Company Achieves Record Annual Revenue; Annual Net Income Increases 202 Percent Year-Over-Year
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 year-over-year. -- 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 segments. -- 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) (Unaudited) 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) (Unaudited) January 29, January 30, 2006 2005 ASSETS 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 LIABILITIES AND STOCKHOLDERS' EQUITY 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