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For the third quarter of fiscal 2009, revenue was $897.7 million compared to $1.12 billion for the third quarter of fiscal 2008, a decrease of 20 percent. For the nine months ended October 26, 2008, revenue increased to $2.94 billion compared to $2.90 billion for the nine months ended October 28, 2007, an increase of 2 percent.
During the third quarter of fiscal 2009, NVIDIA recorded an $8.3 million charge against operating expenses related to restructuring costs in connection with its workforce reduction. These pre-tax charges are comprised of severance and related expenses.
NVIDIA's results for the third quarter of fiscal 2009, computed in accordance with U.S. generally accepted accounting principles (GAAP), included net income of $61.7 million, or $0.11 per diluted share. Non-GAAP net income for the third quarter of fiscal 2009, which excludes stock-based compensation charges, a non-recurring charge against cost of revenue related to a royalty dispute, a restructuring charge against operating expenses, and the associated tax impact, was $111.4 million, or $0.20 per diluted share.
GAAP net income for the nine months ended October 26, 2008 was $117.6 million, or $0.20 per diluted share, compared to $540.7 million, or $0.89 per diluted share, for the nine months ended October 28, 2007. Non-GAAP net income for the nine months ended October 26, 2008, which excludes stock-based compensation charges, a non-recurring charge against cost of revenue related to a royalty dispute, a non-recurring warranty charge against cost of revenue, a restructuring charge against operating expenses, and the associated tax impact was $397.7 million, or $0.68 per diluted share, compared to $626.7 million, or $1.06 per diluted share, for the nine months ended October 28, 2007.
"We made good progress on multiple fronts during the quarter," said Jen-Hsun Huang, president and CEO of NVIDIA. "Improving gross margin while managing operating expenses enabled us to significantly improve our operating fundamentals. We transitioned our performance segment GPUs to 55 nanometers and are now poised to recapture lost share. We entered the fastest growing segment of the PC market with our first notebook chipset for Intel processors, and delivered on several exciting new growth initiatives -- 3-way SLI for the Intel Core i7 processor platform, Quadro CX for Adobe CS4 creative professionals and the Tesla supercomputing processor."
Third Quarter Fiscal 2009 and Recent Highlights:
-- NVIDIA introduced the GeForce 9400 and 9300 motherboard GPUs for Intel desktop PCs. The new motherboard GPUs set a new price/performance standard for integrated graphics by combining the power of three different chips into one highly compact and efficient GPU.
-- Together with Apple, NVIDIA launched the new GeForce 9400M motherboard GPU for their new lineup of Mac notebooks. The GeForce 9400M is the industry's first processor to integrate three complex chips -- the northbridge, the IO/network processor, and GeForce GPU into a single chip, and as a result, delivers up to a 5X performance increase over Intel integrated graphics in one-half the size. The MacBook and MacBook Air come standard with the 9400M. The MacBook Pro comes standard with the hybrid combination of two GeForce GPUs -- the 9400M is used for maximum battery life and a GeForce 9600M GT for high performance mode.
-- NVIDIA announced the NVIDIA Quadro CX, the industry's first accelerator for Adobe's Creative Suite 4 content creation software. Adobe CS4 software has now added optimization to take advantage of GPU technology. NVIDIA specifically designed and optimized the Quadro CX to enhance the performance of the CS4 product line and to give creative professionals the ultimate performance and productivity.
-- For design and creative professionals, NVIDIA introduced five new Quadro FX notebook GPUs that span from ultra-high performance to ultra mobility. NVIDIA also delivered the first desk side visual supercomputer with the Quadro Plex D Series. At this year's SIGGRAPH 2008, NVIDIA set a new milestone in computer graphics by demonstrating the world's first real-time fully-interactive ray tracer on the new Quadro Plex D2 system.
Conference Call and Web Cast Information
NVIDIA will conduct a conference call with analysts and investors to discuss its third quarter fiscal 2009 financial results and current financial prospects today at 2:00 P.M. Pacific Time (5:00 P.M. Eastern Time). To listen to the call, please dial (212) 231-2901. A live Web cast (listen-only mode) of the conference call will be held at the NVIDIA investor relations Web site http://www.nvidia.com/ir and at http;// www.streetevents.com. The Web cast will be recorded and available for replay until the Company's conference call to discuss its financial results for its fourth quarter fiscal 2009.
Non-GAAP Measures
To supplement the Company's Condensed Consolidated Statements of Income presented in accordance with GAAP, we use non-GAAP measures of certain components of financial performance. These non-GAAP measures include non-GAAP gross profit, non-GAAP net income, and non-GAAP diluted net income per share. In order for our investors to be better able to compare our current results with those of previous periods, we have shown a reconciliation of GAAP to non-GAAP financial measures. These reconciliations adjust the related GAAP financial measures to exclude stock-based compensation, a non-recurring charge against cost of revenue related to a royalty dispute, a non-recurring warranty charge against cost of revenue, a restructuring charge against operating expenses, and the associated tax impact, where applicable. We believe the presentation of our non-GAAP financial measures enhances the user's overall understanding of our historical financial performance. The presentation of our non-GAAP financial measures is not meant to be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP, and our non-GAAP measures may be different from non-GAAP measures used by other companies.
About NVIDIA
NVIDIA is the world leader in visual computing technologies and the inventor of the GPU, a high-performance processor which generates breathtaking, interactive graphics on workstations, personal computers, game consoles, and mobile devices. NVIDIA serves the entertainment and consumer market with its GeForce(R) products, the professional design and visualization market with its Quadro(R) products, and the high-performance computing market with its Tesla(TM) products. NVIDIA is headquartered in Santa Clara, California and has offices throughout Asia, Europe, and the Americas. For more information, visit http://www.nvidia.com.
Certain statements in this press release including, but not limited to, statements as to: our growth opportunities; our positioning to recapture lost share; the performance of the NVIDIA GeForce 9300, 9400 and 9400M motherboard GPUs; and the impact of Quadro CX on Adobe's Creative Suite 4 software are forward-looking statements that are subject to risks and uncertainties that could cause results to be materially different than expectations. Important factors that could cause actual results to differ materially include: development of faster or more efficient technology; the impact of technological development and competition; design, manufacturing or software defects; changes in consumer preferences or demands; changes in industry standards and interfaces; unexpected loss of performance of our products or technologies when integrated into systems; as well as other factors detailed from time to time in the reports NVIDIA files with the Securities and Exchange Commission, or SEC, including our Form 10-Q for the fiscal period ended July 27, 2008. Copies of reports filed with the SEC are posted on our website and are available from NVIDIA without charge. These forward-looking statements are not guarantees of future performance and speak only as of the date hereof, and, except as required by law, NVIDIA disclaims any obligation to update these forward-looking statements to reflect future events or circumstances.
Copyright (C) 2008 NVIDIA Corporation. All rights reserved. NVIDIA,
GeForce, Quadro, and Tesla are registered trademarks and/or trademarks of
NVIDIA Corporation in the United States and other countries. All other company
and/or product names may be trade names, trademarks, and/or registered
trademarks of the respective owners with which they are associated. Features,
pricing, availability, and specifications are subject to change without
notice.
NVIDIA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
October 26, October 28, October 26, October 28,
2008 2007 2008 2007
Revenue $897,655 $1,115,597 $2,943,719 $2,895,130
Cost of revenue 529,812 600,044 1,911,116 1,575,447
Gross profit 367,843 515,553 1,032,603 1,319,683
Operating expenses:
Research and development 212,360 179,529 644,100 495,802
Sales, general and
administrative 90,349 88,183 275,782 250,034
Restructuring charges 8,338 - 8,338 -
Total operating expenses 311,047 267,712 928,220 745,836
Operating income 56,796 247,841 104,383 573,847
Interest and other income,
net 4,207 18,958 23,038 47,592
Income before income tax
expense 61,003 266,799 127,421 621,439
Income tax expense (benefit)
(A) (745) 31,138 9,797 80,787
Net income $61,748 $235,661 $117,624 $540,652
Basic net income per share $0.11 $0.42 $0.21 $0.99
Diluted net income per share $0.11 $0.38 $0.20 $0.89
Shares used in basic per
share computation 543,807 554,966 551,623 547,796
Shares used in diluted per
share computation 564,536 612,985 590,490 605,733
(A) The income tax expense (benefit) rate for the three and nine months
ended October 26, 2008 was (1.2)% and 7.7%, respectively. The income
tax expense rate for the three and nine months ended October 28, 2007
was 11.7% and 13.0%, respectively.
NVIDIA CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
October 26, October 28, October 26, October 28,
2008 2007 2008 2007
GAAP gross profit $367,843 $515,553 $1,032,603 $1,319,683
Stock-based compensation
expense included in cost
of revenue (A) 3,558 2,566 10,027 8,077
Non-recurring charge
related to a royalty
dispute 4,500 - 4,500 -
Warranty charge against
cost of revenue arising
from a weak die/packaging
material set - - 195,954 -
Non-GAAP gross profit $375,901 $518,119 $1,243,084 $1,327,760
GAAP net income $61,748 $235,661 $117,624 $540,652
Stock-based compensation
expense (A) 38,384 32,003 120,873 98,868
Restructuring charges 8,338 - 8,338 -
Non-recurring charge
related to a royalty
dispute 4,500 - 4,500 -
Warranty charge against
cost of revenue arising
from a weak die/packaging
material set - - 195,954 -
Income tax impact of non-
GAAP adjustments (1,540) (3,491) (49,624) (12,853)
Non-GAAP net income $111,430 $264,173 $397,665 $626,667
Diluted net income per share
GAAP $0.11 $0.38 $0.20 $0.89
Non-GAAP $0.20 $0.44 $0.68 $1.06
Shares used in GAAP diluted
net income per share
computation 564,536 612,985 590,490 605,733
Cumulative impact of non-
GAAP adjustments (B) (3,374) (17,927) (9,058) (16,716)
Shares used in non-GAAP
diluted net income per
share computation 561,162 595,058 581,432 589,017
(A) Results include stock-
based compensation expense
as follows (in thousands):
Three Months Ended Nine Months Ended
October 26, October 28, October 26, October 28,
2008 2007 2008 2007
Cost of revenue $3,558 $2,566 $10,027 $8,077
Research and development $22,740 $18,650 $71,500 $57,471
Sales, general and
administrative $12,086 $10,787 $39,346 $33,320
(B) Reflects an adjustment to the diluted outstanding shares calculated
under SFAS 123R to conform to diluted outstanding shares calculated
under prior accounting standards (APB 25).
NVIDIA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
October 26, January 27,
2008 2008
ASSETS
Current assets:
Cash, cash equivalents and
marketable securities $1,304,888 $1,809,478
Accounts receivable, net 607,834 666,494
Inventories 523,988 358,521
Prepaid expenses and other current assets 43,389 54,336
Total current assets 2,480,099 2,888,829
Property and equipment, net 609,674 359,808
Goodwill 366,286 354,057
Intangible assets, net 155,646 106,926
Deposits and other assets 37,193 38,051
Total assets $3,648,898 $3,747,671
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $387,252 $492,099
Accrued liabilities 617,213 475,062
Total current liabilities 1,004,465 967,161
Other long-term liabilities 157,358 162,598
Stockholders' equity 2,487,075 2,617,912
Total liabilities and
stockholders' equity $3,648,898 $3,747,671
Web site: http://www.nvidia.com/