Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

                               

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Investors and others should note that we announce material financial information to our investors using our investor relations website, press releases, SEC filings and public conference calls and webcasts. We also use the following social media channels as a means of disclosing information about the company, our products, our planned financial and other announcements and attendance at upcoming investor and industry conferences, and other matters and for complying with our disclosure obligations under Regulation FD:

In addition, investors and others can use the Pulse news reader to subscribe to the NVIDIA Daily News feed and can view NVIDIA videos on YouTube.

The information we post through these social media channels may be deemed material. Accordingly, investors should monitor these accounts and the blog, in addition to following our press releases, SEC filings and public conference calls and webcasts. This list may be updated from time to time. The information we post through these channels is not a part of this quarterly report on Form 10-Q. These channels may be updated from time to time on NVIDIA's investor relations website.

The accompanying unaudited condensed consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP, for interim financial information and with the instructions to Form 10-Q and Article 10 of Securities and Exchange Commission, or SEC, Regulation S-X. The January 25, 2015 consolidated balance sheet was derived from our audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended January 25, 2015, as filed with the SEC, but does not include all disclosures required by U.S. GAAP. In the opinion of management, all adjustments, consisting only of normal recurring adjustments except as otherwise noted, considered necessary for a fair statement of results of operations and financial position have been included. The results for the interim periods presented are not necessarily indicative of the results expected for any future period. The following information should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended January 26, 2014.25, 2015. 

Our condensed consolidated financial statements include the accounts of NVIDIA Corporation and itsour wholly-owned subsidiaries. All material inter-company balances and transactions have been eliminated in consolidation.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. On an on-going basis, we evaluate our estimates, including those related to revenue recognition, cash equivalents and marketable securities, accounts receivable, inventories, income taxes, goodwill, stock-based compensation, warranty liabilities, litigation, investigation and settlement costs, restructuring and other charges, and other contingencies. These estimates are based on historical facts and various other assumptions that we believe are reasonable.

In August 2014,July 2015, the Financial Accounting Standards Board, or FASB, issued newan accounting standards update for the subsequent measurement of inventory. The amended guidance relatedrequires entities to our responsibility to evaluate whether theremeasure inventory at the lower of cost or net realizable value. Net realizable value is substantial doubt about our ability to continue ongoingthe estimated selling price in the ordinary course of business, operationsless reasonably predictable costs of completion, disposal and to provide relevant footnote disclosures.transportation. The new guidancerequirement would replace the current lower of cost or market evaluation. The update is effective for us beginning in our first quarter of fiscal years, andyear 2018, with early adoption permitted to be applied prospectively. We are currently evaluating the impact of this accounting guidance on our consolidated financial statements.

In April 2015, the FASB issued an accounting standards update that requires an entity to present debt issuance costs on the balance sheet as a direct deduction from the related debt liability as opposed to an asset. Amortization of the costs will continue to be reported as interest expense. The update is effective for annual reporting periods (including interim reporting periods within those fiscal years,periods) beginning after December 15, 2016.2015. Early adoption is permitted.permitted for financial statements that have not been previously issued, and the new guidance would be applied retrospectively to all prior periods presented. The update will be effective for us beginning in our first quarter of fiscal year 2017. The adoption of this accounting guidance is not currently expected to have a material impact on our consolidated financial statements.

In June 2014,April 2015, the FASB issued new guidance related to stock-based compensation. The new guidance requiresan accounting standards update that provides clarification on whether a performance target that affects vesting, and that couldcloud computing arrangement includes a software license. If a software license is included, the customer should account for the license consistent with its accounting for other software licenses. If a software license is not included, the arrangement should be achieved after the requisite service period is rendered, be treatedaccounted for as a performance condition.service contract. The new guidanceupdate is effective for interimreporting periods within and those fiscal years, beginning after December 15, 2015.2015, with early adoption permitted. Companies can elect to adopt the standard update prospectively or retrospectively to arrangements entered into, or materially modified, after the effective date. The update will be effective for us beginning in our first quarter of fiscal year 2017. We currently do not have awards with a performance target where the employee would be eligible to vest in the award regardless of whether the employee is rendering service on the date the performance target is achieved. Therefore, we believe,expect the adoption of this new accounting guidance will not haveto result in an impact onincrease in software license assets and related depreciation expense, and a corresponding decrease in prepaid service contract assets and related service contract expense in our consolidated financial statements.

Our stock-based compensation expense is associated with stock options, restricted stock units, or RSUs, performance stock units that are based on our corporate financial performance targets, or PSUs, performance stock units that are based on market conditions, or market-based PSUs, and our employee stock purchase plan, or ESPP.

We estimate the fair value of employee stock options on the date of grant using a binomial model and recognize the expense using a straight-line attribution method over the requisite employee service period. We use the closing trading price of our common stock on the date of grant, minus a dividend yield discount, as the fair value of awards of RSUs and PSUs, and we use a Monte Carlo simulation on the date of grant to estimate the fair value of market-based PSUs. TheWe use a Black-Scholes valuation at the commencement of an offering period in March and September of each year to estimate the fair value of the shares to be issued under our ESPP.

Stock-based compensation expense for thestock options, RSUs and market-based PSUs is recognized using a straight-line attribution method over the requisite employee service period, while compensation expense for PSUs and ESPP is recognized using an accelerated amortization model. We estimate the fair value of shares to be issued under our ESPP using the Black-Scholes model at the commencement of an offering period in March and September of each year.  Stock-based compensation for our employee stock purchase plan is expensed using an accelerated amortization model.

Our condensed consolidated statements of income include stock-based compensation expense, net of amounts capitalized as inventory, as follows:

The following is a reconciliation of the numerator and denominator of the basic and diluted net income per share computations for the periods presented:

We recognized income tax expensebenefit of $36.1 million and $89.5$1 million for the three months ended October 25, 2015 and income tax expense of $83 million, $36 million and $90 million for the nine months ended October 25, 2015 and three and nine months ended October 26, 2014, respectively, and $22.8 million and $48.3 millionrespectively. Income tax benefit as a percentage of income before tax was 0.5% for the three and nine months ended October 27, 2013, respectively. Income25, 2015 and income tax expense as a percentage of income before taxes, or our effective tax rate, was 16.9%, 17.3% and 17.0% for the nine months ended October 25, 2015 and three and nine months ended October 26, 2014, respectively, and 16.1% and 14.2%respectively.

Our income tax benefit for the three andmonths ended October 25, 2015 included a tax benefit of $49 million from a tax reserve release related to our Icera modem operations upon the expiration of applicable statutes of limitations. In addition to this benefit, our income tax expense for the nine months ended October 27, 2013, respectively.25, 2015 also included a $27 million charge for the write-down of a deferred tax asset related to our Icera modem operations, partially offset by the tax benefit related to restructuring and other charges.

The increasedecrease in our effective tax rate in fiscal yearthe three months ended October 25, 2015 as compared to the same period in the prior fiscal year was primarily relateddue to the favorable impact of the benefit from the expiration of the applicable statutes of limitations, partially offset by an increase in the amount of earnings subject to U.S. federal researchtax.

Our effective tax credit on December 31, 2013 which resulted in no tax benefit inrate for the nine months ended October 26, 2014.

Our effective tax rate for the first nine months of fiscal year 2015ended October 26, 2014 of 17.0% differs from our annual projected effective tax rate for the first nine months of fiscal year 2015 of 18.5% due to discrete events that occurred in the first nine months of fiscal year 2015 primarily attributable to the tax benefits recognized upon the expiration of statutes of limitations in certain non-U.S. jurisdictions.     

For the nine months ended October 26, 2014,25, 2015, there have been no material changes to our tax years that remain subject to examination by major tax jurisdictions. Additionally, there have been no other material changes to our unrecognized tax benefits and any related interest or penalties since the fiscal year ended January 26, 2014,25, 2015, other than the aforementioned recognition of tax benefits upon the expiration of statuteapplicable statutes of limitation in certain non-U.S. jurisdictionslimitations in the nine months ended October 26, 2014.25, 2015.

While we believe that we have adequately provided for all uncertain tax positions, or tax positions where we believe it is believed not more-likely-than-not that the position will be sustained upon examination, amounts asserted by tax authorities could be greater or less than our accrued position. Accordingly, our provisions on federal, state and foreign tax related matters to be recorded in the future may change as revised estimates are made or the underlying matters are settled or otherwise resolved with the respective tax authorities. As of October 26, 2014,25, 2015, we do not believe that our estimates, as otherwise provided for, on such tax positions will significantly increase or decrease within the next twelve months.

All of our cash equivalents and marketable securities are classified as “available-for-sale” securities. These securities are reported at fair value, with the related unrealized gains and losses included in accumulated other comprehensive income, a component of stockholders’shareholders’ equity, net of tax, and net realized gains and losses recorded in other income, net, on the Condensed Consolidated Statements of Income.

The following table provides the breakdown of the investments with unrealized losses at October 26, 2014:25, 2015: 

 

Net realized gains were not significant for the three months ended October 25, 2015 and losses for the three and nine months ended October 26, 2014, and for the three months ended October 27, 2013, were not significant.2014. Net realized gains were $3 million for the nine months ended October 27, 2013 were $1.8 million.25, 2015.

The components of our amortizable intangible assets are as follows:

Certain balance sheet components are as follows:

U.S. GAAP requires that upon issuance of a guarantee, the guarantor must recognize a liability for the fair value of the obligation it assumes under that guarantee. In addition, U.S. GAAP requires disclosures about the guarantees that an entity has issued, including a tabular reconciliation of the changes of the entity’s product warranty liabilities.

In connection with certain agreements that we have executedentered into in the past, we have at times provided indemnities to cover the indemnified party for matters such as tax, product, and employee liabilities. We have also on occasion included intellectual property indemnification provisions in our technology related agreements with third parties. Maximum potential future payments cannot be estimated because many of these agreements do not have a maximum stated liability. As such, we have not recorded any liability in our Condensed Consolidated Financial Statements for such indemnifications. 

The following table presents the carrying amounts of the liability and equity components: