========================================================= SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 --------------------------------------------- FORM 10-Q X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES --- EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2001 ----------------------------------------------- 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) Delaware 04-2742817 (State of Incorporation) (IRS Employer Identification Number) 25 Frontage Road, Andover, Massachusetts 01810 (Address of registrant's principal executive office) (978) 470-2900 (Registrant's 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 X No --- Indicate the number of shares outstanding of each of the issuer's classes of common stock as of September 30, 2001. Common Stock, $.01 par value ----------------30,451,285 Class B Common Stock, $.01 par value -------11,930,848 =========================================================
VICOR CORPORATION INDEX TO FORM 10-Q Page ---- Part I - Financial Information: Item 1 - Financial Statements (Unaudited) Condensed Consolidated Balance Sheets at 1 September 30, 2001 and December 31, 2000 Condensed Consolidated Statements of Operations 2 for the quarters ended September 30, 2001 and 2000 and for the nine months ended September 30, 2001 and 2000 Condensed Consolidated Statements of Cash Flows 3 for the nine months ended September 30, 2001 and 2000 Notes to Condensed Consolidated Financial 4-5 Statements Item 2 - Management's Discussion and Analysis of 6-10 Financial Condition and Results of Operations Item 3 - Quantitative and Qualitative Disclosures About Market Risk 10 Part II - Other Information: Item 1 - Legal Proceedings 11-12 Item 2 - Changes in Securities 13 Item 3 - Defaults Upon Senior Securities 13 Item 4 - Submission of Matters to a Vote of 13 Security Holders Item 5 - Other Information 13 Item 6 - Exhibits and Reports on Form 8-K 13 Signature(s) 14 Note: The balance sheet at December 31, 2000 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. See accompanying notes.
FORM 10-Q PART 1 ITEM 1 Item 1 - Financial Statements Page 1 - ----------------------------- VICOR CORPORATION Condensed Consolidated Balance Sheets (In thousands) (Unaudited) Assets September 30, 2001 December 31, 2000 - ------------------------------------------------------- ------------------ ----------------- Current assets: Cash and cash equivalents $ 63,909 $ 62,916 Short-term investments 13,929 5,600 Accounts receivable, net 32,431 48,094 Note receivable 7,500 - Inventories, net 46,126 44,497 Other current assets 8,968 8,577 --------- --------- Total current assets 172,863 169,684 Property, plant and equipment, net 111,730 107,807 Notes receivable 1,758 9,066 Other assets 6,821 7,556 --------- --------- $ 293,172 $ 294,113 ========= ========= Liabilities and Stockholders' Equity - ------------------------------------------------------- Current liabilities: Accounts payable $ 6,907 $ 9,515 Accrued compensation and benefits 4,667 4,372 Accrued liabilities 7,234 9,319 --------- --------- Total current liabilities 18,808 23,206 Deferred income taxes 7,986 7,986 Stockholders' equity: Preferred Stock - - Class B Common Stock 119 120 Common Stock 370 367 Additional paid-in capital 144,656 142,573 Retained earnings 221,147 219,899 Accumulated other comprehensive income 338 214 Treasury stock, at cost (100,252) (100,252) --------- --------- Total stockholders' equity 266,378 262,921 --------- --------- $ 293,172 $ 294,113 ========= ========= See accompanying notes.
FORM 10-Q PART I ITEM 1 PAGE 2 VICOR CORPORATION Condensed Consolidated Statements of Operations (In thousands, except per share data) (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2001 2000 2001 2000 ---- ---- ---- ---- Net revenues: Product $ 50,849 $ 65,422 $153,844 $180,593 License 750 2,429 3,034 7,822 -------- -------- -------- -------- 51,599 67,851 156,878 188,415 Costs and expenses: Cost of revenue 35,614 37,821 108,863 106,462 Selling, general and administrative 11,111 11,155 32,767 32,035 Research and development 4,741 4,962 15,526 15,581 -------- -------- -------- -------- 51,466 53,938 157,156 154,078 -------- -------- -------- -------- Income (loss) from operations 133 13,913 (278) 34,337 Other income, net 42 743 2,062 2,698 -------- -------- -------- -------- Income before income taxes 175 14,656 1,784 37,035 Provision for income taxes 53 4,617 536 11,665 -------- -------- -------- -------- Net income $ 122 $ 10,039 $ 1,248 $ 25,370 ======== ======== ======== ======== Net income per common share: Basic $ 0.00 $ 0.24 $ 0.03 $ 0.60 Diluted $ 0.00 $ 0.23 $ 0.03 $ 0.59 Shares used to compute net income per share: Basic 42,369 42,216 42,328 42,284 Diluted 42,648 43,435 42,727 43,300 See accompanying notes.
FORM 10-Q PART I ITEM 1 PAGE 3 VICOR CORPORATION Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) Nine Months Ended -------------------------------------------------------------- September 30, 2001 September 30, 2000 ------------------ ------------------ Operating activities: Net income $ 1,248 $ 25,370 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 14,655 13,518 Loss on disposal of equipment 355 166 Tax benefit relating to stock option plans 714 4,985 Change in current assets and liabilities, net 9,058 (13,649) -------- --------- Net cash provided by operating activities 26,030 30,390 Investing activities: Purchases of short-term investments (8,200) - Additions to property, plant and equipment (18,265) (11,932) Proceeds from sale of equipment 7 2 Increase in notes receivable (192) (14) Decrease in other assets 48 693 -------- --------- Net cash used in investing activities (26,602) (11,251) Financing activities: Proceeds from issuance of Common Stock 1,371 7,549 Acquisitions of treasury stock - (19,646) -------- --------- Net cash provided by (used in) financing activities 1,371 (12,097) Effect of foreign exchange rates on cash 194 (114) -------- --------- Net increase in cash and cash equivalents 993 6,928 Cash and cash equivalents at beginning of period 62,916 69,109 -------- --------- Cash and cash equivalents at end of period $ 63,909 $ 76,037 ======== ======== FORM 10-Q PART I ITEM 1 PAGE 4 VICOR CORPORATION Notes to Condensed Consolidated Financial Statements September 30, 2001 (Unaudited) 1. BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements 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, they 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 only normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three- and nine-month periods ended September 30, 2001 are not necessarily indicative of the results that may be expected for the year ended December 31, 2001. For further information, refer to the consolidated financial statements and notes thereto included in the Company's audited financial statements for the year ended December 31, 2000, contained in the Company's annual report filed on Form 10-K (File No. 0-18277) with the Securities and Exchange Commission. 2. NET INCOME PER SHARE The following table sets forth the computation of basic and diluted income per share for the three and nine months ended September 30 (in thousands, except per share amounts):
Three Months Ended Nine Months Ended September 30, September 30, 2001 2000 2001 2000 ---- ---- ---- ---- Numerator: Net income $ 122 $ 10,039 $ 1,248 $ 25,370 ======== ========= ========= ========= Denominator: Denominator for basic income per share-weighted average shares 42,369 42,216 42,328 42,284 Effect of dilutive securities: Employee stock options 279 1,219 399 1,016 ------- --------- --------- --------- Denominator for diluted income per share - adjusted weighted-average shares and assumed conversions 42,648 43,435 42,727 43,300 ======== ========= ========= ========= Basic income per share $ 0.00 $ 0.24 $ 0.03 $ 0.60 ======== ========= ========= ========= Diluted income per share $ 0.00 $ 0.23 $ 0.03 $ 0.59 ======== ========= ========= ========= FORM 10-Q PART I ITEM 2 PAGE 5 VICOR CORPORATION Notes to Condensed Consolidated Financial Statements September 30, 2001 (Continued) 3. INVENTORIES Inventories are valued at the lower of cost (determined using the first-in, first-out method) or market. Inventories were as follows as of September 30, 2001 and December 31, 2000 (in thousands): 4. COMPREHENSIVE INCOME Total comprehensive income was $417,000 and $1,372,000 for the three and nine months ended September 30, 2001, respectively, and $9,931,000 and $25,010,000 for the three and nine months ended September 30, 2000, respectively. Other comprehensive income consisted principally of adjustments for foreign currency translation gains (losses) in the amounts of $231,000 and ($5,000) and unrealized gains on available for sale securities in the amounts of $64,000 and $129,000 for the three and nine months ended September 30, 2001, respectively. 5. IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS In July 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 141, (FAS 141), "Business Combinations" and No. 142, (FAS 142) "Goodwill and Other Intangible Assets." FAS 141 eliminates the pooling-of-interests methods of accounting for business combinations, except for qualifying business combinations, and further clarifies the criteria to recognize intangible assets separately from goodwill. FAS 142 eliminates the amortization of goodwill and indefinite lived intangible assets and requires periodic review for impairment. The Company is currently in the process of evaluating the impact FAS 142 will have on its financial position and results of operations. In October 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 144, (FAS 144), "Accounting for the Impairment or Disposal of Long-Lived Assets." FAS 144 supersedes FAS 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" and provides a single accounting model for long-lived assets to be disposed of. The Company is required to adopt FAS 144 for the fiscal year beginning after December 15, 2001 and is currently in the process of evaluating the impact on its consolidated financial statements.
September 30, 2001 December 31, 2000 ------------------ ----------------- Raw materials................................. $ 36,278 $ 31,341 Work-in-process.............................. 4,362 6,513 Finished goods................................ 5,486 6,643 -------- -------- $ 46,126 $ 44,497 ======== ======== FORM 10-Q PART I ITEM 2 PAGE 6 VICOR CORPORATION ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS SEPTEMBER 30, 2001 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," "plan," "assumes," and other similar expressions identify forward-looking statements. Actual results could differ materially from those projected in the forward-looking statements as a result of the risk factors set forth in this report and in the Company's Annual Report on Form 10-K for the year ended December 31, 2000. Reference is made in particular to the discussions set forth below in this Report under "Management's Discussion and Analysis of Financial Condition and Results of Operations," and set forth in the Annual Report on Form 10-K under Item 1 -- "Business -- Second-Generation Automated Manufacturing Line," "--Competition," "--Patents," "--Licensing," and "--Risk Factors," under Item 3 - "Legal Proceedings," and under Item 7 -- "Management's Discussion and Analysis of Financial Condition and Results of Operations." The risk factors contained in the Annual Report on Form 10-K may not be exhaustive. Therefore, the information contained in that Form 10-K 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. RESULTS OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 2000 Net revenues for the third quarter of 2001 were $51,599,000, a decrease of $16,252,000 (24.0%) as compared to $67,851,000 for the same period a year ago. The decrease in net revenues resulted primarily from a decrease in unit shipments of standard and custom products of approximately $14,573,000 and a decrease in license revenue of $1,679,000. The Company experienced a continued reduction in demand for its first-generation products which began in the fourth quarter of 2000. In addition, the Company experienced a reduction in demand for its second-generation products in the third quarter of 2001. The decrease in licensing revenue was principally due to the recognition of the final amounts under the license agreement with Reltec Corporation during the first quarter of 2001. Gross margin decreased $14,045,000 (46.8%) to $15,985,000 from $30,030,000, and decreased as a percentage of net revenues from 44.3% to 31.0%. The primary components of the decreases in gross margin dollars and the corresponding decrease in percentage were the decrease in net revenues and changes in the revenue mix resulting from the reduced demand for first-generation products. The Company continues to refine the design, processes, equipment and parts associated with second-generation products and is taking steps to increase the capacity and lower the costs of second-generation manufacturing. Until the Company achieves higher production volumes, higher yield levels and component cost reductions on second-generation products, gross margins will continue to be adversely affected. FORM 10-Q PART I ITEM 2 PAGE 7 VICOR CORPORATION Management's Discussion and Analysis of Financial Condition and Results of Operations September 30, 2001 (continued) Selling, general and administrative expenses were $11,111,000 for the period, a decrease of $44,000 (0.4%) over the same period in 2000. As a percentage of net revenues, selling, general and administrative expenses increased to 21.5% from 16.4%. The principal components of the $44,000 decrease were $376,000 (20.5%) in decreased sales commission costs and $270,000 (94.8%) in decreased payroll tax expense associated with the exercise of stock options. The principal components offsetting the above decreases were $494,000 (108.3%) of increased legal expense and $144,000 (3.9%) of increased compensation expense. Research and development expenses decreased $221,000 (4.5%) to $4,741,000 and increased as a percentage of net revenues to 9.2% from 7.3%. The principal component of the $221,000 decrease was $308,000 (100.0%) of decreased research and development expense associated with the operations of Vicor Japan Co., Ltd. ("VJCL") due to a realignment of their activities to applications engineering beginning in the second quarter of 2001, which is included in selling, general and administrative expenses. This was offset by $70,000 (14.0%) of increased project materials costs. Other income decreased $701,000 (94.3%) from the same period a year ago to $42,000. Other income is primarily comprised of interest income derived from invested cash and cash equivalents and short-term investments, as well as a note receivable associated with the Company's real estate transaction. Other income for the period included the write-down of an investment of $600,000, for a decline judged to be other than temporary, and obsolete equipment of $360,000. The decrease in other income from the same period in 2000 was due to the write-down of the investment and lower interest income due to a decrease in average interest rates. Income before income taxes was $175,000, a decrease of $14,481,000 (98.8%) compared to income before taxes of $14,656,000 for the same period in 2000. As a percentage of net revenues, income before income taxes decreased to 0.3% from 21.6% primarily due to the gross margin decrease as discussed above. The effective tax rate for the third quarter of 2001 was 30.3%, compared to 31.5% for the same period in 2000 due to the lower forecasted income for the full year 2001 and the effect of expected tax credits and other tax attributes. Net income per share (diluted) was $.00 for the third quarter of 2001, compared to $.23 for the third quarter of 2000, a decrease of $.23. NINE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2000 Net revenues for the first nine months of 2001 were $156,878,000, a decrease of $31,537,000 (16.7%) as compared to $188,415,000 for the same period a year ago. The decrease in net revenues resulted primarily from a decrease of unit shipments of standard and custom products of approximately $26,749,000 and a decrease in license revenue of $4,788,000. The decrease in licensing revenue was primarily due to recognition of the final amounts under the license agreement with Reltec Corporation during the first quarter of 2001. FORM 10-Q PART I ITEM 2 PAGE 8 VICOR CORPORATION Management's Discussion and Analysis of Financial Condition and Results of Operations September 30, 2001 (continued) Gross margin decreased $33,938,000 (41.4%) to $48,015,000 from $81,953,000 and decreased as a percentage of net revenues from 43.5% to 30.6%. The primary components of the decreases in gross margin dollars and percentage were due to the decrease in net revenues, changes in the revenue mix resulting from the reduced demand for first-generation products and additional provisions for inventory reserves for potential excess raw materials. Selling, general and administrative expenses were $32,767,000 for the period, an increase of $732,000 (2.3%) over the same period in 2000. As a percentage of net revenues, selling, general and administrative expenses increased to 20.9% from 17.0%. The principal components of the $732,000 increase were $1,102,000 (70.0%) of increased legal expense and $1,041,000 (9.9%) of increased compensation expense, offset by a $805,000 (16.3%) decrease in sales commission costs and $494,000 (79.8%) in decreased payroll tax expense associated with the exercise of stock options. The increase in legal expense in 2001 was in connection with activity related to the Company's patent infringement actions (see Part II - Other Information, Item 1 - Legal Proceedings). Research and development expenses decreased $55,000 (0.4%) to $15,526,000 and increased as a percentage of net revenues to 9.9% from 8.3%. The principal component of the $55,000 decrease was $711,000 (76.6%) of decreased research and development expense associated with the operations of VJCL due to a realignment of their activities to applications engineering beginning in the second quarter of 2001, which is included in selling, general and administrative expenses. This was offset by $388,000 (4.5%) of increased compensation expense and $190,000 (292.3%) of increased personnel related expenses, principally for employment recruiting, advertising and relocation expenses. Other income decreased $636,000 (23.6%) from the same period a year ago to $2,062,000. Other income is primarily comprised of interest income derived from invested cash and cash equivalents and short-term investments as well as a note receivable associated with the Company's real estate transaction. Other income decreased principally due to lower interest income due to a decrease in average interest rates. Income before income taxes was $1,784,000, a decrease of $35,251,000 (95.2%) compared to the same period in 2000. As a percentage of net revenues, income before income taxes decreased from 19.7% to 1.1% primarily due to the gross margin decrease as discussed above. The effective tax rate for the nine months ended September 30, 2001 was 30.0%, compared to 31.5% for the same period in 2000. The decrease in the effective tax rate was due to the impact of expected tax credits in 2001. Net income per share (diluted) was $.03 for the nine months ended September 30, 2001, compared to $.59 for the same period in 2000, a decrease of $.56. FORM 10-Q PART I ITEM 2 PAGE 9 VICOR CORPORATION Management's Discussion and Analysis of Financial Condition and Results of Operations September 30, 2001 (continued) LIQUIDITY AND CAPITAL RESOURCES At September 30, 2001 the Company had $63,909,000 in cash and cash equivalents. The ratio of current assets to current liabilities was 9.2:1 at September 30, 2001 compared to 7.3:1 at December 31, 2000. Working capital increased $7,577,000, from $146,478,000 at December 31, 2000 to $154,055,000 at September 30, 2001. The primary factors affecting the working capital increase were an increase in cash, cash equivalents and short-term investments of $9,322,000, the reclassification of a note receivable of $7,500,000 to a current asset as it is now due within one year and the decrease in current liabilities of $4,398,000, offset by a decrease in accounts receivable of $15,663,000. The primary sources of cash were $26,030,000 from operating activities and $1,371,000 from the issuance of Common Stock upon the exercise of stock options. The primary uses of cash for the nine months ended September 30, 2001 were for the purchases of short-term investments of $8,200,000 and additions to property and equipment of $18,265,000. The Company's primary liquidity needs are for making continuing investments in manufacturing equipment, much of which is built internally, particularly for the Company's second-generation products. The internal construction of manufacturing machinery, in order to provide for additional manufacturing capacity, is a practice which the Company expects to continue over the next several years. While manufacturing capacity for second-generation products has increased over the past several quarters, the Company continues to take steps to increase the capacity of second-generation manufacturing, which includes adding equipment and re-deploying equipment from first-generation production. In February 2001, management approved approximately $16 million in new capital expenditures to execute this plan. Through September 30, 2001, the Company has spent approximately $7,000,000 under this plan and anticipates additional spending of approximately $2,000,000 through the end of 2001. In November 2000, the Board of Directors of the Company authorized the repurchase of up to $30,000,000 of the Company's 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 of this program and the amount of the stock that may be repurchased are at the discretion of management based on its view of economic and financial market conditions. There were no stock repurchases during the nine months ended September 30, 2001. The Company believes that cash generated from operations and the total of its cash and cash equivalents, together with other sources of liquidity, will be sufficient to fund planned operations and capital equipment purchases for the foreseeable future. At September 30, 2001, the Company had approximately $1,800,000 of capital expenditure commitments. 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. FORM 10-Q PART I ITEM 3 PAGE 10 VICOR CORPORATION Financial Conditions and Results of Operations September 30, 2001 (continued) COST REDUCTION PLAN In October 2001, the Company announced a cost reduction plan which included the following temporary steps: (1) a reduced work schedule for hourly employees, (2) mandatory use of accrued personal time by salaried employees and (3) a 10% pay reduction for the Company's officers. The Company expects that additional stock options will be granted from time to time to the Company's employees in connection with the Cost Reduction Plan. 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. The Company's exposure to market risk for a change in interest rates relates primarily to the Company's cash and cash equivalents and short-term investments. As the Company's cash and cash equivalents consist principally of money market securities, which are short-term in nature, the Company's exposure to market risk on interest rate fluctuations is not significant. The Company's exposure to market risk for fluctuations in foreign currency exchange rates relates primarily to the operations of VJCL. The Company believes that this market risk is currently not material due to the relatively small size of VJCL's operations. FORM 10-Q PART II ITEM 1-6 PAGE 11 VICOR CORPORATION Part II - Other Information September 30, 2001 ITEM 1 - LEGAL PROCEEDINGS As previously disclosed in the Company's Forms 10-Q for the fiscal quarters ended March 31 and June 30, 2001, in June 1998 the Company and VLT Corporation (which has since merged with and into VLT, Inc., a wholly-owned subsidiary of the Company) filed a lawsuit in the United States District Court of Massachusetts alleging that Unitrode Corporation ("Unitrode") has infringed and is infringing U.S. Reissue Patent No. 36,098 (the "Reset Patent") entitled "Optimal Resetting of the Transformer's Core in Single Ended Forward Converters." The Reset Patent is a reissue of U.S. Patent No. 4,441,146, which issued on April 3, 1984. On January 24, 2001, the Court issued a summary judgment decision in which the Court concluded that the Reset Patent is not anticipated by certain prior art. The Court further concluded that the Reset Patent is not invalid for failure to disclose the best mode of practicing the invention, nor is it invalid for indefiniteness. The Court also concluded that certain single-ended forward converters, built by Unitrode and four of its customers using certain Unitrode integrated circuits ("chips"), had infringed the Reset Patent. The Court declined to rule on certain other matters relating to the Reset Patent, and those matters were made the subject of a jury trial, which concluded on May 25, 2001 with the jury rendering a verdict in which it upheld the validity of the Reset Patent. The jury also found that Unitrode had not induced the four customers to infringe the Reset Patent. On September 4, 2001, Unitrode filed a notice of appeal in the US Court of Appeals for the Federal Circuit seeking to overturn the May 25, 2001 jury verdict of patent validity. Vicor opposed Unitrode's appeal and filed a cross-appeal seeking to overturn the May 25, 2001 jury verdict of non-inducement. On October 23, 2001 the Company announced that it had entered into a settlement with Unitrode, under which the parties agreed to withdraw their respective appeals and dismiss their respective claims. The Company has retained its right to recover damages directly from infringers using Unitrode chips. Given the validity verdict, Vicor and VLT, Inc. are pursuing their infringement claims directly against Artesyn Technologies, Lambda Electronics, Lucent Technologies and Power-One in the United States District Court in Boston, Massachusetts. The lawsuit against Lucent was filed in May 2000 and the lawsuits against the other defendants were filed in February and March 2001. On April 6, 2001, Vicor and VLT moved to add Tyco Electronics Power Systems, Inc. as a defendant in the Lucent proceeding. Tyco Electronics Power Systems, Inc. is the entity which now operates the former power component business of Lucent. Vicor and VLT, Inc. are seeking monetary damages and injunctive relief in these suits. FORM 10-Q PART II ITEM 1-6 PAGE 12 VICOR CORPORATION Part II - Other Information September 30, 2001 (continued) On July 23, 2001, the Company announced that it had entered into a license agreement with Siemens Corporation under which Siemens acquired worldwide, non-exclusive rights to use power conversion technology covered by the Reset Patent. In connection with entering into this license agreement, the Company and VLT, Inc. agreed to dismiss their patent infringement claims against Siemens which were filed in the United States District Court in Boston, Massachusetts in March 2001. On October 2, 2001, the Company announced that it had entered into a license agreement with Magnetek, Inc. under which Magnetek acquired worldwide, non-exclusive rights to use power conversion technology covered by the Reset Patent. In connection with entering into this license agreement, the Company and VLT, Inc. agreed to dismiss their patent infringement claims against Magnetek which were filed in the United States District Court in Boston, Massachusetts in February 2001. The Company is involved in certain other litigation incidental to the conduct of its business. While the outcome of these lawsuits against the Company cannot be predicted with certainty, management does not expect these lawsuits to have a material adverse impact on the Company. FORM 10-Q PART II ITEM 1-6 PAGE 13 VICOR CORPORATION Part II - Other Information September 30, 2001 (continued) ITEM 2 - CHANGES IN SECURITIES Not applicable. ITEM 3 - DEFAULTS UPON SENIOR SECURITIES Not applicable. ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS Not applicable. ITEM 5 - OTHER INFORMATION Not applicable. ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K a. Exhibits - None. b. Reports on Form 8-K - None. FORM 10-Q PART II PAGE 14 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: November 12, 2001 By: /s/ Patrizio Vinciarelli ------------------------- Patrizio Vinciarelli President, Chief Executive Officer and Chairman of the Board (Principal Executive Officer) Date: November 12, 2001 By: /s/ Mark A. Glazer ------------------- Mark A. Glazer Chief Financial Officer (Principal Financial Officer)