##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2006
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from          to
 Commission file number 000-50857
 Volterra Semiconductor Corporation
  Delaware
    
    94-3251865(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 
  þ o
  o þ o
 o þ




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Cautionary Note Regarding Forward-Looking Statements




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##### Table of Contents



Volterra Semiconductor Corporation and Subsidiaries
 PagePART I. FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    4Condensed Consolidated Balance Sheets as of June 30, 2006 and December 31, 2005
    
    
    4Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2006 and 2005
    
    
    5Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2006 and 2005
    
    
    6Notes to the Condensed Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    12Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    18Item 4. Controls and Procedures
    
    
    19PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    19Item 1A. Risk Factors
    
    
    19Item 4. Submission of Matters to Vote of Security Holders
    
    
    32Item 6. Exhibits
    
    
    33SIGNATURES
    
    
    34EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2
 3




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PART I. FINANCIAL INFORMATION
 
 ITEM 1. Financial Statements
 VOLTERRA SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (In thousands, except share amounts)
 June 30,
    
    
    December 31,2006
    
    
    2005(Unaudited)AssetsCurrent assets:Cash and cash equivalents
    
    $
    34,691
    
    
    $
    32,955Short-term investments
    
    
    10,010
    
    
    
    14,952Accounts receivable, net of allowances of $672 and $654, respectively
    
    
    12,130
    
    
    
    8,711Inventory
    
    
    7,453
    
    
    
    4,283Prepaid expenses and other current assets
    
    
    1,458
    
    
    
    1,091Total current assets
    
    
    65,742
    
    
    
    61,992Property and equipment, net
    
    
    4,406
    
    
    
    3,477Other assets
    
    
    70
    
    
    
    34Total assets
    
    $
    70,218
    
    
    $
    65,503Liabilities and Stockholders EquityCurrent liabilities:Accounts payable
    
    $
    4,876
    
    
    $
    4,267Accrued liabilities
    
    
    2,663
    
    
    
    3,476Total current liabilities
    
    
    7,539
    
    
    
    7,743Commitments (note 4)Stockholders equity:Preferred stock, $0.001 par value; 5,000,000 shares authorized;
none issued and outstanding
    
    
    
    
    
    
    Common stock, $0.001 par value; 200,000,000 shares authorized;
24,096,758 and 23,585,590 shares issued and outstanding,
respectively
    
    
    24
    
    
    
    24Additional paid-in capital
    
    
    99,196
    
    
    
    96,227Deferred stock-based compensation
    
    
    
    
    
    
    (189
    )Accumulated deficit
    
    
    (36,541
    )
    
    
    (38,302
    )Total stockholders equity
    
    
    62,679
    
    
    
    57,760Total liabilities and stockholders equity
    
    $
    70,218
    
    
    $
    65,503
 4




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VOLTERRA SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands, except per share amounts)
 (Unaudited)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Net revenue
    
    $
    17,580
    
    
    $
    13,185
    
    
    $
    33,232
    
    
    $
    27,816Cost of revenue*
    
    
    8,834
    
    
    
    5,351
    
    
    
    16,544
    
    
    
    11,756Gross margin
    
    
    8,746
    
    
    
    7,834
    
    
    
    16,688
    
    
    
    16,060Operating expenses:Research and development*
    
    
    5,965
    
    
    
    4,102
    
    
    
    11,143
    
    
    
    7,727Selling, general and administrative*
    
    
    2,822
    
    
    
    2,582
    
    
    
    5,407
    
    
    
    4,714Total operating expenses
    
    
    8,787
    
    
    
    6,684
    
    
    
    16,550
    
    
    
    12,441Income / (loss) from operations
    
    
    (41
    )
    
    
    1,150
    
    
    
    138
    
    
    
    3,619Interest and other income
    
    
    483
    
    
    
    288
    
    
    
    968
    
    
    
    540Interest and other expense
    
    
    (20
    )
    
    
    (4
    )
    
    
    (40
    )
    
    
    (9
    )Income before income taxes
    
    
    422
    
    
    
    1,434
    
    
    
    1,066
    
    
    
    4,150Income tax benefit / (expense)
    
    
    822
    
    
    
    (303
    )
    
    
    695
    
    
    
    (710
    )Net income
    
    $
    1,244
    
    
    $
    1,131
    
    
    $
    1,761
    
    
    $
    3,440Basic net income per share
    
    $
    0.05
    
    
    $
    0.05
    
    
    $
    0.07
    
    
    $
    0.15Shares used in computing basic net income per share
    
    
    24,000
    
    
    
    23,535
    
    
    
    23,934
    
    
    
    23,469Diluted net income per share
    
    $
    0.05
    
    
    $
    0.04
    
    
    $
    0.07
    
    
    $
    0.13Shares used in computing diluted net income per
share
    
    
    26,141
    
    
    
    26,129
    
    
    
    26,183
    
    
    
    26,205* Includes stock-based compensation
expense as follows:Cost of revenue
    
    $
    68
    
    
    $
    7
    
    
    $
    133
    
    
    $
    14Research and development
    
    
    590
    
    
    
    73
    
    
    
    1,232
    
    
    
    121Selling, general and administrative
    
    
    269
    
    
    
    64
    
    
    
    764
    
    
    
    128Total stock-based compensation expense
    
    $
    927
    
    
    $
    144
    
    
    $
    2,129
    
    
    $
    263
 5




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VOLTERRA SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)
 (Unaudited)
 Six Months EndedJune 30,2006
    
    
    2005Cash flows from operating activities:Net income
    
    $
    1,761
    
    
    $
    3,440Adjustments to reconcile net income to net cash
provided (used) by operating activities:Depreciation and amortization
    
    
    719
    
    
    
    259Accretion of discount in debt securities
    
    
    215
    
    
    
    (77
    )Provision for doubtful accounts
    
    
    (152
    )
    
    
    Stock-based compensation
    
    
    2,129
    
    
    
    263Changes in operating assets and liabilities:Accounts receivable
    
    
    (3,267
    )
    
    
    (5,485
    )Inventory
    
    
    (3,103
    )
    
    
    (135
    )Prepaid expenses, other current and other assets
    
    
    (403
    )
    
    
    31Accounts payable
    
    
    609
    
    
    
    2,076Accrued liabilities
    
    
    (813
    )
    
    
    844Net cash (used) provided by operating activities
    
    
    (2,305
    )
    
    
    1,216Cash flows from investing activities:Purchases of property and equipment
    
    
    (1,648
    )
    
    
    (1,091
    )Purchases of short-term investments
    
    
    4,946
    )
    
    
    (9,673
    )Proceeds from maturity of short-term investments
    
    
    9,673
    
    
    
    9,878Net cash provided (used) by investing activities
    
    
    3,079
    
    
    
    (886
    )Cash flows from financing activities:Proceeds from issuance of common stock, net
    
    
    962
    
    
    
    763Net cash provided by financing activities
    
    
    962
    
    
    
    763Net increase in cash and cash equivalents
    
    
    1,736
    
    
    
    1,093Cash and cash equivalents, beginning of period
    
    
    32,955
    
    
    
    24,895Cash and cash equivalents, end of period
    
    $
    34,691
    
    
    $
    25,988Supplemental disclosure of cash flows and non-cash
investing and financing activities:Cash paid for income taxes
    
    $
    909
    
    
    $
    Stock based compensation capitalized to inventory
    
    $
    68
    
    
    $
    
 6




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VOLTERRA SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (In thousands, except share and per share data)
 (Unaudited)
 1. Description of Business and Significant Accounting Policies
  Basis of Presentation
    Use of Estimates
  Reclassifications
  Concentrations of Credit Risk
  Segment Reporting and Significant Customers
  7




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Net Revenue
    
    Accounts ReceivableThree months ended
    
    Six months ended
    
    As of
    
    As ofJune 30,
    
    June 30,
    
    June 30,
    
    December 31,Customer
    
    2006
    
    2005
    
    2006
    
    2005
    
    2006
    
    2005A
    
    
    38
    %
    
    
    24
    %
    
    
    34
    %
    
    
    23
    %
    
    
    35
    %
    
    
    23
    %B
    
    
    13
    %
    
    
    *
    
    
    
    11
    %
    
    
    *
    
    
    
    14
    %
    
    
    *C
    
    
    12
    %
    
    
    15
    %
    
    
    12
    %
    
    
    13
    %
    
    
    10
    %
    
    
    10
    %D
    
    
    *
    
    
    
    16
    %
    
    
    15
    %
    
    
    14
    %
    
    
    14
    %
    
    
    28
    %E
    
    
    *
    
    
    
    12
    %
    
    
    *
    
    
    
    *
    
    
    
    *
    
    
    
    11
    %
 
 * Less than 10%
  Three months ended
    
    Six months endedJune 30,
    
    June 30,Geographic Area
    
    2006
    
    2005
    
    2006
    
    2005Singapore
    
    
    48
    %
    
    
    45
    %
    
    
    49
    %
    
    
    46
    %China
    
    
    28
    %
    
    
    19
    %
    
    
    24
    %
    
    
    20
    %Thailand
    
    
    8
    %
    
    
    1
    %
    
    
    8
    %
    
    
    4
    %United States
    
    
    6
    %
    
    
    7
    %
    
    
    7
    %
    
    
    7
    %Taiwan
    
    
    5
    %
    
    
    12
    %
    
    
    7
    %
    
    
    12
    %Japan
    
    
    2
    %
    
    
    12
    %
    
    
    4
    %
    
    
    9
    %Other
    
    
    3
    %
    
    
    4
    %
    
    
    1
    %
    
    
    2
    %100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
  Revenue Recognition
   8




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Earnings Per Share
   Three months ended June 30,
    
    
    Six months ended June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Numerator:Net income (in thousands)
    
    $
    1,244
    
    
    $
    1,131
    
    
    $
    1,761
    
    
    $
    3,440Denominator:Weighted average shares outstanding, basic
    
    
    24,000,205
    
    
    
    23,535,390
    
    
    
    23,934,203
    
    
    
    23,469,026Dilutive effect of stock options
    
    
    2,140,693
    
    
    
    2,594,008
    
    
    
    2,248,911
    
    
    
    2,735,844Weighted average shares outstanding, diluted
    
    
    26,140,898
    
    
    
    26,129,398
    
    
    
    26,183,114
    
    
    
    26,204,870Basic net income per share
    
    $
    0.05
    
    
    $
    0.05
    
    
    $
    0.07
    
    
    $
    0.15Diluted net income per share
    
    $
    0.05
    
    
    $
    0.04
    
    
    $
    0.07
    
    
    $
    0.13
  Accounting for Stock-Based Compensation
 Share-Based Payment Accounting for
Stock Issued to Employees
 9




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Accounting
for Stock-Based Compensation
    Three Months Ended
    

    Six Months EndedJune 30, 2005
    

    June 30, 2005Net income as reported
    
    
    $
    1,131
    
    
    
    $
    3,440Add: stock-based compensation for employee awards
included in the determination of net income, net tax
    
    
    
    91
    
    
    
    
    191Deduct: stock-based compensation for employee awards
determined under fair value method, net tax
    
    
    
    (822
    )
    
    
    
    (1,529
    )Pro forma net income
    
    
    
    400
    
    
    
    
    2,102Basic net income per share:As reported
    
    
    
    0.05
    
    
    
    
    0.15Pro forma
    
    
    
    0.02
    
    
    
    
    0.09Diluted net income per shareAs reported
    
    
    
    0.04
    
    
    
    
    0.13Pro forma
    
    
    
    0.02
    
    
    
    
    0.08
   10




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2. Inventory
  June 30,

    
    December 31,2006

    
    2005Work-in-process
    
    $
    5,249

    
    $
    2,219Finished goods
    
    
    2,204

    
    
    2,064$
    7,453

    
    $
    4,283
 3. Property and Equipment
  June 30,

    
    December 31,2006

    
    2005Computer hardware
    
    $
    1,427

    
    $
    999Computer software
    
    
    4,273

    
    
    4,244Equipment and furniture
    
    
    3,301

    
    
    2,155Leasehold improvements
    
    
    667
    

    
    6349,668

    
    
    8,032Less accumulated depreciation and amortization
    
    
    (5,262
    )

    
    (4,555
    )$
    4,406

    
    $
    3,477
 4. Commitments
   2010 and2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    thereafter
    
    
    TotalFuture minimum lease
commitments
    
    $
    285
    
    
    $
    437
    
    
    $
    73
    
    
    $
    24
    
    
    $
    
    
    
    $
    819Inventory purchase commitments
    
    
    3,878
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,878$
    4,163
    
    
    $
    437
    
    
    $
    73
    
    
    $
    24
    
    
    $
    
    
    
    $
    4,697
 11




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5. Income Tax
  
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Overview
    12




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Three Months EndedJun 30,
    
    
    Mar 31,
    
    
    Dec 31,
    
    
    Sep 30,
    
    
    Jun 30,2006
    
    
    2006
    
    
    2005
    
    
    2005
    
    
    2005Net revenue (in thousands)
    
    $
    17,580
    
    
    $
    15,652
    
    
    $
    13,541
    
    
    $
    12,509
    
    
    $
    13,185As a percent of net revenue:GAAP Gross margin
    
    
    50
    %
    
    
    51
    %
    
    
    51
    %
    
    
    53
    %
    
    
    59
    %Add: Stock-based compensation
    
    
    *
    %
    
    
    *
    %
    
    
    *
    %
    
    
    *
    %
    
    
    *
    %Non-GAAP Gross margin
    
    
    50
    %
    
    
    51
    %
    
    
    51
    %
    
    
    53
    %
    
    
    59
    %GAAP Income from operations
    
    
    0
    %
    
    
    1
    %
    
    
    9
    %
    
    
    4
    %
    
    
    9
    %Add: Stock-based compensation
    
    
    5
    %
    
    
    8
    %
    
    
    (1
    )%
    
    
    1
    %
    
    
    1
    %Non-GAAP Income from operations
    
    
    5
    %
    
    
    9
    %
    
    
    8
    %
    
    
    5
    %
    
    
    10
    %
 
 
      13




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Net Revenue.
 Cost of Revenue.
 Research and Development.
 Selling, General and Administrative.
 Income Taxes.
 14




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Critical Accounting Policies
  Accounting for Stock Appreciation Rights and Other Variable Stock Option or Awards Plans
  15




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Results of Operations
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2006
    
    2005
    
    2006
    
    2005Net revenue
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %Cost of revenue
    
    
    50
    
    
    
    41
    
    
    
    50
    
    
    
    42Gross margin
    
    
    50
    
    
    
    59
    
    
    
    50
    
    
    
    58Operating expenses:Research and development
    
    
    34
    
    
    
    31
    
    
    
    34
    
    
    
    28Selling, general and
administrative
    
    
    16
    
    
    
    19
    
    
    
    16
    
    
    
    17Total operating expenses
    
    
    50
    
    
    
    50
    
    
    
    50
    
    
    
    45Income from operations
    
    
    
    
    
    
    9
    
    
    
    
    
    
    
    13Interest and other income, net
    
    
    2
    
    
    
    2
    
    
    
    3
    
    
    
    2Income before income taxes
    
    
    2
    
    
    
    11
    
    
    
    3
    
    
    
    15Income tax benefit / (expense)
    
    
    5
    
    
    
    (2
    )
    
    
    2
    
    
    
    (3
    )Net Income
    
    
    7
    %
    
    
    9
    %
    
    
    5
    %
    
    
    12
    %
 Comparison of Quarter Ended June 30, 2006 to Quarter Ended June 30, 2005
 Net Revenue.
 Cost of Revenue and Gross Margin.
 Research and Development.
 Selling, General and Administrative.
 Income Tax.
 16




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Comparison of Six Months Ended June 30, 2006 to Six Months Ended June 30, 2005
 Net Revenue.
 Cost of Revenue and Gross Margin.
 Research and Development.
 Selling, General and Administrative.
 Income Tax.
 Liquidity and Capital Resources
     17




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Contractual Obligations
   2010 and2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    thereafter
    
    
    TotalFuture minimum lease
commitments
    
    $
    285
    
    
    $
    437
    
    
    $
    73
    
    
    $
    24
    
    
    $
    
    
    
    $
    819Inventory purchase commitments
    
    
    3,878
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,878$
    4,163
    
    
    $
    437
    
    
    $
    73
    
    
    $
    24
    
    
    $
    
    
    
    $
    4,697
  Recent Accounting Pronouncements
 Share-Based Payment
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
   18




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Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
    
 PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  The risk factors described in Part II, Item 1A of our Annual Report on Form 10-K for the year ended
December 31, 2005, as filed with the SEC on March 3, 2006, are set forth below. These risk factors
have not substantively changed, except for those identified by asterisk and restated below.
 Our limited operating history and the nature of our industry makes it difficult for us to
accurately forecast revenue and appropriately plan our expenses. *
  19




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We have a history of losses, have only recently experienced revenue growth and become profitable
and may not maintain profitability on a quarterly or annual basis. *
  Our operating results have fluctuated in the past, and we expect a number of factors to cause our
operating results to fluctuate in the future, making it difficult for us to accurately forecast our
operating results. *
  
    
    the loss of one or more key customers, or a significant reduction in sales to one or
more key customers;
    
    demand for our products or the electronic systems into which our products are
incorporated;
    
    our ability to obtain sufficient capacity from foundries and other third-party
subcontractors to manufacture, assemble and test our products on a timely and cost-effective basis;
    
    our ability to fulfill orders for our products in a timely manner, or at all;
    
    varying order patterns in the markets in which we sell our products;
    
    our customers and distributors management of the inventory they hold;
    
    our ability to develop new products or new generations and versions of our existing
products that achieve market acceptance in a timely manner;
    
    the ability of our foundries and third-party subcontractors to achieve satisfactory
yields or quality;
    
    changes in orders received and shipped during the quarter or our turns business;
    
    our customers failure to pay us on a timely basis, or at all;
    
    the ability of our manufacturing subcontractors to obtain an adequate supply of the
raw materials used in the manufacture of our products on a timely and cost-effective basis;
    
    the cyclical nature of the semiconductor industry;
    
    changes in the level of our expenses, including the cost of materials used to
manufacture our products;
    
    the loss of one or more key distributors, or a significant reduction in orders from
one or more key distributors;
 20




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##### Table of Contents




    
    the timing of introductions of competing products or technologies;
    
    changes in the prices of our products or the electronic systems into which our
products are incorporated;
    
    our ability to adequately support our future growth;
    
    disputes regarding intellectual property rights;
    
    litigation involving us or our products; and
    
    changes in accounting principles, policies and estimates
  We depend on a small number of customers for substantially all of our net revenue and the loss of,
or a significant reduction in orders from, any of them would significantly reduce our net revenue
and adversely affect our operating results. *
  We depend on a limited number of markets, and in these markets we have experienced varying order
patterns, and if demand for our products in these markets declines, or if we are unable to adjust
to the varying order patterns in these markets or expand into new markets, our business would be
harmed. *
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We sell a limited number of products and a reduction in demand for these products would harm our
business and operating results.
  If we are unable to timely develop new products or new generations and versions of our existing
products that achieve market acceptance, our operating results and competitive position could be
harmed.
   
    
    our accurate prediction of changing customer requirements;
    
    timely development of new designs;
    
    timely qualification and certification of our products for use in electronic systems;
    
    commercial acceptance and production of the electronic systems into which our
products are incorporated;
    
    availability, quality, price, performance, and size of our products relative to
competing products and technologies;
    
    our customer service and support capabilities and responsiveness;
    
    successful development of relationships with existing and potential new customers;
    
    successful development of relationships with key developers of advanced digital
semiconductors; and
    
    changes in technology, industry standards or consumer preferences.
  We have experienced, and may in the future experience, delays in the development and introduction
of our products, which may harm our business and operating results. *
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Our products are highly complex and may require modifications to resolve undetected errors or
failures and to meet our customers specifications, which could lead to an increase in our costs, a
loss of customers, a delay in market acceptance of our products, or product liability claims. *
   Our dependence on third-party semiconductor manufacturers, or foundries, reduces our control over
the manufacture of our products, which could harm our business.
  
    
    inability to increase production and achieve acceptable yields on a timely basis;
    
    reduced control over delivery schedules and product quality;
    
    inability of our foundries to obtain an adequate supply of the raw materials used in
the manufacturing of our products on a timely and cost-effective basis;
    
    increased exposure to potential misappropriation of our intellectual property;
    
    limited warranties on silicon wafers or products supplied to us;
    
    labor shortages or labor strikes;
    
    natural disasters affecting countries in which we conduct our business or in which
our products are manufactured; and
    
    political instability in countries where our products are manufactured.
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We rely on third-party subcontractors to assemble and test our products and our failure to
successfully manage our relationships with these subcontractors could damage our relationships with
our customers, decrease our net revenue, and limit our growth.
  If our foundries and assembly and test subcontractors fail to achieve satisfactory yields or
quality, our revenue and operating results could decrease, and our relationships with our customers
and our reputation may be harmed.
  We rely primarily on a small number of distributors to market and distribute our products, and if
we fail to maintain or expand these relationships, our net revenue would likely decline. *
    The nature of the design process requires us to incur expenses prior to earning revenue associated
with those expenses, and we will have difficulty selling our products and generating profits if
system designers do not design our products into their electronic systems.
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
    
    it can take up to 12 months or longer from the time our products are selected to
complete the design process;
    
    it can take an additional six to 12 months or longer to complete commercial
introduction of the electronic systems that use our products, if they are introduced at all;
    
    our customers usually require a comprehensive technical evaluation of our products
before they incorporate them into their electronic systems;
    
    OEMs typically limit the initial release of their electronic systems to evaluate
performance and consumer demand; and
    
    the development and commercial introduction of products incorporating new technology
are frequently delayed.
  We face significant competition and many of our competitors have greater resources than we have,
and thus we may be unsuccessful in competing against current and future competitors.
  
    
    our ability to continue to recruit and retain engineering talent;
    
    our ability to introduce new products in a timely manner;
    
    the pricing of components used in competing solutions;
    
    the pace at which our customers incorporate our products into their systems;
    
    the availability of foundry, assembly, and test capacity for our products;
    
    protection of our products by effective utilization of intellectual property laws;
and
    
    general economic conditions.
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We are subject to the highly cyclical nature of the semiconductor industry and any future downturns
could significantly harm our business. *
  Any disruption to our operations or the operations of our foundries or assembly and test
subcontractors resulting from earthquakes, droughts, or other natural disasters or public health
issues could significantly delay the production or shipment of our products. *
  The average selling prices of our products could decrease rapidly, which may negatively impact our
net revenue and operating results.
  We are subject to inventory risks and manufacturing costs that could negatively impact our
operating results.
  We have significant international activities and customers, and plan to continue such efforts,
which subjects us to additional business risks including increased logistical complexity, political
instability, and currency fluctuations. *
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
    
    cultural and language barriers;
    
    increased complexity and costs of managing international operations;
    
    protectionist laws and business practices that favor local competition in some
countries;
    
    multiple, conflicting and changing laws and regulatory and tax environments,
including the European Unions Restrictions of Hazardous Substances (RoHS), which bans lead and certain other substances from products
put on the market;
    
    potentially longer and more difficult collection periods;
    
    political instability, international terrorism, and anti-American sentiment,
particularly in emerging markets;
    
    highly volatile economies in Asia;
    
    difficulty in hiring qualified management, technical sales personnel, and
applications engineers; and
    
    less effective protection of intellectual property than is afforded to us in the
United States.
   Environmental laws and regulations could cause a disruption in our business and operations. *
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We rely on the services of our key personnel, and if we are unable to retain our current personnel
and hire additional personnel, our ability to develop and successfully market our products could be
harmed. *
  If we do not effectively manage our growth, our resources, systems, and controls may be strained
and our operating results may
suffer. *
   Our ability to compete will be harmed if we are unable to adequately protect our intellectual
property. *
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Assertions by third parties of infringement by us of their intellectual property rights could
result in significant costs and cause our operating results to suffer.
  
    
    stop selling products or using technology that contain the allegedly infringing
intellectual property;
    
    pay damages to the party claiming infringement;
    
    attempt to obtain a license to the relevant intellectual property, which may not be
available on reasonable terms or at all; and
    
    attempt to redesign those products that contain the allegedly infringing intellectual
property.
  Any potential dispute involving our patents or other intellectual property could also include our
customers, which could trigger our indemnification obligations to them and result in substantial
expense to us.
  We may need to raise additional capital, which might not be available or which, if available, may
be on terms that are not favorable to us.
  We may undertake acquisitions to expand our business that may pose risks to our business and dilute
the ownership of our existing stockholders.
  
    
    our lack of experience acquiring other businesses;
    
    problems integrating the acquired operations, technologies, or products with our
existing business and products;
    
    diversion of managements time and attention from our core business;
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##### Table of Contents




    
    the need for financial resources above our planned investment levels;
    
    overestimation of potential synergies or a delay in realizing those synergies;
    
    difficulties in retaining business relationships with suppliers and customers of the
acquired company;
    
    risks associated with entering markets in which we lack prior experience; and
    
    the potential loss of key employees of the acquired company.
  Our stock price will fluctuate and may be volatile, which could result in substantial losses for
investors and significant costs related to litigation.
  
    
    actual or anticipated fluctuations in our revenue, operating results or growth rate;
    
    failure to meet the expectations of securities analysts or investors with respect to
our financial performance;
    
    actual or anticipated fluctuations in our competitors operating results or changes
in their growth rates;
    
    sales of our common stock or other securities in the future;
    
    stock market price and trading volume fluctuations of publicly-traded companies in
general and semiconductor companies in particular;
    
    the trading volume of our common stock;
    
    changes in financial estimates and ratings by securities analysts for us, our
competitors or companies in the semiconductor industry generally;
    
    changes in the condition of the financial markets, the economy as a whole, the
semiconductor industry, our customers or our competitors;
    
    publicity about the semiconductor industry, our competitors or our customers; and
    
    additions or departures of key personnel.
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Our principal stockholders have significant voting power and may influence actions that may not be
in the best interests of our other stockholders. *
  Anti-takeover provisions of our charter documents and Delaware law could prevent or delay
transactions resulting in a change in control.
  
    
    our board of directors is classified so that not all members of our board may be
elected at one time;
    
    directors may only be removed for cause and only with the approval of stockholders
holding a majority of our outstanding voting stock;
    
    the ability of our stockholders to call a special meeting of stockholders is
prohibited;
    
    advance notice requirements for nominations for election to our board of directors or
for proposing matters that can be acted upon at stockholder meetings;
    
    stockholder action by written consent is prohibited, thereby requiring all
stockholder actions to be taken at a meeting of our stockholders; and
    
    our board of directors may designate the terms of and issue new series of preferred
stock, commonly referred to as blank check preferred stock, with rights senior to those of common stock without stockholder
approval.
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Item 4. Submission of Matters to a Vote of Security Holders
    Nominee
    
    For
    
    WithheldMel Friedman
    

   17,725,064
    

    122,084Christopher Paisley
    

    17,624,929
    

    222,219
   For
    
    Against
    
    Abstain
    
    Broker Non-Votes17,004,883
    

    832,132
    

    10,133
    

    0
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##### Table of Contents



Item 6. Exhibits
 Exhibit No.
    
    Description3.1(1)
    
    Amended and Restated Certificate of Incorporation of Volterra Semiconductor Corporation.3.2(2)
    
    Amended and Restated Bylaws of Volterra Semiconductor Corporation.4.1
    
    Reference is made to Exhibits 3.1 and 3.2.4.2(3)
    
    Specimen stock certificate.10.1(4)
    
    2004 Non-Employee Directors Stock Option Plan, as amended and restated31.1
    
    Certification of Chief Executive Officer required under Rule 13a-14(a) or Rule
15d-14(a) of the Securities Exchange Act of 1934, as amended.31.2
    
    Certification of Chief Financial Officer required under Rule 13a-14(a) or Rule
15d-14(a) of the Securities Exchange Act of 1934, as amended.32.1*
    
    Certification of Chief Executive Officer required under Rule 13a-14(b) or Rule
15d-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section
1350.32.2*
    
    Certification of Chief Financial Officer required under Rule 13a-14(b) or Rule
15d-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section
1350.
 
 (1)
    
    Previously filed as Exhibit 3.1 to Volterra Semiconductor Corporations Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 2004, as filed with the Securities and
Exchange Commission on September 9, 2004, and incorporated by reference herein.(2)
    
    Previously filed as Exhibit 3.4 to Volterra Semiconductor Corporations Registration
Statement on Form S-1 (No. 333-115614), as filed with the Securities and Exchange Commission
on May 19, 2004, as amended, and incorporated by reference herein.(3)
    
    Previously filed as Exhibit 4.2 to Volterra Semiconductor Corporations Registration
Statement on Form S-1/A (No. 333-115614), as filed with the Securities and Exchange Commission
on July 9, 2004, as amended, and incorporated by reference herein.(4)
    
    Previously filed as Exhibit 10.1 to Volterra Semiconductor Corporations Current Report on
Form 8-K, as filed with the Securities and Exchange Commission on May 22, 2006, and
incorporated by reference herein.*
    
    The certifications attached as Exhibits 32.1 and 32.2 accompany this Quarterly Report on Form
10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed
by Volterra Semiconductor Corporation for purposes of Section 18 of the Securities Exchange
Act of 1934, as amended.
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##### Table of Contents



Signature
  Dated: August 9, 2006
    
    VOLTERRA SEMICONDUCTOR CORPORATIONBy:
    
    /s/ Greg HildebrandGreg HildebrandChief Financial Officer(Principal Financial, Chief Accounting andDuly Authorized Officer)
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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description3.1(1)
    
    Amended and Restated Certificate of Incorporation of Volterra Semiconductor Corporation.3.2(2)
    
    Amended and Restated Bylaws of Volterra Semiconductor Corporation.4.1
    
    Reference is made to Exhibits 3.1 and 3.2.4.2(3)
    
    Specimen stock certificate.10.1(4)
    
    2004 Non-Employee Directors Stock Option Plan, as amended and restated31.1
    
    Certification of Chief Executive Officer required under Rule 13a-14(a) or Rule
15d-14(a) of the Securities Exchange Act of 1934, as amended.31.2
    
    Certification of Chief Financial Officer required under Rule 13a-14(a) or Rule
15d-14(a) of the Securities Exchange Act of 1934, as amended.32.1*
    
    Certification of Chief Executive Officer required under Rule 13a-14(b) or Rule
15d-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section
1350.32.2*
    
    Certification of Chief Financial Officer required under Rule 13a-14(b) or Rule
15d-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section
1350.
 
 (1)
    
    Previously filed as Exhibit 3.1 to Volterra Semiconductor Corporations Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 2004, as filed with the Securities and
Exchange Commission on September 9, 2004, and incorporated by reference herein.(2)
    
    Previously filed as Exhibit 3.4 to Volterra Semiconductor Corporations Registration
Statement on Form S-1 (No. 333-115614), as filed with the Securities and Exchange Commission
on May 19, 2004, as amended, and incorporated by reference herein.(3)
    
    Previously filed as Exhibit 4.2 to Volterra Semiconductor Corporations Registration
Statement on Form S-1/A (No. 333-115614), as filed with the Securities and Exchange Commission
on July 9, 2004, as amended, and incorporated by reference herein.(4)
    
    Previously filed as Exhibit 10.1 to Volterra Semiconductor Corporations Current Report on
Form 8-K, as filed with the Securities and Exchange Commission on May 22, 2006, and
incorporated by reference herein.*
    
    The certifications attached as Exhibits 32.1 and 32.2 accompany this Quarterly Report on Form
10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed
by Volterra Semiconductor Corporation for purposes of Section 18 of the Securities Exchange
Act of 1934, as amended.