For the third quarter of fiscal 2006, revenue was $583.4 million, compared to $515.6 million for the third quarter of fiscal 2005, an increase of 13 percent. Operating income for the third quarter of fiscal 2006 experienced 149 percent year-over-year growth to $71.5 million (including a non-recurring charge of $14.2 million for the anticipated settlement of various litigation matters), compared to operating income of $28.8 million for the third quarter of fiscal 2005. Net income for the third quarter of fiscal 2006 was $65.3 million, or $0.36 per diluted share (including a $0.06 per share charge for the anticipated litigation settlements), compared to net income of $25.9 million, or $0.15 per diluted share, for the third quarter of fiscal 2005, a net income increase of 152 percent.

Revenue for the nine months ended October 30, 2005 was a record $1.74 billion, compared to revenue of $1.44 billion for the nine months ended October 24, 2004. Net income for the nine months ended October 30, 2005 was $204.5 million, or $1.13 per diluted share (including a $0.06 per share charge for the anticipated litigation settlements), compared to net income of $52.3 million, or $0.30 per diluted share, for the nine months ended October 24, 2004, a net income increase of 291 percent.

“Two years ago, with gross margins in the high twenties, we set a corporate objective to achieve gross margins in the high thirties. Seven quarters later, we delivered,” stated Jen-Hsun Huang, president and CEO at NVIDIA. “Through cross-functional profit improvement initiatives, we are re-architecting business and operational processes that will drive sustainable advantages going forward.”

Huang added, “Looking ahead, with our GPU and MCP product families continuing to lead the competition, we expect significant growth in our desktop, notebook, and handheld businesses.”

Third Quarter Fiscal 2006 Highlights:

• Gross margin improved to 39.1 percent, an increase of 130 basis points sequentially from the second quarter fiscal 2006, and 680 basis points year-over-year.
• NVIDIA regained the leadership share position in the desktop GPU segment with 50 percent share, according to the Mercury Research Third Quarter 2005 PC Graphics Report.
• NVIDIA simultaneously introduced and shipped the NVIDIA nForce 400 media and communications processor (MCP) and GeForce 6100 integrated graphics processing unit (GPU) family. They represent the first integrated GPU solution in the industry to support DirectX 9 and Shader Model 3.0, as well as deliver high-definition video processing for high-definition televisions.
• NVIDIA is now the third largest core logic supplier in the world, according to the Mercury Research Third Quarter 2005 PC Processors and Chipsets: Market Strategy and Forecast Report. NVIDIA nForce MCP revenue has increased 100 percent year-over-year and has achieved record revenue for five consecutive quarters.
• Apple announced the first ever Power Mac to incorporate the NVIDIA Quadro FX 4500 as its first workstation graphics card and is the only professional solution currently offered.
• The NVIDIA Quadro workstation product line increased its revenue 24 percent from the third quarter fiscal 2005 and again achieved record revenue.
• NVIDIA launched and shipped its flagship notebook GPU - the GeForce Go 7800 GTX - with leading Tier One and system builders worldwide.
• Motorola and Sony Ericsson launched their brand-leading new 3G mobile phones – the Motorola RAZR and Sony Ericsson W900i Walkman – all based on NVIDIA GoForce GPUs.

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