##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2010
 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
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
  Common Stock, $.01 par value
    
    
    29,957,014Class 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 September 30, 2010 and December 31, 2009
    
    
    1Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2010 and 2009
    
    
    2Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2010 and 2009
    
    
    3Notes to Condensed Consolidated Financial Statements
    
    
    4Item 2 - Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    17Item 3 - Quantitative and Qualitative Disclosures About Market Risk
    
    
    28Item 4 - Controls and Procedures
    
    
    28Part II  Other Information:Item 1 - Legal Proceedings
    
    
    30Item 1A  Risk Factors
    
    
    30Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    30Item 3 - Defaults Upon Senior Securities
    
    
    30Item 5 - Other Information
    
    
    30Item 6
 Exhibits
    
    
    31Signature(s)
    
    
    32EX-31.1EX-31.2EX-32.1EX-32.2




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##### Table of Contents



Item 1. Financial Statements
 September 30, 2010
    
    
    December 31, 2009AssetsCurrent assets:Cash and cash equivalents
    
    $
    46,749
    
    
    $
    40,224Restricted cash equivalents
    
    
    -
    
    
    
    192Short-term investments
    
    
    -
    
    
    
    2,583Accounts receivable, less allowance of $298 in 2010 and $260 in 2009
    
    
    39,440
    
    
    
    26,565Inventories, net
    
    
    29,878
    
    
    
    21,357Deferred tax assets
    
    
    3,678
    
    
    
    181Other current assets
    
    
    5,624
    
    
    
    4,345Total current assets
    
    
    125,369
    
    
    
    95,447Restricted cash and cash equivalents
    
    
    -
    
    
    
    223Long-term investments, net
    
    
    18,984
    
    
    
    29,995Auction rate securities rights
    
    
    -
    
    
    
    962Property, plant and equipment, net
    
    
    49,104
    
    
    
    49,009Long-term deferred tax assets, net
    
    
    222
    
    
    
    -Other assets
    
    
    4,754
    
    
    
    4,941$
    198,433
    
    
    $
    180,577Liabilities and EquityCurrent liabilities:Accounts payable
    
    $
    12,879
    
    
    $
    9,458Accrued compensation and benefits
    
    
    7,188
    
    
    
    5,740Accrued expenses
    
    
    3,093
    
    
    
    2,618Accrued severance charges
    
    
    -
    
    
    
    259Income taxes payable
    
    
    276
    
    
    
    60Deferred revenue
    
    
    4,575
    
    
    
    2,521Total current liabilities
    
    
    28,011
    
    
    
    20,656Long-term deferred revenue
    
    
    2,291
    
    
    
    2,196Long-term income taxes payable
    
    
    953
    
    
    
    384Deferred income taxes
    
    
    -
    
    
    
    1,275Equity:Vicor Corporation stockholders equity:Class B Common Stock
    
    
    118
    
    
    
    118Common Stock
    
    
    385
    
    
    
    384Additional paid-in capital
    
    
    162,499
    
    
    
    161,746Retained earnings
    
    
    122,984
    
    
    
    112,972Accumulated other comprehensive loss
    
    
    (1,100
    )
    
    
    (1,608
    )Treasury stock, at cost
    
    
    (121,827
    )
    
    
    (121,827
    )Total Vicor Corporation stockholders equity
    
    
    163,059
    
    
    
    151,785Noncontrolling interest
    
    
    4,119
    
    
    
    4,281Total equity
    
    
    167,178
    
    
    
    156,066$
    198,433
    
    
    $
    180,577
  -1-




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Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net revenues
    
    $
    68,672
    
    
    $
    47,746
    
    
    $
    177,758
    
    
    $
    148,821Cost of revenues
    
    
    36,199
    
    
    
    27,078
    
    
    
    96,222
    
    
    
    83,724Gross margin
    
    
    32,473
    
    
    
    20,668
    
    
    
    81,536
    
    
    
    65,097Operating expenses:Selling, general and administrative
    
    
    12,166
    
    
    
    11,625
    
    
    
    36,107
    
    
    
    36,467Research and development
    
    
    8,925
    
    
    
    7,831
    
    
    
    26,830
    
    
    
    23,193Severance charges
    
    
    -
    
    
    
    126
    
    
    
    -
    
    
    
    4,083Gain from litigation-related and other settlements, net
    
    
    -
    
    
    
    (846
    )
    
    
    -
    
    
    
    (846
    )Total operating expenses
    
    
    21,091
    
    
    
    18,736
    
    
    
    62,937
    
    
    
    62,897Income from operations
    
    
    11,382
    
    
    
    1,932
    
    
    
    18,599
    
    
    
    2,200Other income, net:Total other
than temporary impairment gains
on available-for-sale securities
    
    
    407
    
    
    
    183
    
    
    
    112
    
    
    
    886Portion of
gain recognized in other comprehensive income
    
    
    (476
    )
    
    
    (177
    )
    
    
    (223
    )
    
    
    (1,353
    )Net
impairment (losses) gains recognized in earnings
    
    
    (69
    )
    
    
    6
    
    
    
    (111
    )
    
    
    (467
    )Other income, net
    
    
    156
    
    
    
    245
    
    
    
    690
    
    
    
    1,029Total other income, net
    
    
    87
    
    
    
    251
    
    
    
    579
    
    
    
    562Income before income taxes
    
    
    11,469
    
    
    
    2,183
    
    
    
    19,178
    
    
    
    2,762(Benefit) provision for income taxes
    
    
    (4,400
    )
    
    
    193
    
    
    
    (3,443
    )
    
    
    1,165Consolidated net income
    
    
    15,869
    
    
    
    1,990
    
    
    
    22,621
    
    
    
    1,597Less: Net
income attributable to
noncontrolling interest
    
    
    50
    
    
    
    299
    
    
    
    103
    
    
    
    1,108Net income attributable to Vicor Corporation
    
    $
    15,819
    
    
    $
    1,691
    
    
    $
    22,518
    
    
    $
    489Net income
per common share attributable toVicor Corporation:Basic
    
    $
    0.38
    
    
    $
    0.04
    
    
    $
    0.54
    
    
    $
    0.01Diluted
    
    $
    0.38
    
    
    $
    0.04
    
    
    $
    0.54
    
    
    $
    0.01Shares used
to compute net income per share 
attributable to Vicor Corporation:Basic
    
    
    41,693
    
    
    
    41,665
    
    
    
    41,682
    
    
    
    41,665Diluted
    
    
    41,774
    
    
    
    41,675
    
    
    
    41,742
    
    
    
    41,668Cash dividends per share
    
    $
    0.30
    
    
    $
    -
    
    
    $
    0.30
    
    
    $
    -
  -2-




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##### Table of Contents



Nine Months EndedSeptember 30, 2010
    
    September 30, 2009Operating activities:Consolidated net income
    
    $
    22,621
    
    
    $
    1,597Adjustments
to reconcile consolidated net income
to net cash provided by operating activities:Depreciation and amortization
    
    
    7,552
    
    
    
    7,741Deferred income taxes
    
    
    (5,115
    )
    
    
    (6
    )Unrealized gain on trading securities
    
    
    (970
    )
    
    
    (696
    )Unrealized loss on auction rate security rights
    
    
    962
    
    
    
    402Stock compensation expense
    
    
    458
    
    
    
    505Gain on disposals of equipment
    
    
    (249
    )
    
    
    (25
    )Credit loss on available for sale securities
    
    
    111
    
    
    
    467Increase in long-term deferred revenue
    
    
    95
    
    
    
    182Severance charges
    
    
    -
    
    
    
    4,083Change in current assets and liabilities, net
    
    
    (14,476
    )
    
    
    1,793Net cash provided by operating activities
    
    
    10,989
    
    
    
    16,043Investing activities:Purchases of investments
    
    
    (808
    )
    
    
    (1,515
    )Sales and maturities of investments
    
    
    15,484
    
    
    
    4,037Additions to property, plant and equipment
    
    
    (7,741
    )
    
    
    (4,282
    )Proceeds from sale of equipment
    
    
    421
    
    
    
    5Change in restricted cash
    
    
    415
    
    
    
    150Decrease (increase) in other assets
    
    
    148
    
    
    
    (566
    )Net cash provided by (used in) investing activities
    
    
    7,919
    
    
    
    (2,171
    )Financing activities:Proceeds from exercise of stock options
    
    
    296
    
    
    
    -Noncontrolling interest dividends paid
    
    
    (297
    )
    
    
    (612
    )Common stock dividends paid
    
    
    (12,506
    )
    
    
    -Net cash used in financing activities
    
    
    (12,507
    )
    
    
    (612
    )Effect of foreign exchange rates on cash
    
    
    124
    
    
    
    (4
    )Net increase in cash and cash equivalents
    
    
    6,525
    
    
    
    13,256Cash and cash equivalents at beginning of period
    
    
    40,224
    
    
    
    22,639Cash and cash equivalents at end of period
    
    $
    46,749
    
    
    $
    35,895
  -3-




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Basis of Presentation
   Short-Term and Long-Term Investments
     -4-




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##### Table of Contents



Gross
    
    
    Gross
    
    
    EstimatedUnrealized
    
    
    Unrealized
    
    
    FairSeptember 30, 2010
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    ValueFailed Auction Securities
    
    $
    19,179
    
    
    $
    -
    
    
    $
    2,480
    
    
    $
    16,699Certificates of deposit
    
    
    2,248
    
    
    
    37
    
    
    
    -
    
    
    
    2,285$
    21,427
    
    
    $
    37
    
    
    $
    2,480
    
    
    $
    18,984Gross
    
    
    Gross
    
    
    EstimatedUnrealized
    
    
    Unrealized
    
    
    FairDecember 31, 2009
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    ValueFailed Auction Securities
    
    $
    19,700
    
    
    $
    -
    
    
    $
    2,590
    
    
    $
    17,110Certificates of deposit
    
    
    2,504
    
    
    
    34
    
    
    
    -
    
    
    
    2,538$
    22,204
    
    
    $
    34
    
    
    $
    2,590
    
    
    $
    19,648
  -5-




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##### Table of Contents



EstimatedCost
    
    
    Fair ValueDue in one year or less
    
    $
    766
    
    
    $
    773Due in two to ten years
    
    
    1,482
    
    
    
    1,512Due in ten to twenty years
    
    
    -
    
    
    
    -Due in twenty to forty years
    
    
    19,179
    
    
    
    16,699$
    21,427
    
    
    $
    18,984
  Gross
    
    
    Gross
    
    
    EstimatedUnrealized
    
    
    Unrealized
    
    
    FairSeptember 30, 2010
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    ValueFailed Auction Securities
    
    $
    -
    
    
    $
    -
    
    
    $
    -
    
    
    $
    -December 31, 2009Failed Auction Securities
    
    $
    13,900
    
    
    $
    -
    
    
    $
    970
    
    
    $
    12,930
   -6-




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Three Months Ended
    

    

    Nine Months EndedSeptember 30,
    

    

    September 30,2010
    
    
    
    
    2010Balance at the beginning of the period
    

    $
    506
    

    

    $
    464Reductions for securities sold during the period
    

    
    (1
    )

    

    
    (13
    )Additions for the amount related to credit (gain) loss for which
other-than-temporary impairment was not previously recognized
    

    
    70
    

    

    
    124Balance at the end of the period
    

    $
    575
    

    

    $
    575
    Fair Value Measurements
   -7-




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Fair Value Measurements at September 30, 2010UsingSignificantQuoted Prices
    
    
    Other
    
    
    Significantin Active
    
    
    Observable
    
    
    Unobservable
    
    
    Total FairMarkets
    
    
    Inputs
    
    
    Inputs
    
    
    Value as of(Level 1)

    
    (Level 2)

    
    (Level 3)

    
    September 30, 2010Cash Equivalents:Money market funds
    
    $
    17,049
    
    
    $
    
    
    
    $
    
    
    
    $
    17,049Long term investments:Auction rate securities
    
    
    
    
    
    
    
    
    
    
    16,699
    
    
    
    16,699Certificate of deposit
    
    
    2,285
    
    
    
    
    
    
    
    
    
    
    
    2,285
   Level 3Balance at the beginning of the period
    
    $
    28,852Redemptions
    
    
    (12,271
    )Unrealized gain on trading securities included in Other income, net
    
    
    8Credit losses on available for sales securities included in Other income, net
    
    
    (111
    )Unrealized gain included in Other comprehensive (loss) income
    
    
    221Balance at the end of the period
    
    $
    16,699
 -8-




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##### Table of Contents



Stock Based Compensation
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,

    
    September 30,2010

    
    2009

    
    2010

    
    2009Cost of revenues
    
    $
    6
    
    
    $
    7
    
    
    $
    12
    
    
    $
    15Selling, general and administrative
    
    
    120
    
    
    
    96
    
    
    
    326
    
    
    
    357Research and development
    
    
    34
    
    
    
    39
    
    
    
    120
    
    
    
    133Total stock based compensation
    
    $
    160
    
    
    $
    142
    
    
    $
    458
    
    
    $
    505
  -9-




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Net Income per Share
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,

    
    September 30,2010

    
    2009

    
    2010

    
    2009Numerator:Net income attributable to Vicor Corporation
    
    $
    15,819
    
    
    $
    1,691
    
    
    $
    22,518
    
    
    $
    489Denominator:Denominator for basic income per share-weighted
average shares (1)
    
    
    41,693
    
    
    
    41,665
    
    
    
    41,682
    
    
    
    41,665Effect of dilutive securities:Employee stock options (2)
    
    
    81
    
    
    
    10
    
    
    
    60
    
    
    
    3Denominator
for diluted income per share  adjusted
weighted-average shares and assumed conversions
    
    
    41,774
    
    
    
    41,675
    
    
    
    41,742
    
    
    
    41,668Basic income per share
    
    $
    0.38
    
    
    $
    0.04
    
    
    $
    0.54
    
    
    $
    0.01Diluted income per share
    
    $
    0.38
    
    
    $
    0.04
    
    
    $
    0.54
    
    
    $
    0.01
 
 (1) Denominator represents weighted average number of Common Shares and Class B Common Shares
outstanding.(2) Options to purchase 292,834 and 728,469 shares of Common Stock for the three months ended
September 30, 2010, and
September 30, 2009, respectively, and options to purchase 407,897 and 845,860 shares of Common
Stock for the nine months ended
September 30, 2010, and September 30, 2009, respectively, 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 be
antidilutive. During the third quarter, the Company granted 1,243,750 stock options that will vest
upon certain performance
conditions (See Note 4). The Company did not meet the performance conditions as of September 30,
2010, and therefore, the
options were excluded from the calculation of diluted income per share for the three and nine
months ended September 30, 2010. Inventories
  -10-




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September 30, 2010

    
    December 31, 2009Raw materials
    
    $
    27,201
    
    
    $
    18,675Work-in-process
    
    
    4,361
    
    
    
    3,434Finished goods
    
    
    3,896
    
    
    
    5,19135,458
    
    
    
    27,300Inventory reserves
    
    
    (5,580
    )
    
    
    (5,943
    )Net balance
    
    $
    29,878
    
    
    $
    21,357
 Other Investments
    Severance Charges
  -11-




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BBU

    
    V*I Chip

    
    TotalBalance as of December 31, 2009
    
    $
    255
    
    
    $
    4
    
    
    $
    259Payments
    
    
    (255
    )
    
    
    (4
    )
    
    
    (259
    )Balance as of September 30, 2010
    
    $
    -
    
    
    $
    -
    
    
    $
    -
 Product Warranties
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,

    
    September 30,2010

    
    2009

    
    2010

    
    2009Balance at the beginning of the period
    
    $
    1,038
    
    
    $
    899
    
    
    $
    772
    
    
    $
    896Accruals for warranties for products
sold in the period
    
    
    47
    
    
    
    (1
    )
    
    
    465
    
    
    
    102Fulfillment of warranty obligations
    
    
    (365
    )
    
    
    (13
    )
    
    
    (382
    )
    
    
    (95
    )Revisions of estimated obligations
    
    
    (13
    )
    
    
    (167
    )
    
    
    (148
    )
    
    
    (185
    )Balance at the end of the period
    
    $
    707
    
    
    $
    718
    
    
    $
    707
    
    
    $
    718
 Income Taxes
  -12-




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##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30

    
    September 302010

    
    2009

    
    2010

    
    2009(Benefit) provision for income taxes
    
    $
    (4,400
    )
    
    $
    193
    
    
    $
    (3,443
    )
    
    $
    1,165Effective income tax rate
    
    
    (38.4)%
    
    
    
    8.8%
    
    
    
    (18.0)%
    
    
    
    42.2%
    -13-




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##### Table of Contents



Comprehensive Income
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,

    
    September 30,2010

    
    2009

    
    2010

    
    2009Consolidated net income
    
    $
    15,869
    
    
    $
    1,990
    
    
    $
    22,621
    
    
    $
    1,597Foreign currency translation gains
    
    
    149
    
    
    
    144
    
    
    
    317
    
    
    
    49Unrealized gains (net of tax) on available-for-sale securities
    
    
    477
    
    
    
    178
    
    
    
    223
    
    
    
    1,354Comprehensive income
    
    
    16,495
    
    
    
    2,312
    
    
    
    23,161
    
    
    
    3,000Less: comprehensive income attributable to noncontrolling interest
    
    
    65
    
    
    
    312
    
    
    
    135
    
    
    
    1,126Comprehensive income attributable to Vicor Corporation
    
    $
    16,430
    
    
    $
    2,000
    
    
    $
    23,026
    
    
    $
    1,874
 Commitments and Contingencies
     -14-




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##### Table of Contents



Segment Information
   BBU

    
    V*I Chip

    
    Picor

    
    Corporate

    
    Eliminations

    
    Total2010:Net revenues
    
    $
    60,456
    
    
    $
    8,695
    
    
    $
    3,240
    
    
    $
    -
    
    
    $
    (3,719
    )
    
    $
    68,672Income (loss) from operations
    
    
    17,522
    
    
    
    (5,999
    )
    
    
    83
    
    
    
    (168
    )
    
    
    (56
    )
    
    
    11,382Total assets
    
    
    239,570
    
    
    
    27,805
    
    
    
    3,963
    
    
    
    94,771
    
    
    
    (167,676
    )
    
    
    198,433Depreciation and amortization
    
    
    1,240
    
    
    
    894
    
    
    
    96
    
    
    
    365
    
    
    
    -
    
    
    
    2,5952009:Net revenues
    
    $
    44,347
    
    
    $
    4,492
    
    
    $
    1,557
    
    
    $
    -
    
    
    $
    (2,650
    )
    
    $
    47,746Income (loss) from operations
    
    
    5,851
    
    
    
    (4,191
    )
    
    
    (1,030
    )
    
    
    (179
    )
    
    
    1,481
    
    
    
    1,932Total assets
    
    
    192,190
    
    
    
    14,815
    
    
    
    9,162
    
    
    
    98,364
    
    
    
    (138,418
    )
    
    
    176,113Depreciation and amortization
    
    
    1,274
    
    
    
    750
    
    
    
    106
    
    
    
    378
    
    
    
    -
    
    
    
    2,508
  BBU

    
    V*I Chip

    
    Picor

    
    Corporate

    
    Eliminations

    
    Total2010:Net revenues
    
    $
    159,490
    
    
    $
    19,999
    
    
    $
    7,923
    
    
    $
    -
    
    
    $
    (9,654
    )
    
    $
    177,758Income (loss) from operations
    
    
    39,390
    
    
    
    (19,246
    )
    
    
    (904
    )
    
    
    (451
    )
    
    
    (190
    )
    
    
    18,599Total assets
    
    
    239,570
    
    
    
    27,805
    
    
    
    3,963
    
    
    
    94,771
    
    
    
    (167,676
    )
    
    
    198,433Depreciation and amortization
    
    
    3,550
    
    
    
    2,582
    
    
    
    309
    
    
    
    1,111
    
    
    
    -
    
    
    
    7,5522009:Net revenues
    
    $
    140,729
    
    
    $
    11,454
    
    
    $
    4,456
    
    
    $
    -
    
    
    $
    (7,818
    )
    
    $
    148,821Income (loss) from operations
    
    
    19,702
    
    
    
    (16,064
    )
    
    
    (3,329
    )
    
    
    (518
    )
    
    
    2,409
    
    
    
    2,200Total assets
    
    
    192,190
    
    
    
    14,815
    
    
    
    9,162
    
    
    
    98,364
    
    
    
    (138,418
    )
    
    
    176,113Depreciation and amortization
    
    
    4,081
    
    
    
    2,213
    
    
    
    294
    
    
    
    1,153
    
    
    
    -
    
    
    
    7,741
  -15-




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Impact of Recently Issued Accounting Standards
   Dividends
    -16-




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##### Table of Contents



Item 2  Managements Discussion and Analysis of Financial Condition and Results of
Operations
 *
 Overview
   -17-




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-18-




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Critical Accounting Policies and Estimates
  Three months ended September 30, 2010, compared to three months ended September 30, 2009
   Three Months EndedSeptember 30,

    
    Increase (decrease)2010

    
    2009

    
    $

    
    %BBU
    
    $
    60,456
    
    
    $
    44,347
    
    
    $
    16,109
    
    
    
    36.3
    %V*I Chip
    
    
    6,786
    
    
    
    2,919
    
    
    
    3,867
    
    
    
    132.5
    %Picor
    
    
    1,430
    
    
    
    480
    
    
    
    950
    
    
    
    197.9
    %Total
    
    $
    68,672
    
    
    $
    47,746
    
    
    $
    20,926
    
    
    
    43.8
    %
  -19-




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Increase (decrease)Commissions expense
    
    $
    249
    
    
    
    16.2
    % (1)Compensation
    
    
    166
    
    
    
    2.6
    % (2)Outside services
    
    
    80
    
    
    
    35.6
    %Travel expenses
    
    
    75
    
    
    
    19.2
    %Other, net
    
    
    (29
    )
    
    
    1.1
    %$
    541
    
    
    
    4.7
    %
 
 (1)
    
    Increase primarily attributed to the increase in net revenues, subject to changes in the mix
of revenues subject to commissions.(2)
    
    Increase primarily attributable to annual compensation adjustments in May 2010 and an
increase in fringe expense due to increases in premiums for employee health benefits.  -20-




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##### Table of Contents



Increase (decrease)Compensation
    
    $
    718
    
    
    
    12.4
    %  (1)Outside services/subcontract labor
    
    
    197
    
    
    
    94.2
    %  (2)Facilities expenses
    
    
    57
    
    
    
    14.5
    %Employment recruiting
    
    
    48
    
    
    
    173.5
    %Depreciation and amortization
    
    
    44
    
    
    
    12.6
    %Project materials
    
    
    (153
    )
    
    
    (18.5
    )% (3)Other, net
    
    
    183
    
    
    
    74.4
    %  (4)$
    1,094
    
    
    
    14.0
    %
 
 (1)
    
    Increase primarily attributed to an increase in research and development personnel for the BBU
and V*I Chip business units, annual compensation adjustments in May 2010, and an increase in
fringe expense due to increases in premiums for employee health benefits.(2)
    
    Increase primarily attributed to increased use of outside services and subcontract labor due to increased activity at one of the Vicor Custom
subsidiaries, in lieu of hiring permanent employees.(3)
    
    Decrease primarily attributed to a decrease in project materials associated with the development of V*I Chip and Picor products.(4)
    
    Other, net consists of a variety of items, none of which was greater than $35,000.  Increase2010

    
    2009

    
    (decrease)Interest income
    
    $
    103
    
    
    $
    132
    
    
    $
    (29
    )Foreign currency gains
    
    
    28
    
    
    
    89
    
    
    
    (61
    )Unrealized loss on auction rate securities rights
    
    
    -
    
    
    
    (257
    )
    
    
    257Unrealized gain on trading securities
    
    
    -
    
    
    
    271
    
    
    
    (271
    )Credit loss on available for sale securities
    
    
    (69
    )
    
    
    6
    
    
    
    (75
    )Other, net
    
    
    25
    
    
    
    10
    
    
    
    15$
    87
    
    
    $
    251
    
    
    $
    (164
    )
  -21-




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Three Months EndedSeptember 30,2010

    
    2009(Benefit) provision for income taxes
    
    $
    (4,400
    )
    
    $
    193Effective income tax rate
    
    
    (38.4%
    )
    
    
    8.8%
    Nine months ended September 30, 2010 compared to Nine months ended September 30, 2009
   Nine Months EndedSeptember 30,

    
    Increase (decrease)2010

    
    2009

    
    $

    
    %BBU
    
    $
    159,490
    
    
    $
    140,729
    
    
    $
    18,761
    
    
    
    13.3
    %V*I Chip
    
    
    14,993
    
    
    
    6,626
    
    
    
    8,367
    
    
    
    126.3
    %Picor
    
    
    3,275
    
    
    
    1,466
    
    
    
    1,809
    
    
    
    123.4
    %Total
    
    $
    177,758
    
    
    $
    148,821
    
    
    $
    28,937
    
    
    
    19.4
    %
  -22-




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-23-




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##### Table of Contents



Increase (decrease)Compensation
    
    $
    (817
    )
    
    
    (4.1)
    %
    
    (1)Legal fees
    
    
    (318
    )
    
    
    (34.6)
    %
    
    (2)Depreciation and amortization
    
    
    (147
    )
    
    
    (5.7)
    %Audit and tax fees
    
    
    (143
    )
    
    
    (12.8)
    %Telephone
    
    
    52
    
    
    
    7.0
    %Employment recruiting
    
    
    86
    
    
    
    98.4
    %Travel expenses
    
    
    120
    
    
    
    9.8
    %Commissions expense
    
    
    150
    
    
    
    3.1
    %
    
    (3)Outside services
    
    
    244
    
    
    
    36.4
    %
    
    (4)Advertising expenses
    
    
    263
    
    
    
    15.0
    %
    
    (5)Other, net
    
    
    150
    
    
    
    6.3
    %$
    (360
    )
    
    
    (1.0)
    %
 
 (1)
    
    Decrease primarily attributable to the workforce reductions completed in the first and second
quarters of 2009, partially offset by an increase in fringe expense due to increases in premiums for
employee health benefits.(2)
    
    Decrease primarily attributed to a decrease in activity associated with the Companys litigation
brought against certain of its insurance carriers with respect to the Ericsson, Inc. settlement of
product liability litigation in 2010 compared to 2009.(3)
    
    Increase primarily attributed to the increase in net revenues, subject to changes in the mix of
revenues subject to commissions.(4)
    
    Increase primarily attributed to the outsourcing of certain information technology functions that
were performed in-house in prior periods.(5)
    
    Increase attributed due to increased trade publication advertising and increased participation in
trade shows, primarily by V*I Chip.  -24-




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##### Table of Contents



Increase (decrease)Compensation
    
    $
    1,638
    
    
    
    9.3
    %
    
    (1)Outside services/subcontract labor
    
    
    650
    
    
    
    109.1
    %
    
    (2)Deferred costs
    
    
    336
    
    
    
    (47.5
    )%
    
    (3)Project materials
    
    
    328
    
    
    
    15.7
    %
    
    (4)Employment recruiting
    
    
    138
    
    
    
    402.6
    %
    
    (5)Facilities expenses
    
    
    100
    
    
    
    7.6
    %Set-up and tooling expenses
    
    
    93
    
    
    
    60.1
    %Depreciation and amortization
    
    
    55
    
    
    
    5.0
    %Other, net
    
    
    299
    
    
    
    31.7
    %
    
    (6)$
    3,637
    
    
    
    15.7
    %
 
 (1)
    
    Increase primarily attributed to an increase in research and development personnel for the BBU
and V*I Chip business units, annual compensation adjustments in May 2010, and an increase in fringe
expense due to increases in premiums for employee health benefits.(2)
    
    Increase primarily attributed to increased use of outside services and subcontract labor due to increased activity at Vicor
Custom subsidiaries, in lieu of hiring permanent employees.(3)
    
    Increase primarily attributed to a decrease, as compared to the prior year, in deferred costs capitalized
for certain non-recurring engineering projects for which the related revenues have been deferred.(4)
    
    Increase primarily attributed to an increase in project materials associated with the development of V*I Chip and Picor
products.(5)
    
    Increase primarily attributed to relocation costs for newly hired research and development personnel for the
V*I Chip business unit.(6)
    
    Other, net consists of a variety of items, none of which was greater than $47,000. -25-




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##### Table of Contents



Increase2010

    
    2009

    
    (decrease)Interest income
    
    $
    360
    
    
    $
    578
    
    
    $
    (218
    )Gain on disposals of equipment
    
    
    248
    
    
    
    25
    
    
    
    223Foreign currency (losses) gains
    
    
    (12
    )
    
    
    87
    
    
    
    (99
    )Unrealized loss on auction rate securities
rights
    
    
    (962
    )
    
    
    (402
    )
    
    
    (560
    )Unrealized gain on trading securities
    
    
    970
    
    
    
    696
    
    
    
    274Credit loss on available for sale securities
    
    
    (111
    )
    
    
    (467
    )
    
    
    356Other, net
    
    
    86
    
    
    
    45
    
    
    
    41$
    579
    
    
    $
    562
    
    
    $
    17
    Nine Months EndedSeptember 30,2010

    
    2009(Benefit) provision for income taxes
    
    $
    (3,443
    )
    
    $
    1,165Effective income tax rate
    
    
    (18.0%
    )
    
    
    42.2%
    -26-




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Liquidity and Capital Resources
          -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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-29-




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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
    
    
    ProgramsJuly 1 - 31, 2010
    
    
    -
    
    
    $
    -
    
    
    
    -
    
    
    $
    8,541,000August 1 - 31, 2010
    
    
    -
    
    
    $
    -
    
    
    
    -
    
    
    $
    8,541,000September 1 - 30,
2010
    
    
    -
    
    
    $
    -
    
    
    
    -
    
    
    $
    8,541,000Total
    
    
    -
    
    
    $
    -
    
    
    
    -
    
    
    $
    8,541,000
  
 Item 3  Defaults Upon Senior Securities
  
 Item 5  Other Information
  -30-




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##### Table of Contents



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
 -31-




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SIGNATURES
  VICOR CORPORATIONDate: November 3, 2010
    By:
    /s/ Patrizio VinciarelliPatrizio VinciarelliChairman of the Board, President and
Chief Executive Officer
(Principal Executive Officer)Date: November 3, 2010
    By:
    /s/ James A. SimmsJames A. SimmsVice President, Chief Financial Officer
(Principal Financial Officer) -32-