EDEN PRAIRIE, Minn.--October 20, 2004--NVE Corporation (NasdaqSC: NVEC) today announced financial results for the three months ended September 30, 2004.

Net income for the second quarter was $423,298, or $0.09 per diluted share, compared to $406,476, or $0.09 per diluted share for the prior-year quarter. Total revenue was $3.10 million, compared to $2.86 million for the prior-year quarter, an increase of 8 percent. Product sales increased 14 percent to $1.45 million, from $1.27 million in the prior-year quarter and contract research and development revenue increased 3 percent to $1.65 million, from $1.60 million.

For the six months ended September 30, 2004, the company reported net income of $906,969, or $0.18 per diluted share, compared to $740,894, or $0.16 per share for the six months ended September 30, 2003. Total revenue for the first six months of fiscal 2005 was $5.98 million, compared to $5.68 million reported in the first six months of fiscal 2004, a 5-percent increase. Product sales in the first half of fiscal 2005 increased 19 percent and contract research and development revenue decreased 4 percent compared with the prior- year period.

"We are pleased with our results for the second quarter," said Daniel A. Baker, Ph.D., NVE president and chief executive officer. "Strong product sales in our core industrial markets more than offset an anticipated decline in product sales to St. Jude Medical, and we maintained solid profitability."

NVE is a leader in the practical commercialization of spintronics, a nanotechnology which 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 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 competitive threats, risks associated with our reliance on several large customers, and risks associated with meeting stringent customer technical requirements, risks in continued profitability, 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 CONDENSED STATEMENTS OF INCOME THREE MONTHS AND SIX MONTHS ENDED SEPTEMBER 30, 2004 AND 2003 (IN THOUSANDS EXCEPT PER SHARE; UNAUDITED) Three Months Ended Sept. 30, 2004 Sept. 30, 2003 Revenue: Contract research and development $ 1,646 $ 1,596 Product sales 1,450 1,269 -------------- -------------- Total revenue 3,096 2,865 Cost of sales 1,961 1,739 -------------- -------------- Gross profit 1,135 1,126 Expenses: Research and development 306 303 Selling, general & administrative 482 476 -------------- -------------- Total expenses 788 779 -------------- -------------- Income from operations 347 347 Interest income 58 44 Interest expense (4) (7) Other income 22 22 -------------- -------------- Net income $ 423 $ 406 ============== ============== Weighted average shares outstanding 4,933 4,679 Net income per share - diluted $ 0.09 $ 0.09 Six Months Ended Sept. 30, 2004 Sept. 30, 2003 Revenue: Contract research and development $ 3,172 $ 3,317 Product sales 2,813 2,367 -------------- -------------- Total revenue 5,985 5,684 Cost of sales 3,587 3,648 -------------- -------------- Gross profit 2,398 2,036 Expenses: Research and development 668 481 Selling, general & administrative 966 926 -------------- -------------- Total expenses 1,634 1,407 -------------- -------------- Income from operations 764 629 Interest income 113 93 Interest expense (8) (15) Other income 38 34 -------------- -------------- Net income $ 907 $ 741 ============== ============== Weighted average shares outstanding 4,929 4,646 Net income per share - diluted $ 0.18 $ 0.16 NVE Corporation CONDENSED BALANCE SHEETS SEPTEMBER 30, 2004 AND MARCH 31, 2004 (IN THOUSANDS) (UNAUDITED) Sept. 30, March 31, 2004 2004 ASSETS Current assets: Cash $ 809 $ 1,056 Investment securities 6,416 6,489 Accounts receivable, net 2,548 1,739 Inventories 1,090 1,150 Other current assets 429 547 ----------- ----------- Total current assets 11,292 10,981 Fixed assets 1,872 1,439 ----------- ----------- Total assets $ 13,164 $ 12,420 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable 447 327 Accrued payroll and other 593 712 Other current liabilities 422 547 ----------- ----------- Total current liabilities 1,462 1,586 Long-term liabilities 68 101 ----------- ----------- Total liabilities 1,530 1,687 Shareholders' equity: Common stock 45 45 Additional paid-in capital 13,377 13,298 Accumulated other comprehensive income 5 90 Accumulated deficit (1,793) (2,700) ----------- ----------- Total shareholders' equity 11,634 10,733 ----------- ----------- Total liabilities and shareholders' equity $ 13,164 $ 12,420