Minnesota | 41-1424202 |
State or other jurisdiction of incorporation or organization | (I.R.S.Employer Identification No.) |
11409 Valley View Road, Eden Prairie, Minnesota | 55344 |
(Address of principal executive offices) | (Zip Code) |
Title
of each class |
Name of each exchange on which registered |
Common stock, $0.01 par value (Common Stock) |
The NASDAQ Stock Market, LLC |
Large accelerated filer [ ] | Accelerated filer [X] |
Non-accelerated filer [ ] (Do not check if a smaller reporting company) | Smaller reporting company [ ] |
Table
of Contents
ITEM 1A. RISK FACTORS.
We caution readers that the following important
factors, among others, could affect our financial condition, operating results,
business prospects or any other aspect of NVE, and could cause our actual results
to differ materially from that projected or estimated by us in the forward-looking
statements made by us or on our behalf. Although we have attempted to list below
the important factors that do or may affect our financial condition, operating
results, business prospects, or any other aspect of NVE, other factors may in
the future prove to be more important. New factors emerge from time to time and
it is not possible for us to predict all of such factors. Similarly, we cannot
necessarily assess or quantify the impact of each such factor on the business
or the extent to which any factor, or combination of factors, may cause actual
results to differ materially from those contained in forward-looking statements.
Risks Related to Our Business
We may lose revenue if any of our
large customers cancel, postpone, or reduce their purchases.
We rely on several large customers for a significant percentage of our revenue. These
large customers include Avago Technologies; Phonak AG; St. Jude Medical, Inc.;
certain other medical device manufacturers; certain distributors; and the U.S.
Government. Although we have agreements with certain large customers, these agreements
do not obligate customers to purchase from us and may not prevent price reductions.
Furthermore, orders from our large customers can generally be reduced, postponed,
or canceled. Any decreases in purchase quantities or purchase prices, or the loss
of any of our large customers, could have a significant impact on our revenue
and our profitability.
We risk losing business to our competitors.
Our known product competitors include Avago Technologies;
Analog Devices, Inc.; Fairchild Semiconductor International; Hermetic Switch,
Inc.; Linear Technology Inc.; Maxim Integrated Products, Inc.; Meder Electronic AG;
Memscap SA; NEC Corporation; Sharp Corporation; Silicon Laboratories, Inc.;
Texas Instruments Incorporated; Toshiba Corporation; Vishay Intertechnology; and
others. Many of our competitors and potential competitors have significantly greater
financial, technical, and marketing resources than us. We believe that our competition
is increasing as the technology and markets mature. This has meant more competitors
and more severe pricing pressure. In addition, our competitors may be narrowing
or eliminating our performance advantages. We expect these trends to continue,
and we may lose business to competitors or it may be necessary to significantly
reduce our prices in order to acquire or retain business. These factors could
cause a material adverse impact on our financial condition, revenue, gross profit
margins, or income.
We will lose revenue if government contract funding is reduced, delayed, or eliminated.
Although our revenue from agencies of the U.S. Government was less than 10% of our total
revenue in each of the past three fiscal years, a material decrease in U.S. Government
funded research or disqualification as a vendor to the U.S. Government for any
reason would likely hamper future research and development activity and decrease
related revenue. In addition to direct Government funding, certain of our non-Government
customers depend on Government support to fund their contracts with us. Our direct and indirect Government
funding depends on adequate continued funding of the agencies and their programs.
Such funding is affected by Government spending priorities that can change and over which
we have no control, and delays in such funding can occur for a number of reasons. Deficit reduction initiatives may impact Department of Defense
budgets. Furthermore, a significant portion of our Government funding has been
through Small Business Innovation Research (SBIR) contracts. SBIR budgets may
be changed by legislation or by agencies such as the Department of Defense.
If we were barred for any reason from U.S. government contracts there could
be a significant adverse impact on our revenue and our ability to make research
and development progress.
If we were to be charged with violation of certain laws or if the U.S. Government
were to determine that we are not a presently responsible contractor,
we could be temporarily suspended or, in the event of a violation, barred for
up to three years from receiving new U.S. Government contracts or government-approved
subcontracts. In addition, we could expend substantial amounts in defending against
such charges and in damages, fines and penalties if such charges are proven or
result in negotiated settlements. Being barred for any reason from U.S. Government
contracts could have a material adverse effect on our revenue, profits, and research
and development efforts.
Failure to qualify as a small business
under federal regulations could make us ineligible for some government-funded
research contracts, which could have a significant adverse impact on our revenue
and our ability to make research and development progress.
We received approximately $2.35 million in
Small Business Innovation Research (SBIR) contract awards in fiscal 2011. Federal regulations place
a number of criteria for a business to be eligible to compete for SBIR awards.
Those criteria currently include number of employees and ownership structure.
While we believe we meet the eligibility criteria, changes in our ownership beyond
our control could cause us to lose our eligibility to compete for SBIR awards,
which in turn could have a material adverse effect on our revenue, profits, and
research and development efforts. In addition, SBIR eligibility requirements could
be changed at any time.
| technological innovations by us or our competitors; | |
| the announcement of new products, product enhancements, contracts, or license agreements by us or our competitors; | |
| delays in our introduction of new products or technologies or market acceptance of these new products or technologies; | |
| changes in demand for our customers products; | |
| the announcement of changes in strategy or discontinuation of products by us or our potential licensees; | |
| quarterly variations in our operating results, revenue, or revenue growth rates; | |
| changes in revenue estimates, earnings estimates, or market projections by market analysts; | |
| speculation in the press or analyst community about our business, potential revenue, or potential earnings; | |
| short selling and covering of short positions in our stock; and | |
| general economic conditions or market conditions specific to particular industries served or potentially served by us or our customers. |
Quarter Ended | |||||||||||||||||||||||
3/31/11 | 12/31/10 | 9/30/10 | 6/30/10 | 3/31/10 | 12/31/09 | 9/30/09 | 6/30/09 | ||||||||||||||||
High | $ | 63.49 | $ | 58.65 | $ | 48.10 | $ | 51.59 | $ | 48.61 | $ | 53.49 | $ | 63.64 | $ | 49.49 | |||||||
Low | $ | 51.01 | $ | 42.17 | $ | 38.00 | $ | 42.84 | $ | 39.83 | $ | 35.51 | $ | 40.00 | $ | 28.02 |
3/31/2006 | 3/31/2007 | 3/31/2008 | 3/31/2009 | 3/31/2010 | 3/31/2011 | ||||||||||||
NVE Corporation | $ | 100.00 | $ | 170.29 | $ | 154.18 | $ | 179.84 | $ | 282.77 | $ | 351.69 | |||||
Cedrus Nanotechnology Index Pure | $ | 100.00 | $ | 111.27 | $ | 121.16 | $ | 73.82 | $ | 137.22 | $ | 158.75 | |||||
NASDAQ Industrial Index | $ | 100.00 | $ | 106.51 | $ | 95.08 | $ | 56.35 | $ | 93.56 | $ | 117.51 |
Balance Sheet Data as of March 31 | ||||||||||||||
2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||
Cash, cash equivalents, and marketable securities |
$ | 62,179,707 | $ | 49,543,766 | $ | 34,321,811 | $ | 24,736,874 | $ | 18,289,191 | ||||
Total assets | $ | 71,836,225 | $ | 57,462,914 | $ | 42,566,440 | $ | 32,768,128 | $ | 25,010,494 | ||||
Total shareholders equity | $ | 69,970,549 | $ | 55,953,294 | $ | 41,567,571 | $ | 31,513,482 | $ | 23,888,255 | ||||
Income Statement Data for Years Ended March 31 | ||||||||||||||
2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||
Revenue | ||||||||||||||
Product sales | $ | 26,024,823 | $ | 22,665,860 | $ | 19,715,311 | $ | 18,505,650 | $ | 14,425,632 | ||||
Contract research and development |
5,172,240 | 5,481,325 | 3,656,958 | 2,023,162 | 2,035,198 | |||||||||
Total revenue | $ | 31,197,063 | $ | 28,147,185 | $ | 23,372,269 | $ | 20,528,812 | $ | 16,460,830 | ||||
Gross profit | $ | 21,413,365 | $ | 19,834,170 | $ | 16,648,027 | $ | 13,695,504 | $ | 10,673,172 | ||||
Income from operations | $ | 17,669,770 | $ | 16,298,536 | $ | 13,251,590 | $ | 10,048,779 | $ | 6,545,569 | ||||
Net income | $ | 13,360,945 | $ | 11,999,344 | $ | 9,782,895 | $ | 7,187,384 | $ | 4,780,783 | ||||
Net income per share diluted | $ | 2.76 | $ | 2.47 | $ | 2.04 | $ | 1.51 | $ | 1.00 |
Percentage
of Revenue Year Ended March 31 |
Year-to-Year Change Years Ended March 31 |
|||||||||||||
2011 | 2010 | 2009 | 2010
to 2011 |
2009
to 2010 |
||||||||||
Revenue | ||||||||||||||
Product sales
|
83.4 | % | 80.5 | % | 84.4 | % | 14.8 | % | 15.0 | % | ||||
Contract research and development
|
16.6 | % | 19.5 | % | 15.6 | % | (5.6 | )% | 49.9 | % | ||||
Total revenue | 100.0 | % | 100.0 | % | 100.0 | % | 10.8 | % | 20.4 | % | ||||
Cost of sales | 31.4 | % | 29.5 | % | 28.8 | % | 17.7 | % | 23.6 | % | ||||
Gross profit | 68.6 | % | 70.5 | % | 71.2 | % | 8.0 | % | 19.1 | % | ||||
Expenses | ||||||||||||||
Selling,
general, and administrative
|
7.9 | % | 8.6 | % | 9.3 | % | 2.5 | % | 10.9 | % | ||||
Research and development
|
4.1 | % | 4.0 | % | 5.2 | % | 13.2 | % | (8.0 | )% | ||||
Total expenses | 12.0 | % | 12.6 | % | 14.5 | % | 5.9 | % | 4.1 | % | ||||
Income from operations | 56.6 | % | 57.9 | % | 56.7 | % | 8.4 | % | 23.0 | % | ||||
Interest and other income | 6.5 | % | 5.7 | % | 5.0 | % | 24.9 | % | 37.6 | % | ||||
Income before taxes | 63.1 | % | 63.6 | % | 61.7 | % | 9.9 | % | 24.2 | % | ||||
Income tax provision | 20.3 | % | 21.0 | % | 19.9 | % | 7.0 | % | 27.4 | % | ||||
Net income | 42.8 | % | 42.6 | % | 41.8 | % | 11.3 | % | 22.7 | % |
Payments Due by Period | |||||||||||||||
Contractual obligations | Total | <1 Year | 13 Years | 35 Years | >5 Years | ||||||||||
Operating lease obligations | $ | 1,237,359 | $ | 254,053 | $ | 519,055 | $ | 464,251 | $ | - | |||||
Purchase obligations | 454,972 | 454,972 | - | - | - | ||||||||||
Total | $ | 1,692,331 | $ | 709,025 | $ | 519,055 | $ | 464,251 | $ | - |
Unaudited; Quarter Ended | |||||||||||
March 31, 2011 | Dec. 31, 2010 | Sept. 30, 2010 | June 30, 2010 | ||||||||
Revenue | |||||||||||
Product sales
|
$ | 6,733,984 | $ | 6,686,451 | $ | 6,410,512 | $ | 6,193,876 | |||
Contract research and development
|
1,449,117 | 1,277,057 | 1,398,648 | 1,047,418 | |||||||
Total revenue | 8,183,101 | 7,963,508 | 7,809,160 | 7,241,294 | |||||||
Cost of sales | 2,641,170 | 2,461,798 | 2,604,926 | 2,075,804 | |||||||
Gross profit | 5,541,931 | 5,501,710 | 5,204,234 | 5,165,490 | |||||||
Expenses | |||||||||||
Selling, general, and administrative
|
573,312 | 638,223 | 634,547 | 628,386 | |||||||
Research and development
|
286,910 | 330,681 | 309,873 | 341,663 | |||||||
Total expenses | 860,222 | 968,904 | 944,420 | 970,049 | |||||||
Income from operations | 4,681,709 | 4,532,806 | 4,259,814 | 4,195,441 | |||||||
Income before taxes | 5,217,471 | 5,045,009 | 4,757,545 | 4,671,171 | |||||||
Net income | $ | 3,669,919 | $ | 3,383,919 | $ | 3,206,010 | $ | 3,101,097 | |||
Net income per share diluted | $ | 0.75 | $ | 0.70 | $ | 0.66 | $ | 0.64 | |||
Unaudited; Quarter Ended |
|||||||||||
March 31, 2010 | Dec. 31, 2009 | Sept. 30, 2009 | June 30, 2009 | ||||||||
Revenue | |||||||||||
Product sales
|
$ | 6,662,150 | $ | 5,292,228 | $ | 5,177,445 | $ | 5,534,037 | |||
Contract research and development
|
1,517,145 | 1,332,629 | 1,331,056 | 1,300,495 | |||||||
Total revenue | 8,179,295 | 6,624,857 | 6,508,501 | 6,834,532 | |||||||
Cost of sales | 2,333,637 | 2,102,855 | 1,985,100 | 1,891,423 | |||||||
Gross profit | 5,845,658 | 4,522,002 | 4,523,401 | 4,943,109 | |||||||
Expenses | |||||||||||
Selling, general, and administrative
|
607,534 | 548,973 | 622,354 | 635,723 | |||||||
Research and development
|
310,564 | 251,625 | 291,540 | 267,321 | |||||||
Total expenses | 918,098 | 800,598 | 913,894 | 903,044 | |||||||
Income from operations | 4,927,560 | 3,721,404 | 3,609,507 | 4,040,065 | |||||||
Income before taxes | 5,367,548 | 4,136,073 | 4,002,705 | 4,410,090 | |||||||
Net income | $ | 3,598,746 | $ | 2,767,483 | $ | 2,694,183 | $ | 2,938,932 | |||
Net income per share diluted | $ | 0.74 | $ | 0.57 | $ | 0.55 | $ | 0.61 |
Exhibit # | Description |
3.1 | Amended and Restated Articles of Incorporation of the company as amended by the Board of Directors effective November 21, 2002 (incorporated by reference to the Form 10-QSB for the period ended December 31, 2002). |
3.2 | Bylaws of the company as amended by the Board of Directors effective December 18, 2007 (incorporated by reference to the Form 8-K filed December 19, 2007). |
10.1 | Lease dated October 1, 1998 between the company and Glenborough Properties, LP (incorporated by reference to the Form 10-QSB for the period ended September 30, 2002). |
10.2 | First amendment to lease between the company and Glenborough Properties, LP dated September 18, 2002 (incorporated by reference to the Form 10-QSB for the period ended September 30, 2002). |
10.3 | Second amendment to lease between the company and Glenborough Properties, LP dated December 1, 2003 (incorporated by reference to the Form 10-QSB for the period ended December 31, 2003). |
10.4 | Notification from Glenborough Properties, LP relating to change in building ownership (incorporated by reference to the Form 8-K filed October 11, 2005). |
10.5 | Notification from Carlson Real Estate Company, Inc. relating to change in building ownership (incorporated by reference to the Form 8-K filed October 11, 2005). |
10.6 | Third amendment to lease between the company and Carlson Real Estate Company, Inc. (incorporated by reference to the Form 8-K/A filed December 20, 2007). |
10.7 | Letter from Carlson Real Estate Services, LLC relating to transfer of building title (incorporated by reference to the Form 8-K/A filed April 15, 2011). |
10.8* | Employment Agreement between the company and Daniel A. Baker dated January 29, 2001 (incorporated by reference to the Form 10-KSB for the year ended March 31, 2001). |
10.9* | NVE Corporation 2000 Stock Option Plan as Amended July 19, 2001 by the shareholders (incorporated by reference to our Registration Statement on Form S-8 filed July 20, 2001). |
10.10+ | Agreement between the company and Agilent Technologies, Inc. dated September 27, 2001 (incorporated by reference to the Form 10-QSB for the period ended September 30, 2001). |
10.11 | Amendment dated October 18, 2002 to Agreement between the company and Agilent Technologies, Inc. (incorporated by reference to the Form 10-QSB for the period ended December 31, 2002). |
10.12 | Notification from Agilent Technologies of planned sale of Agilents Semiconductor Product Group (incorporated by reference to the Form 8-K filed October 19, 2005). |
10.13 | Report of completion of the divestiture of Agilents Semiconductor Products business (incorporated by reference to the Form 8-K/A filed December 6, 2005). |
10.14 | Amendment No. 2 to OEM Purchase Agreement between Agilent Technologies, Inc. and the company (incorporated by reference to the Form 8-K/A filed September 11, 2007). |
10.15 | Amendment No. 3 to Agreement between the company and Agilent Technologies, Inc. (incorporated by reference to the Form 8-K/A filed June 28, 2010. |
10.16* | Amendment No. 1 to Stock Option Agreement dated May 7, 2004 between the Company and Daniel A. Baker (incorporated by reference to the Form 8-K filed March 30, 2005). |
10.17 | Amendment No. 1 to Stock Option Agreement dated August 17, 2004 between the Company and Patricia M. Hollister (incorporated by reference to the Form 8-K filed March 30, 2005). |
10.18 | Indemnification Agreement by and between Pacesetter, Inc., a St. Jude Medical Company, d.b.a. St. Jude Medical Cardiac Rhythm Management Division (St. Jude), and the company (incorporated by reference to the Form 8-K filed September 27, 2005). |
10.19+ | Supplier Partnering Agreement by and between St. Jude and the company (incorporated by reference to the Form 8-K filed January 4, 2006). |
10.20+ | Amendment No. 1 to Supplier Partnering Agreement between St. Jude and the company (incorporated by reference to the Form 8-K/A filed September 10, 2007). |
10.21+ | Amendment No. 2 to Supplier Partnering Agreement between St. Jude and the company (incorporated by reference to the Form 8-K/A filed December 18, 2009). |
10.22+ | Amendment Number 3 to Supplier Partnering Agreement between St. Jude and the company (incorporated by reference to the Form 8-K/A filed September 16, 2010). |
10.23 | Amendment No. 4 to Supplier Partnering Agreement between St. Jude and the company (incorporated by reference to the Form 8-K/A filed February 7, 2011). |
10.24 | Supply Agreement by and between the company and Phonak AG (incorporated by reference to the Form 8-K filed May 6, 2009). |
10.25+ | Amendment to Supply Agreement by and between the company and Phonak AG (incorporated by reference to the Form 8-K/A filed January 12, 2011). |
23 | Consent of Ernst & Young LLP. |
31.1 | Certification by Daniel A. Baker pursuant to Rule 13a-14(a)/15d-14(a). |
31.2 | Certification by Curt A. Reynders pursuant to Rule 13a-14(a)/15d-14(a). |
32 | Certification by Daniel A. Baker and Curt A. Reynders pursuant to 18 U.S.C. Section 1350. |
Name | Title | Date |
/s/Terrence W. Glarner Terrence W. Glarner | Director and Chairman of the Board | May 4, 2011 |
/s/Daniel A. Baker Daniel A. Baker | Director, President & Chief Executive Officer (Principal Executive Officer) | May 4, 2011 |
/s/Curt
A. Reynders Curt A. Reynders | Treasurer
and Chief Financial Officer (Principal Financial and Accounting Officer) | May 4, 2011 |
/s/James D. Hartman
James D. Hartman | Director | May 4, 2011 |
/s/Patricia M. Hollister
Patricia M. Hollister | Director | May 4, 2011 |
/s/Robert
H. Irish Robert H. Irish | Director | May 4, 2011 |
March 31 | |||||||
2011 | 2010 | ||||||
ASSETS | |||||||
Current assets | |||||||
Cash and cash equivalents
|
$ | 952,209 | $ | 1,389,288 | |||
Marketable securities, short term
|
7,970,358 | 1,566,666 | |||||
Accounts receivable, net of allowance for uncollectible accounts of $15,000
|
3,596,239 | 4,221,564 | |||||
Inventories
|
3,343,857 | 1,706,427 | |||||
Prepaid expenses and other assets
|
1,185,306 | 781,294 | |||||
Total current assets | 17,047,969 | 9,665,239 | |||||
Fixed assets | |||||||
Machinery
and equipment
|
6,178,207 | 5,617,136 | |||||
Leasehold improvements
|
612,682 | 450,546 | |||||
6,790,889 | 6,067,682 | ||||||
Less accumulated depreciation
|
5,259,773 | 4,857,819 | |||||
Net fixed assets | 1,531,116 | 1,209,863 | |||||
Marketable securities, long term | 53,257,140 | 46,587,812 | |||||
Total assets | $ | 71,836,225 | $ | 57,462,914 | |||
LIABILITIES AND SHAREHOLDERS EQUITY | |||||||
Current liabilities | |||||||
Accounts payable
|
$ | 731,580 | $ | 665,782 | |||
Accrued payroll and other
|
987,403 | 720,867 | |||||
Deferred taxes
|
146,693 | 102,138 | |||||
Deferred revenue
|
- | 20,833 | |||||
Total current liabilities | 1,865,676 | 1,509,620 | |||||
Shareholders equity | |||||||
Common stock, $0.01 par value, 6,000,000 shares authorized; 4,776,198 issued and
outstanding (4,700,583 issued and outstanding in 2010)
|
47,762 | 47,006 | |||||
Additional paid-in
capital
|
20,894,766 | 20,169,924 | |||||
Accumulated other comprehensive income
|
1,060,438 | 1,129,726 | |||||
Retained earnings
|
47,967,583 | 34,606,638 | |||||
Total shareholders equity | 69,970,549 | 55,953,294 | |||||
Total liabilities and shareholders equity | $ | 71,836,225 | $ | 57,462,914 |
Year Ended March 31 | |||||||||||
2011 | 2010 | 2009 | |||||||||
Revenue | |||||||||||
Product
sales
|
$ | 26,024,823 | $ | 22,665,860 | $ | 19,715,311 | |||||
Contract research and
development
|
5,172,240 | 5,481,325 | 3,656,958 | ||||||||
Total revenue | 31,197,063 | 28,147,185 | 23,372,269 | ||||||||
Cost of sales | 9,783,698 | 8,313,015 | 6,724,242 | ||||||||
Gross profit | 21,413,365 | 19,834,170 | 16,648,027 | ||||||||
Expenses | |||||||||||
Selling,
general, and administrative
|
2,474,468 | 2,414,584 | 2,177,865 | ||||||||
Research and development
|
1,269,127 | 1,121,050 | 1,218,572 | ||||||||
Total expenses | 3,743,595 | 3,535,634 | 3,396,437 | ||||||||
Income from operations | 17,669,770 | 16,298,536 | 13,251,590 | ||||||||
Interest income | 2,021,426 | 1,617,880 | 1,171,810 | ||||||||
Other income | - | - | 4,200 | ||||||||
Income before taxes | 19,691,196 | 17,916,416 | 14,427,600 | ||||||||
Provision for income taxes | 6,330,251 | 5,917,072 | 4,644,705 | ||||||||
Net income | $ | 13,360,945 | $ | 11,999,344 | $ | 9,782,895 | |||||
Net income per share basic | $ | 2.83 | $ | 2.56 | $ | 2.10 | |||||
Net income per share diluted | $ | 2.76 | $ | 2.47 | $ | 2.04 | |||||
Weighted average shares outstanding | |||||||||||
Basic
|
4,729,035 | 4,692,496 | 4,659,486 | ||||||||
Diluted
|
4,844,266 | 4,857,044 | 4,785,565 |
|
Additional Paid-In Capital |
Accumulated Other Comprehen- sive Income (Loss) |
Retained Earnings |
||||||||||||||||
Common Stock | |||||||||||||||||||
Shares | Amount | Total | |||||||||||||||||
Balance at March 31, 2008 | 4,638,683 | $ | 46,387 | $ | 18,539,538 | $ | 103,158 | $ | 12,824,399 | $ | 31,513,482 | ||||||||
Exercise of stock
options and warrants
|
30,650 | 306 | 269,901 | - | - | 270,207 | |||||||||||||
Comprehensive income:
|
|||||||||||||||||||
Unrealized (loss) on
marketable
securities,
net of tax |
- | - | - | (356,098 | ) | (356,098 | ) | ||||||||||||
Net income
|
- | - | - | - | 9,782,895 | 9,782,895 | |||||||||||||
Total comprehensive income
|
9,426,797 | ||||||||||||||||||
Stock-based compensation
|
86,672 | 86,672 | |||||||||||||||||
Tax benefit of stock-
based compensation
|
270,413 | 270,413 | |||||||||||||||||
Balance at March 31, 2009 | 4,669,333 | 46,693 | 19,166,524 | (252,940 | ) | 22,607,294 | 41,567,571 | ||||||||||||
Exercise of stock
options and warrants
|
31,250 | 313 | 622,110 | - | - | 622,423 | |||||||||||||
Comprehensive income:
|
|||||||||||||||||||
Unrealized gain on
marketable securities,
net of tax |
- | - | - | 1,382,666 | 1,382,666 | ||||||||||||||
Net income
|
- | - | - | - | 11,999,344 | 11,999,344 | |||||||||||||
Total comprehensive income
|
13,382,010 | ||||||||||||||||||
Stock-based compensation
|
100,842 | 100,842 | |||||||||||||||||
Tax benefit of stock-
based compensation
|
280,448 | 280,448 | |||||||||||||||||
Balance at March 31, 2010 | 4,700,583 | 47,006 | 20,169,924 | 1,129,726 | 34,606,638 | 55,953,294 | |||||||||||||
Exercise of stock
options and warrants
|
75,615 | 756 | 417,949 | - | - | 418,705 | |||||||||||||
Comprehensive income:
|
|||||||||||||||||||
Unrealized
(loss) on
marketable securities,
net of tax |
- | - | - | (69,288 | ) | (69,288 | ) | ||||||||||||
Net income
|
- | - | - | - | 13,360,945 | 13,360,945 | |||||||||||||
Total comprehensive income
|
13,291,657 | ||||||||||||||||||
Stock-based compensation
|
76,720 | 76,720 | |||||||||||||||||
Tax benefit of stock-
based compensation
|
230,173 | 230,173 | |||||||||||||||||
Balance at March 31, 2011 | 4,776,198 | $ | 47,762 | $ | 20,894,766 | $ | 1,060,438 | $ | 47,967,583 | $ | 69,970,549 |
Year Ended March 31 | |||||||||||
2011 | 2010 | 2009 | |||||||||
OPERATING ACTIVITIES | |||||||||||
Net income | $ | 13,360,945 | $ | 11,999,344 | $ | 9,782,895 | |||||
Adjustments to reconcile net income to net cash
provided by operating activities:
|
|||||||||||
Depreciation
|
411,547 | 389,273 | 473,740 | ||||||||
Stock-based compensation
|
76,720 | 100,842 | 86,672 | ||||||||
Excess tax benefits
|
(230,173 | ) | (280,448 | ) | (270,413 | ) | |||||
Gain on sale of fixed assets
|
- | - | (4,200 | ) | |||||||
Deferred income taxes
|
294,384 | 271,651 | 256,376 | ||||||||
Changes in operating assets and liabilities
|
|||||||||||
Accounts
receivable
|
625,325 | (854,866 | ) | (140,671 | ) | ||||||
Inventories
|
(1,637,430 | ) | 541,194 | 209,183 | |||||||
Prepaid expenses and other assets
|
(404,012 | ) | (111,987 | ) | (139,691 | ) | |||||
Accounts payable and accrued expenses
|
332,334 | 491,947 | (172,444 | ) | |||||||
Deferred revenue
|
(20,833 | ) | (83,334 | ) | (83,333 | ) | |||||
Net cash provided by operating activities | 12,808,807 | 12,463,616 | 9,998,114 | ||||||||
INVESTING ACTIVITIES | |||||||||||
Purchases of fixed assets | (732,800 | ) | (305,862 | ) | (401,612 | ) | |||||
Proceeds from sale of fixed assets | - | - | 4,200 | ||||||||
Purchases of marketable securities | (14,742,032 | ) | (13,804,629 | ) | (12,137,160 | ) | |||||
Proceeds from maturities and sales of marketable securities | 1,580,068 | 258,229 | 1,985,034 | ||||||||
Net cash used in investing activities | (13,894,764 | ) | (13,852,262 | ) | (10,549,538 | ) | |||||
FINANCING ACTIVITIES | |||||||||||
Net proceeds from sale of common stock | 418,705 | 622,423 | 270,207 | ||||||||
Excess tax benefits | 230,173 | 280,448 | 270,413 | ||||||||
Net cash provided by financing activities | 648,878 | 902,871 | 540,620 | ||||||||
Decrease in cash and cash equivalents | (437,079 | ) | (485,775 | ) | (10,804 | ) | |||||
Cash and cash equivalents at beginning of year | 1,389,288 | 1,875,063 | 1,885,867 | ||||||||
Cash and cash equivalents at end of year | $ | 952,209 | $ | 1,389,288 | $ | 1,875,063 | |||||
Supplemental disclosures of cash flow information: | |||||||||||
Cash
paid during the year for income taxes
|
$ | 6,303,598 | $ | 5,587,438 | $ | 4,356,000 |
Year Ended March 31 | |||||
2011 | 2010 | 2009 | |||
Weighted average common shares outstanding basic | 4,729,035 | 4,692,496 | 4,659,486 | ||
Effect of dilutive securities: | |||||
Stock options
|
108,121 | 158,142 | 121,135 | ||
Warrants
|
7,110 | 6,406 | 4,944 | ||
Shares used in computing net income per share diluted | 4,844,266 | 4,857,044 | 4,785,565 |
Total | <1 Year | 13 Years | 35 Years | |||||||
$ | 61,227,498 | $ | 7,970,358 | $ | 28,391,106 | $ | 24,866,034 |
As of March 31, 2011 | As of March 31, 2010 | ||||||||||||||||||||||||
Adjusted Cost |
Gross Unrealized Gains |
Gross Unrealized Losses |
Fair Market Value |
Adjusted Cost |
Gross Unrealized Gains |
Gross Unrealized Losses |
Fair Market Value |
||||||||||||||||||
U.S. agency securities
|
$ | 83,358 | $ | 1,200 | $ | - | $ | 84,558 | $ | 702,992 | $ | 19,240 | $ | - | $ | 722,232 | |||||||||
Corporate bonds | 37,884,146 | 1,231,743 | (147,443 | ) | 38,968,446 | 23,807,375 | 1,029,273 | (23,601 | ) | 24,813,047 | |||||||||||||||
Municipal bonds | 21,582,084 | 602,457 | (10,047 | ) | 22,174,494 | 21,877,258 | 747,483 | (5,542 | ) | 22,619,199 | |||||||||||||||
Total | $ | 59,549,588 | $ | 1,835,400 | $ | (157,490 | ) | $ | 61,227,498 | $ | 46,387,625 | $ | 1,795,996 | $ | (29,143 | ) | $ | 48,154,478 |
Less Than 12 Months | 12 Months or Greater | Total | |||||||||||||||||||
Fair Market Value |
Gross Unrealized Losses |
Fair Market Value |
Gross Unrealized Losses |
Fair Market Value |
Gross Unrealized Losses |
||||||||||||||||
As of March 31, 2011 | |||||||||||||||||||||
U.S. agency securities | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||
Corporate bonds | 9,146,952 | (147,443 | ) | - | - | 9,146,952 | (147,443 | ) | |||||||||||||
Municipal bonds | 2,178,225 | (10,047 | ) | - | - | 2,178,225 | (10,047 | ) | |||||||||||||
Total | $ | 11,325,177 | $ | (157,490 | ) | $ | - | $ | - | $ | 11,325,177 | $ | (157,490 | ) | |||||||
As of March 31, 2010 | |||||||||||||||||||||
U.S. agency securities | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||
Corporate bonds | 2,032,306 | (23,601 | ) | - | - | 2,032,306 | (23,601 | ) | |||||||||||||
Municipal bonds | 1,564,416 | (5,542 | ) | - | - | 1,564,416 | (5,542 | ) | |||||||||||||
Total | $ | 3,596,722 | $ | (29,143 | ) | $ | - | $ | - | $ | 3,596,722 | $ | (29,143 | ) |
March 31 | |||||||
2011 | 2010 | ||||||
Raw materials | $ | 2,083,730 | $ | 595,032 | |||
Work in process | 1,109,270 | 794,091 | |||||
Finished goods | 450,857 | 617,304 | |||||
3,643,857 | 2,006,427 | ||||||
Less inventory reserve | (300,000 | ) | (300,000 | ) | |||
Total inventories | $ | 3,343,857 | $ | 1,706,427 |
Year Ended March 31 | ||||||||
2011 | 2010 | 2009 | ||||||
Risk-free interest rate | 1.6 | % | 2.7 | % | 3.2 | % | ||
Expected volatility | 56 | % | 55 | % | 68 | % | ||
Expected life (years) | 4.2 | 4.1 | 3.7 | |||||
Dividend yield | 0 | % | 0 | % | 0 | % |
Year Ended March 31 | |||||||||||
2011 | 2010 | 2009 | |||||||||
Effect of stock-based compensation on net income | $ | (76,720 | ) | $ | (100,842 | ) | $ | (86,672 | ) | ||
Effect of stock-based compensation on net income per share: | |||||||||||
Basic | $ | (0.02 | ) | $ | (0.02 | ) | $ | (0.02 | ) | ||
Diluted | $ | (0.02 | ) | $ | (0.02 | ) | $ | (0.02 | ) |
Ranges of Exercise Prices |
Number Outstanding |
Weighted Average Exercise Price |
Weighted Remaining Contractual Life (years) | ||||
$ 15.08 - 16.93 | 122,000 | $ | 16.33 | 4.3 | |||
29.65 - 31.27 | 38,000 | 29.78 | 3.4 | ||||
34.71 - 58.27 | 15,000 | 43.06 | 7.1 | ||||
175,000 | $ | 21.54 | 4.3 |
Option Shares Reserved |
Options Outstanding | Weighted
Average Option Exercise Price |
Warrants
Outstanding |
Weighted Average Warrant Exercise Price | |||||||||
At March 31, 2008 | 178,230 | 308,400 | $ | 16.09 | 10,000 | $ | 16.28 | ||||||
Granted | (4,000 | ) | 4,000 | $ | 31.27 | - | - | ||||||
Exercised | - | (30,650 | ) | $ | 8.82 | - | - | ||||||
At March 31, 2009 | 174,230 | 281,750 | $ | 17.10 | 10,000 | $ | 16.28 | ||||||
Granted | (4,000 | ) | 4,000 | $ | 51.04 | - | - | ||||||
Exercised | - | (31,250 | ) | $ | 19.92 | - | - | ||||||
At March 31, 2010 | 170,230 | 254,500 | $ | 17.28 | 10,000 | $ | 16.28 | ||||||
Granted |
(4,000 | ) | 4,000 | $ | 42.45 | - | - | ||||||
Exercised |
- | (83,500 | ) | $ | 9.56 | - | - | ||||||
At March 31, 2011 | 166,230 | 175,000 | $ | 21.54 | 10,000 | $ | 16.28 |
Year Ended March 31 | |||||||||||
2011 | 2010 | 2009 | |||||||||
Current taxes | |||||||||||
Federal
|
$ | 5,761,632 | $ | 5,375,724 | $ | 4,304,330 | |||||
State
|
504,408 | 550,146 | 351,625 | ||||||||
Deferred taxes | |||||||||||
Federal
|
56,996 | (6,109 | ) | (17,880 | ) | ||||||
State
|
7,215 | (2,689 | ) | 6,630 | |||||||
Income tax provision | $ | 6,330,251 | $ | 5,917,072 | $ | 4,644,705 |
Year Ended March 31 | |||||||||||
2011 | 2010 | 2009 | |||||||||
Tax expense at U.S. statutory rate | $ | 6,809,003 | $ | 6,091,581 | $ | 4,905,384 | |||||
State income taxes, net of Federal benefit | 345,213 | 369,754 | 271,307 | ||||||||
Domestic manufacturing deduction | (549,123 | ) | (309,222 | ) | (238,679 | ) | |||||
Municipal interest | (239,636 | ) | (225,695 | ) | (197,065 | ) | |||||
Other | (35,206 | ) | (9,346 | ) | (96,242 | ) | |||||
Income tax provision | $ | 6,330,251 | $ | 5,917,072 | $ | 4,644,705 |
March 31 | |||||||
2011 | 2010 | ||||||
Deferred revenue | $ | - | $ | 7,513 | |||
Vacation accrual | 135,724 | 121,788 | |||||
Inventory reserve | 110,400 | 108,180 | |||||
Depreciation | 36,053 | 65,443 | |||||
Stock-based compensation deductions | 117,800 | 162,869 | |||||
Unrealized gain on marketable securities | (617,471 | ) | (637,127 | ) | |||
Other | 70,801 | 69,196 | |||||
Net deferred tax liabilities | $ | (146,693 | ) | $ | (102,138 | ) |
% of Revenue for Year Ended March 31 | |||||
2011 | 2010 | 2009 | |||
Customer A | 14% | 15% | 10% | ||
Customer B | 11% | 16% | 19% | ||
Customer C | 11% | 11% | 11% |
Year Ended March 31 | ||||||||
2011 | 2010 | 2009 | ||||||
United States | $ | 14,169,952 | $ | 14,283,819 | $ | 12,445,164 | ||
Europe | 12,009,294 | 9,334,742 | 8,154,261 | |||||
Asia | 4,576,270 | 4,133,251 | 2,314,626 | |||||
Other | 441,547 | 395,373 | 458,218 | |||||
Total Revenue | $ | 31,197,063 | $ | 28,147,185 | $ | 23,372,269 |
Year Ending March 31 | ||||||||||||||||
2012 | 2013 | 2014 | 2015 | 2016 | Total | |||||||||||
$ | 254,053 | $ | 257,685 | $ | 261,370 | $ | 264,142 | $ | 200,109 | $ | 1,237,359 |
Exhibit # | Description |
23 | Consent
of Ernst & Young LLP. |
31.1 | Certification by Daniel A. Baker pursuant to Rule 13a-14(a)/15d-14(a).
|
31.2 | Certification by Curt A. Reynders pursuant to Rule 13a-14(a)/15d-14(a). |
32 | Certification by Daniel A. Baker and Curt A. Reynders pursuant to 18 U.S.C. Section 1350. |
Exhibit 23
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the Registration Statement (Form S-8) pertaining to the NVE Corporation 2000 Stock Option Plan (as amended by the shareholders on July 19, 2001) and the NVE Corporation 2001 Employee Stock Purchase Plan of our reports dated May 4, 2011, with respect to the financial statements of NVE Corporation and the effectiveness of internal control over financial reporting of NVE Corporation, included in the Annual Report (Form 10-K) for the year ended March 31, 2011.
/s/ ERNST & YOUNG LLP |
Minneapolis, Minnesota |
May 4, 2011 |
Exhibit 31.1
CERTIFICATION
I, Daniel A. Baker, certify that:
1. I have reviewed this Annual Report on Form 10-K of NVE Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrants other certifying officer(s) and I are responsible
for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control
over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrants disclosure controls
and procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrants internal
control over financial reporting that occurred during the registrants
most recent fiscal quarter (the registrants fourth fiscal quarter in
the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrants internal control over financial
reporting; and
5. The registrants other certifying
officer(s) and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrants auditors and the
audit committee of the registrants board of directors (or persons performing
the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: May 4, 2011
/s/ DANIEL A. BAKER | ||
Daniel A. Baker | ||
President and Chief Executive Officer |