8-KMaterial AgreementsFinancial EventsSecurities & Listing+2

NVIDIA CORP 8-K Report, Material Agreement (Dec 2, 2013)

Filed December 2, 2013For Securities:NVDA

Summary

NVIDIA Corporation (NVDA) filed an 8-K on December 2, 2013, to report on the issuance of $1.5 billion in 1.00% Convertible Senior Notes due 2018. The net proceeds, estimated at $1,476.5 million, are earmarked for repurchasing shares of common stock and for dividend payments under the company's capital return program, as well as for general corporate purposes. A portion of the proceeds was used to fund convertible note hedge transactions and to repurchase shares of common stock at the closing price on November 25, 2013. The issuance of these notes is a significant financial event, indicating the company's strategy to manage its capital structure and return value to shareholders. The accompanying convertible note hedge and warrant transactions are designed to mitigate potential dilution from the convertible notes and manage the overall cost of capital. Investors should monitor the use of proceeds for share repurchases and dividends, as these actions directly impact shareholder value and the company's equity base.

Key Highlights

  • 1NVIDIA issued $1.5 billion in 1.00% Convertible Senior Notes due 2018.
  • 2Net proceeds are approximately $1,476.5 million.
  • 3Proceeds are designated for share repurchases, dividends under the capital return program, and general corporate purposes.
  • 4A portion of the proceeds ($108 million) was used to fund convertible note hedge transactions.
  • 5Approximately $14.3 million of proceeds were used to repurchase 920,355 shares of common stock at $15.51 per share.
  • 6The notes are unsecured general obligations of the company and mature on December 1, 2018.
  • 7The initial conversion price is approximately $20.16 per share, with a conversion rate of 49.5958 shares per $1,000 principal amount.

Frequently Asked Questions

The primary purpose of issuing these notes is to fund NVIDIA's recently announced fiscal 2015 capital return program, which includes repurchasing shares of its common stock and making dividend payments. The remaining proceeds are also allocated for general corporate purposes.

These notes are convertible into shares of NVIDIA's common stock. If converted, this could lead to dilution of existing shareholders' equity. However, NVIDIA has entered into convertible note hedge transactions to mitigate potential dilution and offset cash payments related to the conversion of these notes.

The convertible note hedge transactions are designed to reduce the potential dilution to common stock upon conversion of the notes. The accompanying warrant transactions, while also related to the notes, have strike prices that could result in dilution to earnings per share if exercised and if the market value of the common stock exceeds the strike price.

The notes bear a 1.00% annual interest rate, payable semi-annually, and mature on December 1, 2018. They are unsecured general obligations of NVIDIA. The initial conversion price is approximately $20.16 per share, meaning each $1,000 principal amount note can be converted into approximately 49.5958 shares of common stock, subject to adjustments.