefit)
|
(2.9
|
)
|
3.0
|
0.5
|
2.8
|
||||||||
Net
income (loss)
|
(13.6
|
)%
|
18.4
|
%
|
2.7
|
%
|
17.1
|
%
|
Three Months Ended
|
Six
Months Ended
|
|||||||||||||||||||||||||||||||
July 27,
2008
|
July 29,
2007
|
$
Change
|
%
Change
|
July 27,
2008
|
July 29,
2007
|
$
Change
|
%
Change
|
|||||||||||||||||||||||||
(in
millions)
|
(in
millions)
|
|||||||||||||||||||||||||||||||
Research
and development expenses
|
$
|
212.9
|
$
|
158.0
|
$
|
54.9
|
35
|
%
|
$
|
431.7
|
$
|
316.3
|
$
|
115.4
|
36
|
%
|
||||||||||||||||
Sales,
general and administrative expenses
|
92.4
|
81.2
|
11.2
|
14
|
%
|
185.5
|
161.8
|
23.7
|
15
|
%
|
||||||||||||||||||||||
Total
operating expenses
|
$
|
305.3
|
$
|
239.2
|
$
|
66.1
|
28
|
%
|
$
|
617.2
|
$
|
478.1
|
$
|
139.1
|
29
|
%
|
||||||||||||||||
Research
and development as a percentage of net revenue
|
23.9
|
%
|
16.9
|
%
|
21.1
|
%
|
17.8
|
%
|
||||||||||||||||||||||||
Sales,
general and administrative as a percentage of net
revenue
|
10.4
|
%
|
8.7
|
%
|
9.1
|
%
|
9.1
|
%
|
As
of
July
27,
2008
|
As
of
January
27,
2008
|
|||||||
(In
millions)
|
||||||||
Cash
and cash equivalents
|
$
|
719.1
|
$
|
727.0
|
||||
Marketable
securities
|
938.1
|
1,082.5
|
||||||
Cash,
cash equivalents, and marketable securities
|
$
|
1,657.2
|
$
|
1,809.5
|
Six
Months Ended
|
||||||||
July
27,
|
July
29,
|
|||||||
2008
|
2007
|
|||||||
(In
millions)
|
||||||||
Net
cash provided by operating activities
|
$
|
226.2
|
$
|
616.9
|
||||
Net
cash used in investing activities
|
$
|
(150.1
|
)
|
$
|
(128.2
|
)
|
||
Net
cash used in financing activities
|
$
|
(83.9
|
)
|
$
|
(118.3
|
)
|
·
|
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.
|
·
|
product
performance;
|
·
|
product
bundling by competitors with multiple product lines;
|
·
|
breadth
and frequency of product offerings;
|
·
|
access
to customers and distribution channels;
|
·
|
backward-forward
software support;
|
·
|
conformity
to industry standard application programming interfaces;
and
|
·
|
manufacturing
capabilities.
|
·
|
suppliers
of discrete media and communication processors, or MCPs, that incorporate
a combination of networking, audio, communications and input/output
functionality as part of their existing solutions, such as Advanced Micro
Devices, Inc., or AMD, Broadcom Corporation, or Broadcom, Silicon
Integrated Systems Corporation, or SIS, and Intel;
|
·
|
suppliers
of GPUs, including MCPs that incorporate 3D graphics functionality as part
of their existing solutions, such as AMD, Intel, Matrox Electronics
Systems Ltd., SIS and VIA Technologies, Inc.;
|
·
|
suppliers
of GPUs or GPU intellectual property for handheld and digital consumer
electronics devices that incorporate advanced graphics functionality as
part of their existing solutions, such as AMD, Broadcom, Fujitsu Limited,
Imagination Technologies Ltd., ARM Holdings plc, Marvell Technology Group
Ltd., or Marvell, NEC Corporation, Qualcomm Incorporated, or Qualcomm,
Renesas Technology, Seiko-Epson, Texas Instruments Incorporated, or Texas
Instruments, and Toshiba America, Inc.; and
|
·
|
suppliers
of application processors for handheld and digital consumer electronics
devices that incorporate multimedia processing as part of their existing
solutions such as Broadcom, Texas Instruments, Qualcomm, Marvell,
Freescale Semiconductor Inc., Samsung and ST
Microelectronics.
|
·
|
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.
|
·
|
market
demand for new products and enhancements to existing
products;
|
·
|
timely
completion and introduction of new product designs and new opportunities
for existing products;
|
·
|
seamless
transitions from an older product to a new product;
|
·
|
differentiation
of our new products from those of our competitors;
|
·
|
delays
in volume shipments of our products;
|
·
|
market
acceptance of our products instead of our customers' products;
and
|
·
|
availability
of adequate quantity and configurations of various types of memory
products.
|
·
|
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 our customers;
|
·
|
price
our products competitively; and
|
·
|
introduce
products to the market within our customers’ limited design cycles.
|
·
|
the
mix of our products sold;
|
·
|
average
selling prices;
|
·
|
introduction
of new products;
|
·
|
product
transitions;
|
·
|
sales
discounts;
|
·
|
unexpected
pricing actions by our competitors;
|
·
|
the
cost of product components; and
|
·
|
the
yield of wafers produced by the foundries that manufacture our
products.
|
·
|
difficulty
in combining the technology, products, operations or workforce of the
acquired business with our business;
|
·
|
difficulty
in operating in a new or multiple new locations;
|
·
|
disruption
of our ongoing businesses or the ongoing business of the company we invest
in or acquire;
|
·
|
difficulty
in realizing the potential financial or strategic benefits of the
transaction;
|
·
|
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 customers of our target’s key employees or customers, as
a result of our acquisition or
investment.
|
·
|
international
economic and political conditions, such as political tensions between
countries in which we do business;
|
·
|
unexpected
changes in, or impositions of, legislative or regulatory requirements;
|
·
|
complying
with a variety of foreign laws;
|
·
|
differing
legal standards with respect to protection of intellectual property and
employment practices;
|
·
|
cultural
differences in the conduct of business;
|
·
|
inadequate
local infrastructure that could result in business
disruptions;
|
·
|
exporting
or importing issues related to export or import restrictions, tariffs,
quotas and other trade barriers and restrictions;
|
·
|
financial
risks such as longer payment cycles, difficulty in collecting accounts
receivable and fluctuations in currency exchange rates;
|
·
|
imposition
of additional taxes and penalties; and
|
·
|
other
factors beyond our control such as terrorism, civil unrest, war and
diseases such as severe acute respiratory syndrome and the Avian flu.
|
·
|
the
commercial significance of our operations and our competitors’ operations
in particular countries and regions;
|
·
|
the
location in which our products are manufactured;
|
·
|
our
strategic technology or product directions in different countries; and
|
·
|
the
degree to which intellectual property laws exist and are meaningfully
enforced in different
jurisdictions.
|
·
|
assert
claims of infringement of our intellectual property;
|
·
|
enforce
our patents;
|
·
|
protect
our trade secrets or know-how; or
|
·
|
determine
the enforceability, scope and validity of the propriety rights of
others.
|
·
|
the
possibility of environmental contamination and the costs associated with
fixing any environmental problems;
|
·
|
adverse
changes in the value of these properties, due to interest rate changes,
changes in the neighborhood in which the property is located, or other
factors;
|
·
|
increased
cash commitments for the possible construction of a campus;
|
·
|
the
possible need for structural improvements in order to comply with zoning,
seismic and other legal or regulatory
requirements;
|
·
|
increased
operating expenses for the buildings or the property or
both;
|
·
|
possible
disputes with third parties, such as neighboring owners or others, related
to the buildings or the property or both; and
|
·
|
the
risk of financial loss in excess of amounts covered by insurance, or
uninsured risks, such as the loss caused by damage to the buildings as a
result of earthquakes, floods and or other natural
disasters.
|
·
|
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 our Board to create and issue preferred stock without prior
stockholder approval;
|
·
|
the
prohibition of stockholder action by written consent;
|
·
|
a
classified Board; and
|
·
|
advance
notice requirements for director nominations and stockholder
proposals.
|
1.
|
The
election of three (3) directors to serve for a three-year term until the
2011 Annual Meeting of Stockholders. The results of the voting were as
follows:
|
a.
|
Steven
Chu
|
|
Number
of shares For
|
487,245,948
|
|
Number
of shares Against
|
4,972,489
|
|
Number
of shares Abstain
|
4,012,543
|
b.
|
Harvey
C. Jones
|
|
Number
of shares For
|
479,745,136
|
|
Number
of shares Against
|
12,460,467
|
|
Number
of shares Abstain
|
4,025,376
|
c.
|
William
J. Miller
|
|
Number
of shares For
|
474,938,642
|
|
Number
of shares Against
|
17,017,103
|
|
Number
of shares Abstain
|
4,275,235
|
2.
|
The
approval of the amendment to the NVIDIA Corporation Amended and Restated
Certificate of Incorporation. The results of the voting were as
follows:
|
Number
of shares voted For
|
402,773,505
|
Number
of shares voted Against
|
89,092,095
|
Number
of shares Abstaining
|
4,365,380
|
Number
of Broker Non-Votes
|
0
|
3.
|
The
ratification of the appointment of PricewaterhouseCoopers LLP as our
independent registered accounting firm for our fiscal year ending January
25, 2009. The results of the voting were as
follows:
|
Number
of shares voted For
|
488,656,413
|
Number
of shares voted Against
|
3,637,439
|
Number
of shares Abstaining
|
3,937,128
|
Number
of Broker Non-Votes
|
0
|
Incorporated
by Reference
|
|||||||||||||||
Exhibit
No.
|
Exhibit
Description
|
Schedule/Form
|
File
Number
|
Exhibit
|
Filing
Date
|
||||||||||
3.1
|
*
|
Certificate
of Amendment of Amended and Restated Certificate of
Incorporation
|
|||||||||||||
31.1
|
*
|
Certification
of Chief Executive Officer as required by Rule 13a-14(a) of the Securities
Exchange Act of 1934
|
|||||||||||||
31.2
|
*
|
Certification
of Chief Financial Officer as required by Rule 13a-14(a) of the Securities
Exchange Act of 1934
|
|||||||||||||
32.1#
|
*
|
Certification
of Chief Executive Officer as required by Rule 13a-14(b) of the Securities
Exchange Act of 1934
|
|||||||||||||
32.2#
|
*
|
Certification
of Chief Financial Officer as required by Rule 13a-14(b) of the Securities
Exchange Act of 1934
|
Date:
August 21, 2008
|
|
NVIDIA
Corporation
|
|
By:
|
/s/ MARVIN D.
BURKETT
|
Marvin
D. Burkett
|
|
(Duly
Authorized Officer and Principal Financial and Accounting
Officer)
|
Incorporated
by Reference
|
|||||||||||||||
Exhibit
No.
|
Exhibit
Description
|
Schedule/Form
|
File
Number
|
Exhibit
|
Filing
Date
|
||||||||||
3.1
|
*
|
Certificate
of Amendment of Amended and Restated Certificate of
Incorporation
|
|||||||||||||
31.1
|
*
|
Certification
of Chief Executive Officer as required by Rule 13a-14(a) of the Securities
Exchange Act of 1934
|
|||||||||||||
31.2
|
*
|
Certification
of Chief Financial Officer as required by Rule 13a-14(a) of the Securities
Exchange Act of 1934
|
|||||||||||||
32.1#
|
*
|
Certification
of Chief Executive Officer as required by Rule 13a-14(b) of the Securities
Exchange Act of 1934
|
|||||||||||||
32.2#
|
*
|
Certification
of Chief Financial Officer as required by Rule 13a-14(b) of the Securities
Exchange Act of 1934
|