EDEN PRAIRIE, Minn.--May 3, 2006--NVE Corporation (Nasdaq: NVEC) today announced financial results for the quarter and fiscal year ended March 31, 2006.

Product sales for the fourth quarter of fiscal 2006 increased 76% over the prior year to $2.80 million from $1.59 million. Total revenue, consisting of product sales and contract research and development revenue, increased 13% to $3.48 million for the fourth quarter of fiscal 2006 compared to $3.07 million in the prior-year quarter. Income before taxes for the quarter was $978,493 or $0.21 per diluted share, compared to $349,209 or $0.07 per diluted share for the prior-year quarter. After the effect of a provision for income taxes of $358,749, net income for the fourth quarter of fiscal 2006 was $619,744 or $0.13 per share. Net income for the fourth quarter of fiscal 2005 was $476,113 or $0.10 per share including an income tax benefit of $126,904 or $0.03 per share.

For fiscal 2006 product sales increased 51% to $8.35 million from $5.52 million in fiscal 2005. Total revenue was $12.17 million for fiscal 2006 compared to $11.62 million for fiscal 2005. Income before taxes for fiscal 2006 was $2.84 million or $0.61 per diluted share, compared to $1.62 million or $0.34 per diluted share for the prior year. After the effect of a provision for income taxes of $1.04 million, net income for fiscal 2006 was $1.80 million or $0.39 per share. Net income for fiscal 2005 was $1.76 million or $0.37 per share including an income tax benefit of $138,404 or $0.03 per share.

"We are pleased to report record product sales, total revenue, and pretax profit for the fourth quarter and fiscal year," said NVE President and Chief Executive Officer Daniel A. Baker, Ph.D. "Operating income for the quarter more than tripled, driven by strong product sales. We enter fiscal 2007 with a solid balance sheet, products that are in demand, and an excellent intellectual property portfolio."

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 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, 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 AND YEARS ENDED MARCH 31, 2006 AND 2005 (Unaudited) Quarter Ended March 31 2006 2005 ------------ ------------ Revenue Product sales $ 2,797,882 $ 1,590,848 Contract research and development 684,892 1,481,309 ------------ ------------ Total revenue 3,482,774 3,072,157 Cost of sales 1,600,990 1,853,230 ------------ ------------ Gross profit 1,881,784 1,218,927 Expenses Research and development 487,470 468,367 Selling, general, and administrative 517,385 463,473 ------------ ------------ Total expenses 1,004,855 931,840 ------------ ------------ Income from operations 876,929 287,087 Interest income 99,178 61,798 Interest expense (967) (2,398) Other income 3,353 2,722 ------------ ------------ Income before taxes 978,493 349,209 Provision (benefit) for income taxes 358,749 (126,904) ------------ ------------ Net income $ 619,744 $ 476,113 ============ ============ Net income per share - basic $ 0.13 $ 0.10 ============ ============ Net income per share - diluted $ 0.13 $ 0.10 ============ ============ Weighted average shares outstanding Basic 4,603,634 4,556,138 Diluted 4,690,943 4,777,846 Supplemental financial data (unaudited) Non-cash income tax expense (benefit) $ 321,749 $ (126,904) Year Ended March 31 2006 2005 ------------ ------------ Revenue Product sales $ 8,345,967 $ 5,522,250 Contract research and development 3,824,559 6,093,320 ------------ ------------ Total revenue 12,170,526 11,615,570 Cost of sales 6,218,533 7,010,734 ------------ ------------ Gross profit 5,951,993 4,604,836 Expenses Research and development 1,724,825 1,393,503 Selling, general, and administrative 1,756,142 1,867,556 ------------ ------------ Total expenses 3,480,967 3,261,059 ------------ ------------ Income from operations 2,471,026 1,343,777 Interest income 332,784 235,341 Interest expense (6,051) (13,256) Other income 43,020 53,988 ------------ ------------ Income before taxes 2,840,779 1,619,850 Provision (benefit) for income taxes 1,043,033 (138,404) ------------ ------------ Net income $ 1,797,746 $ 1,758,254 ============ ============ Net income per share - basic $ 0.39 $ 0.39 ============ ============ Net income per share - diluted $ 0.39 $ 0.37 ============ ============ Weighted average shares outstanding Basic 4,580,684 4,512,247 Diluted 4,667,994 4,733,955 Supplemental financial data (unaudited) Non-cash income tax expense (benefit) $ 990,083 $ (126,904) NVE CORPORATION BALANCE SHEETS MARCH 31, 2006 AND 2005 (Unaudited) March 31 March 31 2006 2005 -------------- -------------- ASSETS Current assets Cash and cash equivalents $ 1,288,362 $ 1,240,205 Short-term investments 1,248,103 252,775 Accounts receivable, net of allowance for uncollectible accounts of $15,000 1,667,029 2,285,472 Inventories 2,149,769 1,572,759 Deferred tax assets 1,576,472 756,074 Prepaid expenses and other assets 231,412 130,873 -------------- -------------- Total current assets 8,161,147 6,238,158 Fixed assets Machinery and equipment 4,149,080 4,140,307 Leasehold improvements 413,482 413,482 -------------- -------------- 4,562,562 4,553,789 Less accumulated depreciation 3,319,651 2,826,227 -------------- -------------- Net fixed assets 1,242,911 1,727,562 Long-term investments 8,354,861 6,224,284 -------------- -------------- Total assets $ 17,758,919 $ 14,190,004 ============== ============== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable $ 399,762 $ 319,427 Accrued payroll and other 470,392 465,930 Deferred revenue 77,373 267,355 Capital lease obligations 33,281 67,430 -------------- -------------- Total current liabilities 980,808 1,120,142 Capital lease obligations, less current portion - 33,281 -------------- -------------- Total liabilities 980,808 1,153,423 Shareholders' equity Common stock 46,150 45,698 Additional paid-in capital 16,042,637 14,064,625 Accumulated other comprehensive loss (166,908) (132,228) Retained earnings (deficit) 856,232 (941,514) -------------- -------------- Total shareholders' equity 16,778,111 13,036,581 -------------- -------------- Total liabilities and shareholders' equity $ 17,758,919 $ 14,190,004 ============== ==============