##### 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, 2009
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from
 Commission File Number 0-18277
 VICOR CORPORATION
 Delaware
    
    04-2742817(State of Incorporation)
    
    (I.R.S. Employer Identification No.)
 
 
 þ o
 o o
 
 Large accelerated filer oAccelerated filer þNon-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company o o þ
  Common Stock, $.01 par value
    
    
    29,897,510Class B Common Stock, $.01 par value
    
    
    11,767,052




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##### 



PagePart I  Financial Information:Item 1 - Financial Statements (Unaudited)Condensed Consolidated Balance Sheets at June 30, 2009 and December 31, 2008
    
    
    1Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2009 and 2008
    
    
    2Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2009 and 2008
    
    
    3Notes to Condensed Consolidated Financial Statements
    
    
    4Item 2 - Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    18Item 3 - Quantitative and Qualitative Disclosures About Market Risk
    
    
    28Item 4 - Controls and Procedures
    
    
    28Part II  Other Information:Item 1 - Legal Proceedings
    
    
    29Item 1A - Risk Factors
    
    
    29Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    29Item 3 - Defaults Upon Senior Securities
    
    
    29Item 4 - Submission of Matters to a Vote of Security Holders
    
    
    29Item 5 - Other Information
    
    
    30Item 6 - Exhibits
    
    
    30Signature(s)
    
    
    31EX-31.1EX-31.2EX-32.1EX-32.2




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##### Table of Contents



Item 1. Financial Statements
 June 30, 2009
    
    December 31, 2008AssetsCurrent assets:Cash
    
    $
    30,429
    
    
    $
    22,639Restricted cash equivalents
    
    
    176
    
    
    
    176Short-term invesments
    
    
    845
    
    
    
    1,773Accounts receivable, less allowance of $266 in 2009 and $300 in 2008
    
    
    25,985
    
    
    
    28,757Inventories, net
    
    
    24,763
    
    
    
    26,681Deferred tax assets
    
    
    451
    
    
    
    451Other current assets
    
    
    3,119
    
    
    
    2,279Total current assets
    
    
    85,768
    
    
    
    82,756Restricted cash and cash equivalents
    
    
    388
    
    
    
    561Long-term investments, net
    
    
    35,851
    
    
    
    33,735Auction rate securities rights
    
    
    1,685
    
    
    
    1,926Property, plant and equipment, net
    
    
    45,912
    
    
    
    48,254Other assets
    
    
    4,982
    
    
    
    4,690$
    174,586
    
    
    $
    171,922Liabilities and Stockholders EquityCurrent liabilities:Accounts payable
    
    $
    6,142
    
    
    $
    5,592Accrued compensation and benefits
    
    
    7,114
    
    
    
    6,783Accrued expenses
    
    
    3,027
    
    
    
    3,073Accrued severance charges
    
    
    1,810
    
    
    
    -Income taxes payable
    
    
    68
    
    
    
    1,349Deferred revenue
    
    
    1,312
    
    
    
    662Total current liabilities
    
    
    19,473
    
    
    
    17,459Long-term deferred revenue
    
    
    1,314
    
    
    
    1,118Long-term income taxes payable
    
    
    276
    
    
    
    259Deferred income taxes
    
    
    1,659
    
    
    
    1,660Equity:Vicor Corporation stockholders equity:Class B Common Stock
    
    
    118
    
    
    
    118Common Stock
    
    
    384
    
    
    
    384Additional paid-in capital
    
    
    161,452
    
    
    
    161,089Retained earnings
    
    
    108,972
    
    
    
    110,174Accumulated other comprehensive loss
    
    
    (1,686
    )
    
    
    (2,767
    )Treasury stock, at cost
    
    
    (121,827
    )
    
    
    (121,827
    )Total Vicor Corporation stockholders equity
    
    
    147,413
    
    
    
    147,171Noncontrolling interest
    
    
    4,451
    
    
    
    4,255Total equity
    
    
    151,864
    
    
    
    151,426$
    174,586
    
    
    $
    171,922
  -1-




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##### Table of Contents



Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2009
    
    2008
    
    2009
    
    2008Net revenues
    
    $
    50,627
    
    
    $
    49,297
    
    
    $
    101,075
    
    
    $
    102,766Cost of revenues
    
    
    28,029
    
    
    
    28,184
    
    
    
    56,646
    
    
    
    59,193Gross margin
    
    
    22,598
    
    
    
    21,113
    
    
    
    44,429
    
    
    
    43,573Operating expenses:Selling, general and administrative
    
    
    12,019
    
    
    
    13,975
    
    
    
    24,842
    
    
    
    28,027Research and development
    
    
    7,611
    
    
    
    8,080
    
    
    
    15,362
    
    
    
    15,591Severance charges
    
    
    859
    
    
    
    -
    
    
    
    3,957
    
    
    
    -Gain from litigation-related settlements, net
    
    
    -
    
    
    
    (177
    )
    
    
    -
    
    
    
    (177
    )Total operating expenses
    
    
    20,489
    
    
    
    21,878
    
    
    
    44,161
    
    
    
    43,441Income (loss) from operations
    
    
    2,109
    
    
    
    (765
    )
    
    
    268
    
    
    
    132Other income (expense), net:Total other than temporary impairment gains on
available-for-sale securities
    
    
    869
    
    
    
    -
    
    
    
    703
    
    
    
    -Portion of gain recognized in Other
comprehensive income
    
    
    (1,342
    )
    
    
    -
    
    
    
    (1,176
    )
    
    
    -Net impairment losses recognized in earnings
    
    
    (473
    )
    
    
    -
    
    
    
    (473
    )
    
    
    -Other income (expense), net
    
    
    666
    
    
    
    470
    
    
    
    784
    
    
    
    1,670Total other income (expense), net
    
    
    193
    
    
    
    470
    
    
    
    311
    
    
    
    1,670Income (loss) before income taxes
    
    
    2,302
    
    
    
    (295
    )
    
    
    579
    
    
    
    1,802Provision for income taxes
    
    
    544
    
    
    
    350
    
    
    
    972
    
    
    
    592Loss from equity method investment (net of tax)
    
    
    -
    
    
    
    172
    
    
    
    -
    
    
    
    962Consolidated net income (loss)
    
    
    1,758
    
    
    
    (817
    )
    
    
    (393
    )
    
    
    248Less: Net income attributable to
noncontrolling interest
    
    
    417
    
    
    
    506
    
    
    
    809
    
    
    
    951Net income (loss) attributable to Vicor Corporation
    
    $
    1,341
    
    
    $
    (1,323
    )
    
    $
    (1,202
    )
    
    $
    (703
    )Net income (loss) per common share attributable toVicor Corporation:Basic
    
    $
    0.03
    
    
    $
    (0.03
    )
    
    $
    (0.03
    )
    
    $
    (0.02
    )Diluted
    
    $
    0.03
    
    
    $
    (0.03
    )
    
    $
    (0.03
    )
    
    $
    (0.02
    )Shares used to compute net income (loss) per share
attributable to Vicor Corporation:Basic
    
    
    41,665
    
    
    
    41,643
    
    
    
    41,665
    
    
    
    41,640Diluted
    
    
    41,665
    
    
    
    41,643
    
    
    
    41,665
    
    
    
    41,640Cash dividends declared per share
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    0.15
  -2-




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##### Table of Contents



Six Months EndedJune 30, 2009
    
    June 30, 2008Operating activities:Net loss
    
    $
    (1,202
    )
    
    $
    (703
    )Adjustments to reconcile net loss to net cash provided by operating activities:Depreciation and amortization
    
    
    5,234
    
    
    
    5,211Severance charges
    
    
    3,957
    
    
    
    -Credit loss on available for sale securities
    
    
    473
    
    
    
    -Unrealized gain on trading securities
    
    
    (425
    )
    
    
    -Stock compensation expense
    
    
    363
    
    
    
    588Unrealized loss on auction rate security rights
    
    
    145
    
    
    
    -Increase in long-term deferred revenue
    
    
    196
    
    
    
    882Deferred income taxes
    
    
    94
    
    
    
    -Gain on disposal of equipment
    
    
    (25
    )
    
    
    (22
    )Loss from equity method investee (net of tax)
    
    
    -
    
    
    
    962Change in current assets and liabilities, net
    
    
    1,788
    
    
    
    233Net cash provided by operating activities
    
    
    10,598
    
    
    
    7,151Investing activities:Purchases of investments
    
    
    (1,515
    )
    
    
    (9,812
    )Sales and maturities of investments
    
    
    1,549
    
    
    
    26,139Additions to property, plant and equipment
    
    
    (2,749
    )
    
    
    (4,169
    )Purchase of equity method investment
    
    
    -
    
    
    
    (1,000
    )Proceeds from sale of equipment
    
    
    5
    
    
    
    22Change in restricted cash
    
    
    173
    
    
    
    33(Increase) decrease in other assets
    
    
    (435
    )
    
    
    (119
    )Net cash (used in) provided by investing activities
    
    
    (2,972
    )
    
    
    11,094Financing activities:Net income attributable to noncontrolling interest
    
    
    809
    
    
    
    951Proceeds from issuance of Common Stock
    
    
    -
    
    
    
    93Common Stock dividends paid
    
    
    (612
    )
    
    
    (6,245
    )Net cash provided by (used in) financing activities
    
    
    197
    
    
    
    (5,201
    )Effect of foreign exchange rates on cash
    
    
    (33
    )
    
    
    (61
    )Net increase in cash and cash equivalents
    
    
    7,790
    
    
    
    12,983Cash and cash equivalents at beginning of period
    
    
    22,639
    
    
    
    20,017Cash and cash equivalents at end of period
    
    $
    30,429
    
    
    $
    33,000
  -3-




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Basis of Presentation
  Noncontrolling Interests in Consolidated Financial Statements Consolidated Financial Statements
  Short-Term and Long-Term Investments
   -4-




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##### Table of Contents



Gross
    
    Gross
    
    EstimatedUnrealized
    
    Unrealized
    
    FairJune 30, 2009
    
    Cost
    
    Gains
    
    Losses
    
    ValueAuction rate
securities - student loans
    
    $
    19,975
    
    
    $
    -
    
    
    $
    2,635
    
    
    $
    17,340Certificates of deposit
    
    
    2,750
    
    
    
    24
    
    
    
    -
    
    
    
    2,774$
    22,725
    
    
    $
    24
    
    
    $
    2,635
    
    
    $
    20,114All of the auction rate securities-student loans as of June 30, 2009 have been in an
unrealized loss position for greater than 12 months.December 31, 2008Auction rate
securities - student loans
    
    $
    20,025
    
    
    $
    -
    
    
    $
    3,334
    
    
    $
    16,691Certificates of deposit
    
    
    2,735
    
    
    
    20
    
    
    
    -
    
    
    
    2,755$
    22,760
    
    
    $
    20
    
    
    $
    3,334
    
    
    $
    19,446The amortized cost and estimated fair value of available-for-sale securities on June 30, 2009, by contractual maturities, are shown
below (in thousands):EstimatedCost
    
    Fair ValueDue in one year or less
    
    $
    1,115
    
    
    $
    1,120Due in two to ten years
    
    
    1,710
    
    
    
    1,729Due in twenty to forty years
    
    
    19,900
    
    
    
    17,265$
    22,725
    
    
    $
    20,114The following is a summary of trading securities (in thousands):Gross
    
    Gross
    
    EstimatedUnrealized
    
    Unrealized
    
    FairJune
30, 2009
    
    Cost
    
    Gains
    
    Losses
    
    ValueAuction rate
securities - student loans
    
    $
    18,300
    
    
    $
    -
    
    
    $
    1,717
    
    
    $
    16,583December 31,
2008Auction rate
securities - student loans
    
    $
    18,300
    
    
    $
    -
    
    
    $
    2,238
    
    
    $
    16,062
 -5-




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##### Table of Contents



EstimatedCost
    
    Fair ValueDue in one year or less
    
    $
    -
    
    
    $
    -Due in two to ten years
    
    
    -
    
    
    
    -Due in ten to twenty years
    
    
    2,000
    
    
    
    1,846Due in twenty to forty years
    
    
    16,300
    
    
    
    14,737$
    18,300
    
    
    $
    16,583
     -6-




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The Fair
Value Option for Financial Assets and Financial Liabilities,
   Balance at the beginning of the period
    
    $
    -Additions for the amount related to the credit loss for which an
other-than-temporary impairment was not previously recognized
    
    
    473Balance at the end of the period
    
    $
    473
   Fair Value Measurements
 Fair Value Measurements
 -7-




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##### Table of Contents



Fair Value Measurements at June 30, 2009UsingSignificantQuoted Prices
    
    Other
    
    Significantin Active
    
    Observable
    
    Unobservable
    
    Total FairMarkets
    
    Inputs
    
    Inputs
    
    Value as of(Level 1)
    
    (Level 2)
    
    (Level 3)
    
    June 30, 2009Cash Equivalents:Money market funds
    
    $
    9,987
    
    
    $
    
    
    
    $
    
    
    
    $
    9,987Restricted money market
    
    
    176
    
    
    
    
    
    
    
    
    
    
    
    176Short term investments:Certificate of deposit
    
    
    770
    
    
    
    
    
    
    
    
    
    
    
    770Auction rate securities
    
    
    
    
    
    
    75
    
    
    
    
    
    
    
    75Long term investments:Auction rate securities
    
    
    
    
    
    
    
    
    
    
    33,848
    
    
    
    33,848Auction rate security rights
    
    
    
    
    
    
    
    
    
    
    1,685
    
    
    
    1,685Certificate of deposit
    
    
    2,003
    
    
    
    
    
    
    
    
    
    
    
    2,003Restricted long term investment
    
    
    388
    
    
    
    
    
    
    
    
    
    
    
    388
  -8-




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##### Table of Contents



Level 3Balance at the beginning of the period
    
    $
    34,654Transfers into Level 3 categorization
    
    
    Redemptions
    
    
    (25
    )Transfers into Level 2 categorization
    
    
    (75
    )Unrealized loss on trading securities included in Other income (expense), net
    
    
    280Credit losses on available for sales securities included in Other
income(expense), net
    
    
    (473
    )Unrealized gain (loss) included in Other comprehensive (loss) income
    
    
    1,172Balance at the end of the period
    
    $
    35,533
 Stock Based Compensation
 Share Based
Payment
 Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2009
    
    2008
    
    2009
    
    2008Cost of revenues
    
    $
    4
    
    
    $
    30
    
    
    $
    8
    
    
    $
    45Selling, general and administrative
    
    
    112
    
    
    
    206
    
    
    
    261
    
    
    
    431Research and development
    
    
    48
    
    
    
    50
    
    
    
    94
    
    
    
    112Total stock based compensation
    
    $
    164
    
    
    $
    286
    
    
    $
    363
    
    
    $
    588
 -9-




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##### Table of Contents



Net
Income (Loss) per Share
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2009
    
    2008
    
    2009
    
    2008Numerator:Net income (loss) attributable to Vicor Corporation
    
    $
    1,341
    
    
    $
    (1,323
    )
    
    $
    (1,202
    )
    
    $
    (703
    )Denominator:Denominator
for basic income (loss) per share-weighted average shares (1)
    
    
    41,665
    
    
    
    41,643
    
    
    
    41,665
    
    
    
    41,640Effect of dilutive securities:Employee stock options (2)
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Denominator
for diluted income (loss) per share  adjusted
weighted-average shares and assumed conversions
    
    
    41,665
    
    
    
    41,643
    
    
    
    41,665
    
    
    
    41,640Basic income (loss) per share
    
    $
    0.03
    
    
    $
    (0.03
    )
    
    $
    (0.03
    )
    
    $
    (0.02
    )Diluted income (loss) per share
    
    $
    0.03
    
    
    $
    (0.03
    )
    
    $
    (0.03
    )
    
    $
    (0.02
    )
 
   Inventories
  -10-




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##### Table of Contents



June 30, 2009
    
    December 31, 2008Raw materials
    
    $
    22,436
    
    

    $
    23,275Work-in-process
    
    
    3,326
    
    

    
    3,152Finished goods
    
    
    5,848
    
    

    
    6,61231,610
    
    

    
    33,039Inventory reserves
    
    
    (6,847)
    
    

    
    (6,358)Net balance
    
    $
    24,763
    
    

    $
    26,681
 Other Investments
  The Equity Method of Accounting for
Investments in Common Stock Consolidation of Variable Interest Entities, an Interpretation of Accounting
Research Bulletin No. 51
 -11-




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##### Table of Contents



Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2009
    
    2008
    
    2009
    
    2008Allocation of
losses from equity
method investment
(net of tax)
    
    $
    
    
    
    $
    145
    
    
    $
    
    
    
    $
    174Amortization of
intangible assets
and other (net of
tax)
    
    
    
    
    
    
    27
    
    
    
    
    
    
    
    82Other than
temporary decline
in investment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    706$
    
    
    
    $
    172
    
    
    $
    
    
    
    $
    962
 Severance Charges
   BBU
    
    V*I Chip
    
    TotalBalance as of December 31, 2008
    
    $
    -
    
    
    $
    -
    
    
    $
    -Charges relating to first quarter of 2009 workforce reduction
    
    
    2,485
    
    
    
    613
    
    
    
    3,098Charges relating to second quarter of 2009 workforce reduction
    
    
    859
    
    
    
    -
    
    
    
    859Payments
    
    
    (1,872
    )
    
    
    (275
    )
    
    
    (2,147
    )Balance as of June 30, 2009
    
    $
    1,472
    
    
    $
    338
    
    
    $
    1,810
 Product Warranties
  -12-




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##### Table of Contents



Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2009
    
    2008
    
    2009
    
    2008Balance at the beginning of the period
    
    $
    904
    
    
    $
    693
    
    
    $
    896
    
    
    $
    679Accruals for warranties for products
sold in the period
    
    
    72
    
    
    
    209
    
    
    
    103
    
    
    
    269Fulfillment of warranty obligations
    
    
    (40
    )
    
    
    (19
    )
    
    
    (82
    )
    
    
    (71
    )Revisions of estimated obligations
    
    
    (37
    )
    
    
    (77
    )
    
    
    (18
    )
    
    
    (71
    )Balance at the end of the period
    
    $
    899
    
    
    $
    806
    
    
    $
    899
    
    
    $
    806
 10.
    
    Income Taxes
    Three Months Ended
    
    Six Months EndedJune 30
    
    June 302009
    
    2008
    
    2009
    
    2008Provision for income taxes
    
    $
    544
    
    
    $
    350
    
    
    $
    972
    
    
    $
    592Effective income tax rate
    
    
    23.6%
    
    
    
    (118.6%
    )
    
    
    167.9%
    
    
    
    32.9%
  -13-




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##### Table of Contents



11.
    
    Comprehensive Income (Loss)
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2009
    
    2008
    
    2009
    
    2008Consolidated net income (loss) attributable
to Vicor Corporation
    
    $
    1,341
    
    
    $
    (1,323
    )
    
    $
    (1,202
    )
    
    $
    (703
    )Foreign
currency translation gains (losses)
    
    
    50
    
    
    
    (109
    )
    
    
    (95
    )
    
    
    74Unrealized (losses) gains (net of tax) on
available-for-sale securities
    
    
    1,342
    
    
    
    (250
    )
    
    
    1,176
    
    
    
    (2,250
    )Comprehensive income (loss)
    
    $
    2,733
    
    
    $
    (1,682
    )
    
    $
    (121
    )
    
    $
    (2,879
    )Less: comprehensive income (loss)
attributable to noncontrolling interest
    
    
    (2
    )
    
    
    -
    
    
    
    4
    
    
    
    -Comprehensive income (loss) attributable to
Vicor Corporation
    
    $
    2,735
    
    
    $
    (1,682
    )
    
    $
    (125
    )
    
    $
    (2,879
    )
  12.
    
    Commitments and Contingencies
    -14-




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13.
    
    Segment Information
  -15-




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##### Table of Contents



BBU
    
    V*I Chip
    
    Picor
    
    Corporate
    
    Eliminations
    
    Total2009:Net revenues
    
    $
    47,622
    
    
    $
    3,711
    
    
    $
    1,614
    
    
    $
    -
    
    
    $
    (2,320
    )
    
    $
    50,627Income (loss) from operations
    
    
    8,379
    
    
    
    (5,470
    )
    
    
    (1,075
    )
    
    
    (171
    )
    
    
    446
    
    
    
    2,109Total assets
    
    
    191,939
    
    
    
    14,330
    
    
    
    9,244
    
    
    
    94,012
    
    
    
    (134,939
    )
    
    
    174,586Depreciation and amortization
    
    
    1,391
    
    
    
    728
    
    
    
    96
    
    
    
    394
    
    
    
    -
    
    
    
    2,6092008:Net revenues
    
    $
    45,963
    
    
    $
    3,195
    
    
    $
    1,192
    
    
    $
    -
    
    
    $
    (1,053
    )
    
    $
    49,297Income (loss) from operations
    
    
    6,220
    
    
    
    (6,614
    )
    
    
    (542
    )
    
    
    39
    
    
    
    132
    
    
    
    (765
    )Total assets
    
    
    161,878
    
    
    
    16,084
    
    
    
    7,757
    
    
    
    102,813
    
    
    
    (103,913
    )
    
    
    184,619Depreciation and amortization
    
    
    1,469
    
    
    
    674
    
    
    
    94
    
    
    
    388
    
    
    
    -
    
    
    
    2,625
  BBU
    
    V*I Chip
    
    Picor
    
    Corporate
    
    Eliminations
    
    Total2009:Net revenues
    
    $
    96,382
    
    
    $
    6,962
    
    
    $
    2,899
    
    
    $
    -
    
    
    $
    (5,168
    )
    
    $
    101,075Income (loss) from operations
    
    
    13,833
    
    
    
    (11,873
    )
    
    
    (2,299
    )
    
    
    (339
    )
    
    
    946
    
    
    
    268Total assets
    
    
    191,939
    
    
    
    14,330
    
    
    
    9,244
    
    
    
    93,664
    
    
    
    (134,591
    )
    
    
    174,586Depreciation and amortization
    
    
    2,808
    
    
    
    1,463
    
    
    
    188
    
    
    
    775
    
    
    
    -
    
    
    
    5,2342008:Net revenues
    
    $
    94,975
    
    
    $
    7,508
    
    
    $
    2,335
    
    
    $
    -
    
    
    $
    (2,052
    )
    
    $
    102,766Income (loss) from operations
    
    
    13,797
    
    
    
    (12,757
    )
    
    
    (1,223
    )
    
    
    (109
    )
    
    
    424
    
    
    
    132Total assets
    
    
    161,878
    
    
    
    16,084
    
    
    
    7,757
    
    
    
    102,813
    
    
    
    (103,913
    )
    
    
    184,619Depreciation and amortization
    
    
    3,010
    
    
    
    1,249
    
    
    
    191
    
    
    
    761
    
    
    
    -
    
    
    
    5,211
  14.
    
    Impact of Recently Issued Accounting Standards
 Amendments to FASB Interpretation No. 46(R) Consolidation of Variable Interest Entities,
 -16-




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Interim Disclosures about Fair Value
of Financial Instruments Interim
Financial Reporting
 Determining Fair Value when the Volume and
Level of Activity for the Asset or Liability have Significantly Decreased and Identifying
Transactions that are not Orderly Fair Value Measurements
 Recognition and Presentation of
Other-Than-Temporary Impairments
 15.
    
    Subsequent Event
  -17-




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Item 2  Managements Discussion and Analysis of Financial Condition and Results of
Operations
 *
 Overview
   -18-




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-19-




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Critical Accounting Policies and Estimates
  Three months ended June 30, 2009 compared to three months ended June 30, 2008
   Three Months EndedJune 30,
    
    
    Increase (decrease)2009
    
    
    2008
    
    
    $
    
    
    %BBU
    
    $
    47,621
    
    
    $
    45,963
    
    
    $
    1,658
    
    
    
    3.6%V*I Chip
    
    
    2,431
    
    
    
    3,129
    
    
    
    (698
    )
    
    
    (22.3)%Picor
    
    
    575
    
    
    
    205
    
    
    
    370
    
    
    
    180.5%Total
    
    $
    50,627
    
    
    $
    49,297
    
    
    $
    1,330
    
    
    
    2.7%Book-to-Bill Ratio
    
    
    0.79:1
    
    
    
    1.01:1
    -20-




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Increase (decrease)Compensation
    
    $
    (872
    )
    
    
    (14.1)%
    (1)Legal fees
    
    
    (206
    )
    
    
    (41.8)%
    (2)Travel expenses
    
    
    (198
    )
    
    
    (31.2)%
    (3)Commissions expense
    
    
    (185
    )
    
    
    (15.2)%
    (4)Audit and tax fees
    
    
    (158
    )
    
    
    (29.8)%
    (5)Advertising expenses
    
    
    (156
    )
    
    
    (21.5)%
    (6)Training expenses
    
    
    (143
    )
    
    
    (33.4)%International office expenses
    
    
    (85
    )
    
    
    (57.8)%Vicor Japan expenses
    
    
    (76
    )
    
    
    (7.9)%Vicor Custom Power related expenses
    
    
    179
    
    
    
    17.6%
    (7)Other, net
    
    
    (56
    )
    
    
    (3.5)%$
    (1,956
    )
    
    
    (14.0)%
 
 (1)
    
    Decrease primarily attributable to the workforce reductions completed in the first and second quarters of
2009.(2)
    
    Decrease primarily attributed to a decrease in activity associated with the Companys lawsuit brought against
certain of its insurance carriers with respect to the Ericsson, Inc. settlement of product liability
litigation in the second quarter of 2009 compared to 2008.(3)
    
    Represents an overall reduction in travel across all business units and functional groups.(4)
    
    Decrease primarily attributed to the changes in the mix of revenues subject to commissions.(5)
    
    Decrease primarily attributed to the late filings of our 2007 Forms 10-Q and additional work related to
accounting for our investment in GWS in the first quarter of 2008.(6)
    
    Decrease is primarily attributed to decreased advertising in trade publications.(7)
    
    Increase primarily attributed to $132,000 in increased commissions expense due to increased revenues at Vicor
Custom Power subsidiaries.  -21-




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##### Table of Contents



Increase (decrease)Vicor Custom Power related expenses
    
    $
    218
    
    
    
    37.0%
    (1)Picor non-recurring engineering charges
    
    
    159
    
    
    
    (83.4)%
    (2)Facility expenses
    
    
    58
    
    
    
    15.8%Project materials
    
    
    (247
    )
    
    
    (23.4)%
    (3)Compensation
    
    
    (299
    )
    
    
    (5.5)%
    (4)Deferred costs
    
    
    (339
    )
    
    
    100.0%
    (5)Other, net
    
    
    (19
    )
    
    
    (2.2)%$
    (469
    )
    
    
    5.8%
 
 (1)
    
    Increase primarily attributed to increased outside services of $128,000 and an increase in compensation expense of
$94,000.(2)
    
    The Picor business unit provides engineering services to BBU and V*I Chip to support certain
manufacturing processes and research and development activities. A decline in services related
to manufacturing processes resulted in an increase in the amount of charges allocated to
research and development expense.(3)
    
    Decrease primarily attributed to a decrease in project materials associated with V*I Chip products.(4)
    
    Decrease primarily attributed to the workforce reductions that were completed in the first and second
quarters of 2009.(5)
    
    Decrease primarily attributed to an increase in deferred costs associated with certain non-recurring
engineering projects for which the related revenues have been deferred.   Increase2009
    
    2008
    
    (decrease)Interest income
    
    $
    216
    
    
    $
    520
    
    
    $
    (304
    )Foreign currency gains (losses)
    
    
    63
    
    
    
    (59
    )
    
    
    122Unrealized loss on auction rate securities
rights
    
    
    (145
    )
    
    
    -
    
    
    
    (145
    )Unrealized gain on trading securities
    
    
    494
    
    
    
    -
    
    
    
    494Credit loss on available for sale securities
    
    
    (473
    )
    
    
    -
    
    
    
    (473
    )Other
    
    
    38
    
    
    
    9
    
    
    
    29$
    193
    
    
    $
    470
    
    
    $
    (277
    )
  -22-




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Three Months EndedJune 30,2009
    
    
    2008Provision for income taxes
    
    $
    544
    
    
    $
    350Effective income tax rate
    
    
    23.6%
    
    
    
    (118.6%)
     Six months ended June 30, 2009 compared to six months ended June 30, 2008
   Six Months EndedJune 30,
    
    
    Increase (decrease)2009
    
    
    2008
    
    
    $
    
    
    %BBU
    
    $
    96,382
    
    
    $
    94,973
    
    
    $
    1,409
    
    
    
    1.5%V*I Chip
    
    
    3,707
    
    
    
    7,407
    
    
    
    (3,700
    )
    
    
    (50.0)%Picor
    
    
    986
    
    
    
    386
    
    
    
    600
    
    
    
    155.4%Total
    
    $
    101,075
    
    
    $
    102,766
    
    
    $
    (1,691
    )
    
    
    -1.6%Book-to-Bill Ratio
    
    
    0.89:1
    
    
    
    1.00:1
 -23-




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##### Table of Contents



Increase (decrease)Compensation
    
    $
    (1,054
    )
    
    
    (8.7)%
    (1)Legal fees
    
    
    (853
    )
    
    
    (58.6)%
    (2)Audit and tax fees
    
    
    (610
    )
    
    
    (45.1)%
    (3)Travel expenses
    
    
    (376
    )
    
    
    (33.0)%
    (4)Advertising expenses
    
    
    (290
    )
    
    
    (21.1)%
    (5)Commissions expense
    
    
    (245
    )
    
    
    (10.6)%
    (6)Training expenses
    
    
    (192
    )
    
    
    (24.6)%International office expenses
    
    
    (76
    )
    
    
    (38.1)%Vicor Custom Power related expenses
    
    
    612
    
    
    
    29.6%
    (7)Other, net
    
    
    (101
    )
    
    
    (2.0)%(3,185
    )
    
    
    (11.4)%
 
 (1)
    
    Decrease primarily attributable to the workforce reductions completed in the first and second quarters of
2009.(2)
    
    Decrease primarily attributed to a decrease in activity associated with the Companys lawsuit brought against
certain of its insurance carriers with respect to the Ericsson, Inc. settlement of product liability
litigation in the first two quarters of 2009 compared to 2008.(3)
    
    Decrease primarily attributed to the late filings of our 2007 Forms 10-Q and additional work related to
accounting for our investment in GWS in the first quarter of 2008.(4)
    
    Represents an overall reduction in travel across all business units and functional groups.(5)
    
    Decrease primarily attributed to decreased advertising in trade publications.(6)
    
    Decrease primarily attributed to lower revenues and the changes in the mix of revenues subject to commissions.(7)
    
    Increase primarily attributed to $600,000 in increased commissions expense due to increased revenues at Vicor
Custom Power subsidiaries.  -24-




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##### Table of Contents



Increase (decrease)Deferred costs
    
    $
    (576
    )
    
    
    100.0%
    (1)Project materials
    
    
    (324
    )
    
    
    (17.8)%
    (2)Compensation
    
    
    (72
    )
    
    
    (0.7)%Travel Expenses
    
    
    (52
    )
    
    
    (35.6)%Vicor Custom Power related expenses
    
    
    421
    
    
    
    37.6%
    (3)Picor non-recurring engineering charges
    
    
    365
    
    
    
    87.4%
    (4)Facilities expenses
    
    
    128
    
    
    
    17.1%Other, net
    
    
    (119
    )
    
    
    (7.2)%$
    (229
    )
    
    
    (1.5)%
 
 (1)
    
    Decrease primarily attributed to an increase in deferred costs capitalized for certain non-recurring
engineering projects for which the related revenues have been deferrred.(2)
    
    Decrease primarily attributed to a decrease in project materials associated with V*I Chip products.(3)
    
    Increase primarily attributed to increases in compensation expense of $163,000, outside services of
$146,000 and sub-contract labor of $44,000.(4)
    
    The Picor business unit provides engineering services to BBU and V*I Chip to support certain
manufacturing processes and research and development activities. A decline in services related
to manufacturing processes resulted in an increase in the amount of charges allocated to
research and development expense.
   Increase2009
    
    2008
    
    (decrease)Interest income
    
    $
    446
    
    
    $
    1,424
    
    
    $
    (978
    )Foreign currency (losses) gains
    
    
    (2
    )
    
    
    203
    
    
    
    (205
    )Unrealized loss on auction rate securities
rights
    
    
    (145
    )
    
    
    -
    
    
    
    (145
    )Unrealized gain on trading securities
    
    
    425
    
    
    
    -
    
    
    
    425Credit losses on available for sale securities
    
    
    (473
    )
    
    
    -
    
    
    
    (473
    )Other
    
    
    60
    
    
    
    43
    
    
    
    17$
    311
    
    
    $
    1,670
    
    
    $
    (1,359
    )
  -25-




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##### Table of Contents



Six Months EndedJune 30,2009
    
    2008Provision for income taxes
    
    $
    972
    
    
    $
    592Effective income tax rate
    
    
    167.9%
    
    
    
    32.9%
     Liquidity and Capital Resources
    -26-




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-27-




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##### Table of Contents



Item 3  Quantitative and Qualitative Disclosures About Market Risk
   
 Item 4  Controls and Procedures
      -28-




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##### Table of Contents



Item 1  Legal Proceedings
 Commitments and Contingencies
 
 Item 1A  Risk Factors
 
 
 Item 2  Unregistered Sales of Equity Securities and Use of Proceeds
 Issuer Purchases of Equity SecuritiesMaximum Number(of ApproximateTotal Number of
    
    Dollar Value) ofShares (or Units)
    
    Shares (or Units)Total Number
    
    Average Price
    
    Purchased as Part
    
    that May Yet Beof Shares
    
    Paid
    
    of Publicly
    
    Purchased Under(or Units)
    
    per Share
    
    Announced Plans
    
    the Plans orPeriod
    
    Purchased
    
    (or Unit)
    
    or Programs
    
    ProgramsApril 1 - 30, 2009
    
    
    -
    
    
    $
    -
    
    
    
    -
    
    
    $
    8,541,000May 1 - 31, 2009
    
    
    -
    
    
    $
    -
    
    
    
    -
    
    
    $
    8,541,000June 1 - 30, 2009
    
    
    -
    
    
    $
    -
    
    
    
    -
    
    
    $
    8,541,000Total
    
    
    -
    
    
    $
    -
    
    
    
    -
    
    
    $
    8,541,000
  
 Item 3  Defaults Upon Senior Securities
  
 Item 4  Submission of Matters to a Vote of Security Holders
   -29-




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##### Table of Contents



Nominee
    
    Votes For
    
    Votes WithheldPatrizio Vinciarelli
    
    137,889,512
    
    6,468,611Estia J. Eichten
    
    143,290,119
    
    1,068,004Barry Kelleher
    
    137,982,274
    
    6,375,849David T. Riddiford
    
    143,584,840
    
    773,283Samuel Anderson
    
    137,094,271
    
    7,263,852James A. Simms
    
    137,863,158
    
    6,494,965Claudio Tuozzolo
    
    137,347,865
    
    7,010,258Jason L. Carlson
    
    143,620,121
    
    738,002
  
 Item 5  Other Information
  
 Item 6  Exhibits
 Exhibit Number
    
    Description31.1
    
    Certification of Chief Executive Officer pursuant to Rule
13a-14(a) of the Securities Exchange Act of 193431.2
    
    Certification of Chief Financial Officer pursuant to Rule
13a-14(a) of the Securities Exchange Act of 193432.1
    
    Certification of Chief Executive Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 200232.2
    
    Certification of Chief Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
 -30-




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##### Table of Contents



SIGNATURES
  VICOR CORPORATIONDate: August 5, 2009
    By:
    /s/ Patrizio VinciarelliPatrizio VinciarelliChairman of the Board, President and
Chief Executive Officer
(Principal Executive Officer)Date: August 5, 2009
    By:
    /s/ James A. SimmsJames A. SimmsVice President, Chief Financial Officer
(Principal Financial Officer) -31-