NVIDIA Announces Financial Results for the Fourth Quarter and Fiscal 2016

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  • Launched NVIDIA DRIVE™ PX 2, a powerful engine for in-vehicle artificial intelligence.

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CFO Commentary
Commentary on the quarter by Colette Kress, NVIDIA's executive vice president and chief financial officer, is available at http://investor.nvidia.com/.

Conference Call and Webcast Information

NVIDIA will conduct a conference call with analysts and investors to discuss its fourth quarter and fiscal 2016 financial results and current financial prospects today at 2 p.m. Pacific Time (5 p.m. Eastern Time). To listen to the conference call, dial (212) 231-2927; no password is required. A live webcast (listen-only mode) of the conference call will be accessible at NVIDIA's investor relations website, http://investor.nvidia.com, and at www.streetevents.com. The webcast will be recorded and available for replay until the company's conference call to discuss its financial results for its first quarter of fiscal 2017.

Non-GAAP Measures

To supplement NVIDIA's Condensed Consolidated Statements of Income 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 operating income, non-GAAP other income (expense), net, non-GAAP income tax expense, non-GAAP net income, non-GAAP net income, or earnings, per diluted share, non-GAAP diluted shares, per diluted share impact of restructuring and other charges, 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, product warranty charge, acquisition-related costs, restructuring and other charges, gains and losses from non-affiliated investments, interest expense related to amortization of debt discount, and the associated tax impact of these items, where applicable. Weighted average shares used in the non-GAAP diluted net income per share computation includes the anti-dilution impact of the company's Note Hedge. Per diluted share impact of restructuring and other charges is calculated as restructuring and other charges, net of income tax, divided by GAAP diluted shares. 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 its 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 millions, except per share data)                    
                                (Unaudited)                                 
                                                                            
                                                                            
                               Three Months Ended      Twelve Months Ended  
                             ----------------------  ---------------------- 
                               January     January     January     January  
                                 31,         25,         31,         25,    
                                2016        2015        2016        2015    
                             ----------  ----------  ----------  ---------- 
                                                                            
Revenue                      $    1,401  $    1,251  $    5,010  $    4,682 
Cost of revenue                     610         552       2,199          2,083  
                                                          ----------    ----------    ----------    ----------  
Gross  profit                                                791                  699              2,811              2,599  
Operating  expenses                                                                                                                    
    Research  and  development                    344                  348              1,331              1,360  
    Sales,  general  and                                                                                                                
      administrative                                      161                  120                  602                  480  
    Restructuring  and  other                                                                                                      
      charges                                                      34                      -                  131                      -  
                                                          ----------    ----------    ----------    ----------  
        Total  operating  expenses                539                  468              2,064              1,840  
                                                          ----------    ----------    ----------    ----------  
Operating  income                                        252                  231                  747                  759  
    Interest  income                                        11                      8                    39                    28  
    Interest  expense                                    (12)                (12)                (47)                (46)
    Other  income,  net                                      2                      1                      4                    14  
                                                          ----------    ----------    ----------    ----------  
Income  before  income  tax                                                                                                        
  expense                                                        253                  228                  743                  755  
Income  tax  expense                                      46                    35                  129                  124  
                                                          ----------    ----------    ----------    ----------  
Net  income                                      $            207    $            193    $            614    $            631  
                                                          ==========    ==========    ==========    ==========  
                                                                                                                                                        
Net  income  per  share:                                                                                                              
    Basic                                            $          0.38    $          0.35    $          1.13    $          1.14  
                                                          ==========    ==========    ==========    ==========  
    Diluted                                        $          0.35    $          0.35    $          1.08    $          1.12  
                                                          ==========    ==========    ==========    ==========  
                                                                                                                                                        
Weighted  average  shares  used                                                                                                
  in  per  share  computation:                                                                                                    
    Basic                                                          539                  544                  543                  552  
    Diluted                                                      593                  557                  569                  563  
                                                                                                                                                        
                                                                                                                                                        
                                                          NVIDIA  CORPORATION                                                          
                                        CONDENSED  CONSOLIDATED  BALANCE  SHEETS                                      
                                                                (In  millions)                                                              
                                                                  (Unaudited)                                                                
                                                                                                                                                        
                                                                                                                                                        
                                                                                                  January  31,        January  25,  
                                                                                                        2016                      2015          
                                                                                              --------------  --------------
ASSETS                                                                                                                                            
                                                                                                                                                        
Current  assets:                                                                                                                          
    Cash,  cash  equivalents  and  marketable                                                                          
      securities                                                                    $                5,037  $                4,623
    Accounts  receivable,  net                                                                505                        474
    Inventories                                                                                          418                        483
    Prepaid  expenses  and  other  current  assets                                93                        133
                                                                                              --------------  --------------
        Total  current  assets                                                                6,053                    5,713
                                                                                                                                                        
Property  and  equipment,  net                                                              466                        557
Goodwill                                                                                                    618                        618
Intangible  assets,  net                                                                        166                        222
Other  assets                                                                                              67                          91
                                                                                              --------------  --------------
        Total  assets                                                              $                7,370  $                7,201
                                                                                              ==============  ==============
                                                                                                                                                        
LIABILITIES,  CONVERTIBLE  DEBT  CONVERSION  OBLIGATION  AND  SHAREHOLDERS'  EQUITY
                                                                                                                                                        
Current  liabilities:                                                                                                                
    Accounts  payable                                                          $                    296  $                    293
    Accrued  and  other  current  liabilities                                      642                        603
    Convertible  short-term  debt                                                      1,413                            -
                                                                                              --------------  --------------
        Total  current  liabilities                                                      2,351                        896
                                                                                                                                                        
Convertible  long-term  debt                                                                    -                    1,384
Other  long-term  liabilities                                                              453                        489
Capital  lease  obligations,  long-term                                              10                          14
                                                                                              --------------  --------------
        Total  liabilities                                                                      2,814                    2,783
                                                                                                                                                        
Convertible  debt  conversion  obligation                                          87                            -
                                                                                                                                                        
Shareholders'  equity                                                                        4,469                    4,418
                                                                                              --------------  --------------
        Total  liabilities,  convertible  debt                                                                          
          conversion  obligation  and  shareholders'                                                                
          equity                                                                        $                7,370  $                7,201
                                                                                              ==============  ==============
                                                                                                                                                        
                                                                                                                                                        
                                                          NVIDIA  CORPORATION                                                          
                      RECONCILIATION  OF  GAAP  TO  NON-GAAP  FINANCIAL  MEASURES                        
                                        (In  millions,  except  per  share  data)                                        
                                                                (Unaudited)                                                                  
                                                                                                                                                        
                                                                Three  Months  Ended            Twelve  Months  Ended  
                                                    -----------------------------  -------------------  
                                                      Jan.  31,    Oct.  25,    Jan.  25,    Jan.  31,    Jan.  25,  
                                                          2016            2015            2015            2016            2015      
                                                    ---------  ---------  ---------  ---------  ---------  
                                                                                                                                                        
GAAP  gross  profit                  $          791  $          734  $          699  $      2,811  $      2,599  
    GAAP  gross  margin                        56.5%          56.3%          55.9%          56.1%          55.5%
    Stock-based                                                                                                                              
      compensation  expense                                                                                                          
      (A)                                                        5                  4                  4                15                12  
    Product  warranty  charge                                                                                                      
      (B)                                                        5                  -                  -                20                  -  
                                                    ---------  ---------  ---------  ---------  ---------  
Non-GAAP  gross  profit          $          801  $          738  $          703  $      2,846  $      2,611  
                                                    =========  =========  =========  =========  =========  
    Non-GAAP  gross  margin                57.2%          56.5%          56.2%          56.8%          55.8%
                                                                                                                                                        
GAAP  operating  expenses      $          539  $          489  $          468  $      2,064  $      1,840  
    Stock-based                                                                                                                              
      compensation  expense                                                                                                          
      (A)                                                    (56)            (47)            (39)          (190)          (146)
    Acquisition-related                                                                                                              
      costs  ©                                          (4)              (4)              (9)            (22)            (37)
    Restructuring  and  other                                                                                                      
      charges                                            (34)              (8)                -            (131)                -  
                                                    ---------  ---------  ---------  ---------  ---------  
Non-GAAP  operating                                                                                                                    
  expenses                                  $          445  $          430  $          420  $      1,721  $      1,657  
                                                    =========  =========  =========  =========  =========  
                                                                                                                                                        
GAAP  operating  income          $          252  $          245  $          231  $          747  $          759  
    Total  impact  of  non-                                                                                                            
      GAAP  adjustments  to                                                                                                            
      operating  income                          104                63                52              378              195  
                                                    ---------  ---------  ---------  ---------  ---------  
Non-GAAP  operating  income  $          356  $          308  $          283  $      1,125  $          954  
                                                    =========  =========  =========  =========  =========  
                                                                                                                                                        
GAAP  other  income                                                                                                                      
  (expense),  net                      $              1  $              -  $            (3)$            (4)$            (4)
    Gains  from  non-                                                                                                                      
      affiliated  investments                  -                (4)                -                (5)            (15)
    Interest  expense                                                                                                                    
      related  to                                                                                                                              
      amortization  of  debt                                                                                                          
      discount                                              7                  7                  7                29                28  
                                                    ---------  ---------  ---------  ---------  ---------  
Non-GAAP  other  income,                                                                                                            
  net                                            $              8  $              3  $              4  $            20  $              9  
                                                    =========  =========  =========  =========  =========  
                                                                                                                                                        
GAAP  net  income                      $          207  $          246  $          193  $          614  $          631  
    Total  pre-tax  impact  of                                                                                                      
      non-GAAP  adjustments                  111                66                59              402              208  
    Income  tax  impact  of                                                                                                            
      non-GAAP  adjustments                  (21)            (57)            (11)            (87)            (38)
                                                    ---------  ---------  ---------  ---------  ---------  
Non-GAAP  net  income              $          297  $          255  $          241  $          929  $          801  
                                                    =========  =========  =========  =========  =========  
                                                                                                                                                        
Diluted  net  income  per                                                                                                            
  share                                                                                                                                            
    GAAP                                        $        0.35  $        0.44  $        0.35  $        1.08  $        1.12  
                                                    =========  =========  =========  =========  =========  
    Non-GAAP                                $        0.52  $        0.46  $        0.43  $        1.67  $        1.42  
                                                    =========  =========  =========  =========  =========  
                                                                                                                                                        
Weighted  average  shares                                                                                                          
  used  in  diluted  net                                                                                                                
  income  per  share                                                                                                                      
  computation                                                                                                                                
    GAAP                                                    593              565              557              569              563  
    Anti-dilution  impact                                                                                                            
      from  note  hedge  (D)                    (26)            (10)                -              (13)                -  
                                                    ---------  ---------  ---------  ---------  ---------  
    Non-GAAP                                            567              555              557              556              563  
                                                    =========  =========  =========  =========  =========  
                                                                                                                                                        
Metrics:                                                                                                                                        
    Restructuring  and  other                                                                                                      
      charges                                $            34  $              8  $              -  $          131  $              -  
        Income  tax  impact  of                                                                                                        
          restructuring  and                                                                                                            
          other  charges                              (9)            (50)                -              (45)                -  
                                                    ---------  ---------  ---------  ---------  ---------  
    Restructuring  and  other                                                                                                      
      charges,  net  of  income                                                                                                      
      tax                                        $            25  $          (42)$              -  $            86  $              -  
    GAAP  diluted  shares                      593              565                  -              569                  -  
                                                    ---------  ---------  ---------  ---------  ---------  
    Per  diluted  share                                                                                                                  
      impact  of                                                                                                                                
      restructuring  and                                                                                                                
      other  charges                    $        0.04  $      (0.07)$              -  $        0.15  $              -  
                                                    =========  =========  =========  =========  =========  
                                                                                                                                                        
    GAAP  net  cash  provided                                                                                                        
      by  operating                                                                                                                          
      activities                          $          510  $          255  $          443  $      1,175  $          906  
    Purchase  of  property                                                                                                            
      and  equipment  and                                                                                                                
      intangible  assets                        (15)            (16)            (31)            (86)          (123)
                                                    ---------  ---------  ---------  ---------  ---------  
    Free  cash  flow                    $          495  $          239  $          412  $      1,089  $          783  
                                                    =========  =========  =========  =========  =========  
                                                                                                                                                        
----------------------------------------------------------------------------
(A)  Excludes  stock-based                                                                                                        
  compensation  as  follows:              Three  Months  Ended            Twelve  Months  Ended  
                                                    -----------------------------  -------------------  
                                                      Jan.  31,    Oct.  25,    Jan.  25,    Jan.  31,    Jan.  25,  
                                                          2016            2015            2015            2016            2015      
                                                    ---------  ---------  ---------  ---------  ---------  
    Cost  of  revenue                  $              5  $              4  $              4  $            15  $            12  
    Research  and                                                                                                                            
      development                        $            33  $            28  $            23  $          115  $            88  
    Sales,  general  and                                                                                                                
      administrative                  $            22  $            19  $            15  $            74  $            57  
                                                                                                                                                        
(B)  Represents  warranty  charge  associated  with  a  product  recall.                        
                                                                                                                                                        
©  Consists  of  amortization  of  acquisition-related  intangible  assets,            
  transaction  costs,  compensation  charges,  and  other  credits  related  to            
  acquisitions.                                                                                                                            
                                                                                                                                                        
(D)  Represents  the  number  of  shares  that  would  be  delivered  upon  conversion  
  of  the  currently  outstanding  1.00%  Convertible  Senior  Notes  Due  2018.            
  Under  U.S.  GAAP,  shares  delivered  in  hedge  transactions  are  not  considered  
  offsetting  shares  in  the  fully  diluted  share  calculation  until  actually        
  delivered.                                                                                                                                  
----------------------------------------------------------------------------
                                                                                                                                                        
                                                                                                                                                        
                                                          NVIDIA  CORPORATION                                                          
                                  RECONCILIATION  OF  GAAP  TO  NON-GAAP  OUTLOOK                                  
                                                                                                                                                        
                                                                                                                                                        
                                                                                                                  Q1  FY2017  Outlook    
                                                                                                                -------------------  
                                                                                                                                                        
GAAP  gross  margin                                                                                                            57.2%
    Impact  of  stock-based  compensation                                                                        0.3%
                                                                                                                -------------------  
Non-GAAP  gross  margin                                                                                                    57.5%
                                                                                                                ===================  
                                                                                                                                                        
                                                                                                                                                        
                                                                                                                  Q1  FY2017  Outlook    
                                                                                                                -------------------  
                                                                                                                      (In  millions)        
                                                                                                                                                        
GAAP  operating  expenses                                                                  $                              500  
    Stock-based  compensation  expense  and  acquisition-                                                  
      related  costs                                                                                                                (55)
                                                                                                                -------------------  
Non-GAAP  operating  expenses                                                          $                              445  
                                                                                                                ===================  
                                                                                                                                                        
 

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