##### 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, 2011
 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
    
    
    30,010,713Class 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, 2011 and December 31, 2010
    
    
    1Condensed Consolidated Statements of Operations for the three months ended March 31, 2011 and 2010
    
    
    2Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2011 and 2010
    
    
    3Notes to Condensed Consolidated Financial Statements
    
    
    4Item 2  Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 3  Quantitative and Qualitative Disclosures About Market Risk
    
    
    21Item 4  Controls and Procedures
    
    
    21Part II  Other Information:Item 1  Legal Proceedings
    
    
    23Item 1A  Risk Factors
    
    
    23Item 2  Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    23Item 6  Exhibits
    
    
    24Signature(s)
    
    
    25EX-31.1EX-31.2EX-32.1EX-32.2




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##### Table of Contents



Item 1. Financial Statements
 March 31, 2011
    
    
    December 31, 2010AssetsCurrent assets:Cash and cash equivalents
    
    $
    56,400
    
    
    $
    49,279Accounts receivable, less allowance of $330 in 2011 and $309 in 2010
    
    
    39,796
    
    
    
    38,825Inventories, net
    
    
    35,610
    
    
    
    35,489Deferred tax assets
    
    
    2,499
    
    
    
    2,164Other current assets
    
    
    2,273
    
    
    
    2,397Total current assets
    
    
    136,578
    
    
    
    128,154Long-term investments, net
    
    
    18,354
    
    
    
    18,417Property, plant and equipment, net
    
    
    51,199
    
    
    
    50,848Long-term deferred tax assets, net
    
    
    1,830
    
    
    
    2,805Other assets
    
    
    4,601
    
    
    
    4,688$
    212,562
    
    
    $
    204,912Liabilities and EquityCurrent liabilities:Accounts payable
    
    $
    12,794
    
    
    $
    11,999Accrued compensation and benefits
    
    
    7,489
    
    
    
    6,772Accrued expenses
    
    
    4,236
    
    
    
    3,138Income taxes payable
    
    
    769
    
    
    
    102Deferred revenue
    
    
    520
    
    
    
    689Total current liabilities
    
    
    25,808
    
    
    
    22,700Long-term deferred revenue
    
    
    2,065
    
    
    
    2,178Long-term income taxes payable
    
    
    1,039
    
    
    
    1,022Commitments and contingencies (Note 11)Equity:Vicor Corporation stockholders equity:Class B Common Stock
    
    
    118
    
    
    
    118Common Stock
    
    
    385
    
    
    
    385Additional paid-in capital
    
    
    164,362
    
    
    
    163,933Retained earnings
    
    
    137,809
    
    
    
    133,791Accumulated other comprehensive loss
    
    
    (1,318
    )
    
    
    (1,369
    )Treasury stock, at cost
    
    
    (121,827
    )
    
    
    (121,827
    )Total Vicor Corporation stockholders equity
    
    
    179,529
    
    
    
    175,031Noncontrolling interest
    
    
    4,121
    
    
    
    3,981Total equity
    
    
    183,650
    
    
    
    179,012$
    212,562
    
    
    $
    204,912
  -1-




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Three Months EndedMarch 31,2011
    
    
    2010Net revenues
    
    $
    70,455
    
    
    $
    51,709Cost of revenues
    
    
    40,001
    
    
    
    28,385Gross margin
    
    
    30,454
    
    
    
    23,324Operating expenses:Selling, general and administrative
    
    
    14,180
    
    
    
    11,880Research and development
    
    
    9,854
    
    
    
    8,868Total operating expenses
    
    
    24,034
    
    
    
    20,748Income from operations
    
    
    6,420
    
    
    
    2,576Other income (expense), net:Total other than temporary impairment gains (losses)
on available-for-sale securities
    
    
    127
    
    
    
    (479
    )Portion of (gain) loss recognized in other
comprehensive income
    
    
    (120
    )
    
    
    436Net impairment gains (losses) recognized in earnings
    
    
    7
    
    
    
    (43
    )Other income (expense), net:
    
    
    (205
    )
    
    
    110Total other income (expense), net
    
    
    (198
    )
    
    
    67Income before income taxes
    
    
    6,222
    
    
    
    2,643Provision for income taxes
    
    
    2,053
    
    
    
    638Consolidated net income
    
    
    4,169
    
    
    
    2,005Less: Net income attributable to
noncontrolling interest
    
    
    151
    
    
    
    53Net income attributable to Vicor Corporation
    
    $
    4,018
    
    
    $
    1,952Net income
per common share attributable to Vicor Corporation:Basic
    
    $
    0.10
    
    
    $
    0.05Diluted
    
    $
    0.10
    
    
    $
    0.05Shares used to compute net income per share
attributable to Vicor Corporation:Basic
    
    
    41,771
    
    
    
    41,666Diluted
    
    
    41,859
    
    
    
    41,700
  -2-




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Three
Months Ended March 31,2011
    
    
    2010Operating activities:Consolidated net income
    
    $
    4,169
    
    
    $
    2,005Adjustments to reconcile consolidated net income
to net cash provided by operating activities:Depreciation and amortization
    
    
    2,628
    
    
    
    2,432Stock compensation expense
    
    
    384
    
    
    
    124Deferred income taxes
    
    
    71
    
    
    
    23Increase in long-term deferred revenue
    
    
    (35
    )
    
    
    (53
    )Excess tax benefit of share-based compensation
    
    
    (12
    )
    
    
    Credit (gain) loss on available for sale securities
    
    
    (7
    )
    
    
    43Gain on disposal of equipment
    
    
    (1
    )
    
    
    Unrealized gain on trading securities
    
    
    
    
    
    
    (37
    )Unrealized loss on auction rate security rights
    
    
    
    
    
    
    33Change in current assets and liabilities, net
    
    
    2,709
    
    
    
    (4,109
    )Net cash provided by operating activities
    
    
    9,906
    
    
    
    461Investing activities:Purchases of investments
    
    
    (90
    )
    
    
    (538
    )Sales and maturities of investments
    
    
    280
    
    
    
    3,924Additions to property, plant and equipment
    
    
    (2,973
    )
    
    
    (2,429
    )Increase in other assets
    
    
    (5
    )
    
    
    (1
    )Net cash (used in) provided by investing activities
    
    
    (2,788
    )
    
    
    956Financing activities:Proceeds from exercise of stock options
    
    
    33
    
    
    
    12Excess tax benefit of share-based compensation
    
    
    12
    
    
    
    Net cash used in financing activities
    
    
    45
    
    
    
    12Effect of foreign exchange rates on cash
    
    
    (42
    )
    
    
    8Net increase in cash and cash equivalents
    
    
    7,121
    
    
    
    1,437Cash and cash equivalents at beginning of period
    
    
    49,279
    
    
    
    40,224Cash and cash equivalents at end of period
    
    $
    56,400
    
    
    $
    41,661
  -3-




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




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Gross
    
    
    Gross
    
    
    EstimatedUnrealized
    
    
    Unrealized
    
    
    FairMarch 31, 2011
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    ValueFailed Auction Securities
    
    $
    18,975
    
    
    $
    
    
    
    $
    2,724
    
    
    $
    16,251Brokered certificates of deposit
    
    
    1,630
    
    
    
    25
    
    
    
    
    
    
    
    1,655Certificates of deposit
    
    
    448
    
    
    
    
    
    
    
    
    
    
    
    448$
    21,053
    
    
    $
    25
    
    
    $
    2,724
    
    
    $
    18,354
 Gross
    
    
    Gross
    
    
    EstimatedUnrealized
    
    
    Unrealized
    
    
    FairDecember 31, 2010
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    ValueFailed Auction Securities
    
    $
    19,075
    
    
    $
    
    
    
    $
    2,856
    
    
    $
    16,219Brokered certificates of deposits
    
    
    1,720
    
    
    
    30
    
    
    
    
    
    
    
    1,750Certificates of deposit
    
    
    448
    
    
    
    
    
    
    
    
    
    
    
    448$
    21,243
    
    
    $
    30
    
    
    $
    2,856
    
    
    $
    18,417
  -5-




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EstimatedCost
    
    
    Fair ValueDue in one year or less
    
    $
    1,168
    
    
    $
    1,180Due in two to ten years
    
    
    910
    
    
    
    923Due in ten to twenty years
    
    
    
    
    
    
    Due in twenty to forty years
    
    
    18,975
    
    
    
    16,251$
    21,053
    
    
    $
    18,354
   Balance at the beginning of the period
    
    $
    610Reductions for securities sold during the period
    
    
    (7
    )Balance at the end of the period
    
    $
    603
    Fair Value Measurements
  -6-




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UsingSignificantQuoted Prices
    
    
    Other
    
    
    Significantin Active
    
    
    Observable
    
    
    Unobservable
    
    
    Total FairMarkets
    
    
    Inputs
    
    
    Inputs
    
    
    Value as of(Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    March 31, 2011Cash Equivalents:Money market funds
    
    $
    14,313
    
    
    $
    
    
    
    $
    
    
    
    $
    14,313Long term investments:Auction rate securities
    
    
    
    
    
    
    
    
    
    
    16,251
    
    
    
    16,251Brokered certificates of deposit
    
    
    
    
    
    
    1,655
    
    
    
    
    
    
    
    1,655Certificate of deposit
    
    
    448
    
    
    
    
    
    
    
    
    
    
    
    448
   -7-




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Balance at the beginning of the period
    
    $
    16,219Redemptions
    
    
    (100
    )Credit gains on available for sales securities included in
Other income (expense), net
    
    
    7Unrealized gain included in Other comprehensive loss
    
    
    125Balance at the end of the period
    
    $
    16,251
 Stock Based Compensation
  2011
    
    
    2010Cost of revenues
    
    $
    17
    
    
    $
    4Selling, general and administrative
    
    
    230
    
    
    
    84Research and development
    
    
    137
    
    
    
    36Total stock based compensation
    
    $
    384
    
    
    $
    124
   -8-




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Net Income per Share
  2011
    
    
    2010Numerator:Net income attributable to Vicor Corporation
    
    $
    4,018
    
    
    $
    1,952Denominator:Denominator for basic income per share-weighted
average shares (1)
    
    
    41,771
    
    
    
    41,666Effect of dilutive securities:Employee stock options (2)
    
    
    88
    
    
    
    34Denominator for diluted income per share  adjusted
weighted-average shares and assumed conversions
    
    
    41,859
    
    
    
    41,700Basic income per share
    
    $
    0.10
    
    
    $
    0.05Diluted income per share
    
    $
    0.10
    
    
    $
    0.05
 
 (1)
    
    Denominator represents weighted average number of Common Shares and Class B Common Shares outstanding.(2)
    
    Options to purchase 234,639 and 589,814 shares of Common Stock for the three months ended March 31, 2011 and
2010, 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 of 2010, 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 March 31, 2011, and therefore, the options
were excluded from the calculation of diluted income per share. Inventories
  -9-




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March 31, 2011
    
    
    December 31, 2010Raw materials
    
    $
    32,674
    
    
    $
    31,750Work-in-process
    
    
    4,019
    
    
    
    4,182Finished goods
    
    
    4,979
    
    
    
    5,00141,672
    
    
    
    40,933Inventory reserves
    
    
    (6,062
    )
    
    
    (5,444
    )Net balance
    
    $
    35,610
    
    
    $
    35,489
 Other Investments
    Product Warranties
  -10-




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2011
    
    
    2010Balance at the beginning of the period
    
    $
    649
    
    
    $
    772Accruals for warranties for products
sold in the period
    
    
    725
    
    
    
    47Fulfillment of warranty obligations
    
    
    (128
    )
    
    
    (9
    )Revisions of estimated obligations
    
    
    14
    
    
    
    (90
    )Balance at the end of the period
    
    $
    1,260
    
    
    $
    720
  Income Taxes
   2011
    
    
    2010Provision for income taxes
    
    $
    2,053
    
    
    $
    638Effective income tax rate
    
    
    33.0
    %
    
    
    24.1
    %
    -11-




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2011
    
    
    2010Consolidated net income
    
    $
    4,169
    
    
    $
    2,005Foreign currency translation (losses) gains
    
    
    (81
    )
    
    
    34Unrealized gains (losses) (net of tax) on
available-for-sale securities
    
    
    121
    
    
    
    (378
    )Comprehensive income
    
    
    4,209
    
    
    
    1,661Less: comprehensive income
attributable to noncontrolling interest
    
    
    140
    
    
    
    57Comprehensive income attributable to
Vicor Corporation
    
    $
    4,069
    
    
    $
    1,604
 Commitments and Contingencies
    -12-




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Segment Information
    BBU
    
    
    V*I Chip
    
    
    Picor
    
    
    Corporate
    
    
    Eliminations
    
    
    Total(1)
    
    
    (1)
    
    
    
    
    
    
    
    
    
    
    (1) (2)2011:Net revenues
    
    $
    55,591
    
    
    $
    14,307
    
    
    $
    3,302
    
    
    $
    
    
    
    $
    (2,745
    )
    
    $
    70,455Income (loss) from operations
    
    
    10,893
    
    
    
    (4,313
    )
    
    
    61
    
    
    
    (221
    )
    
    
    
    
    
    
    6,420Total assets
    
    
    81,303
    
    
    
    31,316
    
    
    
    7,846
    
    
    
    108,514
    
    
    
    (16,417
    )
    
    
    212,562Depreciation and amortization
    
    
    1,288
    
    
    
    873
    
    
    
    112
    
    
    
    355
    
    
    
    
    
    
    
    2,6282010:Net revenues
    
    $
    47,119
    
    
    $
    5,034
    
    
    $
    1,810
    
    
    $
    
    
    
    $
    (2,254
    )
    
    $
    51,709Income (loss) from operations
    
    
    9,816
    
    
    
    (6,409
    )
    
    
    (690
    )
    
    
    (137
    )
    
    
    (4
    )
    
    
    2,576Total assets
    
    
    218,102
    
    
    
    21,394
    
    
    
    9,556
    
    
    
    95,516
    
    
    
    (161,193
    )
    
    
    183,375Depreciation and amortization
    
    
    1,155
    
    
    
    798
    
    
    
    115
    
    
    
    364
    
    
    
    
    
    
    
    2,432
 
 (1)
    
    During the fourth quarter of 2010, the Company completed a recapitalization of V*I
Chip. The impact of the recapitalization on V*I Chip was to eliminate its intercompany
payable to BBU of approximately $172,100,000 and institute capital accounts totaling
$50,000,000 as of December 31, 2010. There was no impact on the consolidated financial
statements as a result of this recapitalization.(2)
    
    The elimination for net revenues is principally related to inter-segment revenues of
Picor to BBU and V*I Chip and for inter-segment revenues of V*I Chip to BBU. The
elimination for total assets is principally related to inter-segment accounts
receivable due to BBU for the funding of V*I Chip operations and for the purchase of
equipment for both V*I Chip and Picor. -13-




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Item 2  Managements Discussion and Analysis of Financial Condition and Results of
Operations
 *
 Overview
   -14-




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Critical Accounting Policies and Estimates
  Three months ended March 31, 2011, compared to three months ended March 31, 2010
  -15-




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Increase (decrease)2011
    
    
    2010
    
    
    $
    
    
    %BBU
    
    $
    55,591
    
    
    $
    47,120
    
    
    $
    8,471
    
    
    
    18.0
    %V*I Chip
    
    
    13,403
    
    
    
    3,943
    
    
    
    9,460
    
    
    
    239.9
    %Picor
    
    
    1,461
    
    
    
    646
    
    
    
    815
    
    
    
    126.2
    %Total
    
    $
    70,455
    
    
    $
    51,709
    
    
    $
    18,746
    
    
    
    36.3
    %
    -16-




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Increase (decrease)Compensation
    
    $
    1,029
    
    
    
    16.2%
    (1)Legal fees
    
    
    871
    
    
    
    465.7%
    (2)Commissions expense
    
    
    318
    
    
    
    21.3%
    (3)Audit and tax fees
    
    
    (75
    )
    
    
    (14.2
    )%Other, net
    
    
    157
    
    
    
    4.7%
    (4)$
    2,300
    
    
    
    19.4
    %
 
 (1)
    
    Increase primarily attributable to an increase in headcount, annual compensation adjustments in May
2010 and an increase in fringe expense due to increases in premiums for employee health benefits.(2)
    
    Increase in legal fees due to a patent infringement claim filed against the Company during the first
quarter of 2011 by SynQor, Inc. See Note 11 of the Condensed Consolidated Financial Statements for
discussion of this matter.(3)
    
    Increase primarily attributed to the increase in net revenues.(4)
    
    Other, net consists of a variety of items, none of which is greater than $65,000.  -17-




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Increase (decrease)Compensation
    
    $
    705
    
    
    
    10.9
    %
    (1)Deferred costs
    
    
    80
    
    
    
    100.0
    %
    (2)Depreciation and amortization
    
    
    60
    
    
    
    16.4
    %Project materials
    
    
    58
    
    
    
    8.0
    %Computer expense
    
    
    36
    
    
    
    61.2
    %Outside services
    
    
    (87
    )
    
    
    (20.1
    )%
    (3)Other, net
    
    
    134
    
    
    
    14.9
    %
    (4)$
    986
    
    
    
    11.1
    %
 
 (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 a decrease, as compared to the prior year, in the deferral of costs capitalized
for certain non-recurring engineering projects for which the related revenues have been deferred.(3)
    
    Decrease primarily attributed to decreased use of outside services due to decreased activity at one of the Vicor
Custom subsidiaries.(4)
    
    Other, net consists of a variety of items, none of which was greater than $35,000.  Increase2011
    
    
    2010
    
    
    (decrease)Interest income
    
    $
    84
    
    
    $
    155
    
    
    $
    (71
    )Foreign currency losses
    
    
    (306
    )
    
    
    (67
    )
    
    
    (239
    )Unrealized loss on auction rate
securities rights
    
    
    
    
    
    
    (33
    )
    
    
    33Unrealized gain on trading securities
    
    
    
    
    
    
    37
    
    
    
    (37
    )Credit gain (loss) on available for
sale securities
    
    
    7
    
    
    
    (43
    )
    
    
    50Other, net
    
    
    17
    
    
    
    18
    
    
    
    (1
    )$
    (198
    )
    
    $
    67
    
    
    $
    (265
    )
  -18-




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2011
    
    
    2010Provision for income taxes
    
    $
    2,053
    
    
    $
    638Effective income tax rate
    
    
    33.0
    %
    
    
    24.1
    %
    Liquidity and Capital Resources
     -19-




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-20-




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Item 3   Quantitative and Qualitative Disclosures About Market Risk
   
 Item 4   Controls and Procedures
    21




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22




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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
    
    
    ProgramsJanuary 1 - 31, 2011
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    8,541,000February 1 - 28,
2011
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,541,000March 1 - 31, 2011
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,541,000Total
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    8,541,000
  23




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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
 24




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##### Table of Contents



SIGNATURES
  VICOR CORPORATIONDate: May 2, 2011
    By:
    /s/ Patrizio VinciarelliPatrizio VinciarelliChairman of the Board, President and
Chief Executive Officer
(Principal Executive Officer)Date: May 2, 2011
    By:
    /s/ James A. SimmsJames A. SimmsVice President, Chief Financial Officer
(Principal Financial Officer) 25