NVE Corporation Reports Third Quarter Fiscal 2006 Results Product sales increase 56%; pretax income up 64%



    EDEN PRAIRIE, Minn., Jan. 18 /PRNewswire-FirstCall/ -- NVE Corporation
 (Nasdaq:   NVEC) today announced financial results for the quarter and nine
 months ended December 31, 2005.
     Product sales for the quarter increased 56% over the prior year to
 $1.74 million from $1.12 million. Total revenue, consisting of product sales
 and contract research and development revenue, increased 2% to $2.61 million
 for the third quarter of fiscal 2006 compared to $2.56 million in the prior-
 year quarter. Income before taxes for the quarter was $614,664 or $0.13 per
 diluted share, compared to $375,172 or $0.08 per diluted share for the prior-
 year quarter. After the effect of a provision for income taxes of $213,279,
 net income for the third quarter of fiscal 2006 was $401,385 or $0.09 per
 diluted share, compared to $375,172 or $0.08 per diluted share in the third
 quarter of fiscal 2005.
     Product sales in the first nine months of fiscal 2006 increased 41% to
 $5.55 million from $3.93 million for the first nine months of fiscal 2005.
 Total revenue was $8.69 million for the first nine months of fiscal 2006
 compared to $8.54 million for the first nine months of fiscal 2005. Income
 before taxes for the first nine months of fiscal 2006 was $1.86 million or
 $0.40 per diluted share, compared to $1.28 million or $0.26 per diluted share
 for the prior-year period. After the effect of a provision for income taxes of
 $684,284, net income for the first nine months of fiscal 2006 was
 $1.18 million or $0.25 per diluted share, compared to $1.28 million or $0.26
 per diluted share in the prior nine-month period.
     "We are pleased with the increase in product sales and our solid
 profitability in the quarter," said NVE President and Chief Executive Officer
 Daniel A. Baker, Ph.D. "Pretax income improved to 24% of revenue for the
 quarter, driven by an increase in gross profit margin to 50% from 39% compared
 to the prior-year quarter. Our cash plus investments is approaching
 $10 million as we continue to build liquidity."
     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.
 
 
                                NVE CORPORATION
                              STATEMENTS OF INCOME
           QUARTERS AND NINE MONTHS ENDED DECEMBER 31, 2005 AND 2004
                                  (Unaudited)
 
                                                   Quarter Ended December 31
                                                     2005              2004
     Revenue
       Product sales                             $1,742,163        $1,118,210
       Contract research and development            868,119         1,440,262
     Total revenue                                2,610,282         2,558,472
     Cost of sales                                1,308,752         1,570,826
     Gross profit                                 1,301,530           987,646
     Expenses
       Research and development                     342,616           257,284
       Selling, general, and administrative         434,183           437,839
     Total expenses                                 776,799           695,123
     Income from operations                         524,731           292,523
     Interest income                                 88,168            60,177
     Interest expense                                (1,336)           (2,796)
     Other income                                     3,101            25,268
     Income before taxes                            614,664           375,172
     Provision for income taxes                     213,279               -
     Net income                                    $401,385          $375,172
 
     Net income per share - basic                     $0.09             $0.08
     Net income per share - diluted                   $0.09             $0.08
     Weighted average shares outstanding
       Basic                                      4,576,454         4,501,345
       Diluted                                    4,677,712         4,883,402
 
 
                                                 Nine Months Ended December 31
                                                     2005              2004
     Revenue
       Product sales                             $5,548,085        $3,931,402
       Contract research and development          3,139,667         4,612,011
     Total revenue                                8,687,752         8,543,413
     Cost of sales                                4,617,543         5,157,504
     Gross profit                                 4,070,209         3,385,909
     Expenses
       Research and development                   1,237,355           925,136
       Selling, general, and administrative       1,238,757         1,404,083
     Total expenses                               2,476,112         2,329,219
     Income from operations                       1,594,097         1,056,690
     Interest income                                233,606           173,543
     Interest expense                                (5,084)          (10,858)
     Other income                                    39,667            62,766
     Income before taxes                          1,862,286         1,282,141
     Provision for income taxes                     684,284               -
     Net income                                  $1,178,002        $1,282,141
 
     Net income per share - basic                     $0.26             $0.29
     Net income per share - diluted                   $0.25             $0.26
     Weighted average shares outstanding
       Basic                                      4,573,173         4,497,919
       Diluted                                    4,674,431         4,879,976
 
 
                                NVE CORPORATION
                                 BALANCE SHEETS
                      DECEMBER 31, 2005 AND MARCH 31, 2005
 
                                                 (Unaudited)
                                                 December 31         March 31
                                                     2005              2005
     ASSETS
     Current assets
       Cash and cash equivalents                 $1,111,009        $1,240,205
       Short-term investments                       998,205           252,775
       Accounts receivable, net of allowance
        for uncollectible accounts of $15,000     1,741,367         2,285,472
       Inventories                                2,033,941         1,572,759
       Deferred tax assets                        1,042,877           756,074
       Prepaid expenses and other assets            138,311           130,873
     Total current assets                         7,065,710         6,238,158
     Fixed assets
       Machinery and equipment                    4,122,662         4,140,307
       Leasehold improvements                       413,482           413,482
                                                  4,536,144         4,553,789
       Less accumulated depreciation              3,205,085         2,826,227
     Net fixed assets                             1,331,059         1,727,562
     Long-term investments                        7,669,263         6,224,284
     Total assets                               $16,066,032       $14,190,004
 
     LIABILITIES AND SHAREHOLDERS' EQUITY
     Current liabilities
       Accounts payable                            $270,447          $319,427
       Accrued payroll and other                    503,991           465,930
       Deferred revenue                              99,015           267,355
       Capital lease obligations                     50,685            67,430
     Total current liabilities                      924,138         1,120,142
     Capital lease obligations, less current
      portion                                           -              33,281
     Total liabilities                              924,138         1,153,423
 
     Shareholders' equity
       Common stock                                  45,765            45,698
       Additional paid-in capital                14,983,963        14,064,625
       Accumulated other comprehensive loss        (124,322)         (132,228)
       Retained earnings (deficit)                  236,488          (941,514)
     Total shareholders' equity                  15,141,894        13,036,581
     Total liabilities and shareholders'
      equity                                    $16,066,032       $14,190,004
 
 
 

SOURCE NVE Corporation

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