##### 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 September 30, 2008
 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
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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Cautionary Note Regarding Forward-Looking Statements
  2




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##### 



Volterra Semiconductor Corporation and Subsidiaries
 PagePART I. FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    4Condensed Consolidated Balance Sheets as of September 30, 2008 and December 31, 2007
    
    
    4Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2008 and 2007
    
    
    5Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2008 and 2007
    
    
    6Notes to the Condensed Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    20Item 4. Controls and Procedures
    
    
    20PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    21Item 1A. Risk Factors
    
    
    21Item 6. Exhibits
    
    
    35SIGNATURES
    
    
    37EXHIBIT 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 per share amounts)
 (Unaudited)
 September 30,
    
    
    December 31,2008
    
    
    2007AssetsCurrent assets:Cash and cash equivalents
    
    $
    58,007
    
    
    $
    47,414Short-term investments
    
    
    5,955
    
    
    
    Accounts receivable, net of allowances of $1,929 and $986, respectively
    
    
    12,541
    
    
    
    12,318Inventory
    
    
    11,124
    
    
    
    6,185Prepaid expenses and other current assets
    
    
    2,041
    
    
    
    1,764Total current assets
    
    
    89,668
    
    
    
    67,681Property and equipment, net
    
    
    5,773
    
    
    
    5,647Other assets
    
    
    506
    
    
    
    767Total assets
    
    $
    95,947
    
    
    $
    74,095Liabilities and Stockholders EquityCurrent liabilities:Accounts payable
    
    $
    5,621
    
    
    $
    5,127Accrued liabilities
    
    
    9,059
    
    
    
    4,680Total current liabilities
    
    
    14,680
    
    
    
    9,807Lease Incentive
    
    
    748
    
    
    
    930Commitments and contingenciesStockholders equity:Preferred stock, $0.001 par value; 5,000 shares authorized;
none issued and outstanding
    
    
    
    
    
    
    Common stock, $0.001 par value; 200,000 shares authorized;
23,934 and 23,567 shares issued and outstanding, respectively
    
    
    24
    
    
    
    24Additional paid-in capital
    
    
    100,848
    
    
    
    94,410Accumulated deficit
    
    
    (17,912
    )
    
    
    (31,076
    )Treasury stock at cost, 284 and 0 shares, respectively
    
    
    (2,441
    )
    
    
    Total stockholders equity
    
    
    80,519
    
    
    
    63,358Total liabilities and stockholders equity
    
    $
    95,947
    
    
    $
    74,095
  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
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net revenue
    
    $
    30,576
    
    
    $
    18,875
    
    
    $
    82,290
    
    
    $
    54,908Cost of revenue
    
    
    12,906
    
    
    
    8,618
    
    
    
    35,600
    
    
    
    29,076Gross margin
    
    
    17,670
    
    
    
    10,257
    
    
    
    46,690
    
    
    
    25,832Operating expenses:Research and development
    
    
    7,144
    
    
    
    5,821
    
    
    
    19,784
    
    
    
    17,240Selling, general and administrative
    
    
    5,076
    
    
    
    4,058
    
    
    
    13,997
    
    
    
    11,540Total operating expenses
    
    
    12,220
    
    
    
    9,879
    
    
    
    33,781
    
    
    
    28,780Income (loss) from operations
    
    
    5,450
    
    
    
    378
    
    
    
    12,909
    
    
    
    (2,948
    )Interest and other income
    
    
    235
    
    
    
    645
    
    
    
    961
    
    
    
    1,898Interest and other expense
    
    
    (53
    )
    
    
    (14
    )
    
    
    (171
    )
    
    
    (84
    )Income (loss) before income taxes
    
    
    5,632
    
    
    
    1,009
    
    
    
    13,699
    
    
    
    (1,134
    )Income tax expense
    
    
    241
    
    
    
    512
    
    
    
    535
    
    
    
    294Income (loss) before cumulative effect of accounting change
    
    
    5,391
    
    
    
    497
    
    
    
    13,164
    
    
    
    (1,428
    )Cumulative effect of accounting change, net of income
tax of $16
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    255Net income (loss)
    
    $
    5,391
    
    
    $
    497
    
    
    $
    13,164
    
    
    $
    (1,683
    )Net income (loss) per share:Basic:Net income (loss) per share before cumulative effect of
accounting change
    
    $
    0.23
    
    
    $
    0.02
    
    
    $
    0.55
    
    
    $
    (0.06
    )Cumulative effect of accounting change
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.01Net income (loss) per share
    
    $
    0.23
    
    
    $
    0.02
    
    
    $
    0.55
    
    
    $
    (0.07
    )Diluted:Net income (loss) per share before cumulative effect of
accounting change
    
    $
    0.21
    
    
    $
    0.02
    
    
    $
    0.52
    
    
    $
    (0.06
    )Cumulative effect of accounting change
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.01Net income (loss) per share
    
    $
    0.21
    
    
    $
    0.02
    
    
    $
    0.52
    
    
    $
    (0.07
    )Weighted average shares outstanding:Basic
    
    
    23,914
    
    
    
    24,584
    
    
    
    23,827
    
    
    
    24,525Diluted
    
    
    25,637
    
    
    
    26,424
    
    
    
    25,411
    
    
    
    24,525
  5




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VOLTERRA SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)
 (Unaudited)
 Nine Months EndedSeptember 30,2008
    
    
    2007Cash flows from operating activities:Net income (loss)
    
    $
    13,164
    
    
    $
    (1,683
    )Adjustments to reconcile net income to net cash used by operating activities:Stock-based compensation
    
    
    3,037
    
    
    
    3,388Depreciation and amortization
    
    
    1,819
    
    
    
    1,486Accretion of discount in debt securities
    
    
    
    
    
    
    146Loss on disposal of fixed assets
    
    
    8
    
    
    
    6Provision for doubtful accounts
    
    
    211
    
    
    
    155Changes in operating assets and liabilities:Accounts receivable, net
    
    
    (434
    )
    
    
    (1,131
    )Inventory
    
    
    (4,894
    )
    
    
    5,845Prepaid expenses, other current, and other assets
    
    
    (16
    )
    
    
    325Accounts payable
    
    
    443
    
    
    
    (4,814
    )Accrued liabilities
    
    
    4,379
    
    
    
    1,581Net cash provided by operating activities
    
    
    17,717
    
    
    
    5,304Cash flows from investing activities:Purchases of property and equipment
    
    
    (2,084
    )
    
    
    (1,599
    )Purchases of short-term investments
    
    
    (6,940
    )
    
    
    Proceeds from maturity of short-term investments
    
    
    985
    
    
    
    9,831Net cash provided by (used in) investing activities
    
    
    (8,039
    )
    
    
    8,232Cash flows from financing activities:Proceeds from issuance of common stock, net
    
    
    3,356
    
    
    
    1,469Repurchase and retirement of common stock
    
    
    
    
    
    
    (5,519
    )Purchase of treasury stock
    
    
    (2,441
    )
    
    
    Net cash provided by financing activities
    
    
    915
    
    
    
    (4,050
    )Net increase (decrease) in cash and cash equivalents
    
    
    10,593
    
    
    
    9,486Cash and cash equivalents, beginning of period
    
    
    47,414
    
    
    
    41,814Cash and cash equivalents, end of period
    
    $
    58,007
    
    
    $
    51,300Supplemental disclosure of cash flows:Income tax (paid) refunds, net
    
    $
    (160
    )
    
    $
    187Non cash investing activitiesFixed Assets addition from lease incentives
    
    
    
    
    
    $
    1,254
  6




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




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VOLTERRA SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
(Unaudited)
  Net Revenue
    
    Net Revenue
    
    Accounts ReceivableThree Months Ended
    
    Nine Months Ended
    
    As ofSeptember 30,
    
    September 30,
    
    September 30,
    
    December 31,Customer
    
    2008
    
    2007
    
    2008
    
    2007
    
    2008
    
    2007A
    
    
    25
    %
    
    
    33
    %
    
    
    27
    %
    
    
    33
    %
    
    
    34
    %
    
    
    38
    %B
    
    
    38
    %
    
    
    20
    %
    
    
    36
    %
    
    
    21
    %
    
    
    31
    %
    
    
    13
    %C
    
    
    10
    %
    
    
    11
    %
    
    
    12
    %
    
    
    13
    %
    
    
    10
    %
    
    
    23
    %D
    
    
    11
    %
    
    
    *
    
    
    
    *
    
    
    
    *
    
    
    
    12
    %
    
    
    *E
    
    
    *
    
    
    
    11
    %
    
    
    *
    
    
    
    13
    %
    
    
    *
    
    
    
    14
    %F
    
    
    *
    
    
    
    10
    %
    
    
    *
    
    
    
    *
    
    
    
    *
    
    
    
    *
 
 *
    
    Less than 10%  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Singapore
    
    
    35
    %
    
    
    44
    %
    
    
    39
    %
    
    
    47
    %China
    
    
    51
    %
    
    
    36
    %
    
    
    48
    %
    
    
    32
    %Taiwan
    
    
    4
    %
    
    
    9
    %
    
    
    5
    %
    
    
    12
    %Japan
    
    
    7
    %
    
    
    4
    %
    
    
    4
    %
    
    
    3
    %United States
    
    
    1
    %
    
    
    6
    %
    
    
    2
    %
    
    
    4
    %Other
    
    
    2
    %
    
    
    1
    %
    
    
    2
    %
    
    
    2
    %
 Revenue Recognition
   Stock-Based Compensation
 8




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VOLTERRA SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
(Unaudited)
 Accounting for Stock Appreciation
Rights and Other Variable Stock Options or Award Plans
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Stock-based compensation expense:Cost of revenue
    
    $
    73
    
    
    $
    95
    
    
    $
    177
    
    
    $
    240Research and development
    
    
    564
    
    
    
    617
    
    
    
    1,410
    
    
    
    1,786Sales, general and administrative
    
    
    495
    
    
    
    456
    
    
    
    1,450
    
    
    
    1,362Total stock-based compensation expense
    
    
    1,132
    
    
    
    1,168
    
    
    
    3,037
    
    
    
    3,388Tax effect of stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Effect on net income (loss)
    
    $
    1,132
    
    
    $
    1,168
    
    
    $
    3,037
    
    
    $
    3,388Effect on basic net income (loss) per share
    
    $
    0.05
    
    
    $
    0.05
    
    
    $
    0.13
    
    
    $
    0.14Effect on diluted net income (loss) per share
    
    $
    0.04
    
    
    $
    0.04
    
    
    $
    0.12
    
    
    $
    0.14
  Income Taxes
  Accounting for
Uncertainty in Income Taxes
  9




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VOLTERRA SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
(Unaudited)
 Earnings Per Share
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Numerator:Net income (loss)
    
    $
    5,391
    
    
    $
    497
    
    
    $
    13,164
    
    
    $
    (1,683
    )Denominator:Weighted average shares outstanding, basic
    
    
    23,914
    
    
    
    24,584
    
    
    
    23,827
    
    
    
    24,525Effect of dilutive securities:Stock options
    
    
    1,723
    
    
    
    1,840
    
    
    
    1,584
    
    
    
    Weighted average shares outstanding, diluted
    
    
    25,637
    
    
    
    26,424
    
    
    
    25,411
    
    
    
    24,525Basic net income (loss) per share
    
    $
    0.23
    
    
    $
    0.02
    
    
    $
    0.55
    
    
    $
    (0.07
    )Diluted net income (loss) per share
    
    $
    0.21
    
    
    $
    0.02
    
    
    $
    0.52
    
    
    $
    (0.07
    )
  Accounting for Lease Incentives
  Fair Value Measurements
  10




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VOLTERRA SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
(Unaudited)
   2. Inventory
  September 30,
    
    
    December 31,2008
    
    
    2007Work-in-process
    
    $
    6,058
    
    
    $
    2,964Finished goods
    
    
    5,066
    
    
    
    3,221$
    11,124
    
    
    $
    6,185
 3. Property and Equipment
  September 30,
    
    
    December 31,2008
    
    
    2007Computer hardware
    
    $
    1,528
    
    
    $
    1,401Computer software
    
    
    4,575
    
    
    
    4,532Equipment and furniture
    
    
    6,191
    
    
    
    4,524Leasehold improvements
    
    
    1,994
    
    
    
    1,93414,288
    
    
    
    12,391Less accumulated depreciation and amortization
    
    
    (8,515
    )
    
    
    (6,744
    )$
    5,773
    
    
    $
    5,647
 4. Change in Accounting Principle
 Accounting for Sabbatical Leave and Other Similar
Benefits Pursuant to FASB Statement No. 43
  11




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VOLTERRA SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
(Unaudited)
 5. Stock Repurchase Program
  6. Fair Value Measurements
       Fair value measurements at reporting date usingQuoted prices in
    
    
    
    
    
    
    Significantactive markets for
    
    
    Significant other
    
    
    unobservableidentical assets
    
    
    observable inputs
    
    
    inputsTotal
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Money market funds
    
    $
    54,685
    
    
    $
    54,685
    
    
    $
    
    
    
    $
    US treasury securities
    
    $
    6,456
    
    
    $
    6,456
    
    
    
    
    
    
    
    Total
    
    $
    61,141
    
    
    $
    61,141
    
    
    $
    
    
    
    $
    
 12




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VOLTERRA SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
(Unaudited)
 7. Subsequent Event
  13




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Overview
      14




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15




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Accounting for Income Taxes
 Critical Accounting Policies
  16




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Results of Operations
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net revenue
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %Cost of revenue
    
    
    42
    
    
    
    46
    
    
    
    43
    
    
    
    53Gross margin
    
    
    58
    
    
    
    54
    
    
    
    57
    
    
    
    47Operating expenses:Research and development
    
    
    23
    
    
    
    31
    
    
    
    24
    
    
    
    31Selling, general and administrative
    
    
    17
    
    
    
    21
    
    
    
    17
    
    
    
    21Total operating expenses
    
    
    40
    
    
    
    52
    
    
    
    41
    
    
    
    52Income (loss) from operations
    
    
    18
    
    
    
    2
    
    
    
    16
    
    
    
    (5
    )Interest and other income, net
    
    
    1
    
    
    
    3
    
    
    
    1
    
    
    
    3Income (loss) before income taxes
    
    
    19
    
    
    
    5
    
    
    
    17
    
    
    
    (2
    )Income tax expense (benefit)
    
    
    1
    
    
    
    3
    
    
    
    1
    
    
    
    1Income (loss) before cumulative
effect of accounting
    
    
    18
    
    
    
    2
    
    
    
    16
    
    
    
    (3
    )Cumulative effect of accounting change
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net Income (loss)
    
    
    18
    %
    
    
    2
    %
    
    
    16
    %
    
    
    (3
    )%
 Comparison of Three Months Ended September 30, 2008 to Three Months Ended September 30, 2007
 Net Revenue.
 Cost of Revenue and Gross Margin.
 Research and Development.
 Selling, General and Administrative.
 17




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Income Tax.
 Comparison of Nine Months Ended September 30, 2008 to Nine Months Ended September 30, 2007
 Net Revenue.
 Cost of Revenue and Gross Margin.
 Research and Development.
 Selling, General and Administrative.
 Income Tax.
 Liquidity and Capital Resources
   18




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Contractual Obligations
  Less than
    
    
    1-3
    
    
    3-5
    
    
    More thanTotal
    
    
    1 year
    
    
    years
    
    
    years
    
    
    5 yearsOperating lease
obligations
    
    $
    3,447
    
    
    $
    1,098
    
    
    $
    1,480
    
    
    $
    869
    
    
    $
    Purchase obligations
    
    
    1,806
    
    
    
    1,806
    
    
    
    
    
    
    
    
    
    
    
    $
    5,253
    
    
    $
    2,904
    
    
    $
    1,480
    
    
    $
    869
    
    
    $
    
  Recent Accounting Pronouncements
  19




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Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
 Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
    20




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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, 2007, as filed with the SEC on March 5, 2008, are set forth below. These risk factors
have not substantively changed, except for those identified by asterisk and restated below. Risk
factors marked with a  +  have been reordered from the presentation in the Annual
Report.
 Risks Related to our Financial Performance
 Our financial performance in the past has fluctuated and we may not be able to 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, or
significant product returns by, one or more key customers;
    
    demand for our products or the electronic systems into which our products are
incorporated and our ability to accurately forecast such demand;
 21




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
    
    the ability of our foundries and third-party subcontractors to achieve satisfactory
yields or quality;
    
    our customers and distributors management of the inventory they hold;
    
    our management of our own inventory levels to meet changes in demand;
    
    changes in orders both received and shipped during the same quarter (our turns
business);
    
    our ability to develop new products or new generations and versions of our existing
products that achieve market acceptance in a timely manner;
    
    our ability to fulfill orders for our products in a timely manner, or at all;
    
    the timing of introductions of competing products or technologies;
    
    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;
    
    varying order patterns in the markets in which we sell our products;
    
    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 volatile nature of the semiconductor industry;
    
    instability or deterioration in worldwide economic conditions;
    
    changes in the level of our expenses, including the cost of materials used to
manufacture our products and expenses incurred in complying with new laws and
regulations applicable to the Company;
    
    the loss of one or more key distributors, or a significant reduction in orders from
one or more key distributors;
    
    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.
  Recent worldwide economic turmoil may affect our financial performance or our ability to forecast
our business.* +
  We are exposed to credit risk and payment delinquencies on our accounts receivable. This risk is
heightened during periods when economic conditions worsen. * +
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Risks Related to our Markets and Customers
 We target our sales and marketing efforts in particular 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.* +
   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.* +
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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.
  Because we often manufacture products in advance of receiving purchase orders, or if existing
purchase orders are changed or cancelled, we are subject to inventory risks and manufacturing costs
that could negatively impact our operating results.* +
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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.
* +
   We are subject to the highly cyclical nature of the semiconductor industry and any future downturns
could significantly harm our business. +
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Risks Related to Competition, Intellectual Property, Litigation and Regulation
 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.
   The average selling prices of our products could decrease rapidly, which may negatively impact our
net revenue and operating results. +
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Assertions by third parties of infringement by us or our vendors 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.
   Our ability to compete will be harmed if we are unable to adequately protect our intellectual
property. +
  27




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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. +
  Environmental laws and regulations could cause a disruption in our business and
operations. +
  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
    
    changes in key personnel.
  28




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Risks Related to our Manufacturing and Development Activities
 Our dependence on third-party semiconductor manufacturers, or foundries, reduces our control over
the manufacture of our products and increases our exposure to third party solvency risks, 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. +
  Our products are highly complex and may require modifications to resolve previously undetected
design or process errors or defects and to meet our customers specifications, which could lead to
an increase in our costs, a loss of revenue and customers, a delay in market acceptance of our
products, or product liability claims.* +
   Any disruption to our operations or the operations of our foundries or assembly and test
subcontractors resulting from earthquakes, droughts, or other natural disasters, public health
issues or other catastrophic events beyond our control could significantly delay the production or
shipment of our products. +
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We have experienced, and may in the future experience, delays in the development and introduction
of our new products, which may harm our business and operating results. +
  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
electronic system designers do not design our products into their electronic systems. +
    
    
    it can typically take up to 12 months from the time our products are selected to
complete the design process, and in some cases such design process may take
substantially more time to complete;
    
    it can typically take an additional six to 12 months to complete commercial
introduction of the electronic systems that use our products, and in some cases such
introduction may take substantially more time to complete, 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, which may also result in
our products being excluded from the system design for reasons other than our design
specifications;
    
    OEMs typically limit the initial release of their electronic systems to evaluate
performance and consumer demand; and
 31




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##### Table of Contents




    
    the development and commercial introduction of products incorporating new
technology are frequently delayed.
  Risks Related to our International Activities
 We have significant international activities and customers, and plan to continue such efforts,
which subjects us to additional business risks including increased logistical complexity,
additional regulatory restrictions and political instability.* +
  
    
    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;
    
    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.
  We do not hedge fluctuations in currency exchange rates, which could harm our financial
results.* +
  Risks Related to our Growth and Organization
 We may undertake acquisitions to expand our business that may pose risks to our business and dilute
the ownership of our existing stockholders. +
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
    
    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;
    
    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.
  If we do not effectively manage our growth, our resources, systems, and controls may be strained
and our operating results may suffer. +
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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 our computer and communications hardware fails, our business, results of operations and
financial condition would be harmed. +
  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. +
  34




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##### Table of Contents




    
    our board of directors is classified so that not all members of our board of
directors 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 is required 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.
   
 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.31.1
    
    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 3.2 to Volterra Semiconductor
Corporations Quarterly Report on Form 10-Q for the quarterly period
ended September 30, 2007, as filed with the Securities and Exchange 35




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##### Table of Contents



Commission on November 1, 2007, 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.*
    
    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. 36




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##### Table of Contents



Signature
  Dated: October 30, 2008
    VOLTERRA SEMICONDUCTOR CORPORATIONBy:
    /s/ Mike BurnsMike BurnsChief Financial Officer
(Principal Financial, Chief Accounting and
Duly Authorized Officer) 37




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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.31.1
    
    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 3.2 to Volterra Semiconductor
Corporations Quarterly Report on Form 10-Q for the quarterly period
ended September 30, 2007, as filed with the Securities and Exchange
Commission on November 1, 2007, 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.*
    
    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. 38