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 31, 201629, 2017 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 31, 2016,29, 2017, 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 31, 2016.29, 2017. 

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 31, 2016.29, 2017. 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 yearyears 2018 and 2017 is aare both 52-week year and fiscal year 2016 was a 53-week year.years. The first quarter of fiscal years 20172018 and 20162017 were both 13-week quarters.

Our condensed consolidated financial statements include the accounts of NVIDIA Corporation and our wholly-owned subsidiaries. All intercompany 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, 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 MarchOctober 2016, the Financial Accounting Standards Board, or FASB, issued an accounting standards update which simplifies certain aspectsrequires the recognition of stock-based compensation accounting, including income taxes at settlement, classificationstax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. We elected to early adopt this new guidance in the statement of cash flows, forfeitures and net settlements, and will be effective in our first quarter of fiscal year 2018. Early adoption is permitted in2018, which required us to reflect any annual or interim period. We are currently evaluating the impactadjustments as of theJanuary 30, 2017. Upon adoption of this accounting guidance, on our consolidated financial statements.we recorded a cumulative-effect adjustment as of the first day of fiscal year 2018 to decrease retained earnings by $28 million, with a corresponding decrease to prepaid taxes that had not been previously recognized in income tax expense.

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,statements. However, we expect the adoption of this accounting guidance to result in an increase in lease assets and a corresponding increase in lease liabilities on our 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 votedWe expect to defer the effective date by one year, such that the new standard will be effective for usadopt this guidance beginning in our first quarter of fiscal year 2019. The FASB will also permit entities to adopt2019 using the standard one year earlier if they choose (i.e., the original effective date). In March, April and May 2016, the FASB issued additional updates to the new revenue standard relating to reporting revenue on a gross versus net basis, identifying performance obligations and licensing arrangements, and narrow-scope improvements and practical expedients, respectively. 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. WeWhile we are currently evaluatingstill finalizing our analysis to quantify the adoption impact of this accounting guidancethe provisions of the new standard, we do not expect it to have a material impact on our consolidated financial statements and have not yet determined which transition method we will apply.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.

Our Condensed Consolidated Statements of Income include stock-based compensation expense, net of amounts capitalized as inventory, as follows:

The following is a summary of our equity award transactions under our equity incentive plans:

Of the total fair value of equity awards granted during the three months ended May 1, 2016first quarter of fiscal years 2018 and April 26, 2015,2017, we estimated that the stock-based compensation expense related to equity awards that are not expected to vest was $10$27 million and $5$10 million, respectively.

The following summarizes the aggregate unearned stock-based compensation expense and estimated weighted average amortization period as of May 1, 2016April 30, 2017 and January 31, 2016:29, 2017:

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. The Convertible Notes will have a dilutive impact on net income per share if our average stock price for the reporting period exceeds the adjusted conversion price of $20.1013$20.0562 per share. The warrants associated with our Convertible Notes, or the Warrants, outstanding are also 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 $27.0594$26.9988 per share. For the three months ended May 1, 2016, our average stock price was $32.63, which exceeded both the adjusted conversion price and the adjusted strike price, causing the Notes and the Warrants to have a dilutive impact for this period.

The denominator for diluted net income per share does not include any effect from the convertible note hedge transaction,transactions, or the Note Hedges, that we entered into concurrently with the issuance of the Convertible Notes, as itsthis effect would be anti-dilutive. In the event of conversion of the Convertible Notes, the shares delivered to us under the Note Hedges will offset the dilutive effect of the shares that we would issue under the Convertible Notes.

We recognized income tax expense of $45$29 million and $38$33 million for the three months ended May 1, 2016first quarter of fiscal years 2018 and April 26, 2015,2017, respectively. Our effectiveIncome tax rateexpense as a percentage of income before income tax was 18.6%5.5% and 22.0%13.7% for the three months ended May 1, 2016first quarter of fiscal years 2018 and April 26, 2015,2017, respectively.

The decrease in our effective tax rate in the three months ended May 1, 2016first quarter of fiscal year 2018 as compared to the same period in the prior fiscal year was primarily due toreflects the favorable benefitrecognition of the U.S. federal research tax credit, which was permanently re-enacted on December 18, 2015 under the Protecting Americans from Tax Hikes Act of 2015, and lower permanent tax differencesbenefits related to stock-based compensation partially offset by an increaseand a proportional decrease in the amount of earnings subject to U.S. tax.United States tax in the first quarter of fiscal year 2018.

Our effective tax rate for the first three monthsquarter of fiscal year 2018 of 5.5% and fiscal year 2017 of 18.6%13.7% was lower than the U.S. federal statutory rate of 35% due primarily to tax benefits related to stock-based compensation, income earned in jurisdictions where the tax rate is lower than the U.S. federal statutory tax rate, and the benefit of the U.S. federal research tax credit and discrete events that occurred incredit.

For the first three monthsquarter of fiscal year 2017 primarily attributable to tax benefits recognized upon the expiration of statutes of limitations in certain non-U.S. jurisdictions. 

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 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.

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 total other income and expense, net,(expense) on the Condensed Consolidated Statements of Income.

We performed an impairment review of our investment portfolio as of May 1, 2016.April 30, 2017. 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 May 1, 2016.April 30, 2017.

The following is a summary of cash equivalents and marketable securities as of May 1, 2016April 30, 2017 and January 31, 2016:29, 2017:

 

The following table provides the breakdown of the investments with unrealized losses as of May 1, 2016:April 30, 2017, aggregated by investment category and length of time that individual securities have been in a continuous loss position: 

The gross unrealized losses as of May 1, 2016 related to fixed income securities were due to changes in interest rates andrates. We have determined that the gross unrealized losses on investment securities as of April 30, 2017 are temporary in nature. WeCurrently, we have the intent and ability to hold our investments with impairment indicators until maturity. Net realized gains and losses were not significant for the first quarter of fiscal years 2018 and 2017.

The amortized cost and estimated fair value of cash equivalents and marketable securities, which are primarily debt instruments, are classified as available-for-sale as of May 1, 2016April 30, 2017 and January 31, 201629, 2017 and are shown below by contractual maturity:  

We measureThe fair values of our cash equivalents, marketable securities,financial assets and interest rate swap at fair valueliabilities are determined using quoted market prices of identical assets or quoted market prices of similar assets from active markets. We review the fair value hierarchy classification on a quarterly basis. There were no significant transfers between Levels 1 and 2 assets or liabilities for the three months ended May 1, 2016, and wefirst quarter of fiscal year 2018. We did not have any investments or liabilities classified as Level 3 as of May 1, 2016.

The components of our amortizable intangible assets are as follows:

Amortization expense associated with intangible assets was $17$15 million and $19$17 million for the three months ended May 1, 2016first quarter of fiscal years 2018 and April 26, 2015,2017, respectively. Future amortization expense related to the net carrying amount of intangible assets as of May 1, 2016April 30, 2017 is estimated to be $51$40 million for the remainder of fiscal year 2017, $54 million in fiscal year 2018, $26 million in fiscal year 2019, $16 million in fiscal year 2020, $7 million in fiscal year 2021, and a total of $1 million in fiscal year 2022 and beyond.

As of May 1, 2016,April 30, 2017, we had outstanding inventory purchase obligations totaling $696$799 million.

In August 2015,fiscal year 2016, 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. This interest rate swap is designated as a cash flow hedge, will have settlements beginning in the second quarter of fiscal year 2019, and will terminate in the fourth quarter of fiscal year 2023. Gains or losses on this swap are recorded in accumulated other comprehensive income (loss) and will subsequently be recorded in earnings at the point when the related operating lease financing expense begins to affect earnings or if ineffectiveness of the swap should occur.

During the first quarter of fiscal year 2017, we enteredWe enter into six foreign currency forward contracts with a total U.S. dollar equivalent notional value of $35 million 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 hedge relationships on a spot to spot basis. Gains or losses on the contracts are recorded in accumulated other comprehensive income (loss) and will be reclassified to operating expense when the related operating expenses are recognized in earnings or ineffectiveness should occur. The fair value of the contracts as of May 1, 2016April 30, 2017 was not significant.

Under the master netting agreements with the respective counterparties to our foreign currency forward contracts, we are allowed to net settle transactions with the same counterparty, subject to applicable requirements. However, we present our derivative assets and liabilities at their gross fair values on our Condensed Consolidated Balance Sheets. We are not required to pledge, and are not entitled to receive, cash collateral related to these derivative instruments.

As of May 1, 2016,April 30, 2017, the maturities of the designated foreign currency forward contracts were three months or less.

We formally assess, both at inception and on an ongoing basis, whether the derivative financial instruments designated for hedge accounting treatment are highly effective. For the three months ended May 1, 2016,first quarter of fiscal years 2018 and 2017, all derivative financial instruments designated for hedge accounting treatment were determined to be highly effective and there were no gains or losses associated with ineffectiveness.

The amountDuring the first quarter of gain or (loss) recognizedfiscal years 2018 and 2017, net change in other comprehensive incomeunrealized gains (losses) on derivative financial instruments wasdesignated for hedge accounting treatment were not significant for the three months ended May 1, 2016.significant.

We expect to realize all of the amountsgains and losses deferred into accumulated other comprehensive income (loss) related to foreign currency forward contracts within the next twelve months. WeHowever, we do not expect to reclassify any amount from accumulated other comprehensive income (loss) into earnings related to the interest rate swap as its settlement for the underlying operating lease financing payments for our new headquarters buildingexpense will not start within the next twelve months.

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.

We record a reduction to revenue for estimated product returns at the time revenue is recognized primarily based on historical return rates. Cost of revenue includes the estimated cost of product warranties. Under limited circumstances, we may offer an extended limited warranty to customers for certain products. Additionally, we accrue for known warranty and indemnification issues if a loss is probable and can be reasonably estimated.

The estimated product returns and estimated product warranty liabilities as of May 1, 2016April 30, 2017 and January 31, 201629, 2017 were as follows: 

In connection with certain agreements that we have entered into in the past, we have provided indemnities to cover the indemnified party for matters such as tax, product, and employee liabilities. We have 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. We have not recorded any liability in our Condensed Consolidated Financial Statements for such indemnifications.

On December 2, 2013,During the first quarter of fiscal year 2018, we issued $1.50 billionpaid cash to settle an aggregate of $605 million in Notes. The Notes are unsecured, unsubordinated obligationsprincipal amount of the Company, which pay interestConvertible Notes and had $222 million in cash semi-annually atprincipal amount outstanding as of April 30, 2017. We also issued 24 million shares of our common stock for the excess conversion value and recognized a loss of $14 million on early conversions of the Convertible Notes. Based on the closing price of our common stock of $104.30 on the last trading day of the first quarter of fiscal year 2018, the if-converted value of the remaining outstanding Convertible Notes as of April 30, 2017 exceeded their principal amount by approximately $933 million. As of April 30, 2017, the conversion rate of 1.00% per annum. The Notes will mature on December 1, 2018 unless repurchased or converted prior to such date. The Notes were initially convertible at a rate of 49.5958was 49.8598 shares of common stock per $1,000 principal amount of the Convertible Notes (equivalent to an initial conversion price of $20.1630 per share of common stock). The conversion rate and conversion price are adjusted upon the occurrence of certain events, including our cash dividends or distributions exceeding $0.085 per share. Accordingly, as of May 1, 2016, the conversion rate has been adjusted to 49.7481 shares of common stock per $1,000 principal amount of Notesafter adjusting for dividend increases (equivalent to an adjusted conversion price of $20.1013$20.0562 per share of common stock) for dividend increases made to that date..

We separately accounted forThrough the liability and equity componentsfirst quarter of fiscal year 2018, we settled an aggregate of $1.28 billion in principal amount of the Notes at issuance and the value assigned to the debt component was the estimated fair value, asConvertible Notes. Subsequently, we received additional conversion notices for an aggregate of $136 million in principal amount of the issuance date,Convertible Notes. Settlements of a similar debt withoutthese conversion requests are expected to be completed in the second quarter of fiscal year 2018. The actual number of shares issuable upon conversion feature. The difference betweenwill be determined based upon the net cash proceedsterms of the Convertible Notes, and this estimated fair value representedwe expect to receive an equal number of shares of our common stock under the value assigned toterms of the equity component and was recorded as a debt discount. The debt discount is amortized using the effective interest method from the origination date through its stated contractual maturity date.Note Hedges.

We separately accounted for the liability and ending on May 1, 2016. As such,equity components of the $1.41Convertible Notes at issuance, since our conversion obligation in excess of the aggregate principal could be fully or partially settled in cash. The liability component was assigned by estimating the fair value of a similar debt without the conversion feature. The difference between the net cash proceeds and the liability component was assigned as the equity component. The initial liability component of the Convertible Notes was valued at $1.35 billion and the initial carrying value of the equity component recorded in additional paid-in-capital was valued at $126 million. This equity component, together with the $23 million purchaser's discount to the par value of the Convertible Notes, represented the initial aggregate unamortized debt discount of $148 million. The debt discount is amortized as interest expense over the contractual term of January 31, 2016the Convertible Notes using the effective interest method and an interest rate of 3.15%.

As of April 30, 2017, the carrying value of the Convertible Notes was classified as a current liability and the $87 million difference between the principal amount and the carrying value of the Convertible Notes was reclassified from shareholders' equity toclassified as convertible debt conversion obligation in the mezzanine equity section of our Condensed Consolidated Balance Sheet asSheet.

The following table presents the carrying value of January 31, 2016.the Convertible Notes:

Concurrently with the issuance of the Convertible Notes, we entered into a convertible note hedge transaction, or the Note Hedges. The Note Hedges with a strike price equal to the initial conversion price of the Notes, or $20.1630 per share. Adjusting for dividends paid through May 1, 2016, thehave an adjusted strike price of the Note Hedges has been adjusted to $20.1013$20.0562 per share. The Note Hedgesshare and allow us to receive shares of our common stock and/or cash related to the excess conversion value that we would deliver and/or pay, respectively, to the holders of the Convertible Notes upon conversion. During the first quarter of fiscal year 2018, we had received 24 million shares of our common stock from the exercise of a portion of the Note Hedges related to the settlement of $605 million in principal amount of the Convertible Notes. Subsequently, we expect to receive additional shares of our common stock related to at least an additional $136 million in principal amount that is expected to settle during the second quarter of fiscal year 2018.

In addition, concurrent with the offering of the Convertible Notes and the purchase of the Note Hedges, we entered into a separate warrant transaction, or the Warrants, with an initialadjusted strike price of $26.9988 per share. In the fourth quarter of fiscal year 2017, we contracted with a counterparty bank to the holdersterminate 63 million of the Warrants of $27.1425 per share. Under the terms of the Warrants, the strike price is adjusted upon the occurrence of certain events, including our cash dividends or distributions that deviate from $0.085 per share. Accordingly, as of May 1, 2016, the strike price was adjusted to $27.0594 per share, reflecting adjustments for our dividend increases made to that date. The Warrants are net share settled75 million warrants outstanding and cover, subject to customary anti-dilution adjustments, 74issued 48 million shares of our common stock.stock related to the terminated Warrants.

In fiscal year 2016, we began to construct a new headquarters building in Santa Clara, California, which is currently targeted for completion in the fourth quarter of fiscal year 2018. We are financing this construction under an off-balance sheet, build-to-suit operating lease arrangement. As a part of this arrangement, we leased the real property we own where the building will be constructed under a 99 year ground lease to a syndicate of banks and concurrently leased back the building under a real property lease.

Under the real property lease, we pay rent, taxes, maintenance costs, utilities, insurance and other property related costs. The lease has an initial 7.5 year term expiring onin December 19, 2022, consisting of an approximately 2.5 year construction period followed by a 5 year lease term. We have the option to renew this lease for up to three additional 5 year periods, subject to approval by the banks.

We will overseehave been overseeing the construction of the headquarters building. The banks have committed to fund up to $380 million of costs relating to construction. Advances will behave been made periodically to reimburse us for construction costs we incur. Once construction is complete, the lease balance will remain static at the completed cost for the remaining duration of the lease term. During construction, accrued interest will beis capitalized into the lease balance. Following construction, we will pay rent in the form of interest. We have guaranteed the obligations under the lease held by our subsidiary.

During the term of the lease, we may elect to purchase the headquarters building for the amount of the banks’ investment in the building and any accrued but unpaid rent. At the end of the lease term, we may elect to buy the building for the outstanding balance on the maturity date or arrange for the cash sale of the building to an unaffiliated third party. The aggregate guarantee made by us under the lease is no more than 87.5% of the costs incurred in connection with the construction of the building. However, under certain default circumstances, the lease guarantee may be 100% of the banks’ investment in the building plus any and all accrued but unpaid interest and all other rent due and payable under the operative agreements.

The operative agreements are subject to customary default provisions, including, for example, those relating to payment and performance defaults, and events of bankruptcy. We are also subject to the financial covenants including a covenant to maintain a maximum total leverage ratio not to exceed 3.0 to 1.0 and a minimum interest coverage ratio in excess of 3.5 to 1.0 during the term.1.0. If certain events of default occur and are continuing under the operative agreements, the banks may accelerate repayment of their investment under the lease.

On April 28,May 16, 2016, NVIDIAPolaris Innovations Limited, a non-practicing entity and Samsung entered a binding memorandumwholly-owned subsidiary of understanding which resolved all existing intellectual property disputes between the parties, and requires the immediate dismissal of all pending litigation between them. As a result of this agreement, on May 5, 2016, SamsungWi-LAN Inc., filed a Stipulation of Dismissalcomplaint in the United States District Court for the EasternWestern District of Virginia. Texas alleging that NVIDIA has infringed and is continuing to infringe on six of its U.S. patents related generally to control of dynamic random-access memory (DRAM). The complaint seeks unspecified monetary damages, enhanced damages, interest, fees, expenses, and costs against NVIDIA.

On May 11,September 14, 2016, NVIDIA voluntarily dismissed its petitionanswered the Polaris Complaint and asserted various defenses including non-infringement and invalidity of the six Polaris patents. On December 5, 2016, the Texas Court granted NVIDIA’s motion to transfer and transferred the case to the United States Court of Appeals for the Federal Circuit to review the ITC’s decision in Investigation No. 337-TA-932. On May 12, 2016, NVIDIA voluntarily dismissed its Complaint in the United States District Court for theNorthern District of Delaware. On May 19, 2016, Samsung filed a Corrected Joint Motion to Terminate Investigation No. 337-TA-941; the motionCalifornia. A trial date has not yet been granted. Also as part of this agreement, NVIDIA and Samsung each received a license to a small number of patents of the other, but no portfolio license was granted nor was any compensation paid by either party.set.

NVIDIA’s dismissals on May 11,On December 7, 2016, and May 12, 2016 also terminated its claims against Qualcomm.

On December 30, 2016, NVIDIA received notice that Polaris had filed a complaint for the District of Delaware allegingpatent infringement in Germany. The German case alleges infringement of certain patents relatingEuropean Patent No. EP1428225 and German Patent Nos. DE 10223167 and DE 1020066043668. NVIDIA has retained counsel in Germany to graphics processingdefend this case. A trial date has not yet been set. On March 31, 2017, the German Patent Court acknowledged receipt of nullity actions filed by NVIDIA challenging the validity of EP1428225 and memory management.DE 1020066043668. Polaris has not yet responded to these actions.

On May 9, 2017, NVIDIA filed a Motion to Stay the action pending final resolution of the inter partes review of U.S. Patents Nos. 7,886,122; 7,124,325; and Advanced Silicon Technologies resolved this litigation on April 22, 2016 and NVIDIA agreed to license the patents asserted and other patents owned and controlled by Advanced Silicon Technologies and certain of its affiliates. On April 27, 2016, NVIDIA and Advanced Silicon Technologies jointly moved to terminate the investigation as to NVIDIA. The Office of Unfair Import Investigations supported8,161,344. If the motion and none ofis granted, the other parties opposed it. On May 10, 2016,action will be suspended until the Administrative Law Judge issued an Initial Determination granting the joint request to terminate the investigation as to NVIDIA. The Initial Determination is expected to become the Final Determination of the ITC on or before June 9, 2016. Pursuant to the license agreement, we paid Advanced Silicon Technologies $16 million during the three months ended May 1, 2016, of which $6 million was recorded as a patent-related intangible asset and $10 million was recorded as a charge to cost of revenue.inter partes reviews are finally resolved.

While there can be no assurance of favorable outcomes, we believe the claims made by other party in the above ongoing matters are without merit and we intend to vigorously defend the actions. As of April 30, 2017, we have not recorded any accrual for contingent liabilities associated with the legal proceedings described above based on our belief that liabilities, while possible, are not probable. Further, any possible range of loss in these matters cannot be reasonably estimated at this time. We are engaged in other legal actions not described above arising in the ordinary course of its business and, while there can be no assurance of favorable outcomes, we believe that the ultimate outcome of these actions will not have a material adverse effect on our operating results, liquidity or financial position.