NVE Corp. (NVEC, Financial) filed Quarterly Report for the period ended 2009-09-30.
NVE Corp. is a recognized leader in the practical commercialization of `spintronics` which many experts believe represents the next generation of microelectronics. NVE's products include magnetic sensors and couplers which revolutionize data acquisition and transfer. Nve Corp. has a market cap of $205.8 million; its shares were traded at around $46.18 with a P/E ratio of 19.4 and P/S ratio of 8.8. Nve Corp. had an annual average earning growth of 65.3% over the past 5 years.
Total revenue for the six months ended September 30, 2009 increased 26% to $13,343,033 compared to $10,591,576 for the six months ended September 30, 2008. The increase was due to a 14% increase in product sales and a 124% increase in contract research and development revenue. The increase in product sales was due to the addition of new customers and increased purchase volume by existing customers. The increase in research and development revenue was due to new contracts. The increase in research and development revenue may not be representative of future trends and there can be no assurance of additional or follow-on contracts for expired or completed contracts. Gross profit margin increased to 71% of revenue for the first six months of fiscal 2010 compared to 70% for the first six months of fiscal 2009. The increase was due to higher margins on both product sales and contract research and development revenue. Selling, general, and administrative expense for the first six months of fiscal 2010 increased 13% compared to the first six months of fiscal 2009, primarily due to increased salaries, performance-based compensation, commissions, and stock-based compensation expense. Stock-based compensation expenses for the six months ended September 30, 2009 and 2008 were primarily due to the issuance of automatic stock options to our non-employee directors on their reelection to our Board. The increase in stock-based compensation for the six months ended September 30, 2009 compared to the prior-year period was primarily due to a higher stock price at the date of grant compared to the prior-year date of grant. Research and development expense decreased 16% for the first six months of fiscal 2010 compared to the first six months of fiscal 2009 due to an increase in contract research and development activities, which caused resources to be reallocated from expensed research and development activities. The decrease in research and development expense for the six-month period may not be representative of future expense trends. Our research and development expense can fluctuate significantly depending on staffing, project requirements, and contract research and development activities. Interest and other income increased 43% to $763,223 for the first six months of fiscal 2010 compared to $534,909 for first six months of fiscal 2009. The increase was due to an increase in interest-bearing marketable securities. The provision for income taxes was $2,779,680, or 33% of income before taxes, for the first six months of fiscal 2010 compared to $1,986,686, or 32% of income before taxes, for the first six months of fiscal 2009. The effective tax rate can fluctuate due to a number of factors, some of which are outside our control. The 34% increase in net income in the first six months of fiscal 2010 compared to the prior-year period was primarily due to increases in product sales, contract research and development revenue, and interest income.12
Liquidity and capital resources At September 30, 2009 we had $43,626,680 in cash plus short-term and long-term marketable securities compared to $34,321,811 at March 31, 2009. Our entire portfolio of short-term and long-term marketable securities is classified as available for sale. The increase in cash plus marketable securities in the first six months of fiscal 2010 was primarily due to $6,617,013 in net cash provided by operating activities, a $1,952,593 net increase in the market value of our marketable securities due to market-price changes, and $622,423 in net proceeds from the sale of common stock related to option exercises. Deferred taxes were a $23,971 liability at September 30, 2009 compared to a $667,729 asset at March 31, 2009. The change was primarily due to a $702,771 increase in deferred taxes related to the net increase in the value of our marketable securities. Accounts receivable decreased by $413,671 at September 30, 2009 compared to March 31, 2009 due to the timing of payments by our customers. Inventories decreased by $382,632 due to raw material purchase timing and our efforts to manage certain inventories. We currently believe our working capital is adequate for our needs at least for the next 12 months. Item 3. Quantitative and Qualitative Disclosures About Market Risk. The primary objective of our investment activities is to preserve principal while at the same time maximizing after-tax yields without significantly increasing risk. To achieve this objective, we maintain our portfolio of cash equivalents and marketable securities in a variety of securities including government agency obligations, municipal obligations, corporate obligations, and money market funds. Short-term and long-term marketable securities are generally classified as available-for-sale and consequently are recorded on the balance sheet at fair value with unrealized gains or losses reported as a separate component of accumulated other comprehensive income, net of estimated tax. Marketable securities as of September 30, 2009 had remaining maturities between seven and 58 months. Our short-term and long-term marketable securities had a fair market value of $41,036,494 at September 30, 2009, representing approximately 81% of our total assets. We have not used derivative financial instruments in our investment portfolio. Item 4. Controls and Procedures. Management, with the participation of the Chief Executive Officer and Chief Financial Officer, has performed an evaluation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (Exchange Act)) as of the end of the period covered by this report. This evaluation included consideration of the controls, processes and procedures that are designed to ensure that information required to be disclosed by us in the reports we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective. During the quarter ended September 30, 2009, there was no change in our internal control over financial reporting that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.13
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NVE Corp. is a recognized leader in the practical commercialization of `spintronics` which many experts believe represents the next generation of microelectronics. NVE's products include magnetic sensors and couplers which revolutionize data acquisition and transfer. Nve Corp. has a market cap of $205.8 million; its shares were traded at around $46.18 with a P/E ratio of 19.4 and P/S ratio of 8.8. Nve Corp. had an annual average earning growth of 65.3% over the past 5 years.
Highlight of Business Operations:
Total revenue for the quarter ended September 30, 2009 (the second quarter of fiscal 2010) increased 14% to $6,508,501 compared to $5,727,790 for the quarter ended September 30, 2008 (the second quarter of fiscal 2009). The increase was due to a 6% increase in product sales and a 55% increase in contract research and development revenue. The increase in product sales was due to the addition of new customers and increased purchase volume by existing customers. The increase in research and development revenue was due to new contracts. The increase in research and development revenue may not be representative of future trends and there can be no assurance of additional or follow-on contracts for expired or completed contracts. Gross profit margin was 69% of revenue for the second quarter of fiscal 2010, unchanged from the second quarter of fiscal 2009. Higher margins on both product sales and contract research and development revenue offset a less favorable revenue mix with a higher portion of revenue from contract research and development. Selling, general, and administrative expense for the second quarter of fiscal 2010 increased 6% compared to the second quarter of fiscal 2009, primarily due to increases in salaries, commissions, and stock-based compensation expense. Stock-based compensation expenses for the quarters ended September 30, 2009 and 2008 were primarily due to the issuance of automatic stock options to our non-employee directors on their reelection to our Board. The increase in stock-based compensation for the quarter ended September 30, 2009 compared to the prior-year quarter was primarily due to a higher stock price at the date of grant compared to the prior-year date of grant. Research and development expense increased 4% for the second quarter of fiscal 2010 compared to the second quarter of fiscal 2009 due to increased sensor and coupler product development. Our research and development expense can fluctuate significantly depending on staffing, project requirements, and contract research and development activities. Interest and other income increased 42% to $393,198 for the second quarter of fiscal 2010 compared to $277,074 for the second quarter of fiscal 2009. The increase was due to an increase in interest-bearing marketable securities. The provision for income taxes was $1,308,522, or 33% of income before taxes, for the second quarter of fiscal 2010 compared to $1,090,629, or 32% of income before taxes, for the second quarter of fiscal 2009. The effective tax rate can fluctuate due to a number of factors, some of which are outside our control. The 17% increase in net income in the second quarter of fiscal 2010 compared to the prior-year quarter was primarily due to increases in product sales, contract research and development revenue, and interest income, partially offset by increased expenses.11Total revenue for the six months ended September 30, 2009 increased 26% to $13,343,033 compared to $10,591,576 for the six months ended September 30, 2008. The increase was due to a 14% increase in product sales and a 124% increase in contract research and development revenue. The increase in product sales was due to the addition of new customers and increased purchase volume by existing customers. The increase in research and development revenue was due to new contracts. The increase in research and development revenue may not be representative of future trends and there can be no assurance of additional or follow-on contracts for expired or completed contracts. Gross profit margin increased to 71% of revenue for the first six months of fiscal 2010 compared to 70% for the first six months of fiscal 2009. The increase was due to higher margins on both product sales and contract research and development revenue. Selling, general, and administrative expense for the first six months of fiscal 2010 increased 13% compared to the first six months of fiscal 2009, primarily due to increased salaries, performance-based compensation, commissions, and stock-based compensation expense. Stock-based compensation expenses for the six months ended September 30, 2009 and 2008 were primarily due to the issuance of automatic stock options to our non-employee directors on their reelection to our Board. The increase in stock-based compensation for the six months ended September 30, 2009 compared to the prior-year period was primarily due to a higher stock price at the date of grant compared to the prior-year date of grant. Research and development expense decreased 16% for the first six months of fiscal 2010 compared to the first six months of fiscal 2009 due to an increase in contract research and development activities, which caused resources to be reallocated from expensed research and development activities. The decrease in research and development expense for the six-month period may not be representative of future expense trends. Our research and development expense can fluctuate significantly depending on staffing, project requirements, and contract research and development activities. Interest and other income increased 43% to $763,223 for the first six months of fiscal 2010 compared to $534,909 for first six months of fiscal 2009. The increase was due to an increase in interest-bearing marketable securities. The provision for income taxes was $2,779,680, or 33% of income before taxes, for the first six months of fiscal 2010 compared to $1,986,686, or 32% of income before taxes, for the first six months of fiscal 2009. The effective tax rate can fluctuate due to a number of factors, some of which are outside our control. The 34% increase in net income in the first six months of fiscal 2010 compared to the prior-year period was primarily due to increases in product sales, contract research and development revenue, and interest income.12
Liquidity and capital resources At September 30, 2009 we had $43,626,680 in cash plus short-term and long-term marketable securities compared to $34,321,811 at March 31, 2009. Our entire portfolio of short-term and long-term marketable securities is classified as available for sale. The increase in cash plus marketable securities in the first six months of fiscal 2010 was primarily due to $6,617,013 in net cash provided by operating activities, a $1,952,593 net increase in the market value of our marketable securities due to market-price changes, and $622,423 in net proceeds from the sale of common stock related to option exercises. Deferred taxes were a $23,971 liability at September 30, 2009 compared to a $667,729 asset at March 31, 2009. The change was primarily due to a $702,771 increase in deferred taxes related to the net increase in the value of our marketable securities. Accounts receivable decreased by $413,671 at September 30, 2009 compared to March 31, 2009 due to the timing of payments by our customers. Inventories decreased by $382,632 due to raw material purchase timing and our efforts to manage certain inventories. We currently believe our working capital is adequate for our needs at least for the next 12 months. Item 3. Quantitative and Qualitative Disclosures About Market Risk. The primary objective of our investment activities is to preserve principal while at the same time maximizing after-tax yields without significantly increasing risk. To achieve this objective, we maintain our portfolio of cash equivalents and marketable securities in a variety of securities including government agency obligations, municipal obligations, corporate obligations, and money market funds. Short-term and long-term marketable securities are generally classified as available-for-sale and consequently are recorded on the balance sheet at fair value with unrealized gains or losses reported as a separate component of accumulated other comprehensive income, net of estimated tax. Marketable securities as of September 30, 2009 had remaining maturities between seven and 58 months. Our short-term and long-term marketable securities had a fair market value of $41,036,494 at September 30, 2009, representing approximately 81% of our total assets. We have not used derivative financial instruments in our investment portfolio. Item 4. Controls and Procedures. Management, with the participation of the Chief Executive Officer and Chief Financial Officer, has performed an evaluation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (Exchange Act)) as of the end of the period covered by this report. This evaluation included consideration of the controls, processes and procedures that are designed to ensure that information required to be disclosed by us in the reports we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective. During the quarter ended September 30, 2009, there was no change in our internal control over financial reporting that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.13
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