UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended September 30, 2014
For the transition
period from to
Commission File Number: 000-12196
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) | |
(952) 829-9217 | ||
(Registrants telephone number, including area code) |
Large accelerated filer [ ] | Accelerated filer [X] |
Non-accelerated filer [ ] (Do not check if a smaller reporting company) | Smaller reporting company [ ] |
(Unaudited) Sept. 30, 2014 |
March 31, 2014* | ||||||
ASSETS | |||||||
Current assets | |||||||
Cash and cash equivalents
|
$ | 3,281,500 | $ | 1,262,300 | |||
Marketable securities, short term
|
14,624,615 | 12,360,091 | |||||
Accounts receivable, net of allowance for uncollectible
accounts of $15,000
|
3,678,396 | 2,331,574 | |||||
Inventories
|
3,389,393 | 3,207,333 | |||||
Deferred tax assets
|
169,671 | 237,387 | |||||
Prepaid expenses and other assets
|
848,528 | 816,276 | |||||
Total current assets | 25,992,103 | 20,214,961 | |||||
Fixed assets | |||||||
Machinery and equipment
|
8,563,720 | 8,536,010 | |||||
Leasehold improvements
|
1,499,454 | 1,499,454 | |||||
10,063,174 | 10,035,464 | ||||||
Less accumulated depreciation
|
7,495,209 | 7,030,692 | |||||
Net fixed assets | 2,567,965 | 3,004,772 | |||||
Marketable securities, long term | 84,551,529 | 82,022,310 | |||||
Total assets | $ | 113,111,597 | $ | 105,242,043 | |||
LIABILITIES AND SHAREHOLDERS EQUITY | |||||||
Current liabilities | |||||||
Accounts payable
|
$ | 337,462 | $ | 374,127 | |||
Accrued payroll and other
|
855,927 | 808,675 | |||||
Total current liabilities | 1,193,389 | 1,182,802 | |||||
Long-term deferred tax liabilities | 224,769 | 354,600 | |||||
Shareholders equity | |||||||
Common stock, $0.01 par value,
6,000,000 shares authorized; 4,857,953 issued and outstanding as of September 30,
2014 and 4,851,043 issued and outstanding as of March 31, 2014
|
48,580 | 48,510 | |||||
Additional paid-in capital
|
20,850,762 | 20,464,883 | |||||
Accumulated other comprehensive income
|
567,974 | 877,857 | |||||
Retained earnings
|
90,226,123 | 82,313,391 | |||||
Total shareholders equity | 111,693,439 |
103,704,641 |
|||||
Total liabilities and shareholders equity | $ | 113,111,597 | $ | 105,242,043 |
Quarter Ended Sept. 30 | |||||||
2014 | 2013 | ||||||
Revenue | |||||||
Product sales
|
$ | 8,113,806 | $ | 7,231,149 | |||
Contract research and development
|
153,567 | 70,031 | |||||
Total revenue | 8,267,373 | 7,301,180 | |||||
Cost of sales | 1,609,632 | 1,503,546 | |||||
Gross profit | 6,657,741 | 5,797,634 | |||||
Expenses | |||||||
Selling, general, and administrative
|
625,599 | 660,076 | |||||
Research and development
|
787,279 | 876,463 | |||||
Total expenses | 1,412,878 | 1,536,539 | |||||
Income from operations | 5,244,863 | 4,261,095 | |||||
Interest income | 562,923 | 520,802 | |||||
Income before taxes | 5,807,786 | 4,781,897 | |||||
Provision for income taxes | 1,932,164 | 1,552,246 | |||||
Net income | $ | 3,875,622 | $ | 3,229,651 | |||
Net income per share basic | $ | 0.80 | $ | 0.67 | |||
Net income per share diluted | $ | 0.80 | $ | 0.66 | |||
Weighted average shares outstanding | |||||||
Basic
|
4,855,071 | 4,852,178 | |||||
Diluted
|
4,872,029 | 4,873,106 |
Quarter Ended Sept. 30 | |||||||
2014 | 2013 | ||||||
Net income | $ | 3,875,622 | $ | 3,229,651 | |||
Unrealized (loss) gain from marketable securities, net of tax | (404,731 | ) | 244,389 | ||||
Comprehensive income | $ | 3,470,891 | $ | 3,474,040 |
Six Months Ended Sept. 30 | |||||||
2014 | 2013 | ||||||
Revenue | |||||||
Product sales
|
$ | 16,461,887 | $ | 13,205,755 | |||
Contract research and development
|
258,521 | 272,358 | |||||
Total revenue | 16,720,408 | 13,478,113 | |||||
Cost of sales | 3,167,978 | 2,881,901 | |||||
Gross profit | 13,552,430 | 10,596,212 | |||||
Expenses | |||||||
Selling, general, and administrative
|
1,255,249 | 1,212,880 | |||||
Research and development
|
1,590,707 | 1,839,374 | |||||
Total expenses | 2,845,956 | 3,052,254 | |||||
Income from operations | 10,706,474 | 7,543,958 | |||||
Interest income | 1,111,477 | 1,047,141 | |||||
Income before taxes | 11,817,951 | 8,591,099 | |||||
Provision for income taxes | 3,905,219 | 2,794,623 | |||||
Net income | $ | 7,912,732 | $ | 5,796,476 | |||
Net income per share basic | $ | 1.63 | $ | 1.19 | |||
Net income per share diluted | $ | 1.63 | $ | 1.19 | |||
Weighted average shares outstanding | |||||||
Basic
|
4,853,068 | 4,857,279 | |||||
Diluted
|
4,868,769 | 4,878,599 |
Six Months Ended Sept. 30 | |||||||
2014 | 2013 | ||||||
Net income | $ | 7,912,732 | $ | 5,796,476 | |||
Unrealized loss from marketable securities, net of tax | (309,883 | ) | (610,646 | ) | |||
Comprehensive income | $ | 7,602,849 | $ | 5,185,830 |
Six Months Ended Sept. 30 | |||||||
2014 | 2013 | ||||||
OPERATING ACTIVITIES | |||||||
Net income | $ | 7,912,732 | $ | 5,796,476 | |||
Adjustments to reconcile net income to net cash
provided by operating activities:
|
|||||||
Depreciation
|
464,517 | 380,272 | |||||
Stock-based compensation
|
58,960 | 53,200 | |||||
Excess tax benefits
|
(24,288 | ) | - | ||||
Deferred income taxes
|
138,992 | 28,457 | |||||
Changes in operating assets and liabilities:
|
|||||||
Accounts receivable
|
(1,346,822 | ) | (509,632 | ) | |||
Inventories
|
(182,060 | ) | 236,147 | ||||
Prepaid expenses and other assets
|
(32,252 | ) | 63,341 | ||||
Accounts payable and
other current liabilities
|
10,587 | (54,230 | ) | ||||
Net cash provided by operating activities | 7,000,366 | 5,994,031 | |||||
INVESTING ACTIVITIES | |||||||
Purchases of fixed assets | (27,710 | ) | - | ||||
Purchases of marketable securities | (9,280,445 | ) | (11,533,738 | ) | |||
Proceeds from maturities and sales of marketable securities | 4,000,000 | 5,855,000 | |||||
Net cash used in investing activities | (5,308,155 | ) | (5,678,738 | ) | |||
FINANCING ACTIVITIES | |||||||
Net proceeds from sale of stock | 302,701 | - | |||||
Excess tax benefits | 24,288 | - | |||||
Repurchase of common stock | - | (1,263,405 | ) | ||||
Net cash provided by (used in) financing activities | 326,989 | (1,263,405 | ) | ||||
Increase (decrease) in cash and cash equivalents | 2,019,200 | (948,112 | ) | ||||
Cash and cash equivalents at beginning of period | 1,262,300 | 2,509,683 | |||||
Cash and cash equivalents at end of period | $ | 3,281,500 | $ | 1,561,571 | |||
Supplemental disclosures of cash flow information: | |||||||
Cash paid during the period for income taxes
|
$ | 3,760,500 | $ | 2,838,033 |
Quarter Ended Sept. 30 | |||
2014 | 2013 | ||
Weighted average common shares outstanding basic | 4,855,071 | 4,852,178 | |
Effect of dilutive securities: | |||
Stock options
|
16,958 | 20,435 | |
Warrants
|
- | 493 | |
Shares used in computing net income per share diluted | 4,872,029 | 4,873,106 |
Six Months Ended Sept. 30 | |||
2014 | 2013 | ||
Weighted average common shares outstanding basic | 4,853,068 | 4,857,279 | |
Effect of dilutive securities: | |||
Stock options
|
15,701 | 20,798 | |
Warrants
|
- | 522 | |
Shares used in computing net income per share diluted | 4,868,769 | 4,878,599 |
Total | <1 Year | 13 Years | 35 Years | |||||||
$ | 99,176,144 | $ | 14,624,615 | $ | 46,756,649 | $ | 37,794,880 |
As of September 30, 2014 | As of March 31, 2014 | ||||||||||||||||||||||||
Adjusted Cost |
Gross Unrealized Gains |
Gross Unrealized Losses |
Fair Market Value |
Adjusted Cost |
Gross Unrealized Gains |
Gross Unrealized Losses |
Fair Market Value |
||||||||||||||||||
Corporate bonds | $ | 95,870,410 | $ | 1,137,401 | $ | (252,010 | ) | $ | 96,755,801 | $ | 88,567,210 | $ | 1,613,822 | $ | (246,973 | ) | $ | 89,934,059 | |||||||
Municipal bonds | 2,413,675 | 6,668 | - | 2,420,343 | 4,436,430 | 16,521 |
(4,609 | ) | 4,448,342 | ||||||||||||||||
Total | $ | 98,284,085 | $ | 1,144,069 | $ | (252,010 | ) | $ | 99,176,144 | $ | 93,003,640 | $ | 1,630,343 | $ | (251,582 | ) | $ | 94,382,401 |
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 September 30, 2014 | |||||||||||||||||||||
Corporate bonds | $ | 29,377,477 | $ | (172,907 | ) | $ | 8,368,641 | $ | (79,103 | ) | $ | 37,746,118 | $ | (252,010 | ) | ||||||
Municipal bonds | - | - | - | - | - | - | |||||||||||||||
Total | $ | 29,377,477 | $ | (172,907 | ) | $ | 8,368,641 | $ | (79,103 | ) | $ | 37,746,118 | $ | (252,010 | ) | ||||||
As of March 31, 2014 | |||||||||||||||||||||
Corporate bonds | $ | 34,761,683 | $ | (246,973 | ) | $ | - | $ | - | $ | 34,761,683 | $ | (246,973 | ) | |||||||
Municipal bonds | 1,418,742 | (4,609 | ) | - | - | 1,418,742 | (4,609 | ) | |||||||||||||
Total | $ | 36,180,425 | $ | (251,582 | ) | $ | - | $ | - | $ | 36,180,425 | $ | (251,582 | ) |
Sept. 30 2014 |
March
31 2014 |
||||||
Raw materials | $ | 898,089 | $ | 776,510 | |||
Work in process | 2,087,528 | 1,940,809 | |||||
Finished goods | 658,776 | 785,014 | |||||
3,644,393 | 3,502,333 | ||||||
Less inventory reserve | (255,000 | ) | (295,000 | ) | |||
Total inventories | $ | 3,389,393 | $ | 3,207,333 |
Percentage
of Revenue Quarter Ended Sept. 30 |
Quarter- to-Quarter Change |
|||||||
2014 | 2013 | |||||||
Revenue | ||||||||
Product sales
|
98.1 | % | 99.0 | % | 12.2 | % | ||
Contract research and development
|
1.9 | % | 1.0 | % | 119.3 | % | ||
Total revenue | 100.0 | % | 100.0 | % | 13.2 | % | ||
Cost of sales | 19.5 | % | 20.6 | % | 7.1 | % | ||
Gross profit | 80.5 | % | 79.4 | % | 14.8 | % | ||
Expenses | ||||||||
Selling, general, and administrative
|
7.6 | % | 9.0 | % | (5.2 | )% | ||
Research and development
|
9.5 | % | 12.0 | % | (10.2 | )% | ||
Total expenses | 17.1 | % | 21.0 | % | (8.0 | )% | ||
Income from operations | 63.4 | % | 58.4 | % | 23.1 | % | ||
Interest income | 6.8 | % | 7.1 | % | 8.1 | % | ||
Income before taxes | 70.2 | % | 65.5 | % | 21.5 | % | ||
Provision for income taxes | 23.3 | % | 21.3 | % | 24.5 | % | ||
Net income | 46.9 | % | 44.2 | % | 20.0 | % |
Percentage
of Revenue Six Months Ended Sept. 30 |
Period- to-Period Change |
|||||||
2014 | 2013 | |||||||
Revenue | ||||||||
Product sales
|
98.5 | % | 98.0 | % | 24.7 | % | ||
Contract research and development
|
1.5 | % | 2.0 | % | (5.1 | )% | ||
Total revenue | 100.0 | % | 100.0 | % | 24.1 | % | ||
Cost of sales | 18.9 | % | 21.4 | % | 9.9 | % | ||
Gross profit | 81.1 | % | 78.6 | % | 27.9 | % | ||
Expenses | ||||||||
Selling, general, and administrative
|
7.5 | % | 9.0 | % | 3.5 | % | ||
Research and development
|
9.5 | % | 13.6 | % | (13.5 | )% | ||
Total expenses | 17.0 | % | 22.6 | % | (6.8 | )% | ||
Income from operations | 64.1 | % | 56.0 | % | 41.9 | % | ||
Interest income | 6.6 | % | 7.7 | % | 6.1 | % | ||
Income before taxes | 70.7 | % | 63.7 | % | 37.6 | % | ||
Provision for income taxes | 23.4 | % | 20.7 | % | 39.7 | % | ||
Net income | 47.3 | % | 43.0 | % | 36.5 | % |
Exhibit # |
Description
|
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. |
101.INS | XBRL Instance Document |
101.SCH | XBRL Taxonomy Extension Schema Document |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
NVE CORPORATION | |
(Registrant) | |
October 22, 2014 | /s/ DANIEL A. BAKER |
Date | Daniel A. Baker |
President and Chief Executive Officer | |
October 22, 2014 | /s/ CURT A. REYNDERS |
Date | Curt A. Reynders |
Chief Financial Officer |
Exhibit 31.1
CERTIFICATION
I, Daniel A. Baker,
certify that:
1. I have reviewed this Quarterly Report on Form 10-Q 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: October 22, 2014
/s/ DANIEL A. BAKER | ||
Daniel A. Baker | ||
President and Chief Executive Officer |
Exhibit 31.2
CERTIFICATION
I, Curt A. Reynders, certify
that:
1. I have reviewed this Quarterly Report on Form 10-Q 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: October 22, 2014
| /s/ CURT A. REYNDERS | |
Curt A. Reynders | ||
Chief Financial Officer |