NVIDIA CORP MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS (Form 10-Q)

Forward-looking statements

This Quarterly Report on Form 10-Q contains forward-looking statements which are
based on our management's beliefs and assumptions and on information currently
available to our management. In some cases, you can identify forward-looking
statements by terms such as "may," "will," "should," "could," "goal," "would,"
"expect," "plan," "anticipate," "believe," "estimate," "project," "predict,"
"potential" and similar expressions intended to identify forward-looking
statements. These statements involve known and unknown risks, uncertainties and
other factors, which may cause our actual results, performance, time frames or
achievements to be materially different from any future results, performance,
time frames or achievements expressed or implied by the forward-looking
statements. We discuss many of these risks, uncertainties and other factors in
this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the
fiscal year ended January 30, 2022 in greater detail under the heading "Risk
Factors" of such reports. Given these risks, uncertainties and other factors,
you should not place undue reliance on these forward-looking statements. Also,
these forward-looking statements represent our estimates and assumptions only as
of the date of this filing. You should read this Quarterly Report on Form 10-Q
completely and with the understanding that our actual future results may be
materially different from what we expect. We hereby qualify our forward-looking
statements by these cautionary statements. Except as required by law, we assume
no obligation to update these forward-looking statements publicly, or to update
the reasons actual results could differ materially from those anticipated in
these forward-looking statements, even if new information becomes available in
the future.

All references to “NVIDIA”, “we”, “us”, “our” or the “Company” mean NVIDIA Corporation and its subsidiaries.

NVIDIA, the NVIDIA logo, GeForce, GeForce NOW, Mellanox, NVIDIA AI Enterprise,
NVIDIA DGX, NVIDIA DRIVE Orin, NVIDIA Grace, NVIDIA Hopper, NVIDIA Omniverse,
NVIDIA OVX, NVIDIA RTX, NVIDIA Spectrum and Quadro, are trademarks and/or
registered trademarks of NVIDIA Corporation in the United States and/or other
countries. MAXQ® is the registered trademark of Maxim Integrated Products, Inc.
Other company and product names may be trademarks of the respective companies
with which they are associated. Features, pricing, availability, and
specifications are subject to change without notice.

The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with the risk factors set forth in Item
1A. "Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended
January 30, 2022 and Part II, Item 1A. "Risk Factors" of this Quarterly Report
on Form 10-Q and our Condensed Consolidated Financial Statements and related
Notes thereto, as well as other cautionary statements and risks described
elsewhere in this Quarterly Report on Form 10-Q, before deciding to purchase or
sell shares of our common stock.

Insight

Our company and our activities

NVIDIA pioneered accelerated computing to help solve the most challenging
computational problems. Since our original focus on PC graphics, we have
expanded to several other large and important computationally intensive fields.
Fueled by the sustained demand for exceptional 3D graphics and the scale of the
gaming market, NVIDIA has leveraged its GPU architecture to create platforms for
scientific computing, AI, data science, autonomous vehicles, robotics, and
augmented and virtual reality.

Our two operating segments are “Graphics” and “Compute & Networking”, as described in note 15 of the notes to the condensed consolidated financial statements.

Based at Santa Clara, CaliforniaNVIDIA was incorporated in California
in April 1993 and reinstated in Delaware in April 1998.

Recent developments, future goals and challenges

Termination of Arm stock purchase agreement

On February 8, 2022, NVIDIA and SoftBank announced the termination of the Share
Purchase Agreement whereby NVIDIA would have acquired Arm from SoftBank. The
parties agreed to terminate because of significant regulatory challenges
preventing the completion of the transaction. We recorded an acquisition
termination cost of $1.35 billion in the first quarter of fiscal year 2023
reflecting the write-off of the prepayment provided at signing in September
2020.


                                       21
--------------------------------------------------------------------------------

Request

Demand for our products is based on many factors, including our product
introductions and transitions, time to market, competitor product releases and
announcements, competing technologies, and changes in macroeconomic conditions,
including rising inflation, all of which can impact the timing and volume of our
revenue. Product transitions are complex and can negatively impact our revenue
as we manage shipments of prior architecture products and channel partners
prepare and adjust to support new products. GPUs have use cases in addition to
their designed and marketed use case, such as for digital currency mining,
including blockchain-based platforms such as Ethereum. It is difficult for us to
estimate with any reasonable degree of precision the past or current impact of
cryptocurrency mining, or forecast the future impact of cryptocurrency mining,
on demand for our products. Volatility in the cryptocurrency market, including
new compute technologies, price changes in cryptocurrencies, government
cryptocurrency policies and regulations, new cryptocurrency standards, and
changes in the method of verifying blockchain transactions, have impacted and
can in the future impact cryptocurrency mining and demand for our products and
can further impact our ability to estimate demand for our products. Changes to
cryptocurrency standards and processes including, but not limited to, the
pending Ethereum 2.0 standard may decrease the usage of GPUs for Ethereum mining
as well as create increased aftermarket resales of our GPUs, impact retail
prices for our GPUs, increase returns of our products in the distribution
channel, and may reduce demand for our new GPUs. We have introduced Lite Hash
Rate, or LHR, GeForce GPUs with limited Ethereum mining capability and provided
CMP products in an effort to address demand from gamers and direct miners to
CMP. Beginning in the second quarter of fiscal year 2022, most desktop NVIDIA
Ampere architecture GeForce GPU shipments were LHR in our effort to direct
GeForce to gamers. Attempts in the aftermarket to improve the hash rate
capabilities of our LHR cards have been successful and our gaming cards may
become more attractive to miners, increasing demand for our gaming GPUs and
limiting our ability to supply our gaming cards to non-mining customers. We
cannot predict whether our strategy of using LHR cards and CMP will achieve our
desired outcome. Additionally, consumer and enterprise behavior during the
COVID-19 pandemic has made it more difficult for us to estimate future demand
and may have changed pre-pandemic behaviors. These challenges may be more
pronounced or volatile in the future on both a global and regional basis and may
continue in the future when the effects of the pandemic subside. Restrictions
that may be imposed or reinstated as the pandemic continues may negatively
impact customer demand for our products. Recent lockdown measures due to
COVID-19 containment efforts in China, as well as the war in Ukraine, have
impacted end customer sales in China and EMEA, respectively, and we expect this
impact to continue into the second quarter of fiscal year 2023. During the first
quarter of fiscal year 2023, we paused all direct sales in Russia. Direct sales
to Russia in fiscal year 2022 were immaterial. Our revenue to partners that sell
into Russia may be negatively impacted due to the war in Ukraine and we estimate
that in fiscal year 2022, Russia accounted for approximately 2% of total end
customer sales and 4% of Gaming end customer sales. In estimating demand and
evaluating trends, we make multiple assumptions, any of which may prove to be
incorrect.

Supply

Our manufacturing lead times are very long and in some cases extend twelve
months or longer, which requires us to make estimates of customers' future
demand. These conditions could lead to a significant mismatch between supply and
demand, giving rise to product shortages or excess inventory, and make our
demand forecast more uncertain. To shorten shipment lead times and deliver more
quickly to our customers, we may build finished products and maintain inventory
for anticipated demand that does not materialize. During fiscal year 2022, we
made substantial strides in broadening our supply base to scale our company and
better serve customer demand. Recent COVID-19-related disruptions and lockdowns
in China have created and are expected to continue to create supply and
logistics constraints. The war in Ukraine has further strained global supply
chains and could result in a shortage of key materials that our suppliers,
including our foundry partners, require to satisfy our needs. We expect
continued supply constraints for some of our products, such as Networking,
through the end of the second quarter of fiscal year 2023 and potentially
beyond. We have placed orders for certain supply in advance of our historical
lead times, paid premiums and provided deposits to secure future supply and
capacity, and may need to continue to do so in the future. Placing orders in
advance of our historical lead times to secure supply and services in a
constrained environment may result in excess inventory, cancellation penalties
or other charges if there is a partial or complete reduction in long-term demand
for our products. These actions may also increase our product costs, in addition
to increased overall costs as a result of rising inflation. Increased costs for
wafers, components, logistics, and other supply chain expenses, driven in part
by inflation, have negatively impacted and may continue to impact our gross
margin. Given our long lead times on inventory purchasing, we may order
components before our product design is finalized and changes to the product
design or to end demand, which may be perishable or may disappear, could trigger
excess inventory. Our supply deliveries and production may be non-linear within
a quarter or year which could cause changes to expected revenue or cash flows.


                                       22
--------------------------------------------------------------------------------

COVID-19[feminine]

The COVID-19 pandemic continued during fiscal year 2023. Most of our employees
continue to work remotely and we have paused most business travel. Our
Professional Visualization market platform benefited from demand for
workstations as enterprises support hybrid work environments. Recent
COVID-19-related disruptions in China are creating supply and logistics
constraints and impacting end customer sales. As our offices begin to reopen, we
expect to incur incremental expenses as we resume onsite services and related
in-office costs.

As the COVID-19 pandemic continues, the timing and overall demand from
customers, and the limited availability of supply chain, logistical services and
component supply may have a material net negative impact on our business and
financial results.

We estimate that our existing balances of cash, cash equivalents and marketable securities, as well as commercial paper arrangements, will be sufficient to meet our working capital requirements, capital purchases, dividends, payables and other cash requirements associated with our existing operations.

Summary of the first quarter of fiscal 2023

                                                        Three Months Ended
                                    May 1, 2022          January 30, 2022         May 2, 2021           Quarter-over-Quarter Change           Year-over-Year Change

                                              ($ in millions, except per share data)
Revenue                            $     8,288          $        7,643           $     5,661                                     8  %                           46  %
Gross margin                              65.5  %                 65.4   %              64.1  %                                10 bps                         140 bps
Operating expenses                 $     3,563          $        2,029           $     1,673                                    76  %                          113  %
Income from operations             $     1,868          $        2,970           $     1,956                                   (37) %                           (4) %
Net income                         $     1,618          $        3,003           $     1,912                                   (46) %                          (15) %
Net income per diluted share       $      0.64          $         1.18           $      0.76                                   (46) %                          (16) %


We specialize in markets where our computing platforms can provide tremendous
acceleration for applications. These platforms incorporate processors,
interconnects, software, algorithms, systems, and services to deliver unique
value. Our platforms address four large markets where our expertise is critical:
Gaming, Data Center, Professional Visualization, and Automotive.

Revenue for the first quarter of fiscal year 2023 is $8.29 billionup 46% from a year ago and 8% sequentially.

Games revenue was up 31% from a year ago and 6% sequentially. The year-over-year increase reflects higher sales of GeForce GPUs based on our NVIDIA Ampere architecture. The sequential increase is due to higher sales of GeForce GPUs for laptops and SOCs for game consoles.

Our GPUs are capable of cryptocurrency mining, though we have limited visibility
into how much this impacts our overall GPU demand. Volatility in the
cryptocurrency market - such as the recent declines in cryptocurrency prices or
changes in method of verifying transactions, including proof of work or proof of
stake - can impact demand for our products and our ability to accurately
estimate it. Most desktop NVIDIA Ampere architecture GeForce GPU shipments were
Lite Hash Rate to help direct GeForce GPUs to gamers.

Data Center revenue was up 83% from a year ago and up 15% sequentially. These
increases were primarily driven by sales of NVIDIA Ampere architecture GPUs and
DGX systems used across both training and inference. Growth was led by cloud
computing and hyperscale customers for workloads such as natural language
processing and deep recommenders.

Professional viewing revenue increased 67% from a year ago and decreased 3% sequentially. The year-over-year increase was driven by sales of NVIDIA Ampere architecture products with growth in workstations as enterprises support hybrid work environments. The sequential decline was due to lower sales of desktop workstation GPUs, partially offset by higher sales of laptop workstation GPUs.

Automotive revenue was down 10% from a year ago and up 10% sequentially. The
year-on-year decrease was due to automakers' supply constraints and the decline
of legacy cockpit revenue. The sequential increase was driven by AI cockpit
revenue.

                                       23

--------------------------------------------------------------------------------



OEM and Other revenue was down 52% from a year ago and down 18% sequentially.
The year-on-year decrease was due to a decline in CMP revenue, which was nominal
in the quarter compared with $155 million from a year ago. The sequential
decrease was driven by lower entry level notebook GPU sales.

GAAP gross margin increased 140 basis points from a year ago, primarily due to a high-end mix of GeForce GPUs in games and the reduced impact of acquisition-related costs. Sequentially, GAAP gross margin increased 10 basis points due to increased contribution and favorable product mix changes within the data center, partially offset by higher game console SOC sales.

GAAP operating expenses were up 113% from a year ago and up 76% sequentially and
include a $1.35 billion acquisition termination charge related to the Arm
transaction. These increases were also driven by employee growth,
compensation-related costs and engineering development costs. We have been
successful in hiring this year and expect to slow hiring in the second half of
fiscal year 2023 as we integrate our new employees.

Income from operations was $1.87 billion, down 4% from a year ago and down 37%
sequentially. Net income was a $1.62 billion. Net income per diluted share was
$0.64, down 16% from a year ago and down 46% sequentially.

Cash, cash equivalents and marketable securities were $20.34 billion, up from
$12.67 billion a year ago and down from $21.21 billion a quarter ago. The
year-on-year increase reflects operating cash flow generation and $5.00 billion
of debt issuance proceeds. The sequential decrease reflects share repurchases
and advanced payments on supply agreements.

During the first quarter of fiscal 2023, we returned $2.10 billion to shareholders in the form of share buybacks and cash dividends.

On May 23, 2022our Board of Directors has increased and extended our share buyback program to repurchase additional common shares up to a total of $15 billion through December 2023.

Marketplace Platform Highlights

In our Data Center Marketplace, we announced the NVIDIA Hopper GPU architecture and its first products based on the architecture, including the NVIDIA H100 Tensor Core GPU and the fourth-generation NVIDIA DGX system. Additionally, we announced the super NVIDIA Grace CPU chip; unveiled the NVIDIA Spectrum-4 400 Gbps end-to-end networking platform; and announced the NVIDIA OVX server reference design for digital twins and other Omniverse applications.

In our Gaming market platform, we introduced the GeForce RTX 3090 Ti
enthusiast-class desktop GPU; announced that there are now over 180 laptop
models featuring RTX 30-series GPUs and our energy efficient, thin & light Max-Q
technologies; announced that 15 new game titles added support for NVIDIA RTX
features, bringing the total to over 250 games and applications; and expanded
the GeForce NOW cloud gaming service library with over 100 games, bringing the
total to over 1,300.

In our Professional Visualization market platform, we added new NVIDIA Ampere
architecture RTX GPUs for workstations and announced that Amazon Robotics is
building AI-enabled digital twins of its warehouses using NVIDIA Omniverse
Enterprise.

In our automotive market platform, we launched production of the NVIDIA DRIVE Orin autonomous vehicle SOC and announced gains with Lucid Engines and BYD.

Financial information by business sector and geographic data

Refer to note 15 of the notes to the condensed consolidated financial statements for information on segment information.

Significant Accounting Policies and Estimates

Refer to Part II, Item 7, "Critical Accounting Policies and Estimates" of our
Annual Report on Form 10-K for the fiscal year ended January 30, 2022. There
have been no material changes to our Critical Accounting Policies and Estimates.


                                       24
--------------------------------------------------------------------------------

Operating results

The following table sets forth, for the periods indicated, certain items in our
Condensed Consolidated Statements of Income expressed as a percentage of
revenue.

                                              Three Months Ended
                                             May 1,            May 2,
                                              2022              2021
Revenue                                           100.0  %     100.0  %
   Cost of revenue                                 34.5         35.9
Gross profit                                       65.5         64.1
Operating expenses
   Research and development                        19.5         20.4
   Sales, general and administrative                7.1          9.2
Acquisition termination cost                       16.3            -
Total operating expenses                           42.9         29.6
Income from operations                             22.6         34.5
   Interest income                                  0.2          0.1
   Interest expense                                (0.8)        (0.9)
   Other, net                                      (0.2)         2.4
Other income (expense), net                        (0.8)         1.6
Income before income tax                           21.8         36.1
Income tax expense                                  2.3          2.3
Net income                                         19.5  %      33.8  %


Revenue

Revenue by segments to be reported

                                     Three Months Ended
                        May 1,       May 2,          $           %
                         2022         2021        Change       Change

                                       ($ in millions)
Graphics               $ 4,616      $ 3,451      $ 1,165         34  %

Calculation and network 3,672 2,210 1,462 66% Total

                  $ 8,288      $ 5,661      $ 2,627         46  %


Graphics - Graphics segment revenue increased by 34% in the first quarter of
fiscal year 2023 compared to the first quarter of fiscal year 2022. We continue
to benefit from increased sales of our NVIDIA Ampere architecture products. The
increase in Gaming revenue during the first quarter of fiscal year 2023 resulted
from a combination of factors including: the ramp of new RTX 30 Series GPUs; the
release of new games supporting ray tracing; the rising popularity of gaming,
eSports, content creation and streaming; the demand for new and upgraded systems
to support the increase in remote work; and the ability of end users to engage
in cryptocurrency mining.

Compute & Networking - Compute & Networking segment revenue increased by 66% for
the first quarter of fiscal year 2023 compared to the first quarter of fiscal
year 2022, driven primarily by sales of NVIDIA Ampere architecture products to
hyperscale customers for cloud computing and workloads such as natural language
processing and deep recommender models, as well as to vertical industries. The
increase also reflects an increase in sales of networking products. CMP
contributed an insignificant amount in the first quarter of fiscal year 2023
compared to $155 million in the prior year.


                                       25

--------------------------------------------------------------------------------

Revenue concentration

Revenue from sales to customers outside of the United States accounted for 77%
and 86% of total revenue for the first quarter of fiscal years 2023 and 2022,
respectively. Revenue by geographic region is allocated to individual countries
based on the location to which the products are initially billed even if the
revenue is attributable to end customers in a different location.

No customer accounted for 10% or more of total revenue in the first quarter of fiscal 2023 or 2022.

Gross Margin

Our overall gross margin increased to 65.5% for the first quarter of fiscal year
2023 from 64.1% for the first quarter of fiscal year 2022, reflecting a
higher-end mix of GeForce GPUs within our Graphics segment and a reduced impact
to gross margin for acquisition-related costs.

Inventory provisions totaled $90 million and $58 million for the first quarter
of fiscal years 2023 and 2022, respectively. Sales of inventory that was
previously written-off or down totaled $15 million and $21 million for the first
quarter of fiscal years 2023 and 2022, respectively. As a result, the overall
net effect on our gross margin was an unfavorable impact of 0.9% and 0.6% in the
first quarter of fiscal years 2023 and 2022, respectively.

Graphics - The gross margin of our Graphics segment increased during the first
quarter of fiscal year 2023 compared to the first quarter of fiscal year 2022,
primarily due to a higher-end mix within GeForce GPUs.

Compute & Networking – Our Compute & Networking segment gross margin decreased in the first quarter of Fiscal 2023 compared to the first quarter of Fiscal 2022, primarily due to lower contribution from legacy boards compared to NVIDIA Ampere architecture systems.

Operating Expenses

                                                            Three Months Ended
                                               May 1,        May 2,          $           %
                                                2022          2021        Change       Change

                                                              ($ in millions)
Research and development expenses            $ 1,618       $ 1,153       $   465         40  %
% of net revenue                                  20  %         20  %
Sales, general and administrative expenses       592           520            72         14  %
% of net revenue                                   7  %          9  %
Acquisition termination cost                   1,353             -         1,353        100  %
% of net revenue                                  16  %          -  %
Total operating expenses                     $ 3,563       $ 1,673       $ 1,890        113  %


Research and Development

Research and development expenses increased by 40% during the first quarter of
fiscal year 2023 compared to the first quarter of fiscal year 2022, primarily
driven by compensation-related costs, including for employee growth and
stock-based compensation, and engineering development costs.

Sales, general and administrative

Sales, general and administrative expenses increased by 14% during the first
quarter of fiscal year 2023 compared to the first quarter of fiscal year 2022,
primarily driven by compensation-related costs, associated with employee growth
and stock-based compensation, partially offset by lower legal fees.

Acquisition termination cost

We recorded an acquisition termination cost related to the Arm transaction of
$1.35 billion in the first quarter of fiscal year 2023 reflecting the write-off
of the prepayment provided at signing in September 2020.


                                       26

--------------------------------------------------------------------------------

Other income (expenses), net

Interest income includes interest earned on cash, cash equivalents and marketable securities. Interest income was $18 million and $6 million for the first quarter of fiscal 2023 and 2022, respectively. The increase in interest income is primarily due to higher interest rates earned on our investments and increased cash balances.

Interest expense is primarily comprised of coupon interest and debt discount
amortization related to our notes. Interest expense was $68 million and $53
million during the first quarter of fiscal years 2023 and 2022, respectively.
The increase in expense reflects interest on the $5.00 billion note issued in
June 2021.

Other, net, consists primarily of realized or unrealized gains and losses from
investments in non-affiliated entities and the impact of changes in foreign
currency rates. Other, net, was an expense of $13 million and income of $135
million during the first quarter of fiscal years 2023 and 2022, respectively.
Changes in other, net, compared to the first quarter of fiscal year 2022 were
primarily driven by mark-to-market impact from public trading equity investments
and changes in value from our non-affiliated private investments. Refer to Note
8 of the Notes to Condensed Consolidated Financial Statements for additional
information regarding our investments in non-affiliated entities.

Income taxes

We recognized an income tax expense of $187 million and $132 million for the
first quarter of fiscal years 2023 and 2022, respectively. The income tax
expense as a percentage of income before income tax was 10.3% and 6.5% for the
first quarter of fiscal years 2023 and 2022, respectively.

The increase in our effective tax rate was primarily due to an increase in the
amount of earnings subject to U.S. tax, the Arm acquisition termination cost
recorded in the first quarter of fiscal year 2023 which did not result in any
material tax benefit, and a decreased impact of tax benefit from the U.S.
federal research tax credit, partially offset by the increased benefits from the
foreign-derived intangible income deduction and stock-based compensation. If our
stock price declines, the future tax benefits from stock-based compensation may
decline, resulting in an increase in tax expense.

Cash and capital resources

                                                    May 1, 2022       January 30, 2022

                                                              (In millions)
Cash and cash equivalents                          $      3,887      $          1,990
Marketable securities                                    16,451                19,218

Cash, cash equivalents and marketable securities $20,338 $

   21,208


                                                            Three Months Ended
                                                       May 1, 2022      May 2, 2021

                                                               (In millions)
Net cash provided by operating activities             $     1,731      $    

1,874

Net cash provided by (used in) investing activities $2,612 $

(1,272)

Net cash used in financing activities                 $    (2,446)     $    

(471)


As of May 1, 2022, we had $20.34 billion in cash, cash equivalents and
marketable securities, a decrease of $0.87 billion from the end of fiscal year
2022. Our investment policy requires the purchase of highly rated fixed income
securities, the diversification of investment types and credit exposures, and
certain maturity limits on our portfolio.

Cash provided by operating activities decreased in the first quarter of fiscal
year 2023 compared to the first quarter of fiscal year 2022, primarily due to
advanced payments on supply agreements in the first quarter of fiscal year 2023
partially offset by an increase in net income adjusted for certain non-cash
items, such as the Arm acquisition termination cost of $1.35 billion during the
first quarter of fiscal year 2023.

Cash provided by investing activities increased in the first quarter of fiscal
year 2023 compared to cash used in the first quarter of fiscal year 2022,
primarily driven by higher marketable securities sales and maturities and lower
purchases of marketable securities.

                                       27

--------------------------------------------------------------------------------



Cash used in financing activities increased in the first quarter of fiscal year
2023 compared to the first quarter of fiscal year 2022, which primarily reflects
share repurchases in the first quarter of fiscal year 2023.

Liquidity

Our primary sources of liquidity are our cash and cash equivalents, our
marketable securities, and the cash generated by our operations. As of May 1,
2022, we had $20.34 billion in cash, cash equivalents, and marketable
securities. Our marketable securities consist of debt securities issued by the
U.S. government and its agencies, highly rated corporations and financial
institutions, and foreign government entities, as well as certificates of
deposit issued by highly rated financial institutions. These marketable
securities are primarily denominated in U.S. dollars. Refer to Note 7 of the
Notes to Condensed Consolidated Financial Statements for additional information.
We believe that we have sufficient liquidity to meet our operating requirements
for at least the next twelve months, and for the foreseeable future, including
our future supply obligations and additional supply. We continuously evaluate
our liquidity and capital resources, including our access to external capital,
to ensure we can finance our future capital requirements.

We have approximately $1.38 billion of cash, cash equivalents, and marketable
securities held outside the U.S. for which we have not accrued any related
foreign or state taxes if we repatriate these amounts to the U.S. Other than
that, substantially all of our cash, cash equivalents and marketable securities
held outside of the U.S. as of May 1, 2022 are available for use in the U.S.
without incurring additional U.S. federal income taxes. We utilized almost all
of our accumulated U.S. federal research tax credits during fiscal year 2022,
resulting in higher cash tax payments starting in fiscal year 2023. In addition,
beginning in fiscal year 2023, the 2017 Tax Cuts and Jobs Act requires taxpayers
to capitalize research and development expenditures and to amortize domestic
expenditures over five years and foreign expenditures over fifteen years. This
will impact cash flows from operations and will result in significantly higher
cash tax payments starting in fiscal year 2023.

Return of capital to shareholders

During the first quarter of fiscal year 2023, we returned $2.00 billion in share
repurchases and $100 million in cash dividends. On May 23, 2022, our Board of
Directors increased and extended our share repurchase program to repurchase
additional common stock up to a total of $15 billion through December 2023.

Our cash dividend program and the payment of future cash dividends under that
program are subject to the continuing determination by our Board of Directors
that the dividend program and the declaration of dividends are in the best
interests of our shareholders.

Outstanding debt and commercial paper

From May 1, 2022we had pending:

• $1.25 billion in bonds maturing in 2023;

• $1.25 billion in bonds maturing in 2024;

• $1.00 billion of bonds maturing in 2026;

• $1.25 billion in bonds maturing in 2028;

•1.50 billion dollars of bonds maturing in 2030;

•1.25 billion dollars of bonds maturing in 2031;

• $1.00 billion in bonds due in 2040;

• $2.00 billion in bonds due in 2050; and

• $500 million in notes due in 2060.

We have a $575 million commercial paper program to support general business needs. From May 1, 2022we had not issued any commercial paper.

Contractual obligations

We have unrecognized tax benefits of $800 million, which includes related
interest and penalties of $67 million recorded in non-current income tax payable
as of May 1, 2022. We are unable to reasonably estimate the timing of any
potential tax liability, interest payments, or penalties in individual years due
to uncertainties in the underlying income tax positions and the timing of the
effective settlement of such tax positions. We are currently under examination
by the

                                       28
--------------------------------------------------------------------------------

Internal Revenue Service for our 2018 and 2019 fiscal years. Refer to Note 6 of the Notes to the Condensed Consolidated Financial Statements for more information.

Other than the contractual obligations described above, there were no material
changes outside the ordinary course of business in our contractual obligations
from those disclosed in our Annual Report on Form 10-K for the fiscal year ended
January 30, 2022. Refer to Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital Resources"
in our Annual Report on Form 10-K for the fiscal year ended January 30, 2022 for
a description of our contractual obligations. For a description of our operating
lease obligations, long-term debt, and purchase obligations, refer to Note 3,
Note 12, and Note 13 of the Notes to Condensed Consolidated Financial
Statements, respectively.

Climate change

To date, there has been no material impact to our results of operations
associated with global sustainability regulations, compliance, costs from
sourcing renewable energy or climate-related business trends. There are no
material current climate change regulations impacting us, however, we are
monitoring potential regulation changes in California, the United States, the
United Kingdom, the European Union and other jurisdictions. We believe that
climate change has not had a material impact to our revenue to date. We have not
experienced any significant physical effects of climate change to date on our
operations and results, nor any significant impacts on the cost or availability
of insurance. In fiscal year 2024, we plan to launch Earth-2, an AI
supercomputer dedicated to predicting the impacts of climate change.

Adoption of new and recently issued accounting pronouncements

Refer to Note 1 of the Notes to the Condensed Consolidated Financial Statements for a discussion of the adoption of a recently issued new accounting pronouncement.

© Edgar Online, source Previews

About Chris McCarter

Check Also

LIFESTANCE HEALTH GROUP, INC. Management report and analysis of the financial situation and operating results. (Form 10-Q)

The following discussion and analysis of our financial condition and results of operations should be …