NVIDIA (NVDA) 8-K Results of Operations and Financial Condition

Exhibit 99.1

NVIDIA REPORTS RECORD RESULTS FOR

FOURTH QUARTER AND FISCAL YEAR 2007

Company Achieves Record Annual Revenue;

Annual Net Income Increases 49 Percent Year-Over-Year

SANTA CLARA, CA—FEBRUARY 13, 2007—NVIDIA Corporation (Nasdaq: NVDA) today reported financial results for the fourth quarter of fiscal 2007 and the fiscal year ended January 28, 2007.

For the fourth quarter of fiscal 2007, revenue increased to a record $878.9 million, compared to $633.6 million for the fourth quarter of fiscal 2006, an increase of 39 percent.  Net income computed in accordance with U.S. generally accepted accounting principles (GAAP) for the fourth quarter of fiscal 2007 was $163.5 million, or $0.41 per diluted share, compared to net income of $97.4 million, or $0.26 per diluted share, for the fourth quarter of fiscal 2006, a net income increase of 68 percent.

Non-GAAP net income for the fourth quarter of fiscal 2007, which excludes a charge for in-process research and development related to our acquisition of Portal Player, Inc., plus SFAS 123R and other stock-based compensation charges and the associated payroll tax impact, was $205.6 million, or $0.53 per diluted share.

Revenue for the fiscal year ended January 28, 2007 was a record $3.07 billion, compared to revenue of $2.38 billion for the fiscal year ended January 29, 2006, an increase of 29 percent. GAAP net income for the fiscal year ended January 28, 2007 was $448.8 million, or $1.15 per diluted share, compared to GAAP net income of $301.2 million, or $0.82 per diluted share, for the fiscal year ended January 29, 2006, a net income increase of 49 percent.

Non-GAAP net income for the fiscal year ended January 28, 2007, which excludes a charge for in-process research and development related to the acquisition of Portal Player, Inc., a one-time charge associated with licensing certain patents, plus SFAS 123R and other stock-based compensation charges and the associated payroll tax impact, was $577.9 million, or $1.50 per diluted share.

“Fiscal 2007 was an outstanding year,” stated Jen-Hsun Huang, president and CEO of NVIDIA. “Our record year is a result of intense focus on building market-defining products and financial performance. We established the number one position in multiple categories - desktop GPUs, notebook GPUs, workstation GPUs, and AMD chipsets. Most importantly, we significantly enhanced our strategic position in the markets we serve.”

“Looking ahead into fiscal 2008, we expect multiple growth drivers - driving deeper into the Intel segment with our branded motherboard GPUs, delivering our first application processor for the handheld market, and launching the ‘GPU Computing’ era with GPUs designed to dramatically accelerate high-performance computing. This is the year the industry ramps three very new applications that are enhanced with our GPUs - Vista, DX10, and HD/Blu-ray DVD. It is exciting that the GPU is becoming an increasingly central part of our computing experience,” added Mr. Huang.

Fourth Quarter Fiscal 2007 Highlights:

·   Non-GAAP gross margin reached a Company record of 44.2 percent, an increase of 130 basis points sequentially from the third quarter of fiscal 2007, and 400 basis points year-over-year. GAAP gross margin was 43.9 percent.

·   NVIDIA extended its leadership share position in the notebook graphics processing unit (GPU) segment to 58 percent share, according to the Mercury Research Fourth Quarter 2006 PC Graphics Report. Notebook GPU revenue grew over 120 percent year-over-year.

·   The NVIDIA nForce® MCP product line achieved record revenue for its tenth consecutive quarter. NVIDIA nForce MCP revenue grew 16 percent sequentially from the third quarter of fiscal 2007 and 89 percent year-over-year.

·   The NVIDIA Quadro® professional product line achieved record revenue with a 24 percent revenue increase from the fourth quarter of fiscal 2006.

·   NVIDIA announced the latest version of its Preface™ Personal Media Display platform, a secondary processor and display subsystem that enables users to access information from their notebook or PC, even when the main system is powered down.

·   The National Academy of Television Arts and Science recognized the Company’s innovation in graphics processor development with a Technology and Engineering Emmy Award at the Consumer Electronics Show (CES) held in January 2007.

·   NVIDIA completed its acquisition of Portal Player, Inc., a leading supplier of semiconductors, firmware, and software for personal media players and secondary display-enabled computers.

NVIDIA will conduct a conference call with analysts and investors to discuss its fourth quarter fiscal 2007 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 (706) 679-0543. A live Web cast (listen-only mode) of the conference call will be held at the NVIDIA investor relations Web site http://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 first quarter fiscal 2008.

Non-GAAP Measures

To supplement the Company’s 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 net income, non-GAAP basic and diluted net income per share, and other non-GAAP line items from the Consolidated Statements of Income, including cost of revenue information, gross profit, gross margin, operating expenses (including research and development, and sales, general and administrative expenses) and income tax expense. In order for our investors to be better able to compare our current results with those of previous periods, we have shown a non-GAAP presentation of our Consolidated Statements of Income as reconciled against the GAAP presentation. Our non-GAAP results adjust our GAAP results to exclude stock-based compensation, in-process R&D related to acquisitions, certain non-recurring charges associated with settling IP matters, and related tax differences. We believe the presentation of our non-GAAP results enhances the user's overall understanding of our historical financial performance. The presentation of our non-GAAP financial results 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 Corporation is the worldwide leader in programmable graphics processor technologies. The Company creates innovative, industry-changing products for computing, consumer electronics, and mobile devices. NVIDIA is headquartered in Santa Clara, CA and has offices throughout Asia, Europe, and the Americas. For more information, visit www.nvidia.com.

Certain statements in this press release including, but not limited to, statements as to: the features, uses, capabilities and performance of NVIDIA GPUs, workstations and chipsets; growth drivers; target markets; delivering our first application process in the handheld market; applications that are enhanced by our products; the role of the GPU; and the use of non-GAAP financial measures 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: delays in ramping new products into production; loss of performance when technologies are integrated; slower than expected growth of a target market; loss of an opportunity in a target market; delays in the launch of new products or technologies; manufacturing or software defects; market or customer acceptance of a competitor's product instead of ours; development of faster or more efficient GPUs; the impact of technological development and competition; our dependence on third-party manufacturers; general industry trends; changes in industry standards and interfaces as well as other factors detailed from time to time in the reports NVIDIA files with the Securities and Exchange Commission including its Form 10-Q for the quarter ended October 29, 2006. 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 © 2007 NVIDIA Corporation.  All rights reserved.  All 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					Twelve Months Ended
	January 28,			January 29,		January 28,		January 29,
	2007			2006 (As restated)		2007		2006 (As restated)
Revenue	$	878,873		$	633,614	$	3,068,771	$	2,375,687
Cost of revenue (A)		493,167			378,812		1,768,322		1,465,654
Gross profit		385,706			254,802		1,300,449		910,033
Operating expenses:
Research and development (A)		162,276			93,346		553,467		357,123
Sales, general and administrative (A)		84,916			50,766		293,530		202,088
Settlement costs		-			-		-		14,158
Total operating expenses		247,192			144,112		846,997		573,369
Operating income		138,514			110,690		453,452		336,664
Interest and other income, net		13,045			4,386		41,028		20,124
Income before income tax expense		151,559			115,076		494,480		356,788
Income tax expense (benefit) (B)		(11,947	)		17,702		46,350		55,612
Income before change in accounting principle		163,506			97,374		448,130		301,176
Cumulative effect of change in accounting principle (C)		-			-		704		-
Net income	$	163,506		$	97,374	$	448,834	$	301,176
Basic net income per share	$	0.46		$	0.28	$	1.27	$	0.89
Diluted net income per share	$	0.41		$	0.26	$	1.15	$	0.82
Shares used in basic per share computation (D)		358,781			342,084		352,404		339,380
Shares used in diluted per share computation (D)		398,994			371,851		391,504		365,704

(A) Results include stock-based compensation expense as follows (in thousands):
	Three Months Ended				Twelve Months Ended
	January 28,		January 29,		January 28,		January 29,
	2007		2006 (As restated)		2007		2006 (As restated)
Cost of revenue	$	2,922	$	138	$	8,200	$	762
Research and development		20,333		911		70,077		5,024
Sales, general and administrative		10,654		602		38,458		(2,354	)
Total stock-based compensation expense	$	33,909	$	1,651	$	116,735	$	3,432
(B) The effective income tax rate for the three and twelve months ended January 28, 2007 was a tax benefit of 8% and tax expense of 9%, respectively. The effective income tax rate for the three and twelve months ended January 29, 2006 was a tax expense of 15% and 16%, respectively.
(C) Reflects the net cumulative impact of estimating forfeitures as a result of the adoption of SFAS 123R.
(D) Reflects a two-for-one stock split effective on April 6, 2006.

NVIDIA CORPORATION
NON-GAAP CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
	Three Months Ended											Three Months Ended
	January 28, 2007											January 29, 2006
	Reported			Non-GAAP Entries					Non-GAAP			Reported		Non-GAAP Entries				Non-GAAP
Revenue	$	878,873		$	-			$	878,873		$	633,614	$	-			$	633,614
Cost of revenue		493,167			(2,922	)	(A)		490,245			378,812		(138	)	(A)		378,674
Gross profit		385,706			2,922				388,628			254,802		138				254,940
Operating expenses:
					(20,333	)	(A)
Research and development		162,276			(13,400	)	(B)		128,543			93,346		(911	)	(A)		92,435
Sales, general and administrative		84,916			(10,654	)	(A)		74,262			50,766		(602	)	(A)		50,164
Total operating expenses		247,192			(44,387	)			202,805			144,112		(1,513	)			142,599
Operating income		138,514			47,309				185,823			110,690		1,651				112,341
Interest and other income, net		13,045			-				13,045			4,386		-				4,386
Income before income tax expense		151,559			47,309				198,868			115,076		1,651				116,727
Income tax expense (benefit)		(11,947	)		5,239		(C)		(6,708	)		17,702		974		(C)		18,676
Net income	$	163,506		$	42,070			$	205,576		$	97,374	$	677			$	98,051
Basic net income per share	$	0.46						$	0.57		$	0.28					$	0.29
Diluted net income per share	$	0.41						$	0.53		$	0.26					$	0.26
Shares used in basic per share computation (D)		358,781			-				358,781			342,084						342,084
Shares used in diluted per share computation (D)		398,994			(7,480	)	(E)		391,514			371,851		393		(E)		372,244

(A) Stock-based compensation expense.

(B) Excludes $13.4 million of In-Process Research & Development related to our acquisition of PortalPlayer.

(C) Income tax expense impact of non-GAAP entries.

(D) Reflects a two-for-one stock split effective on April 6, 2006.

(E) Reflects an adjustment for (7,480) shares and 393 shares for the three months ended January 28, 2007 and January 29, 2006, respectively, to the diluted outstanding shares calculated under SFAS 123R to conform to diluted outstanding shares calculated under prior accounting standards (APB25).

NVIDIA CORPORATION
NON-GAAP CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
	Twelve Months Ended									Twelve Months Ended
	January 28, 2007									January 29, 2006
	Reported		Non-GAAP Entries					Non-GAAP		Reported		Non-GAAP Entries					Non-GAAP
Revenue	$	3,068,771	$	-				$	3,068,771	$	2,375,687	$	-				$	2,375,687
				(8,200	)	(A	)
Cost of revenue		1,768,322		(16,000	)	(B	)		1,744,122		1,465,654		(762	)	(A	)		1,464,892
Gross profit		1,300,449		24,200					1,324,649		910,033		762					910,795
Operating expenses:
				(70,077	)	(A	)
Research and development		553,467		(13,400	)	(C	)		469,990		357,123		(5,024	)	(A	)		352,099
				(38,458	)	(A	)
Sales, general and administrative		293,530		(1,500	)	(B	)		253,572		202,088		2,354		(A	)		204,442
Settlement costs		-		-					-		14,158		-					14,158
Total operating expenses		846,997		(123,435	)				723,562		573,369		(2,670	)				570,699
Operating income		453,452		147,635					601,087		336,664		3,432					340,096
Interest and other income, net		41,028		-					41,028		20,124		-					20,124
Income before income tax expense		494,480		147,635					642,115		356,788		3,432					360,220
Income tax expense		46,350		17,862		(D	)		64,212		55,612		2,023		(D	)		57,635
Income before change in accounting principle		448,130		129,773					577,903		301,176		1,409					302,585
Cumulative effect of change in accounting principle (E)		704		(704	)				-		-		-					-
Net income	$	448,834	$	129,069				$	577,903	$	301,176	$	1,409				$	302,585
Basic net income per share	$	1.27						$	1.64	$	0.89						$	0.89
Diluted net income per share	$	1.15						$	1.50	$	0.82						$	0.83
Shares used in basic per share computation (F)		352,404		-					352,404		339,380		-					339,380
Shares used in diluted per share computation (F)		391,504		(7,168	)	(G	)		384,336		365,704		198		(G	)		365,902

(A) Stock-based compensation expense.

(B) Excludes $17.5 million of patent license fees for past usage.

(C) Excludes $13.4 million of In-Process Research & Development related to our acquisition of PortalPlayer.

(D) Income tax expense impact of non-GAAP entries.

(E) Reflects the net cumulative impact of estimating forfeitures as a result of the adoption of SFAS 123R.

(F) Reflects a two-for-one stock split effective on April 6, 2006.

(G) Reflects an adjustment for (7,168) shares and 198 shares for the twelve months ended January 28, 2007 and January 29, 2006, respectively, to the diluted outstanding shares calculated under SFAS 123R to conform to diluted outstanding shares calculated under prior accounting standards (APB25).

NVIDIA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
	January 28,		January 29,
	2007		2006 (As restated)
ASSETS
Current assets:
Cash, cash equivalents and marketable securities	$	1,117,850	$	950,174
Accounts receivable, net		518,680		318,186
Inventories		354,680		254,870
Prepaid expenses and other current assets		31,141		24,387
Deferred income taxes		9,419		2,682
Total current assets		2,031,770		1,550,299
Property and equipment, net		260,828		178,152
Deposits and other assets		28,349		27,477
Goodwill		301,425		145,317
Intangible assets, net		45,511		15,421
Deferred Income Taxes		7,380		38,021
Total assets	$	2,675,263	$	1,954,687
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	272,075	$	179,395
Accrued liabilities		366,732		259,264
Current debt obligations		-		-
Total current liabilities		638,807		438,659
Other long-term liabilities		29,537		20,036
Stockholders' equity		2,006,919		1,495,992
Total liabilities and stockholders' equity	$	2,675,263	$	1,954,687