To supplement NVIDIA's Condensed Consolidated Statements of Operations and Condensed Consolidated Balance Sheets presented in accordance with GAAP, the company uses non-GAAP measures of certain components of financial performance. These non-GAAP measures include non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP interest and other income/expense, non-GAAP income tax expense, non-GAAP net income, non-GAAP net income, or earnings, per share, and free cash flow. In order for NVIDIA's investors to be better able to compare its current results with those of previous periods, the company has shown a reconciliation of GAAP to non-GAAP financial measures. These reconciliations adjust the related GAAP financial measures to exclude stock-based compensation, legal settlements, a credit related to a weak die/packaging material set, acquisition-related costs, a contribution expense, other expenses, a gain on sale of a non-affiliated investment, interest expense related to amortization of debt discount, 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. NVIDIA believes the presentation of its non-GAAP financial measures enhances the user's overall understanding of the company's historical financial performance. The presentation of the company's non-GAAP financial measures is not meant to be considered in isolation or as a substitute for the company's financial results prepared in accordance with GAAP, and our non-GAAP measures may be different from non-GAAP measures used by other companies.
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NVIDIA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Three Months Ended Twelve Months Ended
------------------------ ------------------------
January 26, January 27, January 26, January 27,
2014 2013 2014 2013
----------- ----------- ----------- -----------
Revenue $ 1,144,218 $ 1,106,902 $ 4,130,162 $ 4,280,159
Cost of revenue 524,976 521,300 1,862,399 2,053,816
----------- ----------- ----------- -----------
Gross profit 619,242 585,602 2,267,763 2,226,343
Operating expenses
Research and
development 336,641 298,007 1,335,834 1,147,282
Sales, general and
administrative 115,677 104,022 435,702 430,822
----------- ----------- ----------- -----------
Total operating
expenses 452,318 402,029 1,771,536 1,578,104
----------- ----------- ----------- -----------
Operating income 166,924 183,573 496,227 648,239
Interest income 4,156 4,693 17,119 19,908
Interest expense (7,935) (880) (10,443) (3,294)
Other income
(expense), net 5,743 (1,278) 7,351 (2,814)
----------- ----------- ----------- -----------
Income before income tax
expense 168,888 186,108 510,254 662,039
Income tax expense 21,971 12,135 70,264 99,503
----------- ----------- ----------- -----------
Net income $ 146,917 $ 173,973 $ 439,990 $ 562,536
=========== =========== =========== ===========
Basic net income per
share $ 0.26 $ 0.28 $ 0.75 $ 0.91
=========== =========== =========== ===========
Diluted net income per
share $ 0.25 $ 0.28 $ 0.74 $ 0.90
=========== =========== =========== ===========
Shares used in basic per
share computation 568,483 620,169 587,893 619,324
Shares used in diluted
per share computation 577,356 622,018 594,517 624,957
NVIDIA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
January 26, January 27,
2014 2013
------------- -------------
ASSETS
Current assets:
Cash, cash equivalents and marketable
securities $ 4,671,810 $ 3,727,883
Accounts receivable, net 426,357 454,252
Inventories 387,765 412,467
Prepaid expenses and other current assets 138,779 180,656
------------- -------------
Total current assets 5,624,711 4,775,258
Property and equipment, net 582,740 576,144
Goodwill 643,179 641,030
Intangible assets, net 296,012 312,332
Other assets 104,252 107,481
------------- -------------
Total assets $ 7,250,894 $ 6,412,245
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 324,391 $ 356,428
Accrued liabilities and other current
liabilities 621,105 619,795
------------- -------------
Total current liabilities 945,496 976,223
Long-term debt 1,356,375 -
Other long-term liabilities 475,125 589,321
Capital lease obligations, long-term 17,500 18,998
Stockholders' equity 4,456,398 4,827,703
------------- -------------
Total liabilities and stockholders' equity $ 7,250,894 $ 6,412,245
============= =============
NVIDIA CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited)
Three Months Ended Twelve Months Ended
------------------------------- ----------------------
January October January January January
26, 2014 27, 2013 27, 2013 26, 2014 27, 2013
--------- --------- --------- ---------- ----------
GAAP gross profit $ 619,242 $ 584,415 $ 585,602 $2,267,763 $2,226,343
GAAP gross margin 54.1% 55.4% 52.9% 54.9% 52.0%
Stock-based
compensation
expense
included in
cost of
revenue (A) 2,777 3,090 2,826 10,688 10,490
Legal
settlement 1,450 - - 3,740 -
Credit from a
weak
die/packaging
material set
(B) (7,782) - - (7,782) -
--------- --------- --------- ---------- ----------
Non-GAAP gross
profit $ 615,687 $ 587,505 $ 588,428 $2,274,409 $2,236,833
========= ========= ========= ========== ==========
Non-GAAP gross
margin 53.8% 55.7% 53.2% 55.1% 52.3%
GAAP operating
expenses $ 452,318 $ 443,427 $ 402,029 $1,771,536 $1,578,104
Stock-based
compensation
expense
included in
operating
expense (A) (33,427) (31,209) (32,943) (125,607) (126,172)
Acquisition-
related costs
(C) (9,250) (4,577) (8,698) (31,652) (36,138)
Contribution
expense (D) - - - - (20,127)
Other expense
(E) (1,845) (2,235) - (4,080) -
--------- --------- --------- ---------- ----------
Non-GAAP operating
expenses $ 407,796 $ 405,406 $ 360,388 $1,610,197 $1,395,667
========= ========= ========= ========== ==========
GAAP interest and
other
income/expense,
net $ 1,964 $ 496 $ 2,535 $ 14,027 $ 13,800
Gain on sale of
a non-
affiliated
investment (3,074) - - (3,074) -
Interest
expense
related to
amortization
of debt
discount 4,600 - - 4,600 -
--------- --------- --------- ---------- ----------
Non-GAAP interest
and other
income/expense,
net $ 3,490 $ 496 $ 2,535 $ 15,553 $ 13,800
========= ========= ========= ========== ==========
GAAP net income $ 146,917 $ 118,734 $ 173,973 $ 439,990 $ 562,536
Total pre-tax
impact of non-
GAAP
adjustments 42,493 41,111 44,467 169,511 192,927
Income tax
impact of non-
GAAP
adjustments (1,924) (6,055) (3,507) (21,094) (27,090)
--------- --------- --------- ---------- ----------
Non-GAAP net income $ 187,486 $ 153,790 $ 214,933 $ 588,407 $ 728,373
========= ========= ========= ========== ==========
Diluted net income
per share
GAAP $ 0.25 $ 0.20 $ 0.28 $ 0.74 $ 0.90
========= ========= ========= ========== ==========
Non-GAAP $ 0.32 $ 0.26 $ 0.35 $ 0.99 $ 1.17
========= ========= ========= ========== ==========
Shares used in
diluted net income
per share
computation 577,356 588,752 622,018 594,517 624,957
Metrics:
GAAP net cash
flow provided
by operating
activities $ 400,712 $ 162,315 $ 451,009 $ 835,146 $ 824,172
Purchase of
property and
equipment and
intangible
assets (66,374) (38,159) (47,758) (255,186) (183,309)
--------- --------- --------- ---------- ----------
Free cash flow $ 334,338 $ 124,156 $ 403,251 $ 579,960 $ 640,863
========= ========= ========= ========== ==========
----------------------------------------------------------------------------
(A) Excludes stock-
based compensation
as follows: Three Months Ended Twelve Months Ended
------------------------------- ----------------------
January October January January January
26, 2014 27, 2013 27, 2013 26, 2014 27, 2013
--------- --------- --------- ---------- ----------
Cost of revenue $ 2,777 $ 3,090 $ 2,826 $ 10,688 $ 10,490
Research and
development $ 21,548 $ 20,902 $ 22,009 $ 82,940 $ 82,157
Sales, general
and
administrative $ 11,879 $ 10,307 $ 10,934 $ 42,667 $ 44,015
(B) Release of the remaining warranty reserve related to a weak
die/packaging material set, as of January 26, 2014.
(C) Consists of amortization of acquisition-related intangible assets,
transaction costs, compensation charges, and other credits related to
acquisitions.
(D) Net present value of a $25 million charitable contribution pledged on
June 12, 2012 to Stanford Hospital and Clinic, payable over ten years.
(E) Includes intangible asset write-off, restructuring charge, and legal
settlement costs, net of credits.
----------------------------------------------------------------------------
NVIDIA CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP OUTLOOK
Q1 FY2015
Outlook
-------------
GAAP gross margin 54.2%
Impact of stock-based compensation 0.3%
-------------
Non-GAAP gross margin 54.5%
=============
Q1 FY2015
Outlook
-------------
(In millions)
GAAP operating expenses $ 454
Stock-based compensation expense and acquisition-related
costs (41)
-------------
Non-GAAP operating expenses $ 413
=============
