e10vq
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
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þ |
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2011
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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
(Exact name of registrant as specified in its charter)
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Delaware
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04-2742817 |
(State of Incorporation)
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(I.R.S. Employer Identification No.) |
25 Frontage Road, Andover, Massachusetts 01810
(Address of Principal Executive Office)
(978) 470-2900
(Registrants telephone number)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated
filer, accelerated filer, and smaller reporting company in Rule 12b-2 of the Exchange Act.
(Check one):
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Large accelerated filer o
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Accelerated filer þ
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Non-accelerated filer o
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Smaller reporting company o |
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(Do not check if a smaller reporting company) |
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes o No þ
The number of shares outstanding of each of the issuers classes of common stock as of April 30,
2011 was:
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Common Stock, $.01 par value |
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30,010,713 |
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Class B Common Stock, $.01 par value |
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11,767,052 |
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VICOR CORPORATION
INDEX TO FORM 10-Q
VICOR CORPORATION
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
Item 1. Financial Statements
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March 31, 2011 |
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December 31, 2010 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
56,400 |
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$ |
49,279 |
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Accounts receivable, less allowance of $330 in 2011 and $309 in 2010 |
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39,796 |
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38,825 |
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Inventories, net |
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35,610 |
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35,489 |
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Deferred tax assets |
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2,499 |
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2,164 |
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Other current assets |
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2,273 |
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2,397 |
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Total current assets |
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136,578 |
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128,154 |
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Long-term investments, net |
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18,354 |
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18,417 |
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Property, plant and equipment, net |
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51,199 |
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50,848 |
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Long-term deferred tax assets, net |
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1,830 |
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2,805 |
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Other assets |
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4,601 |
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4,688 |
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$ |
212,562 |
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$ |
204,912 |
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Liabilities and Equity |
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Current liabilities: |
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Accounts payable |
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$ |
12,794 |
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$ |
11,999 |
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Accrued compensation and benefits |
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7,489 |
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6,772 |
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Accrued expenses |
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4,236 |
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3,138 |
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Income taxes payable |
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769 |
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102 |
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Deferred revenue |
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520 |
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689 |
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Total current liabilities |
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25,808 |
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22,700 |
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Long-term deferred revenue |
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2,065 |
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2,178 |
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Long-term income taxes payable |
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1,039 |
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1,022 |
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Commitments and contingencies (Note 11) |
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Equity: |
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Vicor Corporation stockholders equity: |
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Class B Common Stock |
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118 |
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118 |
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Common Stock |
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385 |
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385 |
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Additional paid-in capital |
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164,362 |
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163,933 |
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Retained earnings |
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137,809 |
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133,791 |
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Accumulated other comprehensive loss |
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(1,318 |
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(1,369 |
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Treasury stock, at cost |
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(121,827 |
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(121,827 |
) |
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Total Vicor Corporation stockholders equity |
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179,529 |
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175,031 |
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Noncontrolling interest |
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4,121 |
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3,981 |
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Total equity |
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183,650 |
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179,012 |
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$ |
212,562 |
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$ |
204,912 |
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See accompanying notes.
-1-
VICOR CORPORATION
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
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Three Months Ended |
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March 31, |
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2011 |
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2010 |
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Net revenues |
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$ |
70,455 |
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$ |
51,709 |
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Cost of revenues |
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40,001 |
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28,385 |
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Gross margin |
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30,454 |
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23,324 |
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Operating expenses: |
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Selling, general and administrative |
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14,180 |
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11,880 |
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Research and development |
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9,854 |
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8,868 |
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Total operating expenses |
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24,034 |
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20,748 |
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Income from operations |
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6,420 |
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2,576 |
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Other income (expense), net: |
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Total other than temporary impairment gains (losses)
on available-for-sale securities |
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127 |
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(479 |
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Portion of (gain) loss recognized in other
comprehensive income |
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(120 |
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436 |
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Net impairment gains (losses) recognized in earnings |
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7 |
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(43 |
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Other income (expense), net: |
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(205 |
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110 |
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Total other income (expense), net |
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(198 |
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67 |
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Income before income taxes |
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6,222 |
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2,643 |
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Provision for income taxes |
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2,053 |
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638 |
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Consolidated net income |
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4,169 |
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2,005 |
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Less: Net income attributable to
noncontrolling interest |
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151 |
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53 |
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Net income attributable to Vicor Corporation |
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$ |
4,018 |
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$ |
1,952 |
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Net income
per common share attributable to Vicor Corporation: |
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Basic |
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$ |
0.10 |
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$ |
0.05 |
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Diluted |
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$ |
0.10 |
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$ |
0.05 |
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Shares used to compute net income per share
attributable to Vicor Corporation: |
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Basic |
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41,771 |
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41,666 |
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Diluted |
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41,859 |
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41,700 |
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See accompanying notes.
-2-
VICOR CORPORATION
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
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Three
Months Ended March 31, |
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2011 |
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2010 |
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Operating activities: |
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Consolidated net income |
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$ |
4,169 |
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$ |
2,005 |
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Adjustments to reconcile consolidated net income
to net cash provided by operating activities: |
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Depreciation and amortization |
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2,628 |
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2,432 |
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Stock compensation expense |
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384 |
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124 |
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Deferred income taxes |
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71 |
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23 |
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Increase in long-term deferred revenue |
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(35 |
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(53 |
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Excess tax benefit of share-based compensation |
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(12 |
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Credit (gain) loss on available for sale securities |
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(7 |
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43 |
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Gain on disposal of equipment |
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(1 |
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Unrealized gain on trading securities |
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(37 |
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Unrealized loss on auction rate security rights |
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33 |
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Change in current assets and liabilities, net |
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2,709 |
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(4,109 |
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Net cash provided by operating activities |
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9,906 |
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461 |
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Investing activities: |
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Purchases of investments |
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(90 |
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(538 |
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Sales and maturities of investments |
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280 |
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3,924 |
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Additions to property, plant and equipment |
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(2,973 |
) |
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(2,429 |
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Increase in other assets |
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(5 |
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(1 |
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Net cash (used in) provided by investing activities |
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(2,788 |
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956 |
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Financing activities: |
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Proceeds from exercise of stock options |
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33 |
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12 |
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Excess tax benefit of share-based compensation |
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12 |
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Net cash used in financing activities |
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45 |
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12 |
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Effect of foreign exchange rates on cash |
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(42 |
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8 |
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Net increase in cash and cash equivalents |
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7,121 |
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1,437 |
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Cash and cash equivalents at beginning of period |
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49,279 |
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40,224 |
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Cash and cash equivalents at end of period |
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$ |
56,400 |
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$ |
41,661 |
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See accompanying notes.
-3-
VICOR CORPORATION
Notes to Condensed Consolidated Financial Statements
March 31, 2011
(unaudited)
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of Vicor Corporation
(the Company) have been prepared in accordance with generally accepted accounting principles
for interim financial information and pursuant to the rules and regulations of the Securities and
Exchange Commission. Accordingly, these interim financial statements do not include all of the
information and footnotes required by generally accepted accounting principles for complete
financial statements.
In the opinion of management, all adjustments (consisting of normal recurring adjustments)
considered necessary for a fair presentation have been included. Operating results for the three
months ended March 31, 2011, are not necessarily indicative of the results that may be expected
for any other interim period or the year ending December 31, 2011. The balance sheet at December
31, 2010, presented herein has been derived from the audited financial statements at that date
but does not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. For further information, refer to the
consolidated financial statements and notes thereto contained in the Companys Annual Report on
Form 10-K for the year ended December 31, 2010, (File No. 0-18277) filed by the Company with the
Securities and Exchange Commission.
2. Short-Term and Long-Term Investments
The Companys principal sources of liquidity are its existing balances of cash and cash
equivalents and short-term investments, as well as cash generated from operations. Consistent
with the Companys investment policy guidelines, the Company can invest, and has historically
invested, its cash balances in demand deposit accounts, money market funds and auction rate
securities meeting certain quality criteria. All of the Companys investments are subject to
credit, liquidity, market, and interest rate risk.
The Companys long-term investments are classified as available-for-sale.
Available-for-sale securities are recorded at fair value, with unrealized gains and losses, net
of tax, attributable to credit loss recorded through the statement of operations and unrealized
gains and losses, net of tax, attributable to other non-credit factors recorded in Accumulated
other comprehensive loss, a component of Stockholders Equity. In determining the amount of
credit loss, the Company compared the present value of cash flows expected to be collected to the
amortized cost basis of the securities, considering, among other factors, credit default risk
probabilities and changes in credit ratings as significant inputs.
The amortized cost of debt securities is adjusted for amortization of premiums and accretion
of discounts to maturity, the net amount of which, along with interest and realized gains and
losses, is included in Other income (expense), net in the Condensed Consolidated Statements of
Operations. The Company periodically evaluates investments to determine if impairment is
required, whether an impairment is other than temporary, and the measurement of an impairment
loss. The Company considers a variety of impairment indicators such as, but not limited to, a
significant deterioration in the earnings performance, credit rating, or asset quality of the
investment.
As of March 31, 2011, the Company held par value of $18,975,000 of auction rate securities.
These auction rate securities consist of collateralized debt obligations, supported by pools of
student loans, sponsored by state student loan agencies and corporate student loan servicing
firms. The interest rates for these securities are reset at auction at regular intervals ranging
from seven to 90 days. The auction rate securities held by the Company traded at par prior to
February 2008 and are callable at par at the option of the issuer.
Until February 2008, the auction rate securities market was liquid, as the investment banks
conducting the periodic Dutch auctions by which interest rates for the securities had been
established had committed their capital to support such auctions in the event of insufficient
third-party investor demand. Starting the week of February 11, 2008, a substantial number of
auctions failed, as demand from third-party investors weakened and the investment banks
conducting the auctions chose not to commit capital to support such auctions (i.e., investment
banks chose not to purchase securities themselves in order to balance supply and demand, thereby
facilitating a successful auction, as they had done in the past). The consequences of a failed
auction are (a) an investor must hold the specific security until the next scheduled auction
(unless that investor chooses to sell the security to a third party outside of the auction process) and (b) the interest rate on the security generally resets
to an interest rate set forth in each securitys indenture.
-4-
VICOR CORPORATION
Notes to Condensed Consolidated Financial Statements
March 31, 2011
(unaudited)
As of March 31, 2011, the Company held auction rate securities that had experienced failed
auctions totaling $18,975,000 at par value, all of which had been purchased through and are held
by a broker-dealer affiliate of Bank of America, N.A. (the Failed Auction Securities). As of
March 31, 2011, the majority of the Failed Auction Securities held by the Company were AAA/Aaa
rated by the major credit rating agencies, with all of the securities collateralized by student
loans, of which most are guaranteed by the U.S. Department of Education under the Federal Family
Education Loan Program. Management is not aware of any reason to believe any of the issuers of
the Failed Auction Securities held by the Company are presently at risk of default. Through
March 31, 2011, the Company has continued to receive interest payments on the Failed Auction
Securities in accordance with the terms of their respective indentures. In April 2011, two of
the Failed Auction Securities outstanding as of March 31, 2011 with an aggregate par value of
$5,500,000 were redeemed at par. Management believes the Company ultimately should be able to
liquidate all of its Failed Auction Securities without significant loss primarily due to the
overall quality of the issues held and the collateral securing the substantial majority
of the underlying obligations. However, current conditions in the auction rate securities market
have led management to conclude the recovery period for the Failed Auction Securities exceeds 12
months. As a result, the Company continued to classify the Failed Auction Securities as
long-term as of March 31, 2011.
The following is a summary of available-for-sale securities (in thousands):
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Gross |
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Gross |
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Estimated |
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Unrealized |
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Unrealized |
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Fair |
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March 31, 2011 |
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Cost |
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Gains |
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Losses |
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Value |
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Failed Auction Securities |
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$ |
18,975 |
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$ |
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$ |
2,724 |
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$ |
16,251 |
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Brokered certificates of deposit |
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1,630 |
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25 |
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1,655 |
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Certificates of deposit |
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448 |
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448 |
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$ |
21,053 |
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$ |
25 |
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$ |
2,724 |
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$ |
18,354 |
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Gross |
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Gross |
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Estimated |
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Unrealized |
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Unrealized |
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Fair |
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December 31, 2010 |
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Cost |
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Gains |
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Losses |
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Value |
|
Failed Auction Securities |
|
$ |
19,075 |
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$ |
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$ |
2,856 |
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$ |
16,219 |
|
Brokered certificates of deposits |
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1,720 |
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30 |
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|
1,750 |
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Certificates of deposit |
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|
448 |
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448 |
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$ |
21,243 |
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$ |
30 |
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$ |
2,856 |
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$ |
18,417 |
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All of the Failed Auction Securities as of March 31, 2011, have been in an unrealized loss
position for greater than 12 months.
-5-
VICOR CORPORATION
Notes to Condensed Consolidated Financial Statements
March 31, 2011
(unaudited)
The amortized cost and estimated fair value of available-for-sale securities on March 31, 2011, by contractual maturities,
are shown below (in thousands):
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Estimated |
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Cost |
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Fair Value |
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Due in one year or less |
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$ |
1,168 |
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$ |
1,180 |
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Due in two to ten years |
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|
910 |
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|
923 |
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Due in ten to twenty years |
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Due in twenty to forty years |
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18,975 |
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16,251 |
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$ |
21,053 |
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$ |
18,354 |
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Based on the fair value measurements described in Note 3, the fair value of the Failed
Auction Securities on March 31, 2011, with a par value of $18,975,000, was estimated by the
Company to be approximately $16,251,000, an increase in fair value of $32,000, net of $100,000 of
redemptions from December 31, 2010. The gross unrealized loss of $2,724,000 on the Failed Auction
Securities consists of two types of estimated loss: an aggregate credit loss of $603,000 and an
aggregate temporary impairment of $2,121,000. For the three months ended March 31, 2011, the
aggregate credit loss on the Failed Auction Securities decreased by a net amount of $7,000, which
was recorded in Net impairment gains (losses) recognized in earnings in the Condensed
Consolidated Statement of Operations. In determining the amount of credit loss, the Company
compared the present value of cash flows expected to be collected to the amortized cost basis of
the securities, considering credit default risk probabilities and changes in credit ratings as
significant inputs, among other factors (See Note 3).
The following table represents a rollforward of the activity related to the credit loss recognized in earnings on available-for-sale
auction rate securities held by the Company for the three months ended March 31, 2011 (in thousands):
|
|
|
|
|
Balance at the beginning of the period |
|
$ |
610 |
|
Reductions for securities sold during the period |
|
|
(7 |
) |
|
|
|
|
Balance at the end of the period |
|
$ |
603 |
|
|
|
|
|
For the first quarter, the Company decreased the temporary impairment recorded in
Accumulated other comprehensive loss in the Condensed Consolidated Balance Sheet by $132,000 to
reflect an increase in the estimated fair value of the Failed Auction Securities.
At this time, the Company has no intent to sell any of the impaired Failed Auction
Securities and does not believe it is more likely than not the Company will be required to sell
any of these securities. Management expects the securities to regain liquidity as the financial
markets recover from the current economic downturn. If current market conditions deteriorate
further, the Company may be required to record additional unrealized losses. If the credit
rating of the security deteriorates, or the anticipated recovery in the market values does not
occur, the Company may be required to adjust the carrying value of these investments through
impairment charges recorded in the Condensed Consolidated Statement of Operations, and any such
impairment adjustments may be material.
Based on the Companys ability to access cash and cash equivalents and its expected
operating cash flows, management does not anticipate the current lack of liquidity associated
with the Failed Auction Securities held will affect the Companys ability to execute its current
operating plan.
3. Fair Value Measurements
The Company accounts for certain financial assets at fair value, defined as the price that
would be received to sell an asset or paid to transfer a liability (i.e., an exit price) in the
principal or most advantageous market for the asset or liability in an orderly
-6-
VICOR CORPORATION
Notes to Condensed Consolidated Financial Statements
March 31, 2011
(unaudited)
transaction between market participants on the measurement date. As such, fair value is a
market-based measurement that should be determined based on assumptions market participants would
use in pricing an asset or liability. A three-level hierarchy is used to show the extent and
level of judgment used to estimate fair value measurements.
The Company uses the fair value option for certain financial assets, which allows an entity
the irrevocable option to elect fair value for the initial and subsequent measurement for
specified financial assets and liabilities on a case-by-case basis.
Assets measured at fair value on a recurring basis include the following as of March 31,
2011 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Using |
|
|
|
|
|
|
|
|
|
|
|
|
|
Significant |
|
|
|
|
|
|
|
|
|
Quoted Prices |
|
|
Other |
|
|
Significant |
|
|
|
|
|
|
in Active |
|
|
Observable |
|
|
Unobservable |
|
|
Total Fair |
|
|
|
Markets |
|
|
Inputs |
|
|
Inputs |
|
|
Value as of |
|
|
|
(Level 1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
|
March 31, 2011 |
|
Cash Equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds |
|
$ |
14,313 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
14,313 |
|
Long term investments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Auction rate securities |
|
|
|
|
|
|
|
|
|
|
16,251 |
|
|
|
16,251 |
|
Brokered certificates of deposit |
|
|
|
|
|
|
1,655 |
|
|
|
|
|
|
|
1,655 |
|
Certificate of deposit |
|
|
448 |
|
|
|
|
|
|
|
|
|
|
|
448 |
|
The Company has brokered certificates of deposit that are classified as Level 2 due to the
fact that the fair value for these investments is determined utilizing observable inputs from
non-active markets. The fair values fluctuate with changes in market interest rates which are
derived from information available in publicly quoted markets.
As of March 31, 2011, there was insufficient observable auction rate security market
information available to determine the fair value of the Failed Auction Securities using Level 1
or Level 2 inputs. As such, the Companys investments in Failed Auction Securities were deemed
to require valuation using Level 3 inputs. Management, after consulting with advisors, valued
the Failed Auction Securities using analyses and pricing models similar to those used by market
participants (i.e., buyers, sellers, and the broker-dealers responsible for execution of the
Dutch auction pricing mechanism by which each issues interest rate was set). Management
utilized a probability weighted discounted cash flow (DCF) model to determine the estimated
fair value of these securities as of March 31, 2011. The major assumptions used in preparing the
DCF model included estimates for the amount and timing of future interest and principal payments
based on default probability assumptions used to measure the credit loss of approximately 3%, the
rate of return required by investors to own these securities in the current environment, which
management estimates to be 5% above the risk free rate of return, and the estimated timeframe for
successful auctions for these securities to occur being three to five years. In making these
assumptions, management considered relevant factors including: the formula applicable to each
security defining the interest rate paid to investors in the event of a failed auction; forward
projections of the interest rate benchmarks specified in such formulas; the likely timing of
principal repayments; the probability of full repayment considering the guarantees by the U.S.
Department of Education of the underlying student loans, guarantees by other third parties, and
additional credit enhancements provided through other means; and publicly available pricing data
for recently issued student loan asset-backed securities not subject to auctions. The estimate
of the rate of return required by investors
to own these securities also considered the currently reduced liquidity for auction rate
securities. An increase or decrease in the liquidity risk premium (i.e., the discount rate) of
100 basis points as used in the model would decrease or increase, respectively, the fair value of
the Failed Auction Securities by approximately $800,000.
-7-
VICOR CORPORATION
Notes to Condensed Consolidated Financial Statements
March 31, 2011
(unaudited)
The following table summarizes the change in the estimated fair values calculated for those assets valued on a recurring basis
utilizing Level 3 inputs for the three months ended March 31, 2011 (in thousands):
|
|
|
|
|
Balance at the beginning of the period |
|
$ |
16,219 |
|
Redemptions |
|
|
(100 |
) |
Credit gains on available for sales securities included in
Other income (expense), net |
|
|
7 |
|
Unrealized gain included in Other comprehensive loss |
|
|
125 |
|
|
|
|
|
Balance at the end of the period |
|
$ |
16,251 |
|
|
|
|
|
4.Stock Based Compensation
The Company uses the Black-Scholes option pricing model to calculate the grant-date fair
value of stock option awards. Stock-based compensation expense for the three months ended March
31 was as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
2011 |
|
|
2010 |
|
Cost of revenues |
|
$ |
17 |
|
|
$ |
4 |
|
Selling, general and administrative |
|
|
230 |
|
|
|
84 |
|
Research and development |
|
|
137 |
|
|
|
36 |
|
|
|
|
|
|
|
|
Total stock based compensation |
|
$ |
384 |
|
|
$ |
124 |
|
|
|
|
|
|
|
|
During the third quarter of 2010, the Company granted 1,243,750 non-qualified stock options
under the Vicor Corporation Amended and Restated 2000 Stock Option and Incentive Plan (the 2000
Plan), with performance-based vesting provisions tied to achievement of certain quarterly
revenue targets by the Brick Business Unit. Under the accounting rules for performance-based
awards, the Company is required to assess, on an ongoing basis, the probability of whether the
performance criteria will be achieved. If and when achievement is deemed probable, the Company
will begin to recognize the associated compensation expense for the stock options over the
relevant performance period. As of March 31, 2011, the Company determined that it was not
probable that the revenue targets could be achieved and, accordingly, has not recorded any
compensation expense relating to these options since the grant date. The unrecognized
compensation expense of these performance-based options was approximately $7,790,000 as of March
31, 2011.
On December 31, 2010, the Company granted 2,984,250 non-qualified stock options under the
2007 V*I Chip Plan with performance-based vesting provisions tied to achievement of certain
margin targets by the V*I Chip Business Unit. As of December 31, 2010, the Company determined
that it was probable that the margin targets could be achieved and, accordingly, began recording
compensation expense relating to these options beginning January 1, 2011. The unrecognized
compensation expense of these performance-based options was approximately $1,410,000 as of March
31, 2011.
-8-
VICOR CORPORATION
Notes to Condensed Consolidated Financial Statements
March 31, 2011
(unaudited)
5. Net Income per Share
The following table sets forth the computation of basic and diluted income per share for three months ended
March 31 (in thousands, except per share amounts):
|
|
|
|
|
|
|
|
|
|
|
2011 |
|
|
2010 |
|
Numerator: |
|
|
|
|
|
|
|
|
Net income attributable to Vicor Corporation |
|
$ |
4,018 |
|
|
$ |
1,952 |
|
|
|
|
|
|
|
|
Denominator: |
|
|
|
|
|
|
|
|
Denominator for basic income per share-weighted
average shares (1) |
|
|
41,771 |
|
|
|
41,666 |
|
Effect of dilutive securities: |
|
|
|
|
|
|
|
|
Employee stock options (2) |
|
|
88 |
|
|
|
34 |
|
|
|
|
|
|
|
|
Denominator for diluted income per share adjusted
weighted-average shares and assumed conversions |
|
|
41,859 |
|
|
|
41,700 |
|
|
|
|
|
|
|
|
Basic income per share |
|
$ |
0.10 |
|
|
$ |
0.05 |
|
|
|
|
|
|
|
|
Diluted 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. |
6. Inventories
Inventories are valued at the lower of cost (determined using the first-in, first-out
method) or net realizable value. The Company provides reserves for inventories estimated to be
excess, obsolete or unmarketable. The Companys estimation process for assessing net realizable
value is based upon its known backlog, projected future demand and expected market conditions.
If the Companys estimated demand and / or market expectation were to change or if product sales
were to decline, the Companys estimation process may cause larger inventory reserves to be
recorded, resulting in larger charges to cost of revenues.
-9-
VICOR CORPORATION
Notes to Condensed Consolidated Financial Statements
March 31, 2011
(unaudited)
Inventories were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
March 31, 2011 |
|
|
December 31, 2010 |
|
Raw materials |
|
$ |
32,674 |
|
|
$ |
31,750 |
|
Work-in-process |
|
|
4,019 |
|
|
|
4,182 |
|
Finished goods |
|
|
4,979 |
|
|
|
5,001 |
|
|
|
|
|
|
|
|
|
|
|
41,672 |
|
|
|
40,933 |
|
Inventory reserves |
|
|
(6,062 |
) |
|
|
(5,444 |
) |
|
|
|
|
|
|
|
|
Net balance |
|
$ |
35,610 |
|
|
$ |
35,489 |
|
|
|
|
|
|
|
|
7. Other Investments
The Companys gross investment in non-voting convertible preferred stock of Great Wall
Semiconductor Corporation (GWS) totaled $5,000,000 as of March 31, 2011, and December 31, 2010,
giving the Company an approximately 30% ownership interest in GWS. GWS and its subsidiary design
and sell semiconductors, conduct research and development activities, develop and license
patents, and litigate against those who infringe upon patented technology. A director of the
Company is the founder, Chairman of the Board, President and Chief Executive Officer (CEO), as
well as the majority voting shareholder, of GWS. The Company and GWS are parties to an
intellectual property cross-licensing agreement, a license agreement and two supply agreements
under which the Company purchases certain components from GWS. Purchases from GWS totaled
approximately $804,000 and $671,000 for the three months ended March 31, 2011, and 2010,
respectively.
The Company accounts for its investment in GWS under the equity method of accounting. The
Company has determined that, while GWS is a variable interest entity, the Company is not the
primary beneficiary. The key factors in the Companys assessment were that the CEO of GWS has:
(i) the power to direct the activities of GWS that most significantly impact its economic
performance, and (ii) has an obligation to absorb losses or the right to receive benefits from
GWS, respectively, that could potentially be significant to GWS.
There was no allocation of equity method income (loss) for the three months ended March 31,
2011 and 2010, as GWS incurred a net loss in each period. The balance in the Companys
investment in GWS was zero as of March 31, 2011 and December 31, 2010.
8. Product Warranties
The Company generally offers a two-year warranty for all of its products. The Company
provides for the estimated cost of product warranties at the time product revenue is recognized.
Factors that affect the Companys warranty reserves include the number of units sold, historical
and anticipated rates of warranty returns, and the cost per return. The Company periodically
assesses the adequacy of the warranty reserves and adjusts the amounts as necessary. Warranty
obligations are included in Accrued expenses in the accompanying Condensed Consolidated Balance
Sheets.
-10-
VICOR CORPORATION
Notes to Condensed Consolidated Financial Statements
March 31, 2011
(unaudited)
Product warranty activity for the three months ended March 31, was as follows (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
2011 |
|
|
2010 |
|
Balance at the beginning of the period |
|
$ |
649 |
|
|
$ |
772 |
|
Accruals for warranties for products
sold in the period |
|
|
725 |
|
|
|
47 |
|
Fulfillment of warranty obligations |
|
|
(128 |
) |
|
|
(9 |
) |
Revisions of estimated obligations |
|
|
14 |
|
|
|
(90 |
) |
|
|
|
|
|
|
|
Balance at the end of the period |
|
$ |
1,260 |
|
|
$ |
720 |
|
|
|
|
|
|
|
|
The increase in Accruals for warranties for products sold in the period in 2011 was
primarily due to additional reserves for expected future replacements of certain products under
warranty that were manufactured with a component that exhibited a higher than expected failure
rate.
9. Income Taxes
In 2011 and 2010, the tax provision is based on the estimated annual effective tax rate for
the year, which includes estimated federal, state and foreign income taxes on the Companys
projected annual pre-tax income and estimated federal and state income taxes for certain
noncontrolling interest subsidiaries that are not part of the Companys consolidated
income tax returns, offset in 2010 by the expected utilization of federal and foreign net
operating loss carryforwards. The 2011 and 2010 tax provisions also include discrete items,
principally expense for increases in state taxes and accrued interest for potential liabilities.
The provision for income taxes and the effective income tax rate for the three months ended March 31,
were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
2011 |
|
|
2010 |
|
Provision for income taxes |
|
$ |
2,053 |
|
|
$ |
638 |
|
Effective income tax rate |
|
|
33.0 |
% |
|
|
24.1 |
% |
For the three months ended March 31, 2011 compared to 2010, the provision for income taxes
increased due to the increase in income before income taxes and the increase in the effective
income tax rate. The increase in the effective tax rate was primarily due to the complete
utilization of remaining federal, foreign and a significant portion of remaining state net
operating loss carryforwards through the end of 2010, which lowered the income tax provision in
2010.
As of March 31, 2011, the Company had a remaining valuation allowance of approximately
$10,600,000 against certain deferred tax assets, for which realization cannot be considered more
likely than not at this time. Such deferred tax assets principally relate to tax credit
carryforwards in certain state tax jurisdictions for which sufficient taxable income for
utilization cannot be projected at this time or the credits may expire without being utilized.
Management assesses the need for the valuation allowance on a quarterly basis. If and when
management determines the valuation allowance should be released, the adjustment would result in
a tax benefit in the Consolidated Statements of Operations and may include a portion to be
accounted for through Additional paid-in capital, a component of Stockholders Equity. The
amount of the tax benefit to be recorded in a particular quarter could be material.
In January 2010, the Company received notice from the Commonwealth of Massachusetts that its
Massachusetts corporate excise tax returns, for tax years 2006 and 2007 had been selected for
audit. Other than the Massachusetts audit still in process as of March 31, 2011, there are no
other income tax audits currently in process.
-11-
VICOR CORPORATION
Notes to Condensed Consolidated Financial Statements
March 31, 2011
(unaudited)
10. Comprehensive Income
The following table sets forth the computation of Comprehensive income (loss) for the three months ended March 31,
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
2011 |
|
|
2010 |
|
Consolidated net income |
|
$ |
4,169 |
|
|
$ |
2,005 |
|
Foreign currency translation (losses) gains |
|
|
(81 |
) |
|
|
34 |
|
Unrealized gains (losses) (net of tax) on
available-for-sale securities |
|
|
121 |
|
|
|
(378 |
) |
|
|
|
|
|
|
|
Comprehensive income |
|
|
4,209 |
|
|
|
1,661 |
|
Less: comprehensive income
attributable to noncontrolling interest |
|
|
140 |
|
|
|
57 |
|
|
|
|
|
|
|
|
Comprehensive income attributable to
Vicor Corporation |
|
$ |
4,069 |
|
|
$ |
1,604 |
|
|
|
|
|
|
|
|
11. Commitments and Contingencies
At March 31, 2011, the Company had approximately $1,192,000 of capital expenditure
commitments.
On February 22, 2007, the Company announced it had reached an agreement in principle with
Ericsson, Inc., the U.S. affiliate of LM Ericsson, to settle a lawsuit brought by Ericsson
against the Company in California state court. Under the terms of the settlement agreement
entered into on March 29, 2007, after a court ordered mediation, the Company paid $50,000,000 to
Ericsson, of which $12,800,000 was reimbursed by the Companys insurance carriers.
Accordingly, the Company recorded a net loss of $37,200,000 from the litigation related
settlements in the fourth quarter of 2006. The Company has been seeking further reimbursement
from its insurance carriers. On November 14, 2008, a jury in the United States District Court for
the District of Massachusetts found in favor of the Company in a lawsuit against certain of its
insurance carriers with respect to the Ericsson settlement. The jury awarded $17,300,000 in
damages to Vicor, although the verdict is subject to challenge in the trial court and on appeal.
Both parties filed certain motions subsequent to the ruling and, on March 2, 2009, the judge in
the case rendered his decision on the subsequent motions, reducing the jury award by $4,000,000.
On March 26, 2009, the U.S. District Court, District of Massachusetts (the Court) issued its
judgment in the matter, affirming the award of $13,300,000, plus prejudgment interest from the
date of breach on March 29, 2007, through March 26, 2009, the date of judgment in the amount of
approximately $3,179,000. The insurance carriers have filed their appeal to this total judgment
in the amount of approximately $16,479,000. No final and collectible judgment has been entered by
the Court yet.
On January 28, 2011, SynQor, Inc. (SynQor) filed a complaint for patent infringement
against Ericsson, Inc. (Ericsson), Cisco Systems, Inc. (Cisco) and Vicor in U.S. District
Court for the Eastern District of Texas. This immediately followed a complaint filed by the
Company on January 26, 2011 in U.S. District Court for the District of Massachusetts, in which
the Company sought a declaratory judgment that its bus converter products do not infringe any
valid claim of certain of SynQors U.S. patents, and that the claims of those patents are
invalid. With respect to Vicor, SynQors complaint alleges that Vicors products, including, but
not limited to, unregulated bus converters used in intermediate bus architecture power supply
systems, infringe certain SynQor patents. SynQor seeks, amongst other items, an injunction
against further infringement and an award of unspecified compensatory and enhanced damages,
interest, costs and attorney
fees. On February 8, 2011, SynQor filed a motion for preliminary injunction seeking an order
enjoining Vicor from manufacturing, using, selling, and offering for sale in the United States
and/or importing into the United States certain identified unregulated bus converters, as well as
any other bus converters not significantly different from those products. On February 17, 2011,
the Company dismissed its Massachusetts action without prejudice to allow the litigation to
proceed in Texas. An initial hearing has been scheduled for late May 2011 in Marshall, Texas.
-12-
VICOR CORPORATION
Notes to Condensed Consolidated Financial Statements
March 31, 2011
(unaudited)
Vicor does not believe any of its products, including its unregulated bus converters,
infringe any valid claim of the SynQor patents, either alone or when used in an intermediate bus
architecture implementation. Vicor believes SynQors claims lack merit and therefore the Company
plans to vigorously defend itself against SynQors patent infringement allegations.
In addition, the Company is involved in certain other litigation and claims incidental to
the conduct of its business. While the outcome of lawsuits and claims against the Company cannot
be predicted with certainty, management does not expect any current litigation or claims to have
a material adverse impact on the Companys financial position or results of operations.
12. Segment Information
The Company has organized its business segments according to its key product lines. The
Brick Business Unit segment (BBU) designs, develops, manufactures and markets the Companys
modular power converters and configurable products, and also includes the operations of the
Companys Westcor division, the six entities comprising Vicor Custom Power, and the Brick
operations of Vicor Japan Company, Ltd. (VJCL). The V*I Chip segment includes V*I Chip
Corporation that designs, develops, manufactures and markets the Companys factorized power
architecture (FPA) products along with the V*I Chip business through VJCL. Picor designs,
develops, manufactures and markets integrated circuits and related products for use in a variety
of power management and power system applications. Picor develops these products to be sold as
part of Vicors products or to third parties for separate applications.
During the fourth quarter of 2010, the Company began to include the net revenues and cost of
revenues for shipments of V*I Chip products by VJCL in the V*I Chip segment, along with an
allocation of certain VJCL operating expenses from the BBU to the V*I Chip segment. Previously,
all VJCL operating activity had been included in the BBU segment. The segment information for the
three months ended March 31, 2010 has been reclassified to conform to this new presentation.
The following table provides significant segment financial data as of and for the three months ended March 31, (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BBU |
|
|
V*I Chip |
|
|
Picor |
|
|
Corporate |
|
|
Eliminations |
|
|
Total |
|
|
|
|
|
(1) |
|
|
(1) |
|
|
|
|
|
|
|
|
|
|
(1) (2) |
|
|
|
|
2011: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues |
|
$ |
55,591 |
|
|
$ |
14,307 |
|
|
$ |
3,302 |
|
|
$ |
|
|
|
$ |
(2,745 |
) |
|
$ |
70,455 |
|
Income (loss) from operations |
|
|
10,893 |
|
|
|
(4,313 |
) |
|
|
61 |
|
|
|
(221 |
) |
|
|
|
|
|
|
6,420 |
|
Total assets |
|
|
81,303 |
|
|
|
31,316 |
|
|
|
7,846 |
|
|
|
108,514 |
|
|
|
(16,417 |
) |
|
|
212,562 |
|
Depreciation and amortization |
|
|
1,288 |
|
|
|
873 |
|
|
|
112 |
|
|
|
355 |
|
|
|
|
|
|
|
2,628 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues |
|
$ |
47,119 |
|
|
$ |
5,034 |
|
|
$ |
1,810 |
|
|
$ |
|
|
|
$ |
(2,254 |
) |
|
$ |
51,709 |
|
Income (loss) from operations |
|
|
9,816 |
|
|
|
(6,409 |
) |
|
|
(690 |
) |
|
|
(137 |
) |
|
|
(4 |
) |
|
|
2,576 |
|
Total assets |
|
|
218,102 |
|
|
|
21,394 |
|
|
|
9,556 |
|
|
|
95,516 |
|
|
|
(161,193 |
) |
|
|
183,375 |
|
Depreciation 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-
VICOR CORPORATION
Managements Discussion and Analysis of
Financial Condition and Results of Operation
March 31, 2011
Item 2 Managements Discussion and Analysis of Financial Condition and Results of
Operations
Except for historical information contained herein, some matters discussed in this report
constitute forward-looking statements within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words
believes, expects, anticipates, intend, estimate, plans, assumes, may, will,
would, should, continue, prospective, project, and other similar expressions identify
forward-looking statements. Forward-looking statements also include statements regarding the
derivation of a portion of the Companys sales in each quarter from orders booked in the same
quarter, the Companys plans to invest in research and development and manufacturing equipment, the
Companys belief regarding market risk being mitigated because of limited foreign exchange
fluctuation exposure, the Companys continued success depending in part on its ability to attract
and retain qualified personnel, the Companys belief that cash generated from operations and the
total of its cash and cash equivalents and short-term investments will be sufficient for the
foreseeable future, the Companys intention regarding protecting its rights under its patents and
the Companys expectation that no current litigation or claims will have a material adverse impact
on its financial position or results of operations. These statements are based upon the Companys
current expectations and estimates as to the prospective events and circumstances which may or may
not be within the Companys control and as to which there can be no assurance. Actual results
could differ materially from those projected in the forward-looking statements as a result of
various factors, including our ability to develop and market new products and technologies cost
effectively, to leverage design wins into increased product sales, to continue to make progress
with key customers and prospects, to decrease manufacturing costs, to enter into licensing
agreements that amplify the market opportunity and accelerate market penetration, to realize
significant royalties under license agreements, to achieve a sustainable increased bookings rate
over a longer period, to hire key personnel and to continue to build our three business units, to
successfully enforce our intellectual property rights, to successfully defend outstanding
litigation, to successfully leverage the V*I Chips in standard products to promote market
acceptance of Factorized Power Architecture, to develop or maintain an effective system of internal
controls, to obtain required financial information for certain investments on a timely basis, and
factors impacting the Companys various end markets, the impact of write-downs in the value of
assets, the effects of equity accounting with respect to certain affiliates, the failure of auction
rate securities to sell at their reset dates as well as those factors described in the risk
factors set forth in the Companys Annual Report on Form 10-K for the year ended December 31, 2010,
under Part I, Item I Business, under Part I, Item 1A Risk Factors, under Part I, Item 3
Legal Proceedings, and under Part II, Item 7 Managements Discussion and Analysis of
Financial Condition and Results of Operations. The risk factors contained in this report may not
be exhaustive. Therefore, the information contained in this report should be read together with
other reports and documents that the Company files with the Securities and Exchange Commission from
time to time, including Forms 10-Q, 8-K and 10-K, which may supplement, modify, supersede or update
those risk factors. The Company does not undertake any obligation to update any forward-looking
statements as a result of future events or developments.
Overview
Vicor Corporation designs, develops, manufactures and markets modular power components and
complete power systems based upon a portfolio of patented technologies. The Company sells its
products primarily to customers in the higher-performance, higher-power segments of the power
systems market, including aerospace and defense electronics, enterprise and high performance
computing, industrial equipment and automation, telecommunications and network infrastructure, and
vehicles and transportation, through a network of independent sales representative organizations in
North and South America and, internationally, through independent distributors. Export sales as a
percentage of total revenues for the three months ended March 31, 2011 and 2010 were approximately
56% and 49%, respectively.
The Company has organized its business segments according to its key product lines. The Brick
Business Unit segment (BBU) designs, develops, manufactures and markets the Companys modular
power converters and configurable products, and also includes the operations of the Companys
Westcor division, the six entities comprising Vicor Custom Power, and the BBU activities through
Vicor Japan Company, Ltd. (VJCL). The V*I Chip segment includes V*I Corporation which designs,
develops, manufactures and markets the Companys factorized power architecture (FPA) products.
V*I Chip activities conducted through VJCL are included in the V*I Chip segment. Picor designs,
develops, manufactures and markets integrated circuits and related products for use in a variety of
power management and power system applications. Picor develops these products to be sold as part of
Vicors products or to third parties for separate applications.
-14-
VICOR CORPORATION
Managements Discussion and Analysis of
Financial Condition and Results of Operation
March 31, 2011
Revenues for the first quarter increased by 36.3% to $70,455,000, compared to $51,709,000 for
the corresponding period a year ago, but decreased by 3.5% on a sequential basis from $72,975,000
for the fourth quarter of 2010. Gross margin increased to $30,454,000 for the first quarter of
2011, compared to $23,324,000 for the corresponding period a year ago, but decreased on a
sequential basis from $32,984,000 for the fourth quarter of 2010. Gross margin, as a percentage of
revenue, decreased to 43.2% for the first quarter of 2011 compared to 45.1% for the first quarter
of 2010 and decreased on a sequential basis from 45.2% for the fourth quarter of 2010. Net income
attributable to Vicor Corporation for the first quarter was $4,018,000, or $0.10 per diluted share,
compared to net income attributable to Vicor Corporation of $1,952,000, or $0.05 per diluted share,
for the corresponding period a year ago and net income attributable to Vicor Corporation of
$10,807,000, or $0.26 per diluted share, for the fourth quarter of 2010.
The book-to-bill ratio, calculated by the dollar amount of orders placed with scheduled
delivery dates within one year divided by the net revenues in the respective period, was 0.94:1 for
the first quarter of 2011, compared to 0.66:1 for the fourth quarter of 2010. Backlog,
representing the total of purchase orders received for which product has not yet been shipped, was
$74,757,000 at the end of the first quarter of 2011, as compared to $78,876,000 at the end of the
fourth quarter of 2010.
Operating expenses for the three months ended March 31, 2011 increased $3,286,000, or 15.8%,
to $24,034,000 from $20,748,000 in 2010, principally due to an increase in selling, general and
administrative expenses of $2,300,000, and research and development expenses of $986,000. The key
increases in selling, general and administrative expenses were in compensation expense of
$1,029,000, legal expense of $871,000, and commissions expense of $318,000, partially offset by a
decrease in audit and tax fees of $75,000. The key increases in research and development expenses
were in compensation expense of $705,000, deferred costs of $80,000, depreciation and amortization
of $60,000, project materials of $58,000, and computer expense of $36,000, partially offset by a
decrease in outside services of $87,000.
Other income (expense), net for the three months ended March 31, 2011 decreased $265,000 to
$(198,000) from $67,000 in the corresponding period in 2010. The primary reasons for the decrease
were an increase in foreign currency losses of $239,000 and a decrease in interest income of
$71,000, partially offset by an increase in credit gain on available-for-sale securities of
$50,000.
For the three months ended March 31, 2011, depreciation and amortization was $2,628,000 and
capital additions were $2,973,000, compared to $2,432,000 and $2,429,000, respectively, for the
first three months of 2010.
Inventories increased by approximately $121,000 or 0.3% to $35,610,000 as compared with
$35,489,000 at December 31, 2010. This increase was primarily attributed to an increase in BBU
inventories of $478,000, partially offset by a decrease in V*I Chip and Picor inventories of
approximately $320,000, and $37,000, respectively.
Critical Accounting Policies and Estimates
Please refer to the Companys Annual Report on Form 10-K for the year ended December 31, 2010,
for a complete summary of the critical accounting policies and estimates.
Three months ended March 31, 2011, compared to three months ended March 31, 2010
Net revenues for the first quarter of March 31, 2011 were $70,455,000, an increase of
$18,746,000 or 36.3%, as compared to $51,709,000 for the same period a year ago, and a decrease of
3.5% on a sequential basis from the fourth quarter of 2010.
-15-
VICOR CORPORATION
Managements Discussion and Analysis of
Financial Condition and Results of Operation
March 31, 2011
The components of revenue for the three months ending March 31, were as follows (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Orders during the three months ending March 31, 2011 increased by 37.1% compared with the
fourth quarter of 2010. This increase was caused by increases during the period in BBU, V*I Chip,
and Picor orders of 21.5%, 118.7% and 212.7%, respectively. The consolidated book to bill ratio
for the three months ended March 31, 2011, was 0.94:1, as compared to 1.39:1 for the corresponding
period a year ago, and 0.66:1 for the fourth quarter of 2010. The quarterly book-to-bill ratio has
been volatile and management believes that the ratio is not always an accurate indicator of the
amount or timing of future revenue.
Gross margin for the first quarter of 2011 increased $7,130,000, or 30.6%, to $30,454,000 from
$23,324,000 in the first quarter of 2010. Gross margin, as a percentage of net revenues, decreased
to 43.2% from 45.1% as a percentage of net revenues. The increase in gross margin dollars was
primarily due to the increase in net revenues. The decrease in gross margin percentage was
primarily due to a shift in product mix to a higher proportion of lower margin V*I Chip products,
partially offset by lower average unit costs of both BBU and V*I Chip products, in the first
quarter of 2011 compared to 2010. In addition, during the first quarter of 2011, the Company
increased inventory and warranty reserves by approximately $743,000 through charges to cost of
revenues for inventory to be scrapped and for expected future replacements of certain products
under warranty, both of which were manufactured with a component that exhibited a higher than
expected failure rate.
Selling, general and administrative expenses were $14,180,000 for the quarter ended March 31,
2011, an increase of $2,300,000, or 19.4%, as compared to $11,880,000 for the same period in 2010.
Selling, general and administrative expenses as a percentage of net revenues, decreased to 20.1%
from 23.0% for the same period in 2010, primarily due to the increase in net revenues.
-16-
VICOR CORPORATION
Managements Discussion and Analysis of
Financial Condition and Results of Operation
March 31, 2011
The components of the $2,300,000 increase in selling, general and administrative expenses were as follows
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
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. |
Research and development expenses were $9,854,000 for the quarter ended March 31, 2011, an
increase of $986,000, or 11.1%, as compared to $8,868,000 for the same period in 2010. As a
percentage of net revenues, research and development decreased to 14.0% from 17.1%, primarily due
to the increase in net revenues.
-17-
VICOR CORPORATION
Managements Discussion and Analysis of
Financial Condition and Results of Operation
March 31, 2011
The components of the $986,000 increase in research and development expenses were as follows
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
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. |
The major changes in the components of the other income (expense), net were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase |
|
|
|
2011 |
|
|
2010 |
|
|
(decrease) |
|
Interest income |
|
$ |
84 |
|
|
$ |
155 |
|
|
$ |
(71 |
) |
Foreign currency losses |
|
|
(306 |
) |
|
|
(67 |
) |
|
|
(239 |
) |
Unrealized loss on auction rate
securities rights |
|
|
|
|
|
|
(33 |
) |
|
|
33 |
|
Unrealized gain on trading securities |
|
|
|
|
|
|
37 |
|
|
|
(37 |
) |
Credit gain (loss) on available for
sale securities |
|
|
7 |
|
|
|
(43 |
) |
|
|
50 |
|
Other, net |
|
|
17 |
|
|
|
18 |
|
|
|
(1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(198 |
) |
|
$ |
67 |
|
|
$ |
(265 |
) |
|
|
|
|
|
|
|
|
|
|
The Companys exposure to market risk for fluctuations in foreign currency exchange rates
relates primarily to the operations of VJCL. The functional currency of the Companys subsidiaries
in Europe and Hong Kong is the U.S. dollar. The decrease in interest income is due to lower
average balances on the Companys short and long-term investments as well as a decrease in interest
rates. The estimated credit gains (losses) on the Companys other auction rate securities result
from the change in the estimated fair value of these investments at March 31, 2011 and March 31,
2010, compared to December 31, 2010 and December 31, 2009, respectively.
-18-
VICOR CORPORATION
Managements Discussion and Analysis of
Financial Condition and Results of Operation
March 31, 2011
Income before income taxes was $6,222,000 for the first quarter of 2011 compared to $2,643,000 for the same period in 2010.
The provision for income taxes and the effective income tax rate for the three months ended March 31, were
as follows (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
2011 |
|
|
2010 |
|
Provision for income taxes |
|
$ |
2,053 |
|
|
$ |
638 |
|
Effective income tax rate |
|
|
33.0 |
% |
|
|
24.1 |
% |
For the three months ended March 31, 2011 compared to 2010, the provision for income taxes
increased due to the increase in income before income taxes and the increase in the effective
income tax rate. The increase in the effective tax rate was primarily due to the complete
utilization of remaining federal, foreign and a significant portion of remaining state, net
operating loss carryforwards through the end of 2010, which lowered the income tax provision in
2010.
Net income of noncontrolling interest increased $98,000 to $151,000 in the first quarter of
2011 from $53,000 for the same period in 2010. This was due to higher net income at certain
entities in which the Company holds a noncontrolling interest.
Basic and diluted income per share attributable to Vicor Corporation was $0.10 for the first
quarter of 2011 compared to $0.05 for the first quarter of 2010.
Liquidity and Capital Resources
At March 31, 2011, the Company had $56,400,000 in cash and cash equivalents. The ratio of
current assets to current liabilities was 5.3:1 as of March 31, 2011, and 5.6:1 as of December 31,
2010. Working capital increased $5,316,000 to $110,770,000 as of March 31, 2011, from $105,454,000
as of December 31, 2010. The primary factors affecting the working capital increase were increases
in cash and cash equivalents of $7,121,000, accounts receivable of $971,000, deferred tax assets of
$335,000 and inventories of $121,000, partially offset by increases in accrued expenses of
$1,098,000, accounts payable of $795,000, accrued compensation and benefits of $717,000, and income
taxes payable of $667,000. The primary source of cash for the three months ended March 31, 2011,
was $9,906,000 from operating activities. The primary use of cash for the three months ended March
31, 2011 was $2,973,000 for the purchase of equipment.
As of March 31, 2011, the Company held $18,975,000 of auction rate securities at par value
classified as long-term investments. Please see Note 2 of the Companys Condensed Consolidated
Financial Statements for a discussion of the securities and the Companys accounting treatment
thereof.
In November 2000, the Board of Directors of the Company authorized the repurchase of up to
$30,000,000 of the Companys Common Stock (the November 2000 Plan). The November 2000 Plan
authorizes the Company to make such repurchases from time to time in the open market or through
privately negotiated transactions. The timing and amounts of stock repurchases are at the
discretion of management based on its view of economic and financial market conditions. The Company
did not repurchase shares of Common Stock during the three months ended March 31, 2011. As of
March 31, 2011, the Company had approximately $8,541,000 remaining under the November 2000 Plan.
The Companys primary liquidity needs are for making continuing investments in manufacturing
equipment, particularly equipment to increase capacity for our V*I Chip products. The Company
believes cash generated from operations and the total of its cash and cash equivalents will be
sufficient to fund planned operations and capital equipment purchases for the foreseeable future.
The Company had approximately $1,192,000 of capital expenditure commitments, principally for
manufacturing equipment, as of March 31, 2011.
-19-
VICOR CORPORATION
Managements Discussion and Analysis of
Financial Condition and Results of Operation
March 31, 2011
Based on the Companys ability to access cash and cash equivalents and its expected operating
cash flows, management does not anticipate the current lack of liquidity of the Companys auction
rate securities will affect the Companys ability to execute its current operating plan.
The Company does not consider the impact of inflation and changing prices on its business
activities or fluctuations in the exchange rates for foreign currency transactions to have been
significant during the last three fiscal years.
-20-
Vicor Corporation
March 31, 2011
Item 3 Quantitative and Qualitative Disclosures About Market Risk
The Company is exposed to a variety of market risks, including changes in interest rates
affecting the return on its cash and cash equivalents and fluctuations in foreign currency exchange
rates. As the Companys cash and cash equivalents consist principally of money market securities,
which are short-term in nature, the Company believes its exposure to market risk on interest rate
fluctuations for these investments is not significant. The Companys long-term investments consist
mainly of municipal and corporate debt securities, of which the Failed Auction Securities represent
a significant portion. While the Failed Auction Securities are all highly rated investments,
generally with AAA/Aaa ratings, continued failure to sell at their reset dates could negatively
impact the carrying value of the investments, in turn leading to impairment charges in future
periods. Changes in the fair value of the Failed Auction Securities attributable to credit loss are
recorded through earnings, with the remainder of any change recorded in Accumulated other
comprehensive loss, a component of Stockholders Equity. Should a decline in the value of the
Failed Auction Securities be other than temporary, the losses would be recorded in Other income
(expense), net. The Company does not believe there was an other-than-temporary decline in value
in these securities as of March 31, 2011.
The Companys exposure to market risk for fluctuations in foreign currency exchange rates
relates primarily to the operations of VJCL and changes in the dollar/yen exchange rate, as the
functional currency of the Companys subsidiaries in Europe and Hong Kong is the U.S. dollar.
Therefore, the Company believes market risk is mitigated since these operations are not materially
exposed to foreign exchange fluctuations.
Item 4 Controls and Procedures
(a) Disclosure regarding controls and procedures.
As required by Rule 13a-15 under the Securities Exchange Act, the Companys management, with
the participation of the Companys Chief Executive Officer (CEO) and Chief Financial Officer
(CFO), conducted an evaluation of the effectiveness of the Companys disclosure controls and
procedures, as of the end of the last fiscal quarter (i.e., March 31, 2011). In designing and
evaluating the Companys disclosure controls and procedures, the Company and its management
recognize that any controls and procedures, no matter how well designed and operated, can provide
only reasonable assurance of achieving the desired control objectives, and management necessarily
was required to apply its judgment in evaluating and implementing possible controls and procedures.
Based upon that evaluation, management, including the Companys CEO and CFO, has concluded the
Companys disclosure controls and procedures as of March 31, 2011, were reasonably effective to
ensure that information required to be disclosed by the Company in the reports it files or submits
under the Exchange Act is recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commissions rules and forms. Management intends to
continue to review and document the Companys disclosure controls and procedures, including
internal controls over financial reporting, and may from time to time make changes to the
disclosure controls and procedures to enhance their effectiveness and to ensure that the Companys
systems evolve with its business.
A control system, no matter how well designed and operated, can provide only reasonable, not
absolute, assurance that the control systems objectives will be met. Accordingly, management,
including the CEO and CFO, recognizes the Companys disclosure controls or its internal control
over financial reporting may not prevent or detect all errors and all fraud. The design of a
control system must reflect the fact that there are resource constraints, and the benefits of
controls must be considered relative to their costs. Further, because of the inherent limitations
in all control systems, no evaluation of controls can provide absolute assurance that misstatements
due to error or fraud will not occur or that all control issues and instances of fraud, if any,
within the Company have been detected. These inherent limitations include the realities that
judgments in decision-making can be faulty and that breakdowns can occur because of simple error or
mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of
two or more people, or by management override of the controls. The design of any system of
controls is based in part on certain assumptions about the likelihood of future events, and there
can be no assurance that any design will succeed in achieving its stated goals under all potential
future conditions. Projections of any controls effectiveness to future periods are subject to
risks. Over time, controls may become inadequate because of changes in conditions or deterioration
in the degree of compliance with policies or procedures.
21
Vicor Corporation
March 31, 2011
(b) Changes in internal control over financial reporting.
There was no change in the Companys internal control over financial reporting that occurred
during the fiscal quarter ended March 31, 2011, that materially affected, or is reasonably likely
to materially affect, the Companys internal control over financial reporting.
22
Vicor Corporation
Part II Other Information
March 31, 2011
Item 1 Legal Proceedings
See Note 11. Commitments and Contingencies in the Notes to Condensed Consolidated
Financial Statements in Part I Item 1 Financial Statements.
Item 1A Risk Factors
There have been no material changes in the risk factors described in Item 1A (Risk Factors) of
the Companys Annual Report on Form 10-K for the year ended December 31, 2010.
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuer Purchases of Equity Securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maximum Number |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(of Approximate |
|
|
|
|
|
|
|
|
|
|
|
Total Number of |
|
|
Dollar Value) of |
|
|
|
|
|
|
|
|
|
|
|
Shares (or Units) |
|
|
Shares (or Units) |
|
|
|
Total Number |
|
|
Average Price |
|
|
Purchased as Part |
|
|
that May Yet Be |
|
|
|
of Shares |
|
|
Paid |
|
|
of Publicly |
|
|
Purchased Under |
|
|
|
(or Units) |
|
|
per Share |
|
|
Announced Plans |
|
|
the Plans or |
|
Period |
|
Purchased |
|
|
(or Unit) |
|
|
or Programs |
|
|
Programs |
|
January 1 - 31, 2011 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
8,541,000 |
|
February 1 - 28,
2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,541,000 |
|
March 1 - 31, 2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,541,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
8,541,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In November 2000, the Board of Directors of the Company authorized the repurchase of up to
$30,000,000 of the Companys Common Stock.
23
Vicor Corporation
Part II Other Information
March 31, 2011
Item 6 Exhibits
|
|
|
|
|
Exhibit Number |
|
Description |
|
31.1 |
|
|
Certification of Chief Executive Officer pursuant to Rule
13a-14(a) of the Securities Exchange Act of 1934 |
|
|
|
|
|
|
31.2 |
|
|
Certification of Chief Financial Officer pursuant to Rule
13a-14(a) of the Securities Exchange Act of 1934 |
|
|
|
|
|
|
32.1 |
|
|
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 2002 |
|
|
|
|
|
|
32.2 |
|
|
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
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
|
|
|
|
VICOR CORPORATION
|
|
Date: May 2, 2011 |
By: |
/s/ Patrizio Vinciarelli
|
|
|
|
Patrizio Vinciarelli |
|
|
|
Chairman of the Board, President and
Chief Executive Officer
(Principal Executive Officer) |
|
|
|
|
|
Date: May 2, 2011 |
By: |
/s/ James A. Simms
|
|
|
|
James A. Simms |
|
|
|
Vice President, Chief Financial Officer
(Principal Financial Officer) |
|
|
25
exv31w1
Exhibit 31.1
CERTIFICATIONS
I, Patrizio Vinciarelli, certify that:
|
1. |
|
I have reviewed this quarterly report on Form 10-Q of Vicor Corporation; |
|
|
2. |
|
Based on my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the
period covered by this report; |
|
|
3. |
|
Based on my knowledge, the financial statements, and other financial information included
in this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this
report; |
|
|
4. |
|
The registrants other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
a) |
|
Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which
this report is being prepared; |
|
|
b) |
|
Designed such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally
accepted accounting principles; |
|
|
c) |
|
Evaluated the effectiveness of the registrants disclosure controls and
procedures and presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this report
based on such evaluation; and |
|
|
d) |
|
Disclosed in this report any change in the registrants internal control over
financial reporting that occurred during the registrants most recent fiscal quarter
(the registrants fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrants
internal control over financial reporting; and |
|
5. |
|
The registrants other certifying officer and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrants auditors and
the audit committee of the registrants board of directors (or persons performing the
equivalent functions): |
|
a) |
|
All significant deficiencies and material weaknesses in the design or operation
of internal control over financial reporting which are reasonably likely to adversely
affect the registrants ability to record, process, summarize and report financial
information; and |
|
|
b) |
|
Any fraud, whether or not material, that involves management or other employees
who have a significant role in the registrants internal control over financial
reporting. |
Dated:
May 2, 2011
|
|
|
|
|
|
|
|
|
/s/ Patrizio Vinciarelli
|
|
|
Patrizio Vinciarelli |
|
|
Chief Executive Officer |
|
|
exv31w2
Exhibit 31.2
CERTIFICATIONS
I, James A. Simms, certify that:
|
1. |
|
I have reviewed this quarterly report on Form 10-Q of Vicor Corporation; |
|
|
2. |
|
Based on my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the
period covered by this report; |
|
|
3. |
|
Based on my knowledge, the financial statements, and other financial information included
in this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this
report; |
|
|
4. |
|
The registrants other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
a) |
|
Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which
this report is being prepared; |
|
|
b) |
|
Designed such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally
accepted accounting principles; |
|
|
c) |
|
Evaluated the effectiveness of the registrants disclosure controls and
procedures and presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this report
based on such evaluation; and |
|
|
d) |
|
Disclosed in this report any change in the registrants internal control over
financial reporting that occurred during the registrants most recent fiscal quarter
(the registrants fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrants
internal control over financial reporting; and |
|
5. |
|
The registrants other certifying officer and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrants auditors and
the audit committee of the registrants board of directors (or persons performing the
equivalent functions): |
|
a) |
|
All significant deficiencies and material weaknesses in the design or operation
of internal control over financial reporting which are reasonably likely to adversely
affect the registrants ability to record, process, summarize and report financial
information; and |
|
|
b) |
|
Any fraud, whether or not material, that involves management or other employees
who have a significant role in the registrants internal control over financial
reporting. |
Dated:
May 2, 2011
|
|
|
|
|
|
|
|
|
/s/ James A. Simms
|
|
|
James A. Simms |
|
|
Vice President, Chief Financial Officer |
|
|
exv32w1
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Vicor Corporation (the Company) on Form 10-Q for the
period ending March 31, 2011 as filed with the Securities and Exchange Commission on the date
hereof (the Report), I, Patrizio Vinciarelli, Chief Executive Officer of the Company, certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:
|
(1) |
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and |
|
|
(2) |
|
The information contained in the Report fairly presents, in all material respects, the
financial condition and results of operations of the Company. |
|
|
|
|
|
|
|
|
|
/s/ Patrizio Vinciarelli
|
|
|
Patrizio Vinciarelli |
|
|
President, Chairman of the Board and
Chief Executive Officer |
|
|
May 2, 2011
A signed original of this written statement required by Section 906 has been provided to the
Company and will be retained by the Company and furnished to the Securities and Exchange Commission
or its staff upon request.
exv32w2
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Vicor Corporation (the Company) on Form 10-Q for the
period ending March 31, 2011 as filed with the Securities and Exchange Commission on the date
hereof (the Report), I, James A. Simms, Chief Financial Officer of the Company, certify, pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that:
|
(1) |
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and |
|
|
(2) |
|
The information contained in the Report fairly presents, in all material respects, the
financial condition and results of operations of the Company. |
|
|
|
|
|
|
|
|
|
/s/ James A. Simms
|
|
|
James A. Simms |
|
|
Vice President, Chief Financial Officer |
|
|
May 2, 2011
A signed original of this written statement required by Section 906 has been provided to the
Company and will be retained by the Company and furnished to the Securities and Exchange Commission
or its staff upon request.