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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 26, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 0-23985
nvda-20200726_g1.jpg

NVIDIA CORPORATION
(Exact name of registrant as specified in its charter)
Delaware94-3177549
(State or Other Jurisdiction of(I.R.S. Employer
Incorporation or Organization)Identification No.)
2788 San Tomas Expressway
Santa Clara, California 95051
(408) 486-2000
(Address, including zip code, and telephone number,
including area code, of principal executive offices)
N/A
(Former name, former address and former fiscal year if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.001 par value per shareNVDAThe Nasdaq Global Select Market
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. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) 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). Yes No
The number of shares of common stock, $0.001 par value, outstanding as of August 14, 2020, was 617 million.



NVIDIA CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED July 26, 2020
TABLE OF CONTENTS
  Page
  
Financial Statements (Unaudited) 
 a) Condensed Consolidated Statements of Income for the three and six months ended July 26, 2020 and July 28, 2019
b) Condensed Consolidated Statements of Comprehensive Income for the three and six months ended July 26, 2020 and July 28, 2019
 c) Condensed Consolidated Balance Sheets as of July 26, 2020 and January 26, 2020
d) Condensed Consolidated Statements of Shareholders' Equity for the three and six months ended July 26, 2020 and July 28, 2019
 e) Condensed Consolidated Statements of Cash Flows for the six months ended July 26, 2020 and July 28, 2019
 f) Notes to Condensed Consolidated Financial Statements
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Controls and Procedures
  
Legal Proceedings
Risk Factors
Unregistered Sales of Equity Securities and Use of Proceeds
Exhibits
 
WHERE YOU CAN FIND MORE INFORMATION
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: 
NVIDIA Twitter Account (https://twitter.com/nvidia)
NVIDIA Company Blog (http://blogs.nvidia.com)
NVIDIA Facebook Page (https://www.facebook.com/nvidia)
NVIDIA LinkedIn Page (http://www.linkedin.com/company/nvidia)
NVIDIA Instagram Page (https://www.instagram.com/nvidia)
In addition, investors and others 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.
2


PART I. FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS (UNAUDITED)
NVIDIA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data)
(Unaudited)
 Three Months EndedSix Months Ended
 July 26,July 28,July 26,July 28,
2020201920202019
Revenue$3,866 $2,579 $6,946 $4,799 
Cost of revenue1,591 1,038 2,667 1,962 
Gross profit2,275 1,541 4,279 2,837 
Operating expenses  
Research and development997 704 1,732 1,379 
Sales, general and administrative627 266 920 529 
Total operating expenses1,624 970 2,652 1,908 
Income from operations651 571 1,627 929 
Interest income13 47 44 92 
Interest expense(54)(13)(78)(27)
Other, net(1)1 (2)1 
Other income (expense), net
(42)35 (36)66 
Income before income tax609 606 1,591 995 
Income tax expense (benefit)(13)54 52 48 
Net income$622 $552 $1,539 $947 
Net income per share:
Basic$1.01 $0.91 $2.50 $1.56 
Diluted$0.99 $0.90 $2.47 $1.54 
Weighted average shares used in per share computation:
Basic616 609 615 608 
Diluted626 616 624 616 
See accompanying Notes to Condensed Consolidated Financial Statements.

3


NVIDIA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
(Unaudited)
 Three Months EndedSix Months Ended
 July 26,July 28,July 26,July 28,
2020201920202019
 
Net income$622 $552 $1,539 $947 
Other comprehensive income, net of tax
Available-for-sale securities:
Net change in unrealized gain3 1 3 9 
Reclassification adjustments for net realized gain (loss) included in net income(2) (2) 
Net change in unrealized gain1 1 1 9 
Cash flow hedges:
Net unrealized gain16  6 4 
Reclassification adjustments for net realized gain (loss) included in net income(3) (4)(2)
Net change in unrealized gain13  2 2 
Other comprehensive income, net of tax14 1 3 11 
Total comprehensive income$636 $553 $1,542 $958 
See accompanying Notes to Condensed Consolidated Financial Statements.

4


NVIDIA CORPORATION AND SUBSIDIARIES 
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
July 26,January 26,
 20202020
ASSETS
Current assets:  
Cash and cash equivalents$3,274 $10,896 
Marketable securities7,707 1 
Accounts receivable, net2,084 1,657 
Inventories1,401 979 
Prepaid expenses and other current assets215 157 
Total current assets14,681 13,690 
Property and equipment, net1,964 1,674 
Operating lease assets701 618 
Goodwill4,193 618 
Intangible assets, net2,854 49 
Deferred income tax assets630 548 
Other assets157 118 
Total assets$25,180 $17,315 
LIABILITIES AND SHAREHOLDERS’ EQUITY  
Current liabilities:  
Accounts payable$893 $687 
Accrued and other current liabilities1,517 1,097 
Total current liabilities2,410 1,784 
Long-term debt6,960 1,991 
Long-term operating lease liabilities611 561 
Other long-term liabilities1,285 775 
Total liabilities11,266 5,111 
Commitments and contingencies - see Note 13
Shareholders’ equity:  
Preferred stock  
Common stock1 1 
Additional paid-in capital7,828 7,045 
Treasury stock, at cost(10,232)(9,814)
Accumulated other comprehensive income4 1 
Retained earnings16,313 14,971 
Total shareholders' equity13,914 12,204 
Total liabilities and shareholders' equity$25,180 $17,315 
See accompanying Notes to Condensed Consolidated Financial Statements.

5


NVIDIA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED JULY 26, 2020 AND JULY 28, 2019
(Unaudited)
Common Stock
Outstanding
Additional Paid-in CapitalTreasury StockAccumulated Other Comprehensive Income (Loss)Retained EarningsTotal Shareholders' Equity
(In millions, except per share data)SharesAmount
Balances, April 26, 2020615 $1 $7,354 $(10,036)$(10)$15,790 $13,099 
Net income     622 622 
Other comprehensive income    14  14 
Issuance of common stock from stock plans 3  6    6 
Tax withholding related to vesting of restricted stock units(1)  (196)  (196)
Cash dividends declared and paid ($0.16 per common share)
     (99)(99)
Fair value of partially vested equity awards assumed in connection with acquisitions  86    86 
Stock-based compensation  382    382 
Balances, July 26, 2020617 $1 $7,828 $(10,232)$4 $16,313 $13,914 
Balances, April 28, 2019609 $1 $6,317 $(9,474)$(2)$12,862 $9,704 
Net income     552 552 
Other comprehensive income    1  1 
Tax withholding related to vesting of restricted stock units   (50)  (50)
Cash dividends declared and paid ($0.16 per common share)
     (97)(97)
Stock-based compensation  226    226 
Balances, July 28, 2019609 $1 $6,543 $(9,524)$(1)$13,317 $10,336 
See accompanying Notes to Condensed Consolidated Financial Statements.

6


NVIDIA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
FOR THE SIX MONTHS ENDED JULY 26, 2020 AND JULY 28, 2019
(Unaudited)
Common Stock
Outstanding
Additional Paid-in CapitalTreasury StockAccumulated Other Comprehensive Income (Loss)Retained EarningsTotal Shareholders' Equity
(In millions, except per share data)SharesAmount
Balances, January 26, 2020612 $1 $7,045 $(9,814)$1 $14,971 $12,204 
Net income     1,539 1,539 
Other comprehensive income    3  3 
Issuance of common stock from stock plans 7  94    94 
Tax withholding related to vesting of restricted stock units(2)  (418)  (418)
Cash dividends declared and paid ($0.32 per common share)
     (197)(197)
Fair value of partially vested equity awards assumed in connection with acquisitions  86    86 
Stock-based compensation  603    603 
Balances, July 26, 2020617 $1 $7,828 $(10,232)$4 $16,313 $13,914 
Balances, January 27, 2019606 $1 $6,051 $(9,263)$(12)$12,565 $9,342 
Net income     947 947 
Other comprehensive income    11  11 
Issuance of common stock from stock plans 5  83    83 
Tax withholding related to vesting of restricted stock units(2)  (261)  (261)
Cash dividends declared and paid ($0.32 per common share)
     (195)(195)
Stock-based compensation  409    409 
Balances, July 28, 2019609 $1 $6,543 $(9,524)$(1)$13,317 $10,336 
See accompanying Notes to Condensed Consolidated Financial Statements.
7


NVIDIA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
 Six Months Ended
July 26,July 28,
 20202019
Cash flows from operating activities:  
Net income$1,539 $947 
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation expense598 401 
Depreciation and amortization511 183 
Deferred income taxes(64)(27)
Other(5)1 
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable(205)(137)
Inventories(97)378 
Prepaid expenses and other assets34 36 
Accounts payable63 (45)
Accrued and other current liabilities81 (79)
Other long-term liabilities21 (2)
Net cash provided by operating activities2,476 1,656 
Cash flows from investing activities:  
Proceeds from maturities of marketable securities1,032 3,592 
Proceeds from sales of marketable securities259 3,152 
Purchases of marketable securities(8,286)(1,461)
Acquisition of businesses, net of cash acquired(7,171) 
Purchases of property and equipment and intangible assets(372)(241)
Investments and other, net(7)(2)
Net cash provided by (used in) investing activities(14,545)5,040 
Cash flows from financing activities:  
Issuance of debt, net of issuance costs4,971  
Proceeds related to employee stock plans94 83 
Payments related to tax on restricted stock units(418)(261)
Dividends paid(197)(195)
Other(3) 
Net cash provided by (used in) financing activities4,447 (373)
Change in cash and cash equivalents(7,622)6,323 
Cash and cash equivalents at beginning of period10,896 782 
Cash and cash equivalents at end of period$3,274 $7,105 
Other non-cash investing activity:  
Assets acquired by assuming related liabilities$257 $80 
See accompanying Notes to Condensed Consolidated Financial Statements.
8

NVIDIA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


Note 1 - Summary of Significant Accounting Policies
Basis of Presentation
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 26, 2020 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 26, 2020, 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 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, 2020. 
The unaudited condensed consolidated financial statements in this report include the financial results of Mellanox Technologies Ltd., or Mellanox, prospectively from April 27, 2020. For additional details, refer to Note 2 - Business Combination.
Significant Accounting Policies
Except for the accounting policies for business combination and investment in non-affiliated entities, there have been no material changes to our significant accounting policies disclosed in 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 26, 2020.
Business Combination
We allocate the fair value of the purchase price of an acquisition to the tangible assets acquired, liabilities assumed, and intangible assets acquired, including in-process research and development, or IPR&D, based on their estimated fair values. The excess of the fair value of the purchase price over the fair values of these net tangible and intangible assets acquired is recorded as goodwill. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but our estimates and assumptions are inherently uncertain and subject to refinement. The estimates and assumptions used in valuing intangible assets include, but are not limited to, the amount and timing of projected future cash flows, discount rate used to determine the present value of these cash flows and asset lives. These estimates are inherently uncertain and, therefore, actual results may differ from the estimates made. As a result, during the measurement period of up to one year from the acquisition date, we record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the fair value of the purchase price of an acquisition, whichever comes first, any subsequent adjustments are recorded to our condensed consolidated statements of income.
We initially capitalize the fair value of IPR&D as an intangible asset with an indefinite life. We assess for impairment thereafter. When IPR&D projects are completed, we reclassify the IPR&D as an amortizable purchased intangible asset and amortize over the asset’s estimated useful life.
Acquisition-related expenses are recognized separately from the business combination and expensed as incurred.
Investment in Non-Affiliated Entities
Non-marketable equity investments in privately-held companies are recorded at fair value on a non-recurring basis only if an impairment or observable price adjustment occurs in the period with changes in fair value recorded through net income. These investments are valued using observable and unobservable inputs or data in an inactive market and the valuation requires our judgment due to the absence of market prices and inherent lack of liquidity. The estimated fair value is based on quantitative and qualitative factors including subsequent financing activities by the investee.

9

NVIDIA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)


Fiscal Year
We operate on a 52- or 53-week year, ending on the last Sunday in January. Fiscal year 2021 is a 53-week year and fiscal year 2020 is a 52-week year. The second quarters of fiscal years 2021 and 2020 were both 13-week quarters.
Reclassifications
Certain prior fiscal year balances have been reclassified to conform to the current fiscal year presentation.
Principles of Consolidation
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.
Use of Estimates
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 materially from our 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. The inputs into our judgments and estimates consider the economic implications of COVID-19 on our critical and significant accounting estimates. These estimates are based on historical facts and various other assumptions that we believe are reasonable.
Adoption of New and Recently Issued Accounting Pronouncements
Recently Adopted Accounting Pronouncement
In June 2016, the Financial Accounting Standards Board issued a new accounting standard to replace the existing incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates for accounts receivable and other financial instruments, including available-for-sale debt securities. We adopted the standard in the first quarter of fiscal year 2021 and the impact of the adoption was not material to our consolidated financial statements.

Note 2 - Business Combination
On April 27, 2020, we completed the acquisition of all outstanding shares of Mellanox for a total purchase consideration of $7.13 billion. Mellanox is a supplier of high-performance interconnect products for computing, storage and communications applications. We acquired Mellanox to optimize data center workloads to scale across the entire computing, networking, and storage stack.

10

NVIDIA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)


Preliminary Purchase Price Allocation
The aggregate purchase consideration has been preliminarily allocated as follows (in millions):


Purchase Price
Cash paid for outstanding Mellanox ordinary shares (1)$7,033 
Cash for Mellanox equity awards (2)16 
Total cash consideration7,049 
Fair value of Mellanox equity awards assumed by NVIDIA (3)85 
Total purchase consideration$7,134 
Allocation
Cash and cash equivalents$115 
Marketable securities699 
Accounts receivable, net216 
Inventories320 
Prepaid expenses and other assets179 
Property and equipment, net144 
Goodwill3,431 
Intangible assets2,970 
Accounts payable(136)
Accrued and other current liabilities(236)
Income tax liability(191)
Deferred income tax liability(258)
Other long-term liabilities(119)
$7,134 

(1) Represents the cash consideration of $125.00 per share paid to Mellanox shareholders for approximately 56 million shares of outstanding Mellanox ordinary shares.
(2) Represents the cash consideration for the settlement of approximately 249 thousand Mellanox stock options held by employees and non-employee directors of Mellanox.
(3) Represents the fair value of Mellanox’s stock-based compensation awards attributable to pre-combination services.

We allocated the purchase price to tangible and identified intangible assets acquired and liabilities assumed based on the preliminary estimates of their estimated fair values, which were determined using generally accepted valuation techniques based on estimates and assumptions made by management at the time of the acquisition and are subject to change during the measurement period which is not expected to exceed one year. The primary tasks that are required to be completed include validation of business level forecasts, jurisdictional forecasts, customer attrition rates, contingent liabilities assessments and any related tax impacts from the acquisition. Any adjustments to our preliminary purchase price allocation identified during the measurement period will be recognized in the period in which the adjustments are determined.
The goodwill is primarily attributable to the planned growth in the combined business of NVIDIA and Mellanox. Goodwill is not amortized to earnings, but instead is reviewed for impairment at least annually, absent any interim indicators of impairment. Goodwill recognized in the acquisition is not expected to be deductible for foreign tax purposes. Goodwill arising from the Mellanox acquisition has been allocated to the Compute and Networking segment. Refer to Note 15 – Segment Information for further details on segments.
The operating results of Mellanox have been included in our condensed consolidated financial statements for the second quarter of fiscal year 2021 from the acquisition date. Revenue attributable to Mellanox was approximately 14% of consolidated revenue. There is not a practical way to determine net income attributable to Mellanox due to integration.
11

NVIDIA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)


Acquisition-related costs of $26 million were included in selling, general and administrative expense for the first half of fiscal year 2021.
Intangible Assets
The estimated fair value and weighted average useful life of the acquired intangible assets are as follows:
Fair ValueWeighted Average Useful Lives
(In millions)
Developed technology (1)$1,640 5 years
Customer relationships (2)440 3 years
Order backlog (3)190 Based on actual shipments
Trade names (4)70 5 years
Total identified finite-lived intangible assets2,340 
IPR&D (5)630 N/A
Total identified intangible assets$2,970 

(1) The fair value of developed technology was identified using the Multi-Period Excess Earning Method.
(2) Customer relationships represent the fair value of the existing relationships using the With and Without Method.
(3) Order backlog represents primarily the fair value of purchase arrangements with customers using the Multi-Period Excess Earning Method.
(4) Trade names primarily relate to Mellanox trade names and fair value was determined by applying the Relief-from-Royalty Method under the income approach.
(5) The fair value of IPR&D was determined using the Multi-Period Excess Earning Method.

The fair value of the finite-lived intangible assets will be amortized over the estimated useful lives based on the pattern in which the economic benefits are expected to be received to cost of revenue and operating expenses.
Mellanox had an IPR&D project associated with the next generation interconnect product that had not yet reached technological feasibility as of the acquisition date. Accordingly, we recorded an indefinite-lived intangible asset of $630 million for the fair value of this project, which will initially not be amortized. Instead, the project will be tested for impairment whenever events or changes in circumstances indicate that the project may be impaired or may have reached technological feasibility. Once the project reaches technological feasibility, we will begin to amortize the intangible asset over its estimated useful life.
Supplemental Unaudited Pro Forma Information
The following unaudited pro forma financial information summarizes the combined results of operations for NVIDIA and Mellanox as if the companies were combined as of the beginning of fiscal year 2020:
Pro Forma
 Three Months EndedSix Months Ended
 July 26,
2020
July 28,
2019
July 26,
2020
July 28,
2019
(In millions)
Revenue$3,866 $2,889 $7,375 $5,415 
Net income$964 $411 $1,883 $404 
12

NVIDIA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)


The unaudited pro forma information includes adjustments related to amortization of acquired intangible assets, adjustments to stock-based compensation expense, fair value of acquired inventory, and transaction costs. The unaudited pro forma information presented above is for informational purposes only and is not necessarily indicative of our consolidated results of operations of the combined business had the acquisition actually occurred at the beginning of fiscal year 2020 or of the results of our future operations of the combined businesses.
The pro forma results reflect the inventory step-up expense of $161 million in the first half of fiscal year 2020 and were excluded from the pro forma results for the second quarter and first half of fiscal year 2021. There were no other material nonrecurring adjustments.

Note 3 - Leases
Our lease obligations primarily consist of operating leases for our headquarters complex, domestic and international office facilities, and data center space, with lease periods expiring between fiscal years 2021 and 2035.
Future minimum lease payments under our non-cancelable operating leases as of July 26, 2020, are as follows:   
Operating Lease Obligations
 (In millions)
Fiscal Year: 
2021 (excluding first half of fiscal year 2021)$74 
2022139 
2023119 
202499 
202580 
2026 and thereafter344 
Total855 
Less imputed interest120 
Present value of net future minimum lease payments735 
Less short-term operating lease liabilities124 
Long-term operating lease liabilities$611 
Operating lease expense was $35 million and $28 million for the second quarter of fiscal years 2021 and 2020, respectively, and $67 million and $55 million for the first half of fiscal years 2021 and 2020, respectively. Short-term and variable lease expenses for the second quarter and first half of fiscal years 2021 and 2020 were not significant.
Other information related to leases was as follows:
Six Months Ended
July 26, 2020July 28, 2019
 (In millions)
Supplemental cash flows information 
Operating cash flows used for operating leases$66 $50 
Operating lease assets obtained in exchange for lease obligations (1)$138 $108 
(1) The first half of fiscal year 2021 includes $80 million of operating lease assets addition due to a business combination.
As of July 26, 2020, our operating leases had a weighted average remaining lease term of 8.0 years and a weighted average discount rate of 3.08%. As of January 26, 2020, our operating leases had a weighted average remaining lease term of 8.3 years and a weighted average discount rate of 3.45%.
13

NVIDIA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)



Note 4 - Stock-Based Compensation
Our stock-based compensation expense is associated with 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 allocated to inventory, as follows:
 Three Months EndedSix Months Ended
 July 26,
2020
July 28,
2019
July 26,
2020
July 28,
2019
(In millions)
Cost of revenue$14 $8 $35 $12 
Research and development228 145 362 259 
Sales, general and administrative132 71 201 130 
Total$374 $224 $598 $401 
Equity Award Activity
The following is a summary of equity award transactions under our equity incentive plans:
RSUs, PSUs, and Market-based PSUs Outstanding
 Number of SharesWeighted Average Grant-Date Fair Value Per Share
(In millions, except per share data)
Balances, January 26, 202014 $176.72 
Granted8 $291.89 
Vested restricted stock(5)$149.90 
Balances, July 26, 202017 $239.22 

As of July 26, 2020, there was $3.60 billion of aggregate unearned stock-based compensation expense, net of forfeitures. This amount is expected to be recognized over a weighted average period of 2.8 years for RSUs, PSUs, and market-based PSUs, and 0.9 years for ESPP.


14

NVIDIA CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)


Note 5 – Net Income Per Share
The following is a reconciliation of the denominator of the basic and diluted net income per share computations for the periods presented:
 Three Months EndedSix Months Ended
July 26,July 28,July 26,July 28,
2020201920202019
 (In millions, except per share data)
Numerator:  
Net income
$622 $552 $1,539