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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, 2007
 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
  2




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##### 



Volterra Semiconductor Corporation and Subsidiaries
 PagePART I. FINANCIAL INFORMATION
    
    
    4Item 1. Financial Statements
    
    
    4Condensed Consolidated Balance Sheets as of June 30, 2007 and December 31, 2006
    
    
    4Condensed Consolidated Statements of Operations for the three and six months
ended June 30, 2007 and 2006
    
    
    5Condensed Consolidated Statements of Cash Flows for the six months ended June
30, 2007 and 2006
    
    
    6Notes to the Condensed Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    11Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    17Item 4. Controls and Procedures
    
    
    18PART II. OTHER INFORMATION
    
    
    18Item 1. Legal Proceedings
    
    
    18Item 1A. Risk Factors
    
    
    18Item 4. Submission of Matters to a Vote of Security Holders
    
    
    34Item 6. Exhibits
    
    
    34SIGNATURES
    
    
    36EXHIBIT 10.1EXHIBIT 10.2EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2
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PART I. FINANCIAL INFORMATION
 
 ITEM 1. Financial Statements
 VOLTERRA SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
 June 30,
    
    
    December 31,2007
    
    
    2006(Unaudited)AssetsCurrent assets:Cash and cash equivalents
    
    $
    47,565
    
    
    $
    41,814Short-term investments
    
    
    5,038
    
    
    
    9,977Accounts receivable, net of allowances of $696 and $538, respectively
    
    
    15,966
    
    
    
    13,294Inventory
    
    
    7,675
    
    
    
    12,589Prepaid expenses and other current assets
    
    
    1,530
    
    
    
    1,461Total current assets
    
    
    77,774
    
    
    
    79,135Property and equipment, net
    
    
    3,971
    
    
    
    4,514Other assets
    
    
    60
    
    
    
    54Total assets
    
    $
    81,805
    
    
    $
    83,703Liabilities and Stockholders EquityCurrent liabilities:Accounts payable
    
    $
    5,249
    
    
    $
    8,510Accrued liabilities
    
    
    3,522
    
    
    
    3,377Total current liabilities
    
    
    8,771
    
    
    
    11,887Commitments 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;
24,635 and 24,385 shares issued and outstanding, respectively
    
    
    25
    
    
    
    24Additional paid-in capital
    
    
    106,578
    
    
    
    103,181Accumulated deficit
    
    
    (33,569
    )
    
    
    (31,389
    )Total stockholders equity
    
    
    73,034
    
    
    
    71,816Total liabilities and stockholders equity
    
    $
    81,805
    
    
    $
    83,703
  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 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net revenue
    
    $
    18,480
    
    
    $
    17,580
    
    
    $
    36,033
    
    
    $
    33,232Cost of revenue
    
    
    12,492
    
    
    
    8,834
    
    
    
    20,458
    
    
    
    16,544Gross margin
    
    
    5,988
    
    
    
    8,746
    
    
    
    15,575
    
    
    
    16,688Operating expenses:Research and development
    
    
    5,347
    
    
    
    5,965
    
    
    
    11,419
    
    
    
    11,143Selling, general and administrative
    
    
    4,024
    
    
    
    2,822
    
    
    
    7,482
    
    
    
    5,407Total operating expenses
    
    
    9,371
    
    
    
    8,787
    
    
    
    18,901
    
    
    
    16,550(Loss) income from operations
    
    
    (3,383
    )
    
    
    (41
    )
    
    
    (3,326
    )
    
    
    138Interest and other income
    
    
    625
    
    
    
    483
    
    
    
    1,253
    
    
    
    968Interest and other expense
    
    
    (50
    )
    
    
    (20
    )
    
    
    (70
    )
    
    
    (40
    )(Loss) income before income taxes
    
    
    (2,808
    )
    
    
    422
    
    
    
    (2,143
    )
    
    
    1,066Income tax benefit
    
    
    267
    
    
    
    822
    
    
    
    218
    
    
    
    695(Loss) income before cumulative effect of accounting change
    
    
    (2,541
    )
    
    
    1,244
    
    
    
    (1,925
    )
    
    
    1,761Cumulative effect of accounting change, net of income tax of $16
    
    
    
    
    
    
    
    
    
    
    255
    
    
    
    Net (loss) income
    
    $
    (2,541
    )
    
    $
    1,244
    
    
    $
    (2,180
    )
    
    $
    1,761Net (loss) income per share:Basic:Net (loss) income per share before cumulative effect of
accounting change
    
    $
    (0.10
    )
    
    $
    0.05
    
    
    $
    (0.08
    )
    
    $
    0.07Cumulative effect of accounting change
    
    
    
    
    
    
    
    
    
    
    0.01
    
    
    
    Net (loss) income per share
    
    $
    (0.10
    )
    
    $
    0.05
    
    
    $
    (0.09
    )
    
    $
    0.07Diluted:Net (loss) income per share before cumulative effect of
accounting change
    
    $
    (0.10
    )
    
    $
    0.05
    
    
    $
    (0.08
    )
    
    $
    0.07Cumulative effect of accounting change
    
    
    
    
    
    
    
    
    
    
    0.01
    
    
    
    Net (loss) income per share
    
    $
    (0.10
    )
    
    $
    0.05
    
    
    $
    (0.09
    )
    
    $
    0.07Weighted average shares outstanding:Basic
    
    
    24,560
    
    
    
    24,000
    
    
    
    24,496
    
    
    
    23,934Diluted
    
    
    24,560
    
    
    
    26,141
    
    
    
    24,496
    
    
    
    26,183
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VOLTERRA SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 Six Months EndedJune 30,2007
    
    
    2006Cash flows from operating activities:Net (loss) income
    
    $
    (2,180
    )
    
    $
    1,761Adjustments to reconcile net (loss) income to net cash (used)
provided by operating activities:Stock-based compensation
    
    
    2,220
    
    
    
    2,129Depreciation and amortization
    
    
    957
    
    
    
    719Accretion of discount in debt securities
    
    
    14
    
    
    
    215Provision for (release from) doubtful accounts
    
    
    155
    
    
    
    (152
    )Changes in operating assets and liabilities:Accounts receivable
    
    
    (2,827
    )
    
    
    (3,267
    )Inventory
    
    
    4,949
    
    
    
    (3,103
    )Prepaid expenses, other current, and other assets
    
    
    (75
    )
    
    
    (403
    )Accounts payable
    
    
    (3,261
    )
    
    
    609Accrued liabilities
    
    
    145
    
    
    
    (813
    )Net cash provided (used) by operating activities
    
    
    97
    
    
    
    (2,305
    )Cash flows from investing activities:Purchases of property and equipment
    
    
    (422
    )
    
    
    (1,648
    )Purchases of short-term investments
    
    
    
    
    
    
    (4,946
    )Proceeds from maturity of short-term investments
    
    
    4,933
    
    
    
    9,673Net cash provided by investing activities
    
    
    4,511
    
    
    
    3,079Cash flows from financing activities:Proceeds from issuance of common stock, net
    
    
    1,143
    
    
    
    962Net cash provided by financing activities
    
    
    1,143
    
    
    
    962Net increase in cash and cash equivalents
    
    
    5,751
    
    
    
    1,736Cash and cash equivalents, beginning of period
    
    
    41,814
    
    
    
    32,955Cash and cash equivalents, end of period
    
    $
    47,565
    
    
    $
    34,691Supplemental disclosure of cash flows:Cash (paid) refunds for income tax, net
    
    $
    124
    
    
    $
    (909
    )
  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
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Segment Reporting and Significant Customers
   Net Revenue
    
    Accounts ReceivableThree Months Ended
    
    Six Months Ended
    
    As of
    
    As ofJune 30,
    
    June 30,
    
    June 30,
    
    December 31,Customer
    
    2007
    
    2006
    
    2007
    
    2006
    
    2007
    
    2006A
    
    
    36
    %
    
    
    38
    %
    
    
    34
    %
    
    
    34
    %
    
    
    30
    %
    
    
    25
    %B
    
    
    22
    %
    
    
    12
    %
    
    
    21
    %
    
    
    12
    %
    
    
    20
    %
    
    
    16
    %C
    
    
    16
    %
    
    
    *
    
    
    
    15
    %
    
    
    15
    %
    
    
    18
    %
    
    
    28
    %D
    
    
    11
    %
    
    
    *
    
    
    
    14
    %
    
    
    *
    
    
    
    21
    %
    
    
    13
    %E
    
    
    *
    
    
    
    13
    %
    
    
    *
    
    
    
    11
    %
    
    
    *
    
    
    
    *
 
 *
    
    Less than 10%  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Singapore
    
    
    51
    %
    
    
    48
    %
    
    
    49
    %
    
    
    49
    %China
    
    
    27
    %
    
    
    28
    %
    
    
    30
    %
    
    
    24
    %Taiwan
    
    
    14
    %
    
    
    5
    %
    
    
    13
    %
    
    
    7
    %United States
    
    
    3
    %
    
    
    6
    %
    
    
    3
    %
    
    
    7
    %Japan
    
    
    3
    %
    
    
    2
    %
    
    
    3
    %
    
    
    4
    %Thailand
    
    
    *
    
    
    
    8
    %
    
    
    *
    
    
    
    8
    %Other
    
    
    2
    %
    
    
    3
    %
    
    
    2
    %
    
    
    *
 
 *
    
    Less than 2% Revenue Recognition
  8




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Stock-Based Compensation
 Accounting for Stock Appreciation
Rights and Other Variable Stock Options or Award Plans
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Stock-based compensation expense:Cost of revenue
    
    $
    80
    
    
    $
    68
    
    
    $
    145
    
    
    $
    133Research and development
    
    
    561
    
    
    
    590
    
    
    
    1,169
    
    
    
    1,232Sales, general and administrative
    
    
    403
    
    
    
    269
    
    
    
    906
    
    
    
    764Total stock-based compensation expense
    
    
    1,044
    
    
    
    927
    
    
    
    2,220
    
    
    
    2,129Tax effect of stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Effect on net income (loss)
    
    $
    1,044
    
    
    $
    927
    
    
    $
    2,220
    
    
    $
    2,129Effect on basic net income (loss) per share
    
    $
    0.04
    
    
    $
    0.04
    
    
    $
    0.09
    
    
    $
    0.09Effect on diluted net income (loss) per share
    
    $
    0.04
    
    
    $
    0.04
    
    
    $
    0.09
    
    
    $
    0.08
  Income Taxes
  Accounting for
Uncertainty in Income Taxes
 9




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Earnings Per Share
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Numerator:Net (loss) income
    
    $
    (2,541
    )
    
    $
    1,244
    
    
    $
    (2,180
    )
    
    $
    1,761Denominator:Weighted average shares outstanding, basic
    
    
    24,560
    
    
    
    24,000
    
    
    
    24,496
    
    
    
    23,934Effect of dilutive securities:Stock options
    
    
    
    
    
    
    2,141
    
    
    
    
    
    
    
    2,249Weighted average shares outstanding, diluted
    
    
    24,560
    
    
    
    26,141
    
    
    
    24,496
    
    
    
    26,183Basic net (loss) income per share
    
    $
    (0.10
    )
    
    $
    0.05
    
    
    $
    (0.09
    )
    
    $
    0.07Diluted net (loss) income per share
    
    $
    (0.10
    )
    
    $
    0.05
    
    
    $
    (0.09
    )
    
    $
    0.07
  2. Inventory
  June 30,
    
    
    December 31,2007
    
    
    2006Work-in-process
    
    $
    4,434
    
    
    $
    8,383Finished goods
    
    
    3,241
    
    
    
    4,206$
    7,675
    
    
    $
    12,589
 10




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3. Property and Equipment
  June 30,
    
    
    December 31,2007
    
    
    2006Computer hardware
    
    $
    1,507
    
    
    $
    1,464Computer software
    
    
    4,561
    
    
    
    4,431Equipment and furniture
    
    
    4,160
    
    
    
    3,979Leasehold improvements
    
    
    771
    
    
    
    73110,999
    
    
    
    10,605Less accumulated depreciation and amortization
    
    
    (7,028
    )
    
    
    (6,091
    )$
    3,971
    
    
    $
    4,514
 4. Change in Accounting Principle
 Accounting for Sabbatical Leave and Other Similar Benefits
Pursuant to FASB Statement No. 43
  5. Subsequent Event
  
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Overview
  11




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Critical Accounting Policies
  14




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Results of Operations
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net revenue
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %Cost of revenue
    
    
    68
    
    
    
    50
    
    
    
    57
    
    
    
    50Gross margin
    
    
    32
    
    
    
    50
    
    
    
    43
    
    
    
    50Operating expenses:Research and development
    
    
    29
    
    
    
    34
    
    
    
    31
    
    
    
    34Selling, general and administrative
    
    
    21
    
    
    
    16
    
    
    
    21
    
    
    
    16Total operating expenses
    
    
    50
    
    
    
    50
    
    
    
    52
    
    
    
    50(Loss) income from operations
    
    
    (18
    )
    
    
    
    
    
    
    (9
    )
    
    
    Interest and other income, net
    
    
    3
    
    
    
    2
    
    
    
    3
    
    
    
    3(Loss) income before income taxes
    
    
    (15
    )
    
    
    2
    
    
    
    (6
    )
    
    
    3Benefit from income taxes
    
    
    1
    
    
    
    5
    
    
    
    1
    
    
    
    2(Loss) income before cumulative effect of
accounting change
    
    
    (14
    )
    
    
    7
    
    
    
    (5
    )
    
    
    5Cumulative effect of accounting change
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    Net (loss) income
    
    
    (14
    )%
    
    
    7
    %
    
    
    (6
    )%
    
    
    5
    %
 Comparison of Three Months Ended June 30, 2007 to Three Months Ended June 30, 2006
 Net Revenue.
 Cost of Revenue and Gross Margin.
 Research and Development.
 Selling, General and Administrative.
 Income Tax.
 15




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Comparison of Six Months Ended June 30, 2007 to Six Months Ended June 30, 2006
 Net Revenue.
 Cost of Revenue and Gross Margin.
 Research and Development.
 Selling, General and Administrative.
 Income Tax.
 Liquidity and Capital Resources
    16




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Contractual Obligations
  2011 and2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    Thereafter
    
    
    TotalOperating lease obligations
    
    $
    487
    
    
    $
    901
    
    
    $
    838
    
    
    $
    737
    
    
    $
    1,253
    
    
    $
    4,216Purchase obligations
    
    
    2,344
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,344$
    2,831
    
    
    $
    901
    
    
    $
    838
    
    
    $
    737
    
    
    $
    1,253
    
    
    $
    6,560
  Recent Accounting Pronouncements
 Fair
Value Measurements
 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
   17




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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, 2006, as filed with the SEC on March 8, 2007, 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.
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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
excessive 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;
    
    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 quarter, or our turns business;
    
    the ability of our foundries and third-party subcontractors to achieve satisfactory
yields or quality;
    
    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;
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
    
    the cyclical nature of the semiconductor industry;
    
    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.
  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 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.
   We sell a limited number of products and a reduction in demand for these products would harm our
business and operating results. +
  We are subject to inventory risks and manufacturing costs that could negatively impact our
operating results.* +
  21




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Our products are highly complex and may require modifications to resolve undetected 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. +
   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. +
  22




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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. +
   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;
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
    
    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.
  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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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. +
  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. +
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
    
    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
    
    the development and commercial introduction of products incorporating new technology
are frequently delayed.
  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 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.
   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 are subject to the highly cyclical nature of the semiconductor industry and any future downturns
could significantly harm our business. +
  27




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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.* +
   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. +
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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, political instability, and currency fluctuations.* +
  
    
    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. +
  29




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##### Table of Contents



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.
   30




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##### Table of Contents



If our computer and communications hardware fails, our business, results of operations and
financial condition would be harmed.
  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;
    
    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.
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##### Table of Contents



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.
   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. +
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##### Table of Contents



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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##### Table of Contents



Item 4. Submission of Matters to a Vote of Security Holders
    Nominee
    
    For
    
    WithheldAlan King
    
    
    16,134,630
    
    
    
    6,294,407Edward Winn
    
    
    22,349,128
    
    
    
    78,909Jeffrey Staszak
    
    
    22,281,926
    
    
    
    147,111
    For
    
    Against
    
    Abstain
    
    Broker Non-Votes9,881,710
    
    
    7,775,426
    
    
    
    24,791
    
    
    
    4,474,110
   For
    
    Against
    
    Abstain
    
    Broker Non-Votes22,293,546
    
    
    32,962
    
    
    
    102,529
    
    
    
    0
 
 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
    
    Lease Agreement, dated May 9, 2007, between ProLogis Limited Partnership  I and the
Registrant (47451 Fremont Blvd.).10.2
    
    Lease Agreement, dated May 9, 2007, between ProLogis Limited Partnership  I and the
Registrant (47467 Fremont Blvd.).10.3(4)
    
    Amended and Restated 2004
Non-Employee Directors Stock Option Plan.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.
 34




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##### Table of Contents



Exhibit No.
    
    Description32.1*
    
    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 Appendix A to Volterra Semiconductor Corporations Definitive Proxy Statement,
as filed with the Securities and Exchange Commission on April 24, 2007, 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. 35




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##### Table of Contents



Signature
  Dated: July 31, 2007
    
    VOLTERRA SEMICONDUCTOR CORPORATIONBy:
    
    /s/ Greg Hildebrand

Greg 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
    
    Lease Agreement, dated May 9, 2007, between ProLogis Limited Partnership  I and the
Registrant (47451 Fremont Blvd.).10.2
    
    Lease Agreement, dated May 9, 2007, between ProLogis Limited Partnership  I and the
Registrant (47467 Fremont Blvd.).10.3(4)
    
    Amended and Restated 2004
Non-Employee Directors Stock Option Plan.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 3.4 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 Appendix A to Volterra Semiconductor Corporations Definitive Proxy Statement,
as filed with the Securities and Exchange Commission on April 24, 2007, 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. 37