NVIDIA Reports Record Results for Fourth Quarter and Fiscal Year 2006

Company Achieves Record Annual Revenue; Annual Net Income Increases 202 Percent Year-Over-Year

Feb. 16 /PRNewswire/ -- SANTA CLARA, Calif., Feb. 16 /PRNewswire-FirstCall/ -- NVIDIA Corporation (NASDAQ: NVDA) today reported financial results for the fourth quarter of fiscal 2006 and the fiscal year ended January 29, 2006.

(Logo: http://www.newscom.com/cgi-bin/prnh/20020613/NVDALOGO )

For the fourth quarter of fiscal 2006, revenue was $633.6 million, compared to $566.5 million for the fourth quarter of fiscal 2005, an increase of 12 percent. Operating income for the fourth quarter of fiscal 2006 experienced 97 percent growth to $112.3 million, compared to operating income of $57.2 million for the fourth quarter of fiscal 2005. Net income for the fourth quarter of fiscal 2006 was $98.1 million, or $0.53 per diluted share, compared to net income of $48.0 million, or $0.27 per diluted share, for the fourth quarter of fiscal 2005, a net income increase of 104 percent.

Revenue for the fiscal year ended January 29, 2006 was a record $2.38 billion, compared to revenue of $2.01 billion for the fiscal year ended January 30, 2005. Net income for the fiscal year ended January 29, 2006 was $302.6 million, or $1.65 per diluted share, compared to net income of $100.4 million, or $0.57 per diluted share, for the fiscal year ended January 30, 2005, a net income increase of 202 percent.

"Fiscal 2006 was a milestone year for NVIDIA," stated Jen-Hsun Huang, president and CEO at NVIDIA. "We led the GPU and core logic industry on every front -- technology leadership, product innovation, and operational excellence. As a result, we delivered record annual results for revenue, operating income, operating margin, and operating cash flow."

"Looking ahead into fiscal 2007, multiple important trends will create substantial growth opportunities in our target markets -- HD DVD and Blu-ray high definition video, Microsoft Windows Vista, the 3G ramp and increasing multimedia content for mobile devices, and next generation game consoles. We have aligned ourselves with these exciting new growth drivers and are well positioned to have another strong year."

    Fourth Quarter Fiscal 2006 and Recent Highlights:

    -- Gross margin improved to 40.2 percent, an increase of 110 basis points
       sequentially from the third quarter fiscal 2006, and 600 basis points
    -- NVIDIA increased its leadership share position in the desktop graphics
       processing unit (GPU) segment to 51 percent share, according to the
       Mercury Research Fourth Quarter 2005 PC Graphics Report.
    -- NVIDIA shipped the NVIDIA nForce(R) 4 SLI XE and NVIDIA nForce4 Ultra
       Intel media and communications processors (MCPs).  They represent the
       Company's first discrete chipsets targeted at mainstream Intel-based
       motherboards.  NVIDIA nForce MCP revenue for the fourth quarter of
       fiscal 2006 increased 83 percent year-over-year and has achieved record
       revenue for six consecutive quarters.
    -- NVIDIA and Dell showcased the first ever Quad SLI(TM) PC -- the
       Dimension XPS Renegade -- at the Consumer Electronics Show (CES) 2006,
       and earned the "Best of CES 2006" award for gaming.
    -- The NVIDIA Quadro(R) professional product line increased its revenue
       42 percent from the fourth quarter fiscal 2005 and again achieved
       record revenue.
    -- NVIDIA introduced three new notebook GPUs -- the GeForce(R) Go 7800,
       GeForce Go 7600 and GeForce Go 7400 -- with leading tier one and system
       builders worldwide.
    -- NVIDIA shipped two new GeForce 7 desktop GPUs -- the GeForce 7800 GTX
       512 and GeForce 7300 GS -- for the enthusiast and mainstream desktop PC
    -- NVIDIA announced its intent to acquire ULi Electronics Inc., one of the
       PC industry's most highly-regarded core logic developers.
    -- NVIDIA announced that NVIDIA Quadro professional graphics will offer
       Adobe users direct GPU acceleration capabilities that increase
       application performance and video editing workflow for Adobe Product
       Studio.  As a member of the Adobe OpenHD Alliance, NVIDIA is working
       with the industry to develop tools and technologies that enhance the
       productivity of HD video creation.
    -- NVIDIA unveiled the NVIDIA GoForce(R) 5500 handheld GPU, the industry's
       first handheld GPU to enable true, DVD-quality video, full H.264
       processing for fluid digital TV, high-fidelity surround sound, rapid
       multi-shot photography, and console-class 3D graphics.  Phones based on
       the NVIDIA GoForce 5500 handheld GPU are expected to be available from
       key handset manufacturers before the 2006 holiday season.

NVIDIA will conduct a conference call with analysts and investors to discuss its fourth quarter fiscal 2006 financial results and current financial prospects today at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). To listen to the call, please dial 706-679-0543. A live Web cast (listen-only mode) of the conference call will be held at the NVIDIA investor relations Web site http://nvidia.com/ir and at http://www.streetevents.com . The Web cast will be recorded and available for replay until the Company's conference call to discuss its financial results for its first quarter fiscal 2007.


NVIDIA Corporation is the worldwide leader in programmable graphics processor technologies. The Company creates innovative, industry-changing products for computing, consumer electronics, and mobile devices. NVIDIA is headquartered in Santa Clara, CA and has offices throughout Asia, Europe, and the Americas. For more information, visit www.nvidia.com.

Certain statements in this press release including, but not limited to, trends creating growth opportunities in our target markets, our alignment with growth drivers, our fiscal 2007 as a strong year, the benefits and outcome of our work with the Adobe OpenHD Alliance, dates and sources of availability of new products and our acquisition of ULi Electronics, Inc. are forward-looking statements that are subject to risks and uncertainties that could cause results to be materially different than expectations. Such risks and uncertainties include, but are not limited to, continued market acceptance of new products and technologies, prohibitive pricing of new products and technologies, manufacturing delays or defects, software bugs, delayed adoption of HD DVD and Blu Ray high definition video, Microsoft Vista, 3G, multimedia content for mobile devices and next generation game consoles, emergence of different trends in the graphics industry in fiscal 2007, continued demand for use of GPUs in devices other than the PC or notebook computer, continued demand for improved GPUs, difficulties in the development of new and enhanced products, the impact of technological development, our dependence on third- party manufacturers, general industry trends including cyclical trends in the semiconductor and PC industries, the impact of competition including competitive products and pricing alternatives, slower than expected or unanticipated changes in industry standards and interfaces, risks associated with acquisitions including the ability to successfully integrate the technologies, employees and operations of the companies and diversion of management's attention, not realizing the anticipated benefits of the acquisition, loss of ULi Electronics' customers post acquisition and other risks detailed from time to time in the reports NVIDIA files with the Securities and Exchange Commission including its Form 10-Q for its quarter ended October 30, 2005. These forward-looking statements speak only as of the date of this release. NVIDIA disclaims any obligation to update these forward-looking statements.

    All company and/or product names may be trade names, trademarks and/or
registered trademarks of the respective owners with which they are associated.
Features, pricing, availability, and  specifications  are  subject  to  change
without  notice.

                                                                NVIDIA  CORPORATION
                                      CONDENSED  CONSOLIDATED  STATEMENTS  OF  INCOME
                                            (In  thousands,  except  per  share  data)

                                                              Three  Months  Ended              Twelve  Months  Ended
                                                          January  29,  January  30,      January  29,  January  30,
                                                                  2006              2005                    2006                2005

        Revenue                                        $633,614    $566,476            $2,375,687    $2,010,033

        Cost  of  revenue                          378,674      372,661              1,464,892      1,360,547

        Gross  profit                                254,940      193,815                  910,795          649,486

        Operating  expenses:
            Research  and  development      92,435        84,054                  352,099          335,104
            Sales,  general  and
              administrative                        50,163        52,605                  204,441          200,789
            Settlement  costs                              --                --                    14,158                    --

                    Total  operating
                      expenses                          142,598      136,659                  570,698          535,893

        Operating  income                        112,342        57,156                  340,097          113,593

        Interest  and  other
          income,  net                                    4,386          2,854                    20,124            11,852

        Income  before  income
          tax  expense                                116,728        60,010                  360,221          125,445

        Income  tax  expense  (A)              18,676        12,001                  57,635            25,089

        Net  income                                    $98,052      $48,009                $302,586        $100,356

        Basic  net  income  per  share        $0.57          $0.29                      $1.78              $0.60

        Diluted  net  income  per  share    $0.53          $0.27                      $1.65              $0.57

        Shares  used  in  basic  per
          share  computation                    171,042      166,659                  169,690          166,062

        Shares  used  in  diluted  per
          share  computation                    186,122      177,257                  182,951          176,558

        (A)    The  effective  income  tax  rate  for  the  three  and  twelve  months  ended
        January  29,  2006  was  16%.    The  effective  income  tax  rate  for  the  three  and
        twelve  months  ended  January  30,  2005  was  20%.

                                                              NVIDIA  CORPORATION
                                            CONDENSED  CONSOLIDATED  BALANCE  SHEETS
                                                                  (In  thousands)

                                                                                          January  29,              January  30,
                                                                                                2006                            2005

        Current  assets:
            Cash,  cash  equivalents  and
              marketable  securities                                    $950,174                    $670,045
            Accounts  receivable,  net                                  318,186                      296,279
            Inventories                                                            254,792                      315,518
            Prepaid  and  other  current  assets                    24,387                        19,819
            Deferred  income  tax  asset                                    1,393                          3,265

                Total  current  assets                                  1,548,932                  1,304,926

        Property  and  equipment,  net                                178,152                      178,955
        Deposits  and  other  assets                                      27,477                          9,034
        Goodwill                                                                      145,317                      108,107
        Intangible  assets,  net                                            15,421                        27,514

                Total  assets                                                $1,915,299                $1,628,536


        Current  liabilities:
            Accounts  payable                                                $179,395                    $238,223
            Accrued  liabilities                                            259,264                      182,077
            Current  portion  of  capital  lease
              obligations                                                                    --                              856

                Total  current  liabilities                            438,659                      421,156

        Deferred  income  tax  liability                                8,260                        20,754
        Long-term  liabilities                                              10,624                          8,358

        Stockholders'  equity                                          1,457,756                  1,178,268

                Total  liabilities  and
                  stockholders'  equity                              $1,915,299                $1,628,536


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