NVIDIA 2005 Annual Report Download - page 35

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Shelf Registration Statement
In December 2003, we filed a Form S−3 with the SEC under its "shelf" registration process. This shelf registration was declared
effective by the SEC on March 25, 2004. Under this shelf registration statement, we may sell common stock, preferred stock, debt
securities, warrants, stock purchase contracts and/or stock purchase units in one or more offerings up to a total dollar amount of
$500.0 million. Unless otherwise indicated in the applicable prospectus supplement, we intend to use the proceeds for working capital
and general corporate purposes.
3dfx Asset Purchase
The 3dfx asset purchase closed on April 18, 2001. Under the terms of the Asset Purchase Agreement, the cash consideration due at the
closing was $70.0 million, less $15.0 million that was loaned to 3dfx pursuant to a Credit Agreement dated December 15, 2000. The
Asset Purchase Agreement also provided, subject to the other provisions thereof, that if 3dfx properly certified that all its debts and
other liabilities had been provided for, then we would have been obligated to pay 3dfx two million shares of NVIDIA common stock.
If 3dfx could not make such a certification, but instead properly certified that its debts and liabilities could be satisfied for less than
$25.0 million, then 3dfx could have elected to receive a cash payment equal to the amount of such debts and liabilities and a reduced
number of shares of our common stock, with such reduction calculated by dividing the cash payment by $25.00 per share. If 3dfx
could not certify that all of its debts and liabilities had been provided for, or could not be satisfied, for less than $25.0 million, we
would not be obligated under the agreement to pay any additional consideration for the assets. We are currently party to litigation
relating to certain aspects of the asset purchase and 3dfx's subsequent bankruptcy in October 2002. Please refer to Item 3: Legal
Proceedings for further information regarding this litigation.
Contractual Obligations
The following summarizes our contractual obligations that are both on our balance sheet and off balance sheet as of January 30, 2005
and the effect such obligations are expected to have on our liquidity and cash flow in future periods:
Contractual Obligations Total Within 1
Year 2−3 Years 4−5 Years After 5
Years
(in thousands)
Capital lease obligations, including interest $ 869 $ 869 $ −− $ −− $ −−
Operating leases 191,117 27,534 54,847 52,942 55,794
Purchase obligations (1) 457,273 457,273 −− −− −−
Other liabilities reflected on our balance sheet under
GAAP 4,375 2,000 2,375 −− −−
Total contractual obligations $ 653,634 $ 487,676 $ 57,222 $ 52,942 $ 55,794
_________________
(1) Represents our inventory purchase commitments as of January 30, 2005.
Recently Issued Accounting Pronouncements
In March 2004, the FASB approved the consensus reached on the Emerging Issues Task Force Issue No. 03−1, or EITF 03−1, The
Meaning of Other−Than−Temporary Impairment and Its Application to Certain Investments. EITF 03−1 provides guidance for
identifying impaired investments and new disclosure requirements for investments that are deemed to be temporarily impaired. On
September 30, 2004, the FASB issued a final staff position EITF Issue 03−1−1 that delays the effective date for the measurement and
recognition guidance included in paragraphs 10 through 20 of EITF 03−1. Quantitative and qualitative disclosures required by EITF
03−1 remain effective for fiscal 2005. We do not believe the impact of adoption of this EITF consensus will have a material impact on
our consolidated financial position, results of operations or cash flows.
In November 2004, the FASB issued No. 151, or SFAS No. 151, Inventory Costs, an amendment of ARB No. 43, Chapter 4. SFAS
No. 151 amends ARB No. 43, Chapter 4, to clarify that abnormal amounts of idle facility expense, freight, handling costs and wasted
material (spoilage) should be recognized as current period charges. In addition, SFAS No. 151 requires that allocation of fixed
production overhead to the cost of conversion be based on the normal capacity of the production facilities. The provision of SFAS No.
151 shall be effective for inventory costs incurred during fiscal years beginning after June 15, 2005. We do not expect the adoption of
SFAS No. 151 to have a material impact on our consolidated financial position, results of operations or cash flows.
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