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Gateway 2005 'As-Reported' Income Adjusted to Reflect Effects of Two Significant Prior-Year Events After the Close of the Quarter - The HP Agreement and Increase in a Tax Reserve IRVINE, Calif., March 14 /PRNewswire-FirstCall/ -- Gateway, Inc. (NYSE:GTW) today filed its annual report on Form 10-K with the U.S. Securities and Exchange Commission that included a revision in its as-reported earnings for 2005, based on two significant prior-year events that occurred after the quarter's close but before the filing of the 10-K. Earlier this month, Gateway announced an agreement with the Hewlett- Packard Company (HP) to cross-license each other's patent portfolios for a period of seven years and, as part of the agreement, a global settlement and mutual release of all claims in litigation against the other company. As a result of the agreement with HP, Gateway took a $16.7 million charge against 2005 earnings. Also earlier this month, the company increased, as of December 31, 2005, its sales, income and franchise tax reserves by $27 million for historical tax liability, because Gateway now believes, based on the outcome of a recent court decision against another company in a similar tax litigation case, it is probable that it will be required to make a substantial portion of these tax payments. "We expect this to be but the first of many revisions of our tax liability accruals, both positive and negative, this year as we resolve certain tax liabilities for prior years," said John Goldsberry, Gateway senior vice president and chief financial officer. "We believe that the net total effect of these tax audit adjustments will ultimately be favorable to the company's bottom line." "It's important to note that these specific tax adjustments predominantly date back to the mid- to late-1990s, and therefore should not detract from the operating successes Gateway enjoyed in 2005, including posting its first full- year profit in a half-decade," said Rick Snyder, Gateway's chairman and interim chief executive officer. Therefore, Gateway has revised its previously announced net income for 2005 from the $49.5 million that was reported on Feb. 2, 2006 to $6.2 million or $0.2 per diluted share. About Gateway Since its founding in 1985, Irvine, Calif.-based Gateway (NYSE:GTW) has been a technology pioneer, offering award-winning PCs and related products to consumers, businesses, government agencies and schools. After acquiring eMachines in early 2004, Gateway is now the third largest PC company in the U.S. and among the top ten worldwide. The company's value-based eMachines brand is sold exclusively by leading retailers worldwide, while the premium Gateway line is available at major retailers, over the web and phone, and through its direct and indirect sales force. See http://www.gateway.com/ for more information. Special note This press release contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they do not materialize or prove incorrect, could cause Gateway's results to differ materially from those expressed or implied by such forward-looking statements. All statements, other than statements of historical fact, are statements that could be forward- looking statements, including any projections or preliminary estimates of earnings, revenues, or other financial items; any statements of plans, strategies and objectives of management for future operations; the extent of seasonal changes in demand; any statements regarding proposed new products, services or developments; any statements regarding future economic conditions or performance; statements of belief and any statement of assumptions underlying any of the foregoing. The risks that contribute to the uncertain nature of these statements include, among others, risks related to shifting our distribution model to third-party retail; competitive factors and pricing pressures, including the impact of aggressive pricing cuts by larger competitors; general conditions in the personal computing industry, including changes in overall demand and average selling prices, shifts from desktops to mobile computing products and information appliances and the impact of new microprocessors and operating software; the ability to simplify the company's business, change its distribution model and restructure its operations and cost structure; component supply shortages; short product cycles; the ability to access new technology; infrastructure requirements; risks of international business; foreign currency fluctuations; risks relating to new or acquired businesses, joint ventures and strategic alliances; risks related to financing customer orders; changes in accounting rules; the impact of litigation and government regulation generally; inventory risks due to shifts in market demand; the impact of employee reductions and management changes and additions; and general economic conditions, and other risks described from time to time in Gateway's Securities and Exchange Commission periodic reports and filings. Gateway assumes no obligation to update any forward-looking statements to reflect events that occur or circumstances that exist after the date on which they were made. DATASOURCE: Gateway, Inc. CONTACT: Media, David Hallisey, +1-949-471-7703, , or John W. Spelich, +1-949-471-7710, , or Investors, Marlys Johnson, +1-605-232-2709, , all of Gateway, Inc. Web site: http://www.gateway.com/

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