EDEN PRAIRIE, Minn.--July 20, 2005--NVE Corporation (NasdaqSC: NVEC) today announced financial results for the quarter ended June 30, 2005.

Product sales for the quarter increased 31% over the prior-year quarter to $1.78 million from $1.36 million. Total revenue, which consisted of product sales and contract research and development revenue, was $3.03 million for the first quarter of fiscal 2006 compared to $2.89 million for the prior-year quarter, an increase of 5%. Income before taxes for the quarter was $655,117 or $0.14 per diluted share, compared to $483,671 or $0.10 per diluted share for the prior-year quarter. After the effect of a non-cash provision for income taxes of $242,468, net income for the first quarter of fiscal 2006 was $412,649 or $0.09 per diluted share.

"We are pleased to report another quarter of record product sales and solid profits," said NVE President and Chief Executive Officer Daniel A. Baker, Ph.D. "Sales of spintronic medical sensors and spintronic couplers were especially strong. Pretax margin improved to 22% due to a more favorable revenue mix and reduced expenses. Our cash plus investments increased by $774,215 during the quarter and we eliminated all of NVE's long-term debt."

NVE is a leader in the practical commercialization of spintronics, a nanotechnology that many experts believe represents the next generation of microelectronics. NVE licenses its MRAM intellectual property and sells spintronic products, including sensors and couplers, to revolutionize data sensing and transmission.

Statements used in this press release that relate to future plans, events, financial results or performance are forward-looking statements that are subject to certain risks and uncertainties including, among others, such factors as risks in continued profitability, uncertainties relating to MRAM production by our licensees, risks in the enforcement of our patents, uncertainties related to the awarding of future government contracts, risks related to our dependence on certain suppliers, risks associated with our reliance on several large customers, as well as the risk factors listed from time to time in our filings with the SEC, including our Annual Report on Form 10-KSB and other reports filed with the SEC.

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NVE CORPORATION STATEMENTS OF INCOME QUARTERS ENDED JUNE 30, 2005 AND 2004 (Unaudited) Quarter Ended June 30 2005 2004 ------------ ------------ Revenue Product sales $ 1,784,250 $ 1,363,140 Contract research and development 1,241,298 1,526,087 ------------ ------------ Total revenue 3,025,548 2,889,227 Cost of sales 1,681,118 1,625,881 ------------ ------------ Gross profit 1,344,430 1,263,346 Expenses Research and development 376,800 361,259 Selling, general, and administrative 409,594 484,596 ------------ ------------ Total expenses 786,394 845,855 ------------ ------------ Income from operations 558,036 417,491 Interest income 68,319 54,869 Interest expense (2,053) (4,457) Other income 30,815 15,768 ------------ ------------ Income before taxes 655,117 $ 483,671 Provision for income taxes 242,468 - ------------ ------------ Net income $ 412,649 $ 483,671 ============ ============ Net income per share - basic $ 0.09 $ 0.11 ============ ============ Net income per share - diluted $ 0.09 $ 0.10 ============ ============ Weighted average shares outstanding Basic 4,569,861 4,493,180 Diluted 4,683,151 4,977,489 NVE CORPORATION BALANCE SHEETS JUNE 30, 2005 AND MARCH 31, 2005 (Unaudited) June 30, 2005 March 31, 2005 -------------- -------------- ASSETS Current assets Cash and cash equivalents $ 1,462,601 $ 1,240,205 Short-term investments 759,030 252,775 Accounts receivable, net of allowance for uncollectible accounts of $15,000 2,207,720 2,285,472 Inventories 1,660,158 1,572,759 Deferred tax asset 783,395 756,074 Prepaid expenses and other assets 130,990 130,873 -------------- -------------- Total current assets 7,003,894 6,238,158 Fixed assets Machinery and equipment 4,102,089 4,140,307 Leasehold improvements 413,482 413,482 -------------- -------------- 4,515,571 4,553,789 Less accumulated depreciation 2,927,035 2,826,227 -------------- -------------- Net fixed assets 1,588,536 1,727,562 Long-term investments 6,269,848 6,224,284 -------------- -------------- Total assets $ 14,862,278 $ 14,190,004 ============== ============== LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ 280,426 $ 319,427 Accrued payroll and other 506,061 465,930 Deferred revenue 219,914 267,355 Capital lease obligations 84,392 67,430 -------------- -------------- Total current liabilities 1,090,793 1,120,142 Capital lease obligations, less current portion - 33,281 -------------- -------------- Total liabilities 1,090,793 1,153,423 Shareholders’ equity: Common stock 45,701 45,698 Additional paid-in capital 14,307,683 14,064,625 Accumulated other comprehensive loss (53,034) (132,228) Accumulated deficit (528,865) (941,514) -------------- -------------- Total shareholders’ equity 13,771,485 13,036,581 -------------- -------------- Total liabilities and shareholders’ equity $ 14,862,278 $ 14,190,004 ============== ==============