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<SEC-DOCUMENT>0000724910-08-000003.txt : 20080502
<SEC-HEADER>0000724910-08-000003.hdr.sgml : 20080502
<ACCEPTANCE-DATETIME>20080219063033
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0000724910-08-000003
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		2
FILED AS OF DATE:		20080219

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			NVE CORP /NEW/
		CENTRAL INDEX KEY:			0000724910
		STANDARD INDUSTRIAL CLASSIFICATION:	SEMICONDUCTORS & RELATED DEVICES [3674]
		IRS NUMBER:				411424202
		STATE OF INCORPORATION:			MN
		FISCAL YEAR END:			0331

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		11409 VALLEY VIEW ROAD
		CITY:			EDEN PRAIRIE
		STATE:			MN
		ZIP:			55344
		BUSINESS PHONE:		9528299217

	MAIL ADDRESS:	
		STREET 1:		11409 VALLEY VIEW ROAD
		CITY:			EDEN PRAIRIE
		STATE:			MN
		ZIP:			55344

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	PREMIS CORP
		DATE OF NAME CHANGE:	19920703
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<html>
<hr color="#225EAC" noshade size="1">
<table width="100%" border="0" cellspacing="00" cellpadding="0">
  <tr>
    <td><font face="Times New Roman, Times, serif" size="3"><b><font size="3"><img src="sml-logo.gif" width="102" height="29"></font></b></font></td>
    <td>
      <div align="right"><font size="1" face="Arial, Helvetica, sans-serif">11409 Valley View Road, Eden Prairie, MN 55344-3617<br>
        Phone: 952.829.9217<br>
        www.nve.com</font></div>
    </td>
  </tr>
</table>
<hr color="#225EAC" noshade size="1">
<div align="center"><font face="Times New Roman, Times, serif"><b><br>
  </b></font></div>
<p align="center">
<div align="center"><b><font face="Times New Roman, Times, serif" size="3">Via
  EDGAR and Federal Express<br>
  <br>
  <br>
  </font></b></div>
<font face="Times New Roman, Times, serif" size="3"></font>
<p></p>
<p><font face="Times New Roman, Times, serif" size="3">February 18, 2008</font></p>
<p><font face="Times New Roman, Times, serif" size="3"><br>
  Mr. Jay Web<br>
  Division of Corporate Finance<br>
  Mail Stop 6010<br>
  United States Securities and Exchange Commission<br>
  100 F Street N.E.<br>
  Washington, DC 20549<br>
  <br>
  <br>
</font><table width="100%" border="0" cellspacing="00" cellpadding="0">
  <tr>
    <td width="1%"><font face="Times New Roman, Times, serif" size="3"><b>SUBJ:</b>&nbsp;&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif" size="3">NVE Corporation</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>
      <p><font face="Times New Roman, Times, serif" size="3">Form 10&#8209;K for the
        year ended March 31, 2007<br>
        Filed May 25, 2007<br>
        Form 10&#8209;Q for the quarter ended December 31, 2007<br>
        Filed January 23, 2008<br>
        File No. 000&#8209;12196</font></p>
    </td>
  </tr>
</table>
<p><font face="Times New Roman, Times, serif" size="3"> </font><font face="Times New Roman, Times, serif" size="3"><br>
  Dear Mr. Web,</font></p>
<p><font face="Times New Roman, Times, serif" size="3">This is in response to
  your February 6, 2008 letter commenting on our filings on Forms 10&#8209;K and
  10&#8209;Q.<br>
<br><br>
<b><u>Form 10&#8209;K for the year ended March 31, 2007</u></b></font>
<p><u><b><font face="Times New Roman, Times, serif" size="3">Item 7. Management&#146;s
  Discussion and Analysis of Financial Condition and Results of Operations, page
  16</font></b></u></p>
<p><u><b><font face="Times New Roman, Times, serif" size="3">Inventory Reserves
  Estimation, page 16</font></b></u>
<p><b><font face="Times New Roman, Times, serif" size="3">COMMENT 1. We note that
  you maintain reserves for potentially excess, obsolete, and slow-moving inventory.
  We also note that &#147;...if [you] are able to sell previously reserved inventory,
  [you] <i>reverse</i> a portion of the reserve&#148;. Note that a write-down
  of inventory to the lower of cost or market at the close of a fiscal period
  creates a new cost basis that subsequently cannot be marked up based on changes
  in underlying facts and circumstances. Please explain to us how your reversal
  of the previously recorded inventory reserve is in accordance with SAB Topic&nbsp;5BB
  and tell us the amount of reversed inventory reserve for each of the fiscal
  years presented in your filing. Otherwise, please clarify your accounting policy
  on inventory valuation. Revise your future filings to address the matters outlined
  in our comment.</font></b>
<p align="center"><font face="Times New Roman, Times, serif" size="3">&nbsp;</font>
<hr><br clear="all" style="page-break-before:always;">
  <font face="Times New Roman, Times, serif" size="3">RESPONSE 1. Our inventories
  are stated at the lower of cost or market determined by the first in, first
  out method, or net realizable value. Where there is evidence that inventory
  could be disposed of at less than carrying value, the inventory is written down
  to the net realizable value in the current period. In accordance with SAB Topic&nbsp;5BB,
  such write-downs create new cost bases that will not be subsequently marked
  up. Our inventory reserve is for potentially excess and slow-moving inventory,
  not for lower-of-cost-or-market write-downs. If inventory that has been reserved
  for is subsequently sold, corresponding reductions in inventory and inventory
  valuation allowance are made.</font>
<p><font face="Times New Roman, Times, serif" size="3">We will revise our disclosures
  in &#147;Inventory Reserves Estimation&#148; and &#147;Significant Accounting
  Policies&#148; in future filings to clarify our policies and to address the
  matters in Comment&nbsp;1.<br>
<br><br>
<b><u>Results of Operations,
  page 17</u></b></font> </p>
<p><font size="3" face="Times New Roman, Times, serif"><b>COMMENT 2. In future
  filings, please provide a more detailed discussion about your results of operations
  and reasons for changes therein. For example, you explained that your product
  sales increased in fiscal 2007 from the prior year by 73% as a result of increased
  sales of both spintronic sensors and spintronic couplers. Your explanation about
  the increases in product sales is too general to be helpful to the readers of
  your financial statements. Please note that the objective of Management&#146;s Discussion
  and Analysis is to enable investors and other users to see the company through
  eyes of management to provide information about the quality and potential variability
  of a company&#146;s earnings and cash flow, so that investors can judge the likelihood
  that past performance is indicative of future performance. For further guidance,
  please refer to Item 303(a) and the related instructions thereto in Regulation
  S&#8209;K, and the SEC Interpretive Release No.&nbsp;33&#8209;8350 effective December&nbsp;29, 2003.</b></font>
<p><font size="3" face="Times New Roman, Times, serif">RESPONSE 2. We will expand
  our MD&amp;A in future filings in consideration of SEC Release No.&nbsp;33&#8209;8350.<br>
<br>
<br>
<u><b>Note 6. Income Taxes, page F&#8209;14</b></u></font>
<p><font size="3" face="Times New Roman, Times, serif"><b>COMMENT 3. You disclosed
  that &#147;Tax provisions of $2,083,886 for fiscal 2007 and $990,083 for fiscal 2006
  were credited to additional paid-in capital. [You] also had $1,443,223 at March&nbsp;31, 2007 and $8,431,966 at March&nbsp;31, 2006 in stock based compensation deductions
  that could be used to offset future income. Realizations of stock-based compensation
  deductions are credited to additional paid-in capital&#148;. Please respond to the following: </b></font></p>
<p><font size="3" face="Times New Roman, Times, serif"><b>a. Explain to us the
  facts and circumstances related to your credits of $2,083,886 and $990,083 to
  additional paid-in capital. Please also explain to us how your accounting for
  these tax credits is in accordance with paragraphs 58&nbsp;&#8209;&nbsp;63 of SFAS 123(R) or
  other authoritative accounting literature. Finally, explain to us where on the
  statements of shareholders&#146; equity you disclosed the referenced $990,083 credit
  in fiscal 2006.</b></font></p>
<p><font size="3" face="Times New Roman, Times, serif"><b>b. We note from your
  statements of cash flows that you had an inflow of $2,083,886 from financing
  activities in fiscal year 2007 labeled as excess tax benefits. Please tell us
  where you disclose the cash flows in connection with the exercise of stock options
  related to the referenced excess tax benefits.</b></font>
<p align="center"><font face="Times New Roman, Times, serif" size="3">2</font>
<hr><br clear="all" style="page-break-before:always;">
<font size="3" face="Times New Roman, Times, serif"><b>c. Also in this regard,
we note from your statements of shareholders&#146; equity that you show credits
to additional paid-in capital under the caption of deferred tax asset from stock-based
compensation in fiscal years 2005, 2006 and 2007. Please explain to us the facts
and the circumstances related to these credits. Also explain to us how your accounting
for the credits is in accordance with GAAP, citing the accounting literature that
supports your conclusion.</b></font>
<p><font size="3" face="Times New Roman, Times, serif"><b>Please revise your presentation
  and disclosure in future filings as necessary to clarify your accounting for
  these matters.</b></font>
<p><font size="3" face="Times New Roman, Times, serif">RESPONSE 3a. The credits
  of $2,083,886 in fiscal 2007 and $990,083 in fiscal 2006 to &#147;Additional
  paid-in capital&#148; (&#147;APIC&#148;) were due principally to the reversal
  of valuation allowances against deferred tax assets for carryforwards of net
  operating losses (&#147;NOLs&#148;) that were attributable to stock-based compensation
  deductions. The reversals occurred as a result of the actual utilization of
  such NOL carryforwards in those respective years. The APIC credits in fiscal
  2007 and 2006 also included the tax benefit of stock-based compensation deductions
  in those years. In fiscal 2006, the amount credited to APIC was the full tax
  benefit of the deduction. In fiscal 2007, following our adoption of FAS 123(R),
  the amount credited to APIC was the tax benefit of the deduction to the extent
  it exceeded the corresponding compensation expense recognized for financial
  reporting purposes, in accordance with paragraph 62 of FAS 123(R). The $990,083
  credit to APIC in fiscal 2006 was included in the $1,724,498 described as &#147;Deferred
  tax asset from stock-based compensation&#148; on our statements of shareholders&#146;
  equity, along with the full tax benefit of stock-based compensation deductions
  for that year. </font>
<p><font face="Times New Roman, Times, serif" size="3">We will revise our disclosure
  in future filings to clarify the matters in Comment 3a. We will also change
  the caption titled &#147;Deferred tax asset from stock-based compensation&#148;
  on our statements of shareholders&#146; equity to &#147;Tax benefit of stock-based
  compensation&#148; to clarify our presentation. </font>
<p><font face="Times New Roman, Times, serif" size="3">RESPONSE 3b. The cash we
  received from the exercise of stock options related to fiscal 2007 excess tax
  benefits was included in &#147;Net proceeds from sale of common stock&#148;
  on the statement of cash flows for the year in which the option was exercised
  and cash received by us. </font>
<p><font face="Times New Roman, Times, serif" size="3">We will revise our disclosure
  in future filings to clarify our accounting for the cash we receive from the
  exercise of stock options. </font>
<p><font face="Times New Roman, Times, serif" size="3">RESPONSE 3c. As noted in
  our Response 3a above, we will change the caption &#147;Deferred tax asset from
  stock-based compensation&#148; on our statements of shareholders&#146; equity
  to &#147;Tax benefit of stock-based compensation&#148; in future filings. In
  fiscal 2006 and 2005, such amounts represented either the full tax benefit of
  deductions for stock-based compensation consisting of realized current-year
  deductions, or reversals of valuation allowances against deferred tax assets
  for NOL carryforwards attributable to stock-based compensation deductions, or
  both. In fiscal 2007, following our adoption of FAS 123(R), &#147;Deferred tax
  asset from stock-based compensation&#148; on our statements of shareholders&#146;
  equity represented: (i) the reversal of valuation allowances against deferred
  tax assets for NOL carryforwards attributable to stock-based compensation deductions,
  and (ii) in accordance with paragraph 62 of FAS 123(R), the tax benefit of fiscal
  2007 deductions for stock-based compensation to the extent it exceeded the corresponding
  compensation expense recognized for financial reporting purposes. </font>
<p><font face="Times New Roman, Times, serif" size="3">We will revise our disclosure
  in future filings to clarify the matter in Comment&nbsp;3c.</font>
<p>
  <p align="center"><font face="Times New Roman, Times, serif" size="3">3</font>
<hr><br clear="all" style="page-break-before:always;">
<font size="3" face="Times New Roman, Times, serif"><u><b>Form 10&#8209;Q for the quarter
ended December 31, 2007</b></u></font>
<p><font size="3" face="Times New Roman, Times, serif"><b><u>Note 4. Marketable Securities, page 8</u></b></font></p>
<p><b><font size="3" face="Times New Roman, Times, serif">COMMENT 4. We note from
  your balance sheets that you have approximately $21.8 million (approximately
  70% of your total assets) in marketable securities. We also note that you classify
  all of your marketable securities as available-for-sale. Please respond to the
  following.</font></b></p>
<p><b><font size="3" face="Times New Roman, Times, serif">a. Please explain to
  us how you considered the recent turmoil in the credit market conditions in
  valuing your marketable securities. Refer to paragraph 16 of SFAS 115 and SAB
  Topic&nbsp;5M, and explain to us how you conclude that your marketable securities
  have not had any other than temporary impairments.</font></b>
<p><b><font size="3" face="Times New Roman, Times, serif">b. Tell us how you valued
  your marketable securities.</font></b>
<p><b><font size="3" face="Times New Roman, Times, serif">c. Please provide a
  detailed description of whether you believe your financial condition, results
  of operations, or liquidity will be adversely affected by the current credit
  market conditions, including:<br>
  <br>
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;* If an adverse impact is considered remote, support
  for that conclusion; or<br>
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;* If an adverse impact is not considered remote,
  a detailed description of potential disclosures considered.</font></b></p>
<p><b><font size="3" face="Times New Roman, Times, serif">Revise you[r] future
  filings as necessary based on our concerns.</font></b>
<p><font face="Times New Roman, Times, serif" size="3">RESPONSE 4a. We value our
  marketable securities based on the fair market values of each bond with such
  valuations based on quoted market prices. We considered a number of factors,
  including the recent turmoil in credit markets, to determine whether our marketable
  securities had other than temporary impairments.</font>
<p><font face="Times New Roman, Times, serif" size="3">Paragraph 16 of SFAS&nbsp;115
  indicates that an other-than-temporary impairment exists if it is probable that
  the investor will be unable to collect all amounts due according to the contractual
  terms of a debt security. We hold securities issued by U.S. Agencies such as
  the Federal National Mortgage Association and the Federal Home Loan Mortgage
  Corporation that are involved in mortgages and mortgage guarantees. Based on
  the nature of these securities and their issuing Agencies, we determined that
  despite the recent turmoil in mortgage credit markets, that it was not probable
  that we would not collect all amounts due for the Agency securities we held.</font>
<p><font face="Times New Roman, Times, serif" size="3">We also hold corporate-
  and municipal-backed securities. In accordance with SAB Topic&nbsp;5M, for those
  securities we considered factors including: the credit ratings of the securities;
  historical default rates for securities of comparable credit rating; the presence
  of insurance of the securities and, if insured, the financial condition of the
  insurer; the effect of market interest rates on the value of the securities;
  and the duration and extent of any unrealized losses. Since we were unable to
  determine when market values might recover, we also considered our ability to
  hold the securities to maturity based on our financial condition and anticipated
  cash flows. For each corporate- and municipal-backed security we held, we determined
  that it was not probable that we would not collect all amounts due. </font>
<p><font face="Times New Roman, Times, serif" size="3">RESPONSE 4b. We value our
  marketable securities based on the fair market values of each bond. Fair market
  valuations are based on quoted market prices.</font>
<p align="center"><font face="Times New Roman, Times, serif" size="3">4</font>
<hr>
<br clear="all" style="page-break-before:always;">
  <font size="3" face="Times New Roman, Times, serif">We will revise our future
  filings based on your concerns and our responses to Comments&nbsp;4a and b.</font>
<p><font size="3" face="Times New Roman, Times, serif">RESPONSE 4c. We currently
  consider the possibility remote that our financial condition, results of operations,
  or liquidity will be adversely affected by the current credit market conditions.
  Although the majority of our assets are in marketable securities, our investment
  policy provides for protection of principal and prescribes investment only in
  high-grade securities. Our belief is also based on our evaluation of the securities
  we hold, especially their credit ratings, and our assessment of our ability
  to hold our marketable securities to maturity. Should our assessment change
  we will make appropriate disclosures in future filings.</font>
<p><font size="3" face="Times New Roman, Times, serif">In connection with this
  response to your comments regarding our Form 10&#8209;K for the year ended March&nbsp;31,
  2007 and our Form 10&#8209;Q for the quarter ended December&nbsp;31, 2007, we
  acknowledge that:<br>
  &nbsp;<br>
  </font>
<table width="100%" border="0" cellspacing="00" cellpadding="0">
  <tr>
    <td valign="top" width="1%"><font size="3" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#149;&nbsp;</font></td>
    <td><font size="3" face="Times New Roman, Times, serif">we are responsible
      for the adequacy and accuracy of the disclosure in the filing;<br>
        &nbsp;</font>
</td>
  </tr>
  <tr>
    <td valign="top"><font size="3" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#149;&nbsp;</font></td>
    <td><font size="3" face="Times New Roman, Times, serif">staff comments or
      changes to our disclosures in response to staff comments do not foreclose
      the Commission from taking any action with respect to the filing; and<br>
      &nbsp;</font></td>
  </tr>
  <tr>
    <td valign="top"><font size="3" face="Times New Roman, Times, serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#149;&nbsp;</font></td>
    <td><font size="3" face="Times New Roman, Times, serif">we may not assert
      staff comments as a defense in any proceeding initiated by the Commission
      or any person under the federal securities laws of the United States.<br>
      &nbsp;</font></td>
  </tr>
</table>
<font size="3" face="Times New Roman, Times, serif">Please call Daniel Baker or me at 952-829-9217 with any questions.<br>
<br>
Sincerely,</font><font face="Times New Roman, Times, serif" size="3"><br>
NVE CORPORATION</font>
<p><font face="Times New Roman, Times, serif" size="3">/s/ CURT A. REYNDERS<br>
Curt A. Reynders<br>
Chief Financial Officer<br>
<br>
<br>
<br>
  cc:&nbsp;&nbsp;Daniel A. Baker, Ph.D.; President & CEO</font>
<p align="center"><font face="Times New Roman, Times, serif" size="3">5</font>
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