##### 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 March 31, 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
(State of Incorporation)
    
    04-2742817
(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 March 31, 2009 and December 31, 2008
    
    
    1Condensed Consolidated Statements of Operations for the three months ended March 31, 2009 and 2008
    
    
    2Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2009 and 2008
    
    
    3Notes to Condensed Consolidated Financial Statements
    
    
    4Item 2 - Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15Item 3 - Quantitative and Qualitative Disclosures About Market Risk
    
    
    22Item 4 - Controls and Procedures
    
    
    22Part II  Other Information:Item 1 - Legal Proceedings
    
    
    24Item 1A  Risk Factors
    
    
    24Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    24Item 3 - Defaults Upon Senior Securities
    
    
    24Item 4 - Submission of Matters to a Vote of Security Holders
    
    
    24Item 5 - Other Information
    
    
    24Item 6  Exhibits
    
    
    24Signature(s)
    
    
    25EX-31.1 SECTION 302 CERT OF CEOEX-31.2 SECTION 302 CERT OF CFOEX-32.1 SECTION 906 CERT OF CEOEX-32.2 SECTION 906 CERT OF CFO




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##### Table of Contents



Item 1  Financial Statements
 
  
 March 31, 2009
    

    December 31, 2008AssetsCurrent assets:Cash and cash equivalents
    
    $
    25,136
    
    
    
    $
    22,639Restricted cash equivalents
    
    
    168
    
    
    
    
    176Short-term investments
    
    
    1,161
    
    
    
    
    1,773Accounts receivable, less allowance of $304 in 2009 and $300 in 2008
    
    
    28,586
    
    
    
    
    28,757Inventories, net
    
    
    25,631
    
    
    
    
    26,681Deferred tax assets
    
    
    451
    
    
    
    
    451Other current assets
    
    
    2,817
    
    
    
    
    2,279Total current assets
    
    
    83,950
    
    
    
    
    82,756Restricted cash and cash equivalents
    
    
    534
    
    
    
    
    561Long-term investments, net
    
    
    34,137
    
    
    
    
    33,735Auction rate securities rights
    
    
    1,830
    
    
    
    
    1,926Property, plant and equipment, net
    
    
    46,713
    
    
    
    
    48,254Other assets
    
    
    4,597
    
    
    
    
    4,690$
    171,761
    
    
    
    $
    171,922Liabilities and Stockholders EquityCurrent liabilities:Accounts payable
    
    $
    6,577
    
    
    
    $
    5,592Accrued compensation and benefits
    
    
    6,260
    
    
    
    
    6,783Accrued expenses
    
    
    3,053
    
    
    
    
    3,073Accrued severance charge
    
    
    1,990
    
    
    
    
    Income taxes payable
    
    
    334
    
    
    
    
    1,349Deferred revenue
    
    
    1,201
    
    
    
    
    662Total current liabilities
    
    
    19,415
    
    
    
    
    17,459Long-term deferred revenue
    
    
    1,331
    
    
    
    
    1,118Long-term income taxes payable
    
    
    274
    
    
    
    
    259Deferred income taxes
    
    
    1,577
    
    
    
    
    1,660Equity:Vicor Corporation stockholders equity:Class B Common Stock
    
    
    118
    
    
    
    
    118Common Stock
    
    
    384
    
    
    
    
    384Additional paid-in capital
    
    
    161,289
    
    
    
    
    161,089Retained earnings
    
    
    107,631
    
    
    
    
    110,174Accumulated other comprehensive loss
    
    
    (3,078
    )
    
    
    
    (2,767
    )Treasury stock, at cost
    
    
    (121,827
    )
    
    
    
    (121,827
    )Total Vicor Corporation stockholders equity
    
    
    144,517
    
    
    
    
    147,171Noncontrolling interest
    
    
    4,647
    
    
    
    
    4,255Total equity
    
    
    149,164
    
    
    
    
    151,426$
    171,761
    
    
    
    $
    171,922
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##### Table of Contents



Three Months EndedMarch 31,2009
    
    2008Net revenues
    
    $
    50,448
    
    
    
    $
    53,469Cost of revenues
    
    
    28,617
    
    
    
    
    31,009Gross margin
    
    
    21,831
    
    
    
    
    22,460Operating expenses:Selling, general and administrative
    
    
    12,823
    
    
    
    
    14,052Research and development
    
    
    7,751
    
    
    
    
    7,511Severance charge
    
    
    3,098
    
    
    
    
    Total operating expenses
    
    
    23,672
    
    
    
    
    21,563Income (loss) from operations
    
    
    (1,841
    )
    
    
    
    897Other income (expense), net
    
    
    118
    
    
    
    
    1,200Income (loss) before income taxes
    
    
    (1,723
    )
    
    
    
    2,097Provision for income taxes
    
    
    428
    
    
    
    
    242Loss from equity method investment (net of tax)
    
    
    
    
    
    
    
    790Consolidated net income (loss)
    
    
    (2,151
    )
    
    
    
    1,065Less: Net income attributable to noncontrolling interest
    
    
    392
    
    
    
    
    445Net income (loss) attributable to Vicor Corporation
    
    $
    (2,543
    )
    
    
    $
    620Net income (loss) per common share attributable to Vicor Corporation:Basic
    
    $
    (0.06
    )
    
    
    $
    0.01Diluted
    
    $
    (0.06
    )
    
    
    $
    0.01Shares used to compute net income (loss) per share attributable to Vicor Corporation:Basic
    
    
    41,665
    
    
    
    
    41,636Diluted
    
    
    41,665
    
    
    
    
    41,675Cash dividends declared per share
    
    $
    
    
    
    
    $
    0.15
  - 2 -




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##### Table of Contents



Three Months EndedMarch 31, 2009
    
    March 31, 2008Operating activities:Net income (loss)
    
    $
    (2,543
    )
    
    
    $
    620Adjustments to reconcile net income (loss) to net cash provided by operating activities:Depreciation and amortization
    
    
    2,625
    
    
    
    
    2,586Severance charge
    
    
    3,098
    
    
    
    
    Loss from equity method investee (net of tax)
    
    
    
    
    
    
    
    790Unrealized gain on trading securities
    
    
    (27
    )
    
    
    
    Unrealized loss on auction rate security rights
    
    
    96
    
    
    
    
    Increase in long-term deferred revenue
    
    
    213
    
    
    
    
    Net income attributable to noncontrolling interest
    
    
    392
    
    
    
    
    445Stock compensation expense
    
    
    200
    
    
    
    
    302Gain on disposal of equipment
    
    
    (5
    )
    
    
    
    (13
    )Change in current assets and liabilities, net
    
    
    (628
    )
    
    
    
    (437
    )Net cash provided by operating activities
    
    
    3,421
    
    
    
    
    4,293Investing activities:Purchases of investments
    
    
    (1,092
    )
    
    
    
    (8,254
    )Sales and maturities of investments
    
    
    1,161
    
    
    
    
    21,493Additions to property, plant and equipment
    
    
    (1,029
    )
    
    
    
    (2,325
    )Purchase of equity method investment
    
    
    
    
    
    
    
    (1,000
    )Proceeds from sale of equipment
    
    
    5
    
    
    
    
    13Change in restricted cash
    
    
    35
    
    
    
    
    (72
    )Decrease/(Increase)  in other assets
    
    
    9
    
    
    
    
    (36
    )Net cash (used in) provided by investing activities
    
    
    (911
    )
    
    
    
    9,819Financing activities:Proceeds from issuance of Common Stock
    
    
    
    
    
    
    
    3Net cash provided by financing activities
    
    
    
    
    
    
    
    3Effect of foreign exchange rates on cash
    
    
    (13
    )
    
    
    
    (39
    )Net increase in cash and cash equivalents
    
    
    2,497
    
    
    
    
    14,076Cash and cash equivalents at beginning of period
    
    
    22,639
    
    
    
    
    20,017Cash and cash equivalents at end of period
    
    $
    25,136
    
    
    
    $
    34,093
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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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The Fair Value Option for Financial
Assets and Financial Liabilities,
  - 5 -




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3.
    
    Fair Value Measurements
 Fair Value Measurements
  Fair Value Measurements at March 31, 2009 UsingSignificantQuoted Prices
    
    Other
    
    Significantin Active
    
    Observable
    
    Unobservable
    
    Total FairMarkets
    
    Inputs
    
    Inputs
    
    Value as of(Level 1)
    
    (Level 2)
    
    (Level 3)
    
    March 31, 2009Cash Equivalents:Money market funds
    
    $
    12,647
    
    
    $
    
    
    
    $
    
    
    
    $
    12,647Restricted money market
    
    
    168
    
    
    
    
    
    
    
    
    
    
    
    168Short term investments:Certificate of deposit
    
    
    1,161
    
    
    
    
    
    
    
    
    
    
    
    1,161Long term investments:Auction rate securities
    
    
    
    
    
    
    
    
    
    
    32,583
    
    
    
    32,583Auction rate security rights
    
    
    
    
    
    
    
    
    
    
    1,830
    
    
    
    1,830Certificate of deposit
    
    
    1,554
    
    
    
    
    
    
    
    
    
    
    
    1,554Restricted long term investment
    
    
    534
    
    
    
    
    
    
    
    
    
    
    
    534
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Level 3Balance at the beginning of the period
    
    $
    34,654Transfers into Level 3 categorization:
    
    
    Unrealized loss on trading securities included in Other income (expense)
    
    
    (69
    )Unrealized loss included in other comprehensive (loss) income
    
    
    (172
    )Balance at the end of the period
    
    $
    34,413
 4.
    
    Stock-Based Compensation
 Share-Based
Payment.
 Three Months EndedMarch 31,2009
    
    
    2008Cost of revenues
    
    $
    4
    
    
    $
    15Selling, general and administrative
    
    
    149
    
    
    
    225Research and development
    
    
    47
    
    
    
    62Total stock based compensation
    
    $
    200
    
    
    $
    302
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##### Table of Contents



5.
    
    Net Income (Loss) per Share
  Three Months EndedMarch 31,2009
    
    
    2008Numerator:Net income (loss) attributable to Vicor Corporation
    
    $
    (2,543
    )
    
    $
    620Denominator:Denominator for basic income (loss) per
share-weighted average shares (1)
    
    
    41,665
    
    
    
    41,636Effect of dilutive securities:Employee stock options (2)
    
    
    
    
    
    
    39Denominator
for diluted income (loss) per share 
adjusted weighted-average shares and assumed
conversions
    
    
    41,665
    
    
    
    41,675Basic income (loss) per share
    
    $
    (0.06
    )
    
    $
    0.01Diluted income (loss) per share
    
    $
    (0.06
    )
    
    $
    0.01
 
 (1)
    
    Denominator represents weighted average number of Common
Shares and Class B Common Shares outstanding.(2)
    
    Options to purchase 988,538 shares of Common Stock for
the three months ended March 31, 2009, were not included in the calculation
of net loss per share as the effect would have been antidilutive. Options
to purchase 789,129 shares of Common Stock were outstanding for the three
months ended March 31, 2008, but were not included in the computation of
diluted income per share because the options exercise prices were greater
than the average market price of the Common Stock and, therefore, the effect
would have been antidilutive. 6.
    
    Inventories
   March 31, 2009
    
    December 31, 2008Raw materials
    
    
    $  22,440
    
    
    
    $  23,275Work-in-process
    
    
    3,635
    
    
    
    3,152Finished goods
    
    
    6,249
    
    
    
    6,61232,324
    
    
    
    33,039Inventory reserves
    
    
    (6,693
    )
    
    
    (6,358
    )Net balance
    
    
    $  25,631
    
    
    
    $  26,681
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##### Table of Contents



7.
    
    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
  2009
    
    
    2008Allocation of losses from equity method investment (net of tax)
    
    $
    
    
    
    
    $  29Amortization of intangible assets and other (net of tax)
    
    
    
    
    
    
    55Other than temporary decline in investment
    
    
    
    
    
    
    706$
    
    
    
    
    $790
 8.
    
    Severance Charge
  - 9 -




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BBU
    
    
    V*I Chip
    
    
    TotalBalance as of December 31,
2008
    
    $
    -
    
    
    $
    -
    
    
    $
    -Charges
    
    
    2,485
    
    
    
    613
    
    
    
    3,098Payments
    
    
    (833
    )
    
    
    (275
    )
    
    
    (1,108
    )Balance as of March 31, 2009
    
    $
    1,652
    
    
    $
    338
    
    
    $
    1,990
 9.
    
    Product Warranties
   2009
    
    
    2008Balance at the beginning of the period
    
    $
    896
    
    
    $
    679Accruals for warranties for products sold in the period
    
    
    31
    
    
    
    59Fulfillment of warranty obligations
    
    
    (42
    )
    
    
    (51
    )Revisions of estimated obligations
    
    
    19
    
    
    
    6Balance at the end of the period
    
    $
    904
    
    
    $
    693
 10.
    
    Income Taxes
   - 10 -




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Three Months EndedMarch 312009
    
    2008Provision for income taxes
    
    $
    428
    
    
    $
    242Effective income tax rate
    
    
    (25.7
    %)
    
    
    11.5
    %
  11.
    
    Comprehensive Income (Loss)
  Three Months EndedMarch 31,2009
    
    2008Consolidated net income (loss)
    
    $
    (2,543
    )
    
    $
    620Foreign currency translation gain
    
    
    (145
    )
    
    
    183Unrealized (losses) gains (net of tax) on available-for-sale securities
    
    
    (166
    )
    
    
    (2,000
    )Comprehensive loss
    
    $
    (2,854
    )
    
    $
    (1,197
    )Less: comprehensive income attributable to noncontrolling interest
    
    
    6
    
    
    
    Comprehensive loss attributable to Vicor Corporation
    
    $
    (2,848
    )
    
    $
    (1,197
    )
  12.
    
    Commitments and Contingencies
    - 11 -




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13.
    
    Segment Information
   BBU
    
    V*I Chip
    
    Picor
    
    Corporate
    
    Eliminations
    
    Total2009:Net revenues
    
    $
    48,761
    
    
    $
    3,251
    
    
    $
    1,285
    
    
    $
    
    
    
    $
    (2,849
    )
    
    $
    50,448Income (loss) from operations
    
    
    5,454
    
    
    
    (6,403
    )
    
    
    (1,224
    )
    
    
    (168
    )
    
    
    500
    
    
    
    (1,841
    )Total assets
    
    
    184,970
    
    
    
    13,891
    
    
    
    9,367
    
    
    
    88,029
    
    
    
    (124,496
    )
    
    
    171,761Depreciation and amortization
    
    
    1,417
    
    
    
    735
    
    
    
    92
    
    
    
    381
    
    
    
    
    
    
    
    2,6252008:Net revenues
    
    $
    49,010
    
    
    $
    4,315
    
    
    $
    1,143
    
    
    $
    
    
    
    $
    (999
    )
    
    $
    53,469Income (loss) from operations
    
    
    7,577
    
    
    
    (6,141
    )
    
    
    (681
    )
    
    
    (148
    )
    
    
    290
    
    
    
    897Total assets
    
    
    155,716
    
    
    
    15,630
    
    
    
    7,553
    
    
    
    108,276
    
    
    
    (95,549
    )
    
    
    191,626Depreciation and amortization
    
    
    1,536
    
    
    
    575
    
    
    
    97
    
    
    
    378
    
    
    
    
    
    
    
    2,586
  14.
    
    Impact of Recently Issued Accounting Standards
 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
 - 13 -




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Recognition and Presentation of
Other-Than-Temporary Impairments
 Fair Value Measurements Effective Date of FASB Statement No. 157
 Business Combinations
 - 14 -




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Item 2  Managements Discussion and Analysis of Financial Condition and Results of
Operations
 *
 Overview
   - 15 -




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Critical Accounting Policies and Estimates
  Results of Operations
 Three months ended March 31, 2009, compared to three months ended March 31, 2008
  - 16 -




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Three Months EndedMarch 31,
    
    
    Increase (decrease)2009
    
    
    2008
    
    

$
    
    
    %BBU
    
    $
    48,760
    
    
    $
    49,010
    
    
    $
    (250
    )
    
    
    (0.5
    )%V*I Chip
    
    
    1,276
    
    
    
    4,279
    
    
    
    (3,003
    )
    
    
    (70.2
    )%Picor
    
    
    412
    
    
    
    180
    
    
    
    232
    
    
    
    123.9
    %Total
    
    $
    50,448
    
    
    $
    53,469
    
    
    $
    (3,021
    )
    
    
    (5.7
    )%Book-to-Bill Ratio
    
    
    0.99:1
    
    
    
    0.99:1
   - 17 -




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Increase (decrease)Vicor Custom Power related expenses
    
    $
    434
    
    
    
    41.2%
    (1)Vicor Japan expenses
    
    
    108
    
    
    
    12.4%
    (2)Legal fees
    
    
    (647)
    

    
    
    (67.1)%
    (3)Audit and tax fees
    
    
    (452)
    

    
    
    (55.1)%
    (4)Compensation
    
    
    (182)
    

    
    
    (  3.1)%
    (5)Travel expenses
    
    
    (177)
    

    
    
    (35.3)%Advertising expenses
    
    
    (134)
    

    
    
    (20.6)%Other, net
    
    
    (179)
    

    
    
    (  5.5)%$
    (1,229)
    

    
    
    (  8.8)%
 
 (1)
    
    Increase primarily attributed to $468,000 in increased commissions expense due to increased revenues at Vicor Custom Power subsidiaries.(2)
    
    Increase primarily attributed to increases in headcount.(3)
    
    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 quarter of 2009 compared to the
first quarter of 2008.(4)
    
    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.(5)
    
    The decrease in compensation expense was due to compensation-related accruals of $320,000 for certain of our international subsidiaries
and additional stock compensation expense of $90,000 identified and recorded in the first quarter of 2008.
 - 18 -




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Increase (decrease)Compensation
    
    $
    228
    
    
    
    4.5%
    (1)Picor non-recurring engineering charges
    
    
    207
    
    
    
    90.7%
    (2)Vicor Custom Power related expenses
    
    
    204
    
    
    
    38.2%
    (3)Deferred costs
    
    
    (238
    )
    
    
    100%
    (4)Project materials
    
    
    (77
    )
    
    
    (10.0)%Other, net
    
    
    (84
    )
    
    
    (  6.2)%$
    240
    
    
    
    3.2%
 
 (1)
    
    Increase primarily attributed to annual compensation adjustments in May 2008 and increases in V*I Chip headcount.(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)
    
    Increase primarily attributed to increased compensation expenses of $68,000 and engineering supplies and services of of $128,000.(4)
    
    Increase 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
    
    $
    230
    
    
    $
    903
    
    
    $
    (673
    )Foreign currency (losses) gains
    
    
    (64
    )
    
    
    262
    
    
    
    (326
    )Unrealized loss on auction rate securities rights
    
    
    (96
    )
    
    
    
    
    
    
    (96
    )Unrealized gain on trading securities
    
    
    27
    
    
    
    
    
    
    
    27Other
    
    
    21
    
    
    
    35
    
    
    
    (14
    )$
    118
    
    
    $
    1,200
    
    
    $
    (1,082
    )
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Three Months EndedMarch 31,2009
    
    
    
    2008Provision for income taxes
    
    $
    428
    
    
    $
    242Effective income tax rate
    
    
    (25.7
    %)
    
    
    11.5
    %
     Liquidity and Capital Resources
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Item 3  Quantitative and Qualitative Disclosures About Market Risk
   
 Item 4  Controls and Procedures
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Item 1  Legal Proceedings
  
 Item 1A  Risk Factors
  
 Item 2  Unregistered Sales of Equity Securities and Use of Proceeds
 Issuer Purchases of Equity Securities
 Maximum Number(of ApproximateTotal Number of
    
    Dollar Value) ofShares (or Units)
    
    Shares (or Units)Total Number
    
    
    
    
    
    Purchased as Part
    
    that May Yet Beof Shares (or
    
    
    
    
    
    of Publicly
    
    Purchased UnderUnits)
    
    Average Price Paid
    
    Announced Plans
    
    the Plans orPeriod
    
    Purchased
    
    per Share (or Unit)
    
    or Programs
    
    ProgramsJanuary 1 - 31, 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $   8,541,000February 1 - 28, 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $   8,541,000March 1 - 31, 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $   8,541,000Total
    
    
    
    
    
    
    $ 
    
    
    
    
    
    
    
    $   8,541,000
  
 Item 3  Defaults Upon Senior Securities
  
 Item 4  Submission of Matters to a Vote of Security Holders
  
 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
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SIGNATURES
  VICOR CORPORATIONDate: May 6, 2009
    By:
    /s/ Patrizio VinciarelliPatrizio VinciarelliChairman of the Board, President and Chief Executive Officer
(Principal Executive Officer)Date: May 6, 2009
    By:
    /s/ James A. SimmsJames A. SimmsVice President, Chief Financial Officer
(Principal Financial Officer) - 25 -