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Business Combination | 12 Months Ended
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Jan. 29, 2023
Business Combination and Asset Acquisition [Abstract] |
Business Combination | Business Combination Termination of the Arm Share Purchase Agreement In February 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 due to significant regulatory challenges preventing the completion of the transaction. We recorded an acquisition termination cost of $1.35 billion in fiscal year 2023 reflecting the write-off of the prepayment provided at signing. Acquisition of Mellanox Technologies, Ltd. In April 2020, we completed the acquisition of all outstanding shares of Mellanox for a total purchase consideration of $7.13 billion. Purchase Price Allocation The aggregate purchase consideration has been 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 consideration |  | 7,049 |
Fair value of Mellanox equity awards assumed by NVIDIA (3) |  | 85 |
Total purchase consideration |  | $ | 7,134 |
Allocation |  |
Cash and cash equivalents |  | $ | 115 |
Marketable securities |  | 699 |
Accounts receivable, net |  | 216 |
Inventories |  | 320 |
Prepaid expenses and other assets |  | 179 |
Property and equipment, net |  | 144 |
Goodwill |  | 3,431 |
Intangible assets |  | 2,970 |
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 estimated fair values. 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 17 – Segment Information for further details on segments. The operating results of Mellanox have been included in our consolidated financial statements for fiscal year 2021 since the acquisition date of April 27, 2020. Revenue attributable to Mellanox was approximately 10% for fiscal year 2021. There is not a practical way to determine net income attributable to Mellanox due to integration. Acquisition-related costs attributable to Mellanox of $28 million were included in selling, general and administrative expense for fiscal year 2021. Intangible Assets The estimated fair value and useful life of the acquired intangible assets at the time of the acquisition are as follows:
| Fair Value |  | 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 assets | 2,340 |  |  |
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 Earnings 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 Earnings Method. The intangible asset was fully amortized as of January 31, 2021. (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 Earnings 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 was initially not amortized. In fiscal year 2023, we commenced amortization of the IPR&D intangible asset. 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
| Year Ended
| January 31, 2021 |  |
| (In millions)
Revenue | $ | 17,104 |  |  |
Net income | $ | 4,757 |  |  |
The unaudited pro forma information presented above 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 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 for fiscal year 2021 excluded the inventory step-up expense of $161 million. There were no other material nonrecurring adjustments.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI https://asc.fasb.org/topic&trid=2303972 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 5 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=128092470&loc=d3e4946-128472 + Details
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