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
|
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 [X]
|
|
Emerging growth company [ ]
|
Title of each class | Trading symbol(s) | Name of each exchange on which registered |
Common Stock, $0.01 par value | NVEC | The NASDAQ Stock Market, LLC |
| smart magnetometer sensors for Internet of Things and automotive applications; | |
| smart angle sensors for Internet of Things and automotive applications; | |
| new current sensors for motor control and automotive applications; | |
| lower-power sensors and couplers; | |
| private-label couplers; and | |
| new antitamper sensors. |
| custom integrated circuits for smart sensors; | |
| biosensors for enhancing food safety; and | |
| power conversion integrated circuits. |
| technological innovations by us or our competitors; | |
| the announcement of new products, product enhancements, or contracts by us or our competitors; | |
| delays in our introduction of new products or technologies or market acceptance of these products or technologies; | |
| loss of customers, decreases in customers purchases, or decreases in customers purchase prices; | |
| changes in demand for our customers products; | |
| quarterly variations in our financial results, revenue, or revenue growth rates; | |
| speculation in the press or analyst community about our business, potential revenue, or potential earnings; | |
| general economic conditions or market conditions specific to industries we or our customers serve or may serve; | |
| legal proceedings involving us, including intellectual property litigation or class action litigation; | |
| changes in Federal corporate income tax rates or changes in other tax provisions; | |
| changes in tariffs, customs, duties, or other trade barriers in foreign jurisdictions where we purchase raw materials or sell our products; and | |
| our stock repurchase and dividend policies and decisions. |
Percentage
of Revenue Year Ended March 31 |
Year- to-Year Change |
|||||||
2019 | 2018 | |||||||
Revenue | ||||||||
Product sales
|
95.5 | % | 91.5 | % | (7.4 | )% | ||
Contract research and development
|
4.5 | % | 8.5 | % | (53.5 | )% | ||
Total revenue | 100.0 | % | 100.0 | % | (11.4 | )% | ||
Cost of sales | 19.7 | % | 21.0 | % | (16.9 | )% | ||
Gross profit | 80.3 | % | 79.0 | % | (9.9 | )% | ||
Expenses | ||||||||
Research and development
|
15.5 | % | 12.4 | % | 10.9 | % | ||
Selling, general, and administrative
|
4.6 | % | 4.8 | % | (14.7 | )% | ||
Total expenses | 20.1 | % | 17.2 | % | 3.8 | % | ||
Income from operations | 60.2 | % | 61.8 | % | (13.7 | )% | ||
Interest income | 6.7 | % | 5.2 | % | 14.6 | % | ||
Income before taxes | 66.9 | % | 67.0 | % | (11.5 | )% | ||
Income tax provision | 12.1 | % | 20.4 | % | (47.5 | )% | ||
Net income | 54.8 | % | 46.6 | % | 4.3 | % |
Name | Title | Date |
/s/Terrence W. Glarner Terrence W. Glarner |
Director and Chairman of the Board |
May 1, 2019 |
/s/Daniel A. Baker Daniel A. Baker |
Director, President & Chief Executive Officer (Principal Executive Officer) |
May 1, 2019 |
/s/Curt A. Reynders Curt A. Reynders |
Treasurer and Chief Financial Officer (Principal Financial and Accounting Officer) |
May 1, 2019 |
/s/Patricia M. Hollister Patricia M. Hollister |
Director | May 1, 2019 |
/s/Richard W. Kramp Richard W. Kramp |
Director | May 1, 2019 |
/s/Gary R. Maharaj Gary R. Maharaj |
Director | May 1, 2019 |
March 31, 2019 | March 31, 2018 | ||||||
ASSETS | |||||||
Current assets | |||||||
Cash and cash equivalents
|
$ | 6,877,304 | $ | 4,755,082 | |||
Marketable securities, short-term
|
12,487,821 | 20,765,809 | |||||
Accounts receivable, net of allowance for uncollectible
accounts of $15,000
|
2,995,638 | 2,888,779 | |||||
Inventories
|
4,264,876 | 3,650,439 | |||||
Prepaid expenses and other assets
|
816,045 | 635,160 | |||||
Total current assets | 27,441,684 | 32,695,269 | |||||
Fixed assets | |||||||
Machinery and equipment
|
9,365,806 | 9,395,987 | |||||
Leasehold improvements
|
1,787,269 | 1,749,284 | |||||
11,153,075 | 11,145,271 | ||||||
Less accumulated depreciation and amortization
|
10,258,240 | 9,819,888 | |||||
Net fixed assets | 894,835 | 1,325,383 | |||||
Deferred tax assets | 353,735 | 572,655 | |||||
Marketable securities, long-term | 54,925,633 | 52,838,158 | |||||
Total assets | $ | 83,615,887 | $ | 87,431,465 | |||
LIABILITIES AND SHAREHOLDERS EQUITY | |||||||
Current liabilities | |||||||
Accounts payable
|
$ | 375,188 | $ | 414,970 | |||
Accrued payroll and other
|
460,488 | 574,755 | |||||
Total current liabilities | 835,676 | 989,725 | |||||
Shareholders equity | |||||||
Common stock, $0.01 par value,
6,000,000 shares authorized;
4,846,010 issued and outstanding as of March 31, 2019 and 4,842,010 as of March 31, 2018 |
48,460 | 48,420 | |||||
Additional paid-in capital
|
19,910,558 | 19,599,298 | |||||
Accumulated other comprehensive loss
|
(82,725 | ) | (915,635 | ) | |||
Retained earnings
|
62,903,918 | 67,709,657 | |||||
Total shareholders equity | 82,780,211 | 86,441,740 | |||||
Total liabilities and shareholders equity | $ | 83,615,887 | $ | 87,431,465 |
Year Ended March 31 | |||||||
2019 | 2018 | ||||||
Revenue | |||||||
Product sales
|
$ | 25,291,306 | $ | 27,321,810 | |||
Contract research and development
|
1,181,031 | 2,542,071 | |||||
Total revenue | 26,472,337 | 29,863,881 | |||||
Cost of sales | 5,216,112 | 6,274,744 | |||||
Gross profit | 21,256,225 | 23,589,137 | |||||
Expenses | |||||||
Research and development
|
4,107,692 | 3,702,918 | |||||
Selling, general, and administrative
|
1,223,971 | 1,435,592 | |||||
Total expenses | 5,331,663 | 5,138,510 | |||||
Income from operations | 15,924,562 | 18,450,627 | |||||
Interest income | 1,785,277 | 1,558,197 | |||||
Income before taxes | 17,709,839 | 20,008,824 | |||||
Provision for income taxes | 3,201,903 | 6,096,152 | |||||
Net income | $ | 14,507,936 | $ | 13,912,672 | |||
Net income per share basic | $ | 3.00 | $ | 2.87 | |||
Net income per share diluted | $ | 2.99 | $ | 2.87 | |||
Cash dividends declared per common share | $ | 4.00 | $ | 4.00 | |||
Weighted average shares outstanding | |||||||
Basic
|
4,844,010 | 4,841,347 | |||||
Diluted
|
4,850,567 | 4,846,212 |
Year Ended March 31 | |||||||
2019 | 2018 | ||||||
Net income | $ | 14,507,936 | $ | 13,912,672 | |||
Unrealized gain (loss) from marketable securities, net of tax | 893,275 | (877,337 | ) | ||||
Comprehensive income | $ | 15,401,211 | $ | 13,035,335 |
|
Additional Paid-In Capital |
Accumulated Other Comprehen- sive Income (Loss) |
Retained Earnings |
|||||||||||||||||
Common Stock | ||||||||||||||||||||
Shares | Amount | Total | ||||||||||||||||||
Balance as of March 31, 2017 | 4,841,010 | $ | 48,410 | $ | 19,507,348 | $ | (38,298 | ) | $ | 73,162,025 | $ | 92,679,485 | ||||||||
Exercise of stock
options
|
1,000 | 10 | 51,030 | 51,040 | ||||||||||||||||
Comprehensive income:
|
||||||||||||||||||||
Unrealized loss on
marketable securities,
net of tax |
(877,337 | ) | (877,337 | ) | ||||||||||||||||
Net income
|
13,912,672 | 13,912,672 | ||||||||||||||||||
Total comprehensive income
|
13,035,335 | |||||||||||||||||||
Stock-based compensation
|
40,920 | 40,920 | ||||||||||||||||||
Cash dividends declared
($4.00 per share of
common stock) |
(19,365,040 | ) | (19,365,040 | ) | ||||||||||||||||
Balance as of March 31, 2018 | 4,842,010 | 48,420 | 19,599,298 | (915,635 | ) | 67,709,657 | 86,441,740 | |||||||||||||
Exercise of stock
options
|
4,000 | 40 | 217,900 | 217,940 | ||||||||||||||||
Comprehensive income:
|
||||||||||||||||||||
Unrealized gain on
marketable securities,
net of tax |
893,275 | 893,275 | ||||||||||||||||||
Net income
|
14,507,936 | 14,507,936 | ||||||||||||||||||
Total comprehensive income
|
15,401,211 | |||||||||||||||||||
Stock-based compensation
|
93,360 | 93,360 | ||||||||||||||||||
Cash dividends declared
($4.00 per share of
common stock) |
(19,374,040 | ) | (19,374,040 | ) | ||||||||||||||||
Cumulative effect of accounting change
|
(60,365 | ) | 60,365 | |||||||||||||||||
Balance as of March 31, 2019 | 4,846,010 | $ | 48,460 | $ | 19,910,558 | $ | (82,725 | ) | $ | 62,903,918 | $ | 82,780,211 |
Year Ended March 31 | |||||||
2019 | 2018 | ||||||
OPERATING ACTIVITIES | |||||||
Net income | $ | 14,507,936 | $ | 13,912,672 | |||
Adjustments to reconcile net income to net cash
provided by operating activities:
|
|||||||
Depreciation and amortization
|
705,197 | 979,652 | |||||
Stock-based compensation
|
93,360 | 40,920 | |||||
Deferred income taxes
|
(31,269 | ) | 96,275 | ||||
Changes in operating assets and liabilities:
|
|||||||
Accounts receivable
|
(106,859 | ) | 548,023 | ||||
Inventories
|
(614,437 | ) | (292,141 | ) | |||
Prepaid expenses and other assets
|
(180,885 | ) | (27,877 | ) | |||
Accounts payable and accrued expenses
|
(154,049 | ) | 37,137 | ||||
Deferred revenue
|
- | (142,733 | ) | ||||
Net cash provided by operating activities | 14,218,994 | 15,151,928 | |||||
INVESTING ACTIVITIES | |||||||
Purchases of fixed assets | (68,265 | ) | (604,800 | ) | |||
Purchases of marketable securities | (13,672,407 | ) | (18,217,410 | ) | |||
Proceeds from maturities and sales of marketable securities | 20,800,000 | 19,540,000 | |||||
Net cash provided by investing activities | 7,059,328 | 717,790 | |||||
FINANCING ACTIVITIES | |||||||
Proceeds from sale of common stock | 217,940 | 51,040 | |||||
Payment of dividends to shareholders | (19,374,040 | ) | (19,365,040 | ) | |||
Net cash used in financing activities | (19,156,100 | ) | (19,314,000 | ) | |||
Increase (decrease) in cash and cash equivalents | 2,122,222 | (3,444,282 | ) | ||||
Cash and cash equivalents at beginning of year | 4,755,082 | 8,199,364 | |||||
Cash and cash equivalents at end of year | $ | 6,877,304 | $ | 4,755,082 | |||
Supplemental disclosures of cash flow information: | |||||||
Cash paid during the year for income taxes
|
$ | 3,426,045 | $ | 5,966,425 |
Year Ended March 31 | |||
2019 | 2018 | ||
Weighted average common shares outstanding basic | 4,844,010 | 4,841,347 | |
Dilutive effect of stock options | 6,557 | 4,865 | |
Shares used in computing net income per share diluted | 4,850,567 | 4,846,212 |
Total | <1 Year | 13 Years | 35 Years | |||||||
$ | 74,117,263 | $ | 19,191,630 | $ | 26,733,361 | $ | 28,192,272 |
As of March 31, 2019 | As of March 31, 2018 | ||||||||||||||||
Level 1 | Level 2 | Total | Level 1 | Level 2 | Total | ||||||||||||
Money market funds | $ | 6,703,809 | $ | - | $ | 6,703,809 | $ | 3,951,032 | $ | - | $ | 3,951,032 | |||||
Corporate bonds | - | 67,413,454 | 67,413,454 | 54,517,969 | 19,085,998 | 73,603,967 | |||||||||||
Total | $ | 6,703,809 | $ | 67,413,454 | $ | 74,117,263 | $ | 58,469,001 | $ | 19,085,998 | $ | 77,554,999 |
As of March 31, 2019 | As of March 31, 2018 | ||||||||||||||||||||||||
Amortized Cost |
Gross Unrealized Holding Gains |
Gross Unrealized Holding Losses |
Estimated Fair Value |
Amortized Cost |
Gross Unrealized Gains |
Gross Unrealized Losses |
Estimated Fair Value |
||||||||||||||||||
Money market funds |
$ | 6,703,809 | $ | - | $ | - | $ | 6,703,809 | $ | 3,951,032 | $ | - | $ | - | $ | 3,951,032 | |||||||||
Corporate bonds | 67,519,350 | 315,902 | (421,798 | ) | 67,413,454 | 74,853,327 | - | (1,249,360 | ) | 73,603,967 | |||||||||||||||
Total | $ | 74,223,159 | $ | 315,902 | $ | (421,798 | ) | $ | 74,117,263 | $ | 78,804,359 | $ | - | $ | (1,249,360 | ) | $ | 77,554,999 |
Less Than 12 Months | 12 Months or Greater | Total | |||||||||||||||||||
Estimated Fair Value |
Gross Unrealized Holding Losses |
Estimated Fair Value |
Gross Unrealized Holding Losses |
Estimated Fair Value |
Gross Unrealized Holding Losses |
||||||||||||||||
As of March 31, 2019 | |||||||||||||||||||||
Corporate bonds | $ | - | $ | - | $ | 51,413,428 | $ | (421,798 | ) | $ | 51,413,428 | $ | (421,798 | ) | |||||||
Total | $ | - | $ | - | $ | 51,413,428 | $ | (421,798 | ) | $ | 51,413,428 | $ | (421,798 | ) | |||||||
As of March 31, 2018 | |||||||||||||||||||||
Corporate bonds | $ | 61,731,248 | $ | (1,003,849 | ) | $ | 9,072,719 | $ | (245,511 | ) | $ | 70,803,967 | $ | (1,249,360 | ) | ||||||
Total | $ | 61,731,248 | $ | (1,003,849 | ) | $ | 9,072,719 | $ | (245,511 | ) | $ | 70,803,967 | $ | (1,249,360 | ) |
March 31 | |||||
2019 | 2018 | ||||
Raw materials | $ | 1,130,917 | $ | 1,084,030 | |
Work in process | 2,325,238 | 1,828,492 | |||
Finished goods | 808,721 | 737,917 | |||
Total inventories | $ | 4,264,876 | $ | 3,650,439 |
Year Ended March 31 | |||||
2019 | 2018 | ||||
Risk-free interest rate | 2.9 | % | 1.8 | % | |
Expected volatility | 33 | % | 28 | % | |
Expected life (years) | 4.5 | 4.4 | |||
Dividend yield | 3.7 | % | 5.3 | % |
Ranges
of Exercise Prices |
Number Outstanding |
Weighted Average Exercise Price |
Weighted Remaining Contractual Life (years) |
||||
$49.86 - $67.69 | 14,000 | $ | 58.83 | 5.5 | |||
$76.13 - $107.86 | 8,000 | 92.00 | 8.9 | ||||
22,000 | $ | 70.89 | 6.7 |
Option Shares Reserved |
Options Outstanding |
Weighted
Average Option Exercise Price |
||||||
At March 31, 2017 | 143,230 | 19,000 | $ | 57.51 | ||||
Granted
|
(4,000 | ) | 4,000 | $ | 76.13 | |||
Exercised
|
- | (1,000 | ) | $ | 51.04 | |||
At March 31, 2018 | 139,230 | 22,000 | $ | 61.19 | ||||
Granted
|
(4,000 | ) | 4,000 | $ | 107.86 | |||
Exercised
|
- | (4,000 | ) | $ | 54.49 | |||
At March 31, 2019 | 135,230 | 22,000 | $ | 70.89 |
Year Ended March 31 | |||||||
2019 | 2018 | ||||||
Current taxes | |||||||
Federal
|
$ | 3,107,376 | $ | 5,899,574 | |||
State
|
125,796 | 160,670 | |||||
Deferred taxes | |||||||
Federal
|
(30,012 | ) | 31,800 | ||||
State
|
(1,257 | ) | 4,108 | ||||
Income tax provision | $ | 3,201,903 | $ | 6,096,152 |
Year Ended March 31 | |||||||
2019 | 2018 | ||||||
Tax expense at U.S. statutory rate | $ | 3,719,066 | $ | 6,282,771 | |||
State income taxes, net of Federal benefit | 95,430 | 103,240 | |||||
Domestic manufacturing deduction | - | (495,361 | ) | ||||
Foreign-derived intangible income deduction | (555,256 | ) | - | ||||
Municipal interest | - | (1,378 | ) | ||||
Tax Reform Act effect on deferred tax assets | - | 206,693 | |||||
Other | (57,337 | ) | 187 | ||||
Income tax provision | $ | 3,201,903 | $ | 6,096,152 |
March 31 | |||||||
2019 | 2018 | ||||||
Paid time off accrual | $ | 55,900 | $ | 59,171 | |||
Inventory reserve | 41,572 | 41,572 | |||||
Depreciation and amortization | 112,125 | 81,385 | |||||
Stock-based compensation deductions | 62,671 | 55,886 | |||||
Unrealized loss on marketable securities | 23,170 | 273,360 | |||||
Other | 58,297 | 61,281 | |||||
Deferred tax assets | $ | 353,735 | $ | 572,655 |
%
of Revenue for Year Ended March 31 |
|||
2019 | 2018 | ||
Customer A | 21% | 18% | |
Customer B | 18% | 19% |
Year Ending March 31 | ||||||||||||||||
2020 | 2021 | 2022 | 2023 | 2024 | Total | |||||||||||
$ | 295,436 | $ | 223,981 | $ | - | $ | - | $ | - | $ | 519,417 |
Exhibit # | Description |
23 | Consent of Grant Thornton 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. |
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 |
Exhibit 23
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have issued our reports dated May 1, 2019, with respect to the financial statements and internal control over financial reporting included in the Annual Report of NVE Corporation on Form 10-K for the year ended March 31, 2019. We consent to the incorporation by reference of said reports in the Registration Statement of NVE Corporation on Form S-8 (File No. 333-65560).
/s/ Grant Thornton LLP |
Minneapolis, Minnesota |
May 1, 2019 |
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 1, 2019
/s/ DANIEL A. BAKER | ||
Daniel A. Baker | ||
President and Chief Executive Officer |