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 feedfollow us on Flipboard, YouTube and can view NVIDIA videos on YouTube.Instagram.

              

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, 201531, 2016 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, 2015,31, 2016, 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 25, 2015.31, 2016. 

For a description of significant accounting policies, see Note 1, Organization and Summary of Significant Accounting Policies, of the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended January 25, 2015.31, 2016. There have been no material changes to our significant accounting policies since the filing of the Annual Report on Form 10-K.

We operate on a 52- or 53-week year, ending on the last Sunday in January. Fiscal year 20162017 is a 53-week52-week year and fiscal year 20152016 was a 52-week53-week year. The third quartersquarter of fiscal years 20162017 and 20152016 were both 13-week quarters.

Our condensed consolidated financial statements include the accounts of NVIDIA Corporation and our wholly-owned subsidiaries. All material inter-companyintercompany 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 July 2015,March 2016, the Financial Accounting Standards Board, or FASB, issued an accounting standards update forwhich simplifies certain aspects of stock-based compensation accounting. Among other elements, the subsequent measurement of inventory. The amendednew guidance eliminates additional paid in capital, or APIC, pools and requires entitiesexcess tax benefits and tax deficiencies to measure inventory at the lower of cost or net realizable value. Net realizable value is the estimated selling pricebe recorded in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation.income statement when the awards vest or are settled. In addition, cash flows related to excess tax benefits will no longer be separately classified as a financing activity apart from other income tax cash flows. The requirement would replace the current lower of cost or market evaluation. The updatenew standard is effective for us beginning in our first quarter of fiscal year 2018 with early adoption permittedpermitted. We elected to early adopt this new guidance in the third quarter of fiscal year 2017, which required us to reflect any adjustments as of February 1, 2016.

We elected not to change our policy on accounting for forfeitures, although the new guidance provides an option for us to account for forfeitures as they occur, and thus continued to estimate forfeitures expected to occur to determine the amount of compensation cost to be applied prospectively. We are currently evaluating the impactrecognized in each period.

The adoption of this accountingnew guidance onimpacted our consolidated financial statements.previously reported quarterly results for fiscal year 2017 as follows:

In April 2015,October 2016, the FASB issued an accounting standards update that requires an entity to present debt issuance costs on the balance sheet as a direct deduction fromrecognition of income tax consequences for intra-entity transfers of assets other than inventory when 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 periods) beginning after December 15, 2015. Early adoption is permitted for financial statements that have not been previously issued, and the new guidance would be applied retrospectively to all prior periods presented.transfer occurs. The update will be effective for us beginning in our first quarter of fiscal year 2017.2019, with early adoption permitted. The adoption of this accounting guidance is not currently expected to have a material impact on our consolidated financial statements.

In April 2015,August 2016, the FASB issued an accounting standards update that provides clarification on whether a cloud computing arrangement includes a software license. If a software license is included,clarifies how companies present and classify certain cash receipts and cash payments in 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 accounted for as a service contract. The update is effective for reporting periods beginning after December 15, 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.statement of cash flows. The update will be effective for us beginning in our first quarter of fiscal year 2017.2019, with early adoption permitted. The adoption of this accounting guidance is not expected to have a material impact on our consolidated financial statements.

In February 2016, the FASB issued an accounting standards update regarding the accounting for leases by which we will begin recognizing lease assets and liabilities on the balance sheet for leases with a lease term of more than 12 months. The update will require additional disclosures regarding key information about leasing arrangements. Under existing guidance, operating leases are not recorded as lease assets and lease liabilities on the balance sheet. The update will be effective for us beginning in our first quarter of fiscal year 2020, with early adoption permitted. We are currently evaluating the impact of the adoption of this accounting guidance on our consolidated financial statements. However, we expect the adoption of this accounting guidance to result in an increase in software licenselease assets and related depreciation expense, and a corresponding decreaseincrease in prepaid service contract assets and related service contract expense inlease liabilities on our consolidated financial statements.Condensed Consolidated Balance Sheets.

In May 2014, theThe FASB issued an accounting standards update that creates a single source of revenue guidance under U.S. GAAP for all companies, in all industries, effective for annual reporting periods beginning after December 15, 2016,2017, including interim periods within that reporting period. On July 9, 2015, the FASB voted to defer the effective date by one year, such that theThe new standard will be effective for us beginning in our first quarter of fiscal year 2019. The FASB will also permit entities2019, although we are permitted to adopt the standard one year earlier if they choose (i.e., the original effective date).earlier. We will adopt this guidance either by using a full retrospective approach for all periods presented in the period of adoption, or a modified retrospective approach. We are currently evaluating the impact of this accounting guidance on our consolidated financial statements and have not yet determined which transition method we will apply.

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 valueOur Condensed Consolidated Statements 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. We 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.

Of the total fair value of equity awards granted during the three and nine months ended October 25,30, 2016, the stock-based compensation expense related to equity awards that are not expected to vest was $72 million and $89 million, respectively. Of the total fair value of equity awards granted during the three and nine months ended October 30, 2015, the stock-based compensation expense related to equity awards that are not expected to vest was $34 million and $43 million, respectively. Of the total fair value of equity awards granted during the three and nine months ended October 26, 2014, the stock-based compensation expense related to equity awards that are not expected to vest was $28 million and $35 million, respectively.

The following summarizes the aggregate unearned stock-based compensation expense and estimated weighted average amortization period as of October 25, 201530, 2016 and January 25, 2015:31, 2016:

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

The 1.00% Convertible Senior Notes, or the Convertible Notes, are included in the calculation of diluted net income per share if their inclusion is dilutive.share. The Convertible Notes will generally have a dilutive impact on net income per share if our average stock price for the reporting period exceeds the adjusted conversion price of $20.1630$20.0780 per share. The Warrants outstanding are included in the calculation of diluted net income per share. The Warrants have a dilutive impact on net income per share if our average stock price for the quarter exceeds the adjusted strike price of $27.0281 per share. For the three and nine months ended October 25, 2015,30, 2016, our average stock price forwas $63.83 and $47.82, respectively, which exceeded both the reporting periods exceededadjusted conversion price and the conversionadjusted strike price, causing the Convertible Notes and the Warrants to have a dilutive impact for these periods.

The decreaseincrease in our effective tax rate in the three months ended October 25, 2015 as30, 2016 compared to the same period in the prior fiscal year was primarily due to the absence of the tax benefit related to the restructuring associated with the wind-down of our Icera operations. The decrease in our effective tax rate in the nine months ended October 30, 2016 compared to the same period in the prior fiscal year was primarily due to the favorable impactbenefit of the benefit fromU.S. federal research tax credit, which was permanently enacted in the expirationfourth quarter of fiscal year 2016, and our early adoption of an accounting standard, partially offset by the absence of the applicable statutes of limitations, partially offset byIcera restructuring tax benefit and an increase in the amount of our earnings subject to U.S. tax.

Our effective tax rate for the nine months ended October 25, 201530, 2016 of 16.9%14.2% was lower than the U.S. federal statutory rate of 35% due primarily to income earned in jurisdictions where the tax rate is lower than the U.S. federal statutory tax rate, and certain discrete events including the benefit of the U.S. federal research tax benefitcredit, as well as tax benefits recognized uponin the period in which they occur for early adoption of an accounting standard and expiration of the applicable statutes of limitations and other tax benefits related to the Icera modem operations, partially offset by the write-down of a deferred tax asset related to Icera.

For the nine months ended October 25, 2015,30, 2016, 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 25, 2015,31, 2016, other than the closure of our state income tax position in the three months ended July 31, 2016 and the aforementioned recognition of tax benefits upon the expiration of applicable statutes of limitations in certain non-U.S. jurisdictions in the nine months ended October 25, 2015.30, 2016.

While we believe that we have adequately provided for all uncertain tax positions, or tax positions where we believe it is not more-likely-than-not that the position will be sustained upon examination,review, 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 25, 2015,30, 2016, 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 (loss), a component of shareholders’ equity, net of tax, and net realized gains and losses recorded in other income and expense, net, on the Condensed Consolidated Statements of Income.

We performed an impairment review of our investment portfolio as of October 25, 2015.30, 2016. Based on our quarterly impairment review, we concluded that our investments were appropriately valued and that no other-than-temporary impairment charges were necessary on our portfolio of available-for-sale investments as of October 25, 2015.30, 2016.

The following is a summary of cash equivalents and marketable securities atas of October 25, 201530, 2016 and January 25, 2015:31, 2016: 

The following table provides the breakdown of the investments with unrealized losses atas of October 25, 2015:30, 2016: 

The gross unrealized losses as of October 30, 2016 related to fixed income securities were due to changes in interest rates. We have determined that the gross unrealized losses on investment securities at October 25, 2015rates and are temporary in nature. Currently, weWe have the intent and ability to hold our investments with impairment indicators until maturity.

The amortized cost and estimated fair value of cash equivalents and marketable securities, which are primarily debt instruments, are classified as available-for-sale atas of October 25, 201530, 2016 and January 25, 201531, 2016 and are shown below by contractual maturity:  

 

Net realized gains and losses were not significant for the three months ended October 25, 2015 and for the three and nine months ended October 26, 2014. Net realized gains were $3 million for the nine months ended30, 2016 and October 25, 2015.

We measure our cash equivalents, and marketable securities, and interest rate swap at fair value. The fair values of our financial assets and liabilities are determinedvalue using quoted market prices of identical assets or quoted market prices of similar assets from active markets. Our Level 1 assets consist of our money market funds. We classify securities within Level 1 assets when the fair value is obtained from real time quotes for transactions in active exchange markets involving identical assets. Our available-for-sale securities are classified as having Level 2 inputs. Our Level 2 assets are valued utilizing a market approach where the market prices of similar assets are provided by a variety of independent industry standard data providers to our investment custodian. We review the fair value hierarchy classification on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy. There were no significant transfers between Levels 1 and 2 assets or liabilities for the three and nine months ended October 25, 2015.30, 2016, and we did not have any investments or liabilities classified as Level 3 as of October 30, 2016.

The components of our amortizable intangible assets are as follows:

Amortization expense associated with intangible assets was $18 million and $53 million for the three and nine months ended October 30, 2016, respectively, and $18 million and $56 million for the three and nine months ended October 25, 2015, respectively, and $19 million and $58 million for the three and nine months ended October 26, 2014, respectively. Future amortization expense related to the net carrying amount of intangible assets atas of October 25, 201530, 2016 is estimated to be $19$16 million for the remainder of fiscal year 2016, $63 million in fiscal year 2017, $50$54 million in fiscal year 2018, $22$26 million in fiscal year 2019, $13$16 million in fiscal year 2020, and a total of $5$7 million in fiscal year 2021 and a total of $1 million in fiscal year 2022 and beyond.

Certain balance sheet components are as follows:

AtAs of October 25, 2015,30, 2016, we had outstanding inventory purchase obligations totaling $442$908 million.

In August 2015 we entered into an interest rate swap for a portion of the operating lease financing arrangement for our new headquarters building whichthat entitles us to pay amounts based on a fixed interest rate in exchange for receipt of amounts based on variable interest rates. The objective of this interest rate swap is to mitigate variability in the benchmark interest rate on the first $200 million of existing operating lease financing payments.

A summaryDuring the three and nine months ended October 30, 2016, we entered into foreign currency forward contracts with a total U.S. dollar equivalent notional value of $64 million and $160 million, respectively, to mitigate the impact of foreign currency exchange rate movements on our operating expenses. We designate these contracts as cash flow hedges and assess the effectiveness of the notional amounthedge relationships on a spot to spot basis. Gains or losses on the contracts are recorded in accumulated other comprehensive income or loss and reclassified to operating expense when the related operating expenses are recognized in earnings or ineffectiveness should occur. The fair value of the interest rate swapcontracts as of October 30, 2016 was not significant.

During the three and nine months ended October 30, 2016, we also entered into foreign currency forward contracts with a total U.S. dollar equivalent notional value of $54 million and $67 million, respectively, to mitigate the impact of foreign currency movements on monetary assets and liabilities that are denominated in currencies other than our reporting currency. These foreign currency forward contracts were not designated for hedge accounting treatment. Therefore, the change in fair value of these contracts is recorded as a component of other income or expense, net, and offsets the change in fair value of the foreign currency denominated monetary assets and liabilities, which is also recorded in other income or expense, net.