May 5, 2011
Operator
Good day, ladies and gentlemen. Welcome to the NVE conference call on the fourth quarter and fiscal year results.
At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time.
(Operator Instructions) As a reminder this conference call is being recorded. I would now like to turn the conference over to Daniel Baker, President and CEO.
You may begin.
Daniel Baker
Good afternoon and welcome to our conference call for the quarter and fiscal year ended March 31, 2011. As always, I’m joined by Curt Reynders, our Chief Financial Officer.
This call is being webcast live and being recorded. A replay will be available through our website, nve.com.
After my opening comments, Curt will present a financial review of the quarter and fiscal year, I will cover business items and highlights of the year, and then we will open the call up to questions. We filed our press release with quarterly and annual results, plus our Annual Report on Form 10-K with the SEC in the past hour following the close of market.
Both filings are available through our website. Comments we may make that relate to future plans, events, financial results, or performance are forward-looking statements that are subject to certain risks and uncertainties including among others such factors as risks in continued growth in revenue and profits, uncertainties related to agreements with large customers, uncertainties related to research and development contract funding, risks related to developing marketable products, uncertainties and the possible issuance of patents, uncertainties relating to the revenue potential of new products, and uncertainties related to economic environments, as well as the risk factors listed from time to time in our filings with the SEC including our Annual Report on Form 10-K filed this afternoon.
Product sales backlog as of any particular date may not be indicative of future results and the company undertakes no obligation to update forward-looking statements we may make. We are pleased to report record revenue product sales and net income for both the fiscal year and the fourth quarter, specifically for the fiscal year, revenue increased to 11% to a record $31.2 million, driven by a 15% increase in product sales and net income increased 11% to $13.4 million, or $2.76 per diluted share.
For the quarter, total revenue was a record $8.183 million and net income was a record $3.67 million or $0.75 per diluted share Now, I’ll turn the call over to Curt for details of our financial results.
Curt Reynders
Thanks, Dan and good afternoon. I’ll cover fiscal year income statement, quarterly income statement, the balance sheet and the past five year’s results.
As Dan mentioned, the total revenue for the fiscal year increased 11% to $31.2 million, driven by a 15% increase in product sales to over $26 million. This was our 11th consecutive year of record product sales, since becoming publicly traded in 2000.
The increase in product sales was partially offset by a 6% decrease in research and development revenue. As we’ve said before, our long-term strategy has been to reduce our dependence on contract R&D toward a future of products and licensing, as our principal revenue sources.
International sales accounted for approximately 55% of our revenue in fiscal 2011, up from 49% in fiscal 2010, and consistent with our vision of being a world-class company. There is more about geographic areas in our 10-K.
Revenues increased 29% in Europe, 11% in Asia and 12% in other areas. A 1% decrease in U.S.
revenue was due to a decrease in contract R&D revenue. Gross profit margin decreased slightly to 69% of revenue for fiscal 2011 from 70% for fiscal 2010, due to a less favorable product mix.
Annual operating pretax net margins for fiscal 2011 were among the best in our industry. Operating margin was 57%, pretax margin 63%, and net margins 43%.
Research and development expense increased 13% for fiscal 2011, compared to fiscal 2010, due to increased product development activities and a decrease in contract research and development activities, which caused resources to be reallocated to expensed research and development. Net income for fiscal 2011 increased 11% to $13.4 million, or $2.76 per diluted share, compared to $12 million or $2.47 for fiscal 2010.
The total of customer and company sponsored R&D activities was 17% of revenue, which is significant. Our R&D investments over the years have resulted in new products, technologies, and product opportunities.
Dan will discuss some of those in a few minutes. Turning to quarterly results, we are pleased to show increases in year-over-year fourth quarter product sales and total revenues, despite comparisons to an extraordinary quarter last year.
Total revenue for the quarter hit a record $8.183 million, as increased product sales offset decreased contract R&D revenue. This was our 25th consecutive year-over-year increase in product sales.
Our best quarter ever for product sales was driven by strong sales in the factory and industrial markets, which is an encouraging sign for a worldwide economic recovery. The decrease in quarterly contract R&D revenue to $1.45 million from $1.52 million was due to the completion of certain contracts and contract activities.
Gross margin for the quarter was 68% of revenue, compared to 71% in the prior year quarter due to a less favorable product mix. Total expenses decreased 6% for the fourth quarter of fiscal 2011, compared to the fourth quarter of fiscal 2010, due to a 6% decrease in selling, general, and administrative expense and an 8% decrease in research and development expense.
R&D expenses can fluctuate due to a number of factors and the quarterly decrease may not be representative of future trends, since we envisioned increasing our investment in R&D over the long-term as we grow. Operating margin was an extraordinary 57% for the quarter.
According to a list in April on the website of Investor's Business Daily in the past quarter, NVE has the highest operating margins in the semiconductor industry. Net income for the fourth quarter was $3.67 million, or $0.75 per diluted share, and net margin was 45%.
There are several items reported at the end of the fiscal year, including customer and company sponsored R&D, backlog and employee count. We breakdown customer and company sponsored R&D activities at fiscal year end.
Both customer-sponsored and company sponsored R&D activities increased in this past fiscal year. We spent $5.43 million on customer and company sponsored R&D activities, up 4% from the prior fiscal year.
Our contract R&D firm backlog has nearly doubled this fiscal year to $2.96 million as of March 31, versus $1.53 million a year earlier. Approximately, 49% of the contract backlog was from non-government entities.
We have been transitioning over the past several years to non-government funding from our historical government support, which we believe bodes well for future commercialization and product growth. In accordance with semiconductor industry practice, product order backlog is not included in firm backlog, but based on orders in placed at the beginning of the fiscal year, we believe we have the excellent potential this quarter and beyond.
Our employee count increased to 58 from 52 during the fiscal year. The increase is primarily to allow our production capacity to meet anticipated product demand.
We ended the fiscal year with our balance sheet stronger than ever. As of March 31, cash plus marketable securities was $62.2 million, an increase of $12.6 million in the fiscal year.
The increase in cash, plus marketable securities was primarily due to $12.8 million in operating cash flow. A $6.4 million increase in short-term marketable securities in fiscal 2011 was due to marketable securities previously classified as long-term approaching maturity.
Purchases of fixed assets were approximately $733,000 for the fiscal year, primarily for production equipment to expand our capacity. We may spend on the order of $1 million to expand our production clean-room in fiscal 2012, although we do not have a firm timetable right now.
Shareholders' equity, which is our assets minus liabilities increased to approximately $70 million. Our asset quality is very good.
All our tangible assets and 85% is marketable securities. 10-K reports include a five-year financial summary, some highlights.
Total revenue increased 90%, net income increased 179%, net margin increased 14 percentage points from 29% to more than 43% of revenue, cash and marketable securities more than tripled, and our stock price increased more than 250%, versus 18% for the NASDAQ Industrials Index. According to recent rankings by the St.
Paul Pioneer Press, NVE’s five year total shareholder return was fourth out of the top 100 public companies in Minnesota. Now, I’ll turn it over to Dan for his perspective on our business, Dan?
Daniel Baker
Thanks Curt. I’ll cover customer and distribution agreements, updates on biosensors compassing and MRAM and past year highlights.
In the past quarter, we were pleased to extend our agreements with two of the world’s leading medical companies, Phonak AG and St. Jude Medical.
We discussed the Phonak agreement on our January call. It extends our supply agreement through March 31 2015, expands NVE products under the scope of the supply agreement, and provides minimum purchases.
St. Jude is a leading medical device supplier.
The amendment extends our supplier partnering agreement, which would have expired at the end of this year through January 1, 2016. The amendment acknowledges that our technology is critical to St.
Jude and includes provisions for the escrow of our product technology to allow a continuation of supply in the event of a catastrophe or other unusual circumstances. We have filed our Phonak and St.
Jude agreements and amendments with the SEC and they’re available on the SEC’s website or via our website. We said before, we have a customer who is planning to use a custom spintronic biosensor in a new diagnostic instrument.
Our device will be part of a disposable, so there is good volume potential. We’re able to report that we’re completing a build of a number of pre-production units to ship this quarter in preparation for production late this year.
So this could be the start of an important new market for us. The goal of the spintronic compass is to determine heading using low field tunnel junction sensors to measure the angle of the earth’s magnetic field.
As we’ve said, our goal is to offer best-in-class accuracy, as well as low power consumption in small size. We had previously reported should samples in the most recent quarter and our customer have since said that it is building demonstration prototypes.
In addition to the spintronic compass samples, in the past quarter we successfully completed a National Science Foundation Research contract with a goal of reducing the size of sensors with applicability to navigation and consumer electronics. In addition, the two axes to determine direction, solid-state compasses generally require a measure of tilt, which increases the sensor size.
This project established the feasibility of a novel third axis sensor. MRAM is spintronic Magnetoresistive Memory, which is fabricated with nanotechnology and uses electron spin to store data.
Our MRAM strategy is to design and build the innovative anti-tamper MRAMs and to use what we learned from their development to strengthen our MRAM technology portfolio applicable to large-scale memories. We’re pleased to report that we recently began shipping small quantities of MRAM for anti-tamper applications with more deliveries planned.
In the past quarter, we were granted a new patent titled Vortex Spin Momentum Transfer Magnetoresistive Device. The patent discusses among other things, nanopillar devices, spin-momentum transfer, and magnetic tunnel junctions, as well as applicability to magnetic memory devices or MRAM.
The invention was made with government support under a contract awarded by the Missile Defense Agency. This is an example of the value created by our government contracts and under federal legislation companies normally may retain the principal worldwide patent rights to any invention developed with the U.S.
government support. There continues to be a great deal of interest in MRAM technology.
Just last week, Dr. Joe Davies of our R&D staff, shared a robust MRAM and magnetic logic devices session at Intermag 2011 in Taiwan.
In addition to the spin momentum patent that was granted in the quarter, we received a notice of allowance of a patent related to magnetic isolators. The inventors are Vice President of Development, John Myers, and Founder, Jim Daughton.
Isolators are also known as couplers, because they transmit data between electronic systems. NVE makes spintronic couplers, which are faster than the fastest optical couplers.
The notice of allowance as a written notification that a patent application has been examined by the Patent Office and is nearing issuance. As we begin fiscal 2012, I’d like to summarize highlights from a very successful fiscal 2011.
We had year-over-year increases in revenue and earnings each quarter. We received patents relating to MRAM, biosensors, couplers, and magnetic sensors.
We introduced world-class products, including new medical device sensors and spintronic couplers to enable more productive factories and more efficient cards. We expanded our production space to increase our capacity and efficiency and to allow for even more expansion in the future.
We added distribution in China and Korea, and our stock price increased nearly 25%. Our performance and innovation was recognized with several prestigious awards and accolades in fiscal 2011, including one of America’s 100 best small companies for 2010, according to Forbes, our third consecutive year on that list.
After making the Star Tribune list of the 100 largest public companies in the state last year, we moved up nine notches in the recent 2011 list. Our return on revenue ranked second among the 100 largest public companies in the sate, according to the Star Tribune.
We received the product of the month award awarded by a German trade magazine for our magnetic switches and the 2011 North American Technology Innovation of the year award for the magnetic sensors market from Frost & Sullivan. There are links to more on these and other lists on the awards and accolades and rankings pages of nve.com.
Fiscal 2011 was the best year in NVE’s history and we believe fiscal 2012 will be even better. Now, I’d like to open the call for questions, Latoya?
Operator
Thank you. (Operator Instructions) We have a question from Steven Crowley of Craig-Hallum Caps.
Your line is open.
Steven Crowley
Couple questions for you. First of all, on the biosensor update that you gave us, I just want to make sure, I heard correctly what you told was that you completed the build of a number of pre-production units for shipment this quarter.
Pre-production units will those be used for internal testing by your customer or for beta sites with their customers and what did you say about the timing of production volumes of those units and therefore your parts?
Daniel Baker
The last part of your question first Steve, we said production is planned for late this year, late 2011. We presume that the pre-production units are going to be used for more than internal testing, just because of the quantities involved.
Although we’re not entirely sure in the customers – the customer hasn’t publicly released their plans. But we certainly feel it’s an important milestone along the road towards production and opening up a new market for us.
It’s a disposable. So depending on exactly how they qualify it and test it, it could use up those units fairly quickly.
Steven Crowley
In terms of how we should think about the margin, gross margin profile of that product as we’re actually at the time in which it will come into the calculation, given the novelty of the product, maybe counterbalanced or maybe not counterbalanced by its newness in your manufacturing process, how should we think about the gross margin profile of that product?
Daniel Baker
We are hopeful that it will be a solid gross margins and high volume and we’ve had time to continue to work on the production process to make it more manufacturable, more efficient, and therefore hopefully higher margins. We’ve been talking about the diagnostic instrument for a while now for several years, we’ve had the sensor pretty close to ready to go and we’ve been working on making it more producible.
So, we’re hopeful that we’ll have solid margins. We believe that the product is unique and therefore we’re not subject to a lot of competition, most of the competition is older technology and there are significant advantages we believe in our technology in terms of the specificity, the ability to measure very low levels of a pathogen or a protein that we’re targeting, the ability to do the test quickly and reducing the size and the footprint of the overall device.
And we believe that all of those have value to our customer and their customers.
Steven Crowley
Has their instrument for which you contribute to the consumable portion of the total solution, is that awaiting regulatory approval? Has it been approved by the regulatory agency?
Daniel Baker
They haven’t shared the specifics of that with us, but we believe that there is not a barrier to production relating to regulatory approvals. It’s possible though that it will be introduced in an international market and may not be rolled out in the U.S.
or other markets that tend to have higher barriers to regulatory approval. One advantage of this type of system is that it’s a diagnostic instrument, not an implantable medical device or what’s called a Class III medical device like the devices that we make for St.
Jude Medical. So it’s not subject to quite as stringent we believe medical approvals or something that would be implanted in a person.
Steven Crowley
Okay and just help us understand how you guys think when you say high volume product. It doesn’t necessarily have to specifically about your use of high volume with this product, but when you characterize something as high volume product, can you help us quantify what ballpark that is?
Whether it’s units? Or dollars it could generate for you?
What makes it fall into that category?
Daniel Baker
We don’t have a specific criteria in terms of units or dollars, but we view this as potentially game-changing technology that could significantly change the character of our company and add significant new revenue potential. Now it’s hard to predict what that would be in dollars or the timing and some of it is dependent on the success of our customer and the diagnostic instrument that they are putting together.
Their ability to have an instrument that has significant advantages, their ability to market it, and competitive factors and so forth. But this is technology that as you know, we’ve been working on for many years and we see excellent potential here and we’re really very excited to meet, to make this latest milestone of pre-production units.
And we see it as I said potentially game-changing.
Steven Crowley
Now, you mentioned that, year-end we get some data that we don’t get on a quarterly basis and one of those chapters of data so to speak relates to large customers and what transpired with them over the fiscal year. And one of your lettered customers, over 10% customers in your 10-K went from 16% of sales last year or two years ago to 11% of sales last year, which means they were down about $1 million year-over-year.
I’m wondering whether or not, one we should be concerned about whether or not we should be concerned about that as a statement about the health of the relationship or their commitment to you or your business opportunity there?
Daniel Baker
We don’t see it as a concern. We do have some dependence on large customers and sometimes their specific requirements can change.
Our revenue line by – can be exaggerated at our revenue line. We also find that for some of our customers because our products are important to them.
They might carry significant inventories and so that can magnify changes in their business. But we certainly believe that the long-term trends for most of our customers and for our key businesses, both our medical business and our industrial businesses are very positive, not to mention the prospects for new businesses like the biosensors that we just talked about.
Steven Crowley
But we should look at that situation and jump to conclusions about you losing slots or them going with competitive solutions. It sounds like their inventory level variable that come into play, there are timing of order variables that come into play.
Curt Reynders
That’s correct Steve, this is Curt. The ordering patterns do vary with certain customers and as well as their inventory requirements.
So, I think it can vary quarterly, but I think long-term where our business remains pretty solid there.
Steven Crowley
Yes and I guess I’d be hard pressed to look at that variable and think you know the variance, down to 25% or so year-over-year was something that took place evenly over the course of year. Especially, when I see some variance in the company’s financial performance, versus my model late in the year.
It it’s fair for me to think that some of those timing difference may have been biased to later in the year versus all along the way?
Curt Reynders
There could have been a little bit of that in the most recent quarter.
Steven Crowley
You mentioned with the anti-tamper MRAM program, another exciting new product program that you have, that you started shipping some products and anticipate shipping some more products. Are you shipping to end-customers, to intermediate customers or partners?
What’s the path to the end-customer with the product?
Daniel Baker
This is Dan. The path there is that typically we sell anti-tamper MRAM to customers who integrate it with electronic systems for high value devices.
So those might be instruments that need to be protected. We’ve mentioned examples of such as military and aerospace technology.
So that would go into, say, that might go into something like an electronic subassembly, the electronic subassembly might go into a larger system. But what our devices are doing is typically providing superb protection against tampering something like a crypto key where the device would be able to have an extremely secure code that could detect any tampering misuse of the technology.
So, and I think we did characterize it in our prepared remarks as being small volumes, but we view this as advancing our MRAM technology, which could have much broader applicability in large-scale memories. So we’re seeing this as an important milestone in making MRAM that meets production requirements.
But by advancing the technology, even though we’re not seeing it as the kind of a game-changing technology from a revenue standpoint and our goal there would be to license our technology for large-scale memories, but we’ve demonstrated that we can build some of these specialty MRAMs, the anti-tamper MRAMs right here in Minnesota.
Operator
Thank you. (Operator Instructions) Our next question is from Gregory Greenberg.
Your line is open.
Gregory Greenberg
First of all, I wanted to tell you guys I appreciate the fact that NVE and you guys, specifically management has been great fiduciary to being really judicious with stock options and grants. Just looking, it seems you guys have done just a tremendous job over the last five years.
And I think five years ago, shares outstanding were $4.6 million and today they are $4.7 million. So, I appreciate all your hard work and I just wanted to thank you for that.
And then along the lines probably what I asked last quarter, again this year wonderful job generating profits and cash and cash is up another $13 million to $61 million. So can you explain us a little bit your capital allocation goals and strategies?
Daniel Baker
This is Dan. We’ve got a very strong balance sheet and there are couple of possible uses for that cash, other than to keep a strong balance sheet that we talked about.
One is that we do have a stock-buyback program, which as of our latest reports, we hadn’t used. But that’s available to us.
And also we’ve said that we believe that a strong balance sheet is important in protecting our intellectual property portfolio. We believe we have excellent intellectual property, but we also want to be able to defend it for the benefit of our shareholders.
So having a strong balance sheet allows us to defend our intellectual property if we have to and also we believe that it might have a deterrent effect for a potential infringer, that realizes that we have the resources and the commitment to defend our intellectual property if we have to
Gregory Greenberg
Okay, so the current share buyback authorization is $2.5 million. I think that was put in place about two years ago, does that sound right?
Curt Reynders
Yes.
Gregory Greenberg
So that would be 4% of all of your marketable securities and cash or it would be pretty low year-over-year to buy a share back, correct?
Curt Reynders
That is correct. We’re relatively small company with a relatively low float.
So, we believe that the buyback that was approved by our Board is significant, but the factors that go into a buyback and often be complicated as you know, we don’t mind that potential investors if they see our stock is undervalued. If that they get the opportunity to buy the stock, rather than being crowded out by us.
So, we believe it was a good thing to have, but we also believe in the free market and the advantage of having a publicly traded stock.
Gregory Greenberg
And then so obviously along the lines of having a strong balance sheet to defend IT, is there any update you can give us in respect to EverSpin?
Daniel Baker
Nothing specific. I think as I mentioned in some of the prepared remarks, we continue to see some excellent interest in MRAM technology and EverSpin has, I think shares our vision of a bright future of MRAM.
They’ve continued to announce new MRAM devices over time. And so we see it as just tremendous technology long-term and we’ve invested a great deal of our shareholders’ resources in the research relating to MRAM.
We’re pleased to be able to make some anti-tamper MRAMs and we continue to advance our technology as evidenced by the most recent patent for example on spin momentum transfer MRAM.
Gregory Greenberg
And may just be there is just so many exciting things going on there, I don’t think I heard anything about the automotive opportunity this quarter? And again, it may just be because there is just so many good things going on, is there any update or did I missed that?
Daniel Baker
We didn’t give a specific update. As you say, we are focused on three things in our prepared remarks, the biosensors, compassing and MRAM.
But we continue to make excellent progress on developing products for the automotive market and particularly for the hybrid electric vehicle market, which we see as a longer-term market, but which we see as an excellent candidate for our technology, because our couplers can transmit information at very high speed over very high voltages, which will be a challenge in hybrid electric vehicles. So we have product lines that we’ve talked about and announced before.
We’re working towards automotive certifications, automotive components need to be certified under certain standards. We’re working on those.
And we continue to explore possible partnerships to bring these products to market with partners who have the contacts and the ability to make subassemblies for the automotive market.
Gregory Greenberg
Thank you very much; you guys are doing a wonderful job. It seems like a very exciting time where we’ve got a bunch of new revenue opportunities that you guys have been working for a while that seems just around the corner.
So I’m excited to see the results, thanks.
Daniel Baker
Well, thanks for the kind words and we agree.
Operator
Thank you. We have a follow-up question from Steven Crowley.
Your line is open.
Steven Crowley
I guess it’s going to be me pushing you on the electronic compass. It seems like you’ve made a step or a half step of progress with that initiative during the most recent quarter.
Maybe, I’m asking for a little more granular characterization of what’s going on there and how that has played out relative to your expectations and maybe what impediments are still between you and meaningful volumes there? And then maybe just one all important question about the window of opportunity still being open for you with that product line?
Daniel Baker
What we said was in our prepared remarks is that our customer has told us that they’re building demonstration prototype. So what might go into a demonstration prototype would be an assembly that might contain a GPS chip and accelerometer or other key components for a complete navigation system.
So what we’re providing is a compassing sensor, which is a key part of it, but there are other components that need to be combined and then also another piece of that would likely be a data processing integrated circuit. So that we would present data in a format that it could be usable for something like a handset or other electronic device.
We believe that there is an excellent window of opportunity for a more accurate compass and we believe we can provide that. So while there are compasses available in handsets and smartphones, we believe that we can provide better accuracy than what’s currently available.
Now there may not be a lot of applications right now that need that accuracy, but we believe that they maybe coming and our customer believes that as well. So we certainly don’t see that the window of opportunity is closed in anyway quite the contrary.
We see that we’re getting into a market where the demands are increasing for more accuracy and more precision in compassing and compassing is still a relatively small portion, I couldn’t quote a number, but a relatively small share of smartphones and handsets have compassing or advanced navigation technology right now.
Steven Crowley
Are you pleased with or frustrated by the pace at which your customer is putting these components together in a saleable solution? And are you committed intellectually, contractually, or otherwise to having all your eggs in this one basket?
Daniel Baker
There are no excuses here. We believe we’re working with a very good partner and a good customer.
We would always like things to move faster. We have given the program a tremendous amount of urgency and priority here because of the opportunity that we see.
But we also recognize that in order to do this right and to provide a convincing and a compelling demonstration to the end-users that we need to have excellent prototypes that demonstrate the capabilities of the technology and that really dramatize what one can do with this kind of accuracy. And so having a good demonstration, we think will be very important and our customer is working on that.
Steven Crowley
And you gave us a good feel for the potential significance to the biosensor. At the same time, this program seems like, it could be more broadly applicable and therefore potentially even larger, maybe considerably larger than the opportunity for that program.
I may be editorializing way too much. So this is a series of questions in the form of that statement.
Daniel Baker
But we certainly see that is also a game-changing opportunity in compassing. It’s an opportunity for what’s been estimated to be a very large market.
And it’s a large consumer market. So it’s got a different character than something like a diagnostic instrument market, where the volume is generated by a relatively small number of machines, but as a disposable running a relatively large number of tests.
But, what we were highlighting in our prepared remarks, our three areas that we think can significantly have the potential to significantly change our company and to get us into much larger markets, markets that might be one device per person rather than things like pacemakers and ICDs, which served or hearing aids, which serve a relatively small portion of the population. Those have been very successful for us, but we see the potential to have dramatically higher volumes that carries with it some tremendous rewards and also some challenges.
But that’s our goal is to reach these much larger markets.
Steven Crowley
Last question for me and then this is asked in a completely different direction and geography. Is the unfortunate natural disaster in Japan, did it impact your business in the March quarter?
Or have there been lingering impacts and what kind of color can you give us on that?
Daniel Baker
We do have business in Japan and we have two distributors. And so first, I should say that our hearts go out to the people who are affected by that tragedy.
And it certainly appears to at the very least inconvenience, some of our distribution activities, which are primarily based in the Tokyo area. So, they weren’t directly affected by the earthquake, the Tsunami, or the radiation but there were a number of infrastructure challenges that they faced.
But we’ve heard from our distributors and they were able to solider through and continue to do so. So, it’s hard to quantify a significant effect there.
It doesn’t appear to be a significant or a lasting effect but it did present some challenges there. We’ve also analyzed as many companies have whether our sources of supply were interrupted because of plants that were taken down and raw materials and we haven’t found anything like that.
We continue to monitor it, which is prudent. But so far I think we found that the effects at least from a business standpoint have been probably been pretty minor.
Steven Crowley
Thanks again for taking my questions.
Operator
Thank you. I’m not showing any further questions in the queue at this time.
Daniel Baker
Okay, well, to sum up, we were pleased to report record revenue and net income for the year and the quarter and potentially game-changing prospects. We look forward to our next call, which will be in July to report results for the first quarter of fiscal 2012.
Thank you for participating in the call.
Operator
Ladies and gentlemen, this concludes today’s program. You may now disconnect.
Good day.