☑ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) |
OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) |
OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 04-2742817 | |
(State or other jurisdiction of incorporation or organization) | (IRS employer identification no.) | |
25 Frontage Road, Andover, Massachusetts | 01810 | |
(Address of principal executive offices) | (Zip code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common Stock, par value $0.01 per share | VICR | The NASDAQ Stock Market LLC |
Large Accelerated Filer ☑ | Accelerated Filer ☐ | Non-accelerated Filer ☐ | Smaller Reporting Company ☐ | |||
Emerging growth company ☐ | ||||||
* | Pursuant to SEC guidance, this blank checkbox is included on this cover page but no disclosure with respect thereto shall be made until the adoption and effectiveness of related stock exchange listing standards. |
Title of Each Class | Number of Shares of Common Stock Outstanding as of February | |
Common Stock | ||
Class B Common Stock |
PART I
In this Annual Report on Form
Our consolidated operating results are affected by a wide variety of factors that could materially and adversely affect revenues and profitability, including the risk factors described in Item 1A of this Annual Report on Form
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ITEM 1. | BUSINESS |
Overview
We design, develop, manufacture, and marketsmarket modular power components and power systems for converting electrical power (expressed as “watts,” and represented by the symbol “W”, with wattage being the product of voltage, expressed as “volts,” and represented by the symbol “V,” and current, expressed as
Transformation refers to the process of increasing or decreasing an AC voltage; isolation refers to the electrical separation, for safety, of primary and secondary voltages in a transformer; rectification refers to the process of converting a voltage from AC to DC and/or from DC to AC; and regulation refers to the process of providing a near constant voltage under a range of line and load conditions. Because numerous applications requiring different voltages, currents, and varied power ratings may exist within an electronically-powered device, and system power architectures themselves vary, we offer an extensive range of products and accessories in numerous application-specific configurations. We believe our product offering is among the most comprehensive in the market segments we serve.
Our strategy, competitive positioning, and product offerings are all based on highly differentiated product performance, reflecting our anticipation of the evolution of system power architectures and customer performance requirements. Since the Company was founded, we have pursued continuous innovations in product design and achievements in product performance, largely enabled by our focus on the research and development of advanced technologies and processes, often implemented in proprietary semiconductor circuitry, materials, and packaging. Reflecting this strategy, we categorize our offerings as either “Advanced Products” or “Brick Products,” generally based on design, performance, and form factor considerations, as well as the range of evolving applications for which the products are appropriate.
Our competition varies, depending on the market segment and application. Generally, we compete with developers and manufacturers of integrated circuits and semiconductor-based modules when addressing the needs of customers in enterprise computing and other market segments with implementations of our proprietary Factorized Power Architecture
Our website, www.vicorpower.com, sets forth detailed information describing our products, the applications for which they may be used, and our suite of design tools. The information contained on our website is not a part of, nor incorporated by reference into, this Annual Report on FormAct.
We are headquartered in Andover, Massachusetts, where our manufacturing facility is located. Our wholly-owned subsidiaries,subsidiary, VICR Securities Corporation, and VLT, Inc., also areis located in Andover, Massachusetts. Our other domestic offices are located in Santa Clara, California, Lombard, Illinois, and Lincoln, Rhode Island. Our two Vicor Custom Power
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We have established individual subsidiaries or unincorporated branch offices outside of the United States, which we call Technical Support Centers (“TSCs”), to conduct preparatory and auxiliary services in support of the Company. Vicor Japan Company, Ltd. (“VJCL”), our 92.5%-owned Japanese subsidiary, which is engaged in sales and customer support activities exclusively for the sale of certain products customized by VJCL for the Japanese market, is headquartered in Tokyo, Japan.
In August 2020, our subsidiary, VI Chip Corporation (“VI Chip”)VLT, Inc., which was a vehicle for licensing technologies, was merged with and into the Company, and its operations and personnel were reassigned. On December 30, 2019, we closed Vicor B.V., a
Our remaining subsidiaries and their legal domicile are set forth in Exhibit 21.1 to this Annual Report on Form
Vicor was incorporated in Delaware in 1981, and we completed an initial public offering in May 1991. The Company has two classes of common stock outstanding: shares of our “Common Stock,” listed on The NASDAQ Stock Market under the ticker symbol VICR, and shares of our Class B common stock, which are not subject to registration pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and are not listed on any exchange. (Please refer to Exhibit 4.2 to this Form
Our Strategy
Our strategy emphasizes demonstrable product differentiation and a value proposition based on competitively superior solution performance, advantageous design flexibility, and a compelling total cost of ownership (“TCO”). Since the Company was founded, our competitive position has been maintained by continuous innovations in product design and achievements in product performance, largely enabled by our focus on the research and development of advanced technologies and processes, often implemented in proprietary semiconductor circuitry, materials, and packaging. Many of our products incorporate patented or proprietary implementations of high-frequency switching topologies, which enable the design of power system solutions more efficient and much smaller than conventional alternatives. This efficiency and small size is enabled by our proprietary switching circuitry and magnetic structures, as well as our use of highly differentiated packaging.
Power system performance is based primarily on conversion efficiency (i.e., the ratio of output power (i.e., watts) to input power) and power density (i.e., the amount of output power divided by the volume of the power system). Higher efficiency and density contribute to superior thermal performance, as the
Our strategy complements performance superiority with design flexibility (i.e., ease of use), as our products can be utilized individually or combined, given their level of integration, to create power system solutions specific to a customer’s precise needs. We articulate this positioning through our “Power Component Design Methodology,” an element of our differentiation strategy, which is our approach to providing our customers the modular products, design tools, and engineering support to enable the rapid design of advanced power system solutions by customers and, thereby, accelerate their own product development cycles. Our value proposition is supported by a compelling TCO, representing the cost of acquiring and operating a power system over its useful life, driven by competitive product pricing, high reliability, and demonstrably lower electricity costs.
Our earliest market focus was on telecommunications infrastructure, which uses a standard DC distribution voltage of 48V (nominally 48V to 54V), the highest distribution voltage that meets Safety
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offer products addressing other DC voltage standards (e.g., 380V for power distribution in data centers, 110V for
Our product portfolio also includes families of
Reflecting our strategy, competitive positioning, and product offerings are all based on highly differentiated product performance, reflecting our anticipation of the evolution of system power architectures and customer performance requirements. Reflecting this, we categorize our offerings as either Advanced Products or Brick Products, generally based on design, performance, and form factor considerations, as well as the range of evolving applications for which the respective categories are appropriate. The Advanced Products category consists of our most innovative products, which are used to implement our proprietary distribution architecture, FPA,, a highly differentiated approach to power distribution that enables flexible, rapid power system design using individual components optimized to perform a specific function. The Brick Products category largely consists of integrated power systemsconverters (i.e., “bricks”), incorporating multiple conversion stages, used in conventional power systems architectures including CPA, DPA, and IBA.
Given the growth profiles and performance requirements of the market segments served with Advanced Products and Brick Products, our strategy involves a transition in organizational focus, emphasizing investment in Advanced Products design and manufacturing, targeting high growth market segments with a
Our Products
Reflecting our Power Component Design Methodology, we offer a comprehensive range of modular building blocks enabling rapid design of a power system specific to a customer’s precise needs. Based on design, performance, and form factor considerations, as well as the range of evolving applications for which the products are appropriate, we categorize our product portfolios as either Advanced Products or Brick Products. We also sell a range of electrical and mechanical accessories for use with our products.
Advanced Products
We continue to invest in the research and development of power system technologies and product concepts addressing two accelerating trends, the first toward higher required conversion efficiencies, and the second toward more and diverse
FPA, which is focused on, but not limited to, 48V DC distribution solutions, increases power system conversion efficiency, density, and power delivery performance by “factorizing” (i.e., separating) the power conversion process into individual components, reducing the design limitations, thermal management challenges, and scaling trade-offs associated with conventional architectures for DC voltage distribution. All such architectures follow a sequence whereby a DC voltage is first transformed, or reduced, and that lower voltage subsequently conducted (i.e., “bussed”) across the circuit to the load“load” (i.e., the point of use), where the voltage is
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space utilization and thermal management. A regulated voltage approaching 48V is bussed across the circuit to the transformation module, which performs what we refer to as current multiplication, adjacent to the load. Bussing high voltage minimizes the current levels across the circuit, thereby minimizing the potential for distribution losses and reducing the volume of the conduit (e.g., the copper wire). Placing the relatively low noise, low heat transformationcurrent multiplication module adjacent to the load further minimizes the potential for distribution losses associated with bussing a low operating voltage to the load and reduces the potential influence of the power system on the performance of the load.
A typical FPA implementation for delivering 48V DC from a server backplane to a 1.0V microprocessor would consist of three modules: a PRM
The advantages of FPA over legacy power distribution architectures are most evident in high performance computing applications. Our
We are unaware of any competitive solution for AI acceleration offering the power system performance and density of
Our latest innovation for powering processors is vertical power delivery, which involves mounting our highest-performance solutions on the underside of the motherboard, opposite the GPU or AI ASIC, thereby enabling a further reduction in lower efficiency.distribution losses at the load, yielding higher efficiency and unprecedented power density. Vertically-mounting the solution allows unrestricted access to microprocessor input/output I/O pins on the top side of the motherboard, thereby improving I/O speed and memory access, which are a priority for GPUs and AI ASICs in AI applications. We are in the final development stages of our vertical power delivery solutions and shipped prototype products to a certain customer in 2022.
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Our proprietary technologies enable us to offer a range of Advanced Products, in various package formats across functional families, applicable to other market segments and power distribution architectures other than FPA. Within computing, these market segments include AC to DC voltage conversion and DC voltage distribution in server racks and high voltage conversion across datacenter infrastructure. We also offer Advanced Product power system solutions for aerospace and aviation (e.g., for use in satellites, unmanned aerial vehicles, and various airframes, including battery-powered aircraft, for which small size, light weight, and design flexibility are advantageous); defense electronics (e.g., for use in airborne, seaborne, or field communications and radar, for which reliability in harsh environments is a priority); industrial automation, instrumentation, and test equipment (e.g., for use in robotics and semiconductor testing, for which high power levels and precision performance are required); solid state lighting (e.g., for use in large scale displays and signage, for which, again, small size, light weight, and design flexibility are advantageous );advantageous); telecommunications and networking infrastructure (e.g., for use in high throughputhigh-throughput data distribution and pole-mounted small-cell base stations); and vehicles (e.g., in autonomous driving applications, electric vehicles, and hybrid electric vehicles).
Annual revenue associated with the sale of Advanced Products was approximately 28.6%61.0%, 35.9%47.4%, and 33.4%35.8% of the Company’s consolidated revenue for the years ended December 31, 2019, 2018,2022, 2021, and 2017,2020, respectively. Sales of Advanced Products declined sequentially from 2018 to 2019, falling as a percentage of our total revenue grew in 2022 primarily due to an unexpected and sustained period of low demand across thecloud computing market, notably in the data center and hyperscalers segments we target. This low demand was caused by the buildup of excess inventory levels at contract manufacturers during the second half of 2018 and planning uncertainty associated with the ongoing trade dispute between Chinainfrastructure growth and the U.S.,further adoption of AI systems within the two largest geographic markets we serve. cloud.
We anticipate the percentage of periodic revenue associated with the sale of Advanced Products will increase in the future, given our strategic and organizational focus and the relatively higher expected growth of the market segments we serve.
Brick Products
Brick-format converters provide the integrated transformation, rectification, isolation, regulation, filtering, and/or input protection necessary to power and protect loads, across a range of conventional power architectures. We offer a wide range of brick-format
We also integrate these converters and components into complete power systems representing standard or custom
We market our standard Brick Products emphasizing “mass customization,” using highly automated, efficient, domestic manufacturing to serve customers with product design and performance requirements, across a wide range of worldwide market segments, which could not be met by high-volume oriented competitors. We focus on distributed power implementations, for which our brick-format products are well-suited, in market segments such as aerospace and defense electronics, industrial automation, industrial equipment, instrumentation and test equipment, and transportation (e.g., rail). Our customers range from independent manufacturers of highly specialized electronic devices to larger original equipment manufacturers (“OEMs”) and their contract
Annual revenue associated with the sale of Brick Products, representing the sum of third-party sales of the products sold under the Brick Products line, which were sold under the former the Brick Business Unit operating segment, inclusive of such sales of our Vicor Custom Power and VJCL subsidiaries, was approximately 71.4%39.0%, 64.1%52.6%, and 66.6%64.2% of the Company’s consolidated revenue for the years ended December 31, 2019, 2018,2022, 2021, and 2017,2020, respectively.
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Customers and Backlog
The applications in which our Advanced Products and Brick Products are used are typically in the higher-performance, higher-power segments of the market segments we serve. With our Advanced Product lines, our customers are concentrated in the data center and hyperscaler segments of enterprise computing, in which our products are used for voltage distribution on server motherboards, in server racks, and across datacenter infrastructure, although we also target applications in aerospace and aviation, defense electronics, industrial automation, instrumentation, test equipment, solid state lighting, telecommunications and networking infrastructure, and vehicles (notably in the autonomous driving, electric vehicle, and hybrid vehicle niches of the vehicle segment). With our Brick Product lines, we serve customers concentrated in aerospace and defense electronics, industrial automation, industrial equipment, instrumentation and test equipment, and transportation (notably in rail and heavy equipment applications). With our strategic emphasis on larger, high-volume customers, we expect to experience a greater concentration of sales among relatively fewer customers.
As of December 31, 2019,2022, the Company’s order backlog was approximately $104,164,000,$304,392,000, compared to $102,963,000$345,594,000 as of December 31, 2018.2021. Backlog, as presented here, consists of orders for products for which shipment is scheduled within the following 12 months, subject to our scheduling and cancellation policies.
The lead times between receipt and acceptance of an order and our shipment of the product remained long through 2019, although overall conditions acrosshave increased, largely as a consequence of the global electronics supply chain generally stabilized, allowingCOVID-19 pandemic and in particular in 2022, the Company to shortenresulting lock-downs in China associated with its zero-COVID policy. The COVID-19 pandemic has caused widespread delays in production and delivery. In response, during the second quarter of 2021, we extended our quoted lead times for certain products. As of December 31, 2019, we were quoting average lead times of 16 weeksdelivery to customers consistent withto 26-32 weeks depending on the lead times quoted asproduct family. Customer demand has outstripped capacity and semiconductor suppliers have allocated capacity. In addition, suppliers have increased component pricing. In the second quarter of December 31, 2018, although during 20192021 and in the first quarter of 2022, we quoted lead times as high as 20 weeks for certain products. We expect supply availability for certain materials and componentsincreased our prices in response to remain uncertain for the foreseeable future, and we may further increase inventory levels for these components and raw materials, as necessary. Accordingly, we may notcomponent cost increases that could no longer be able to reduce delivery lead times across all product lines for the foreseeable future.
A portion of our revenue in any quarter is, and will continue to be, derived from “turns” volume, representing either orders booked and shipped in the same quarter or orders for which customers have requested accelerated delivery from a later quarter to the current quarter. This volume generally has been associated with orders for Brick Products. Over the past three years, the volume of orders booked and shipped within a quarter has declined steadily, reflectingDue to lengthened delivery lead times and supply constraints across the electronics industry.industry, the volume of turns orders has been lower on average in the last few years than in prior years. However, over the same period, the volume of orders for which customers have requested accelerated delivery has increased, which we believe to be a reflection of improved conditionsthe demand for our products in many of the market segments we serve with Brick Products.key end markets and our limited capacity to meet this demand. An additional influence on turns volume has been our transition to larger OEM customers, which typically schedule large volumes for delivery over multiple quarters and frequently reschedule deliveries for either earlier or later shipment. Average quarterly turns volume averagedwas approximately 27%11% of 20192022 revenue, approximately 20%19% of 20182021 revenue, and approximately 36%14% of revenue2020 revenue.
In the second half of 2022, the semiconductor industry experienced a slow down due to a number of factors. The order rate from customers declined in this period. We believe the decline in order rate related, in part, to the general slow down in the semiconductor industry. In addition, order rates from contract manufacturing customers that manufacture for 2017.
Competition and Market Characteristics
The competitive characteristics of the markets we serve with Advanced Products and Brick Products can differ significantly. For example, in the higher-performance segments of computing we serve, our Advanced
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highly differentiated alternatives to commodity solutions for customers seeking high levels of performance. The customers we serve with Advanced Products, typically on a direct basis, are in market segments generally characterized by an emphasis on product performance differentiation, a compelling TCO, relatively extended and highly competitive design cycles, and product life cycles of generally less than three years. In contrast, the Brick Products competitive landscape is relatively fragmented, with large-scale,
The size and growth characteristics of the markets we serve with Advanced Products and Brick Products also can differ significantly, and the range and quality of market data is problematic, making summary statements about these markets challenging.
For 2022, exports to China and
For 2022, exports to Taiwan were approximately $105,226,000, representing approximately 26.4% of total revenue has experienced low to middle single-digit growthand an approximately 82.3% increase over the three years prior to 2019. Given the maturity and fragmentation2021 total of the market segments in which we compete and our competitive positioning within these market segments, we anticipate revenueapproximately $57,711,000. Taiwan is a contract manufacturing site for Brick Products will continue to follow trends in industrial activity on a regional basis, with expectations of continued stability in U.S. segments and changes in export activity varying with economic conditions in Europe and Asia, with Chinese demand further influenced by the China — U.S. trade dispute. In 2019, the Chinese governmentcertain high performance compute OEMs that drove increased its pressure on Chinese manufacturers to meet the
Despite our minor share in the overall merchant market and the competitive presence of numerous, far larger vendors in the market segments we serve with both Advanced Products and Brick Products, we believe we maintain an advantageous competitive position in those market segments. Notably,While we believe we have the largesta significant share of 48V power distribution opportunities within the segments of the computing marketmarkets we serve. However,serve, there are numerous competitors across these market segments that have significantly greater engineering, financial, manufacturing, and marketing and sales resources, as well as longer operating histories and longer customer relationships than we do.
Marketing and Sales
We reach and serve customers through several sales channels: a direct sales force; a network of independent sales representative organizations in North America and South America; independent, authorized
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each offering application engineering and sales support for our channel partners. Domestic TSCs are located in: Andover, Massachusetts; Lombard, Illinois; and Santa Clara, California. International TSCs are located in: Beijing, China; Hong Kong, China; Shanghai, China; Shenzhen, China; Munich, Germany; Bangalore, India; Milan, Italy; Tokyo, Japan; Seoul, South Korea; Taipei, Taiwan (Republic of China); and Camberley, United Kingdom. Customers do not place purchase orders with TSCs, but do so directly with the Company or with our distributors.channel partners. In Japan, customers place purchase orders with authorized distributors or, for certain custom products, VJCL.
We generally sell our products on the basis of our standard terms and conditions, and we most commonly warrant our products for a period of two years. Effective January 1, 2017, we extended theThe warranty period tois three years for a range of H Grade, M Grade, and MI Family
Because of the technically complex nature of our products and the applications they address, we maintain an extensive staff of Field Applications Engineers to support our own sales and customer support activities, as well as those of our channel partners. Field Application Engineers, based in our TSCs, provide direct technical support worldwide by reviewing new applications and technical matters with our channel partners in support of existing and potential customers. Product Line Engineers,Development Engineering is located in our Andover headquarters, where our Product Development Engineers support the Field Application Engineers assigned to all of our TSCs.
Our direct sales force focuses on higher-volume opportunities involving Advanced Products with global OEMs (and the Original Design Manufacturers (“ODMs”) and contract manufacturers serving these OEMs). Because of the high level of product differentiation and the increasing complexity and challenges of customer requirements, we have experienced, and may continue to experience, extended design cycles before production orders are received.
We also reach customers through the electronic commerce capabilities of our website, www.vicorpower.com. Registered, qualified customers in the United States, Canada, and certain European countries are able to purchase selected products online.
Our
As stated, our strategy involves maintaining high levels of customer engagement and support for design and engineering, which has resulted in significant expansion of our sales and application engineering infrastructure over historical levels, notably across Asia.levels. We incurred approximately $43,387,000, $42,533,000,$49,708,000, $46,602,000, and $40,438,000$43,396,000 in marketing and sales expenses in 2019, 2018,2022, 2021, and 2017,2020, respectively, representing approximately 16.5%12.5%, 14.6%13.0%, and 17.7%14.6% of revenues in 2019, 2018,2022, 2021, and 2017,2020, respectively.
Manufacturing, Quality Assurance, and Supply Chain Management
Our 230,000 sq. ft. manufacturing facility, consisting of approximately 320,000 square feet, is located in Andover, Massachusetts, where we are headquartered. In this facility, we manufacture Brick Products, with the exception of custom products produced by our Vicor Custom Power and VJCL subsidiaries, and Advanced Products, with
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the exception of certain products designed and sourced by personnel from our former subsidiary, Picor, which, given its fabless model, are manufactured, packaged, and tested by third party wafer foundries and packaging contractors in the United States and Asia.
Our primary manufacturing processes consist ofinvolve steps common to automated assembly of electronic components onto printed circuit boards; automatic testingelectronics devices. We also have developed and employ proprietary manufacturing processes that contribute to the differentiated performance of components; wave, reflow and infrared solderingour devices, including the innovative electroplating of assembled components; encapsulation or over-moldingour SM-ChiP© modules discussed below. During the third quarter of converter subassemblies and assemblies; final environmental stress screening of certain products; and product inspection and testing using automated equipment. These processes are largely automated, but their labor components require relatively high levels of skill and training.
As previously disclosed, in December 2017 we began collaboratingpartner with a highly-specialized third-party developer of electroplating contractor capableprocesses and equipment, which performs certain elements of meeting our near-term volume expectations for our
Product quality and reliability are critical to our success and, as such, we emphasize quality and reliability in our design and manufacturing activities. We follow industry best practices in manufacturing and are compliant with ISO 9001 certification standards (as set forth by the International Organization for Standardization). Our quality assurance practices include rigorous testing and, as necessary,
Components and materials used in our products are purchased from a variety of domestic and international vendors. Generally, the global electronics supply chain has stabilized, but leadcontinued to be impacted by the COVID-19 pandemic in 2022. Lead times for delivery of certain raw materials required for the manufacturing of our products remain extended. Most of these raw materials are available from multiple sources, whether directly from suppliers or indirectly through distributors, and, during 20192022 we continued to opportunistically expand certain raw material inventories to offset the uncertainties associated with availability and lead times.
Certain Advanced Products developed by personnel from Picor,and semiconductor devices used in our former subsidiary,production are manufactured by a limited number of wafer foundries, with packaging and test services provided by a limited number of providers. Our proprietary switching controllers were designed by Picor and are sourced internally, and wethird parties. We rely on these wafer foundries and servicepackaging and test providers for supply continuity and sufficiency of these critical semiconductor devices. Similarly, manyThroughout the majority of 2022, the semiconductor test and packaging segment of the proprietary semiconductors we use, for whichglobal electronics supply chain experienced well-publicized capacity constraints, and, as a result, we have eithercontinued to experience unpredicted delays in receipt of certain semiconductor components from our packaging and test vendors. To date, these delays have not had a manufacturing licensematerial impact on our ability to meet customer delivery requirements. In response to current schedule uncertainties, we are seeking alternate providers of packaging and test services and may further increase inventory levels for these semiconductor components, when possible. Should these capacity constraints continue or ownershipworsen and we are unable to obtain the necessary volumes of required semiconductor components, we may not be able to meet delivery commitments for certain customers and may not be able to reduce delivery lead times for the designs, are sourced from third party foundries.foreseeable future. In the later part of 2022, the semiconductor industry experienced a downturn, and we believe the resulting reduction in orders on the industry will serve to loosen supply chains, though specific supply constraints on certain components remain a challenge.
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To date, we have not experienced material delays or reduced raw material availability as a result of trade disputes between the United StatesU.S. and China, including the imposition in 2018 of import tariffs under the provisions of Section 301 of the Trade Act of 1974 (19 U.S.C. § 2411) (“Section 301 Tariffs”) on certain Chinese goods imported into the United States. For the year ended December 31, 2019,2022, costs associated with tariffs totaled approximately $5,280,000.$10,201,000, an increase of 52.8% over the $6,678,000 in costs incurred for the year ended December 31, 2021. We continue to assess the impact of these costs and are actively evaluating alternative sources of raw materials. We also have engaged a consultant to assist us with implementing afiled “duty drawback” process, by which we may fileapplications with U.S. Customs and Border Protection for the recovery of tariffs paid on raw materials used to produce products we subsequently exported. At this time,We recovered $229,000 and $676,000 for the years ended, December 31, 2022 and December 31, 2021, respectively, however, we are not able to estimate the amount or timing of such recovery or the timing thereof.
Intellectual Property
Our competitive positioning has been, and will continue to be, supported by our long-standing commitment to research and development of power distribution architectures, power conversion technologies, advanced packaging and manufacturing, and innovative approaches to solving customer problems. Our research and development activities have resulted in important domestic and foreign patents protecting our products and enabling technologies, as well as proprietary trade secrets associated with our use of certain components and materials of our own design and proprietary manufacturing, packaging, and testing processes. We incurred approximately $46,588,000, $44,286,000,$60,594,000, $53,114,000, and $44,924,000$50,916,000 in research and development expenses in 2019, 2018,2022, 2021, and 2017,2020, respectively, representing approximately 17.7%15.2%, 15.2%14.8%, and 19.7%17.2% of revenues in 2019, 2018,2022, 2021, and 2017,2020, respectively.
We believe our intellectual property affords advantages by building fundamental and multilayered barriers to competitive encroachment upon key features and performance benefits of our principal product families. Our patents cover the fundamental switching topologies used to achieve the performance attributes of our converter product lines; converter array architectures; product packaging design; product construction; high frequency magnetic structures; and automated equipment and methods for circuit and product assembly.
As of December 31, 2019,2022, in the United States, we have been issued 114 total patents. These122 patents havehaving expirations scheduled between 20202023 and 2038. We also2040 and have filed a number of patent applications which are still pending, many of which are expected to issue as patents in the United States and certain countries of Europe and Asia, including applications that would extend the life of current patents.2023. We have vigorously protected our rights under these patents and will continue to do so. Although we believe patents are an effective way of protecting our technology, there can be no assurances our patents will prove to be enforceable in any given jurisdiction.
In addition to generating revenue from product sales, we seek to license our intellectual property. In granting licenses, we generally retain the right to use our patented technologies and manufacture and sell our products in all licensed geographic areas and fields of use. Licenses are granted and administered through our
Human Capital Management
High-caliber employees are important to achieving Vicor’s mission of providing the highest performance power solutions to meet the requirements of the most demanding applications. In order to maintain leadership in power systems design in a highly competitive employment market, attracting and retaining the best team worldwide is critical. Accordingly, we offer compelling compensation and benefits, foster a culture of innovation in which employees are empowered to do (and are rewarded for) their best work, and seek to establish Vicor as a meaningful contributor to the communities in which we operate, further strengthening the bonds between employees and the Company.
As of December 31, 2019,2022, we had 993 full time1,088 full-time employees, of which 989 were in the U.S. and 21 part time employees. The number of part time employees varies throughout any year, largely based on the number of production shifts we may require at a particular time, as well as the number of college and graduate students participating99 were in short term
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We recruit from colleges and universities, with a focus on specific engineering disciplines. In collaboration with certain universities, we maintain a student “Co-Op” program, whereby qualifying undergraduate and graduate students work at our Andover facilities for one or two semesters, receiving course credit towards their graduation. In recent years, we have had as many as approximately two dozen participants per semester, with a substantial percentage of participants receiving offers of full-time employment.
Our compensation program is designed to attract and reward talented individuals who possess the skills necessary to support our business objectives, assist in the achievement of our strategic goals, and create long-term value for our stockholders. We provide employees with compensation packages that include a competitive base salary or wage rate and benefits such as life and health (medical, dental, and vision) insurance, supplemental insurance, paid time off, paid parental leave, and a 401(k) plan (with Company match). Generally (and subject to local laws), new employees are awarded non-qualified options for the purchase of the Company’s common stock. Depending on an employee’s role, he or she may be eligible for annual incentive bonuses and periodic awards of non-qualified options based on the performance of the Company and that of the employee. We believe a compensation program with appropriate long-term incentives aligns employee and stockholder interests in increasing the value of the Company.
We emphasize and encourage employee development and training. To empower employees to reach their potential, we provide a range of development programs and opportunities, including in-house training programs and tuition reimbursement for those pursuing outside certification or degrees.
We seek to support the communities in which we operate and believe this commitment contributes to our continued success depends, in part, on our abilityefforts to attract and retain qualified personnel. Although there is strong demandemployees. We also partner with a range of non-profit organizations and have had notable success in our collaboration for qualified personnel, we have not to date experienced meaningful difficultyover two decades with the Crest Collaborative of Methuen, MA, a local advocacy agency, in attractingproviding enriching employment opportunities for individuals with disabilities.
For more information on our employee and retaining sufficient engineering and technical personnel to meetcommunity initiatives, please see our needs (see Part I, Item 1A — “Risk Factors”)Corporate Social Responsibility webpage at www.vicorpower.com/about-the-company/corporate-social-responsibility.
Available Information
We maintain a website with the address www.vicorpower.com and make available free of charge through this website our Annual Reports on Form of 1934 (“the Exchange Act”), as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the SEC. We also make available on our website our Code of Business Conduct, as well as the charters for the Audit and Compensation Committees of our Board of Directors.
While our website sets forth extensive information, including information regarding our products and the applications in which they may be used, such information is not a part of, nor incorporated by reference into, this Annual Report on Form
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ITEM 1A. | RISK FACTORS |
This Annual Report on Form
Operational Risks
Our future operating results are difficult to predict and are subject to fluctuations.
Our operating results, including revenues, gross margins, operating expenses, and net income (loss), have fluctuated on a quarterly and annual basis. Our strategic focus on higher volume opportunities with OEMs, ODMs, and contract manufacturers has caused the actions of a relative few such customers to disproportionately influence our operating results. Unanticipated delays in purchase orders from, and shipments to, certain large customers have resulted in lower than expected revenue. Similarly, our strategic focus on the development of market-leading technologies and manufacturing processes, often implemented in proprietary semiconductor circuitry, materials, and packaging, has exposed the Company to the risks and costs of delays in such development and the use of a relatively few number of suppliers of proprietary circuits and materials or providers of proprietary services.
Despite ourrecent profitability during 2019,trends, we cannot predict if we will maintain sustained profitability. Our future operating results may be materially influenced by a number of factors, many of which are beyond our control, including:
• | changes in demand for our products and for our customers’ end-products incorporating our products, as well as our ability to respond efficiently to such changes in demand, including changes in delivery lead times and the volume of product for which orders are accepted and the product shipped within an individual quarter; |
our ability to manage our supply chain, inventory levels, and our own manufacturing capacity or that of third-party partners, particularly in the event of delays or cancellation of significant customer orders;orders or in the event of delays or cost increases associated within our supply chain;
our ability to effectively coordinate changes in the mix of products we manufacture and sell, while managing our ongoing transition in organizational focus and manufacturing infrastructure to Advanced Products from Brick Products;
our ability to provide and maintain a high level of sales and engineering support to an increasing number of demanding, high volume customers;
the ability of our third party suppliers and service subcontractors and manufacturers to supplyprovide us with sufficient quantities of high quality products, components, and/or services on a timely and cost-effective basis;
the effectiveness of our ongoing efforts to continuously reduce productmanufacturing costs per unit and manage operating expenses;
our ability to absorb and mitigate the impact of inflation on our operating results;
our ability to utilize our manufacturing facilities and personnel at efficient levels, maintaining sufficient production capacity and necessary manufacturing yields;
our ability to plan, schedule, execute, and fundexecute capacity expansion, including the anticipated additionstart up in 20202023 of approximately 90,000 square feet to our Andover manufacturing facility;
the timing of our new product introductions and our ability to meet customer expectations for timely delivery of fully qualified products;
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the timing of new product introductions or other competitive actions (e.g., product price reductions) by our competitors;
the ability to hire, retain, and motivate qualified employees to meet the demands of our customers;
intellectual property disputes;
litigation-related costs;costs, which may be significant;
adverse economic conditions in the United StatesU.S. and those international marketsforeign countries in which we operate, as well as our ability to respond to rapidunanticipated developments, such as the imposition of tariffs or trade restrictions;
adverse budgetary conditions within the U.S. government, particularly the Department of Defense, which continue to influence spending on current and anticipated programs into which we sell or anticipate to sell our products;
costs related to compliance with increasing worldwide governance, quality, environmental, and other regulations;
costs and
• | the effects of events outside of our control, including public health emergencies, natural disasters, terrorist activities, political risks, international conflicts, information security breaches, communication interruptions, and other force majeure. |
As a result of these and other factors, we cannot assure you we will not experience significant fluctuations in future operating results on a quarterly or annual basis. In addition, if our operating results do not meet the expectations of investors, the market price of our Common Stock may decline.
Global economic uncertaintyand political uncertainties, notably those associated with trade policy, could materially and adversely affect our business and consolidated operating results.
For the years ended December 31, 2022, 2021, and defense electronics market segments2020, revenues from sales outside the United States were steady for the year. However, conditions67.6%, 67.0%, and 64.4%, respectively, of our total revenues. Net revenues from customers in China and Hong Kong, accounted for approximately 18.8% in 2022, approximately 27.5% in 2021, and approximately 31.4% in 2020, respectively, of total net revenues. We expect international sales, notably in Asia, will continue to be a significant component of total sales, since many of the OEMs and ODMs we target as customers are domiciled offshore, and such customers increasingly utilize offshore contract manufacturers, and rely upon those contract manufacturers to place orders directly with us. We also expect international revenue from our largest international market, continueddistributors to deteriorate throughcontinue to increase.
To date, we have not experienced material delays or reduced raw material availability as a result of trade disputes between the year, contributing to the cyclical decline of certain marketsU.S. and geographies around the world. Conditions in the enterprise computing supply chain, notably those associated with the data center and hyperscaler categories, caused customer uncertainty across Asia and reduced demand for our products. Our exports to China, declined through the year, in part, due toincluding the imposition by Chinain 2018 of import tariffs under the provisions of Section 301 of the Trade Act of 1974 (19 U.S.C. § 2411) (“Section 301 Tariffs”) on certain U.S.Chinese goods imported into China in response to the impositionUnited States. However, the costs of Section 301 Tariffs have had a material impact on our profitability. For the year ended December 31, 2022, Section 301 Tariffs totaled approximately $10,201,000, an increase of 52.8% over the $6,678,000 incurred for 2021. For 2022, 2021 and 2020, Section 301 Tariffs totaled approximately 2.6%, 1.9% and 2.4%, respectively, of annual revenue, representing a material reduction in our gross profit margin as a percentage of annual revenue.
We continue to evaluate alternative sources of raw materials, and in 2020, 2021, and 2022 we qualified non-Chinese vendors for certain importedhigh-volume raw materials and components. We anticipate a reduction in Section 301 Tariffs we incur during 2023, given the ongoing transition to non-Chinese vendors, but we are not able to estimate the amount of such reduction, if any. Similarly, we cannot predict if or when the U.S. government may reduce or eliminate Section 301 Tariffs.
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We also have filed “duty drawback” applications with U.S. Customs and Border Protection for the recovery of Section 301 Tariffs paid on raw materials and components used to produce products we subsequently exported. We recovered $229,000 for the year ended December 31, 2022, however, we are not able to estimate the amount or timing of any additional recoveries, and there can be no assurance that there will be any additional recoveries.
In 2019, China implemented reciprocal inbound tariffs of up to 25% on products exported from the U.S., including all of our products. We do not believe these tariffs, incurred by our Chinese goodsand Hong Kong distributors, have had a material impact on the unit volume or dollar value of our exports to China, which we attribute to the differentiated performance of our products in market segments in which we have an established presence. However, we cannot predict the long-term influence of these tariffs on our competitive position in China, especially in light of the increased pressure by the United States. In addition, our near-term forecastsChinese government on Chinese manufacturers to meet the “China 2025” mandate for targeted development of Chinese technology sectors. Under this mandate, domestic technology vendors are explicitly favored over foreign vendors such as Vicor. We believe we experienced reduced demand forin certain segments (e.g., rail), notably in 2019, reflecting the significant role of state-owned enterprises in those segments. We regularly assess the competitive position and profitability of certain product lines sold in China and Hong Kong, and may choose to reduce our products may be revisedproduct offerings if the negative impact of the coronavirus on the Chinese economy is sustained.
Uncertain macroeconomic conditions, including extended trade disputes, and the relative strength of the U.S. Dollar and rising interest rates, may reduce
In October 2022, the U.S. Government instituted export controls of certain semiconductor technologies to China, and subsequent to that action, the U.S. Department of Commerce added certain China-based companies to its entity list, which precludes shipment of semiconductor products to these companies without a license. These restrictions could cause a reduction in demand for our products from contract manufacturing customers that manufacture for high performance compute OEMs, as well as a reduction in exports to customers on the entity list. We cannot be certain what the ultimate impact of these export controls will be on our business, financial condition, and results of operations.
Our operating results recently have been influenced by a limited number of customers, and our future results may be similarly influenced.
Since the introduction of our Advanced Products, the Company has derived the majority of its revenue from Advanced Products in any given year from either one customer or a limited number of customers, whether through sales directly to the customer(s) or indirectly to the customers’ contract manufacturers. This concentration of revenue is a reflection of the relatively early stage of adoption of the Advanced Products and the associated technologies and power system architectures, and our targeting of market leading innovators as initial customers.
Our current sales and marketing efforts are focused primarily on accelerating the adoption of Advanced Products by a diversified customer base, across a number of identified market segments. While we believe we have been successful to date in diversifying our Advanced Products customer base beyond early adopters, we cannot assure you our strategy will be successful and further diversification of customers will be achieved.
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We may not be able to procure necessary key components or raw materials, or we may purchase excess raw material inventory or unusable inventory, which increases the risk of reserve charges to reduce the value of any inventory deemed excess or obsolete, thereby reducing our profitability.
The power systems industry, and the electronics industry as a whole, can be subject to pronounced, lengthy business cycles and otherwise subject to sudden and sharp changes in demand. Our success, in part, is dependent on our ability to forecast and procure inventories of components and materials to match production schedules and customer delivery requirements. Many of our products require raw materials supplied by a limited number of vendors and, in some instances, a single vendor. During certain periods, key components or materials required to build our products may become unavailable in the timeframe required for us to meet our customers’ needs. Our inability to secure sufficient raw materials to manufacture products for our customers has reduced, in the past, our revenue and profitability and could do so again. Over the course of the last few years, there have been circumstances where supply disruptions, often associated with the global pandemic, have impacted our results.
We may choose, and have chosen, to mitigate our inventory risks by increasing the levels of inventory for certain components and materials. Such increased inventory levels may increase the potential risk for excess or obsolete inventories, should our forecasts fail to materialize or if there are negative factors impacting our customers’ end markets, leading to order cancellation. If we identify excess inventory or determine certain inventory is obsolete (i.e., unusable), we likely will record additional inventory reserves (i.e., expenses representing the write-off of the excess or obsolete inventory), which could have an adverse effect on our gross margins and on our operating results.
We rely on third-party vendors and subcontractors for supply of components, assemblies, and services and, therefore, cannot control the availability or quality of such components, assemblies, and services.
We depend on third-party vendors and subcontractors to supply components, assemblies, and services used to manufacture our products, some of which are supplied by a single vendor. We have experienced shortages of certain semiconductor components and delays in service delivery, have incurred additional and unexpected costs to address the shortages and delays, and have experienced our own delays in production and shipping.
If suppliers or subcontractors cannot provide their products or services on time or to our specifications, we may not be able to meet the demand for our products and our delivery times may be negatively affected. In addition, we cannot directly control the quality of the products and services provided by third parties. In order to expand revenue, we likely will need to identify and qualify new suppliers and subcontractors to supplant or replace existing suppliers and subcontractors, which may be a time-consuming and expensive process. In addition, any qualification of new suppliers may require customers of our products utilizing products and services from new suppliers and service providers to undergo a re-qualification process. Such circumstances likely would lead to disruptions in our production, increased manufacturing costs, delays in shipping to our customers, and/or increases in prices paid to third parties for products and services.
As previously disclosed, we rely on a third-party partner to provide certain manufacturing steps associated with a proprietary Advanced Products packaging process. This process, developed with the third-party partner, involves complex electroplating, performed on equipment developed by the third-party partner. An important, differentiating benefit of this proprietary process is that it does not generate problematic effluent, resulting in an environmentally safe approach to electroplating, with minimal waste. We have entered into agreements with the third-party partner for production and transfer of technologies and process know-how, including the purchase of the enabling equipment developed by the third-party partner.
To date, we have successfully relied upon this third-party partner to perform these manufacturing steps, although we have experienced delivery delays and higher costs associated with the third-party partner’s volume constraints. This experience has caused us to establish our own high-volume capabilities in-house, modifying, in 2020, our construction plans to accommodate a dedicated, on-premises electroplating process facility. We expect
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to rely on our third-party partner for production requirements through the installation and qualification for production of the enabling equipment in the addition to our Andover manufacturing facility. We may also rely on our third-party partner in the future for surge capacity requirements.
If the third-party partner cannot deliver sufficient volumes to us, if we are unable to complete our facility expansion in a timely manner, or if we are unable to effectively implement the new manufacturing processes, we may not be able to achieve the expected volumes or production capacity and, as a result, may experience reduced manufacturing yields, delays in product deliveries, and/or increased expenses, any of which could negatively influence our financial condition and results of operations.
Extended interruption of production at our manufacturing facility in Andover, Massachusetts, could materially reduce our revenue, increase our costs, and, potentially, negatively impact our customers.
The majority of our power components and power systems, whether for direct sale to customers or for sale to our subsidiaries for incorporation into their respective products, are manufactured in our Andover facility.
Substantial damage to our existing manufacturing facility due to fire, natural disaster, power loss, or other events, including disruptive events associated with our ongoing expansion of the facility, could interrupt manufacturing, contributing to lengthy shipment delays that could have a negative impact on customers and, in turn, our customer relationships. While we have never experienced any meaningful interruption of manufacturing in our history, any prolonged inability to utilize all or a significant portion of our Andover facility could have a material adverse effect on our results of operations.
An extended delay in completing our capacity expansion could have a material adverse effect on our results of operations and negatively impact our ability to execute on our Advanced Products strategy.
We have been making and will continue to make capital investments for the expansion of manufacturing capacity for the production of Advanced Products at our Andover facility.
The addition to our facility includes installation of certain equipment and implementation of certain manufacturing steps associated with Advanced Products manufacturing processes we currently outsource to a third-party partner, as described above. These manufacturing processes are associated with a proprietary packaging approach requiring complex electroplating processes using environmentally safe technologies. Given our volume expectations and the proprietary elements of these processes, we have chosen to accelerate the development of a captive capacity that we expect will exceed the total capacity available from our third-party partner. Today, we own and operate, with our employees, certain equipment on premises at our third-party partner and, as such, have established a level of operational competence we believe will enable us to successfully install and implement these manufacturing processes internally. However, we may experience delays and incur additional costs during 2023 in implementing the manufacturing processes, given the complexity of the installation and qualification of the equipment. An extended delay in completing our capacity expansion (and implementing new manufacturing processes) could have a material adverse effect on our results of operations and negatively impact our ability to execute on our Advanced Products strategy.
Once the facility expansion has been completed and all manufacturing equipment installed and qualified for volume production, we may not achieve the anticipated production volumes and operating efficiencies. As we qualify equipment and bring production online, any delay in achieving anticipated operating efficiencies associated with added capacity may cause manufacturing costs to be higher than expected for some period of time, thereby potentially negatively influencing our operating and financial results.
Disruption of our information technology infrastructure could adversely affect our business.
We depend heavily on our computing and communications infrastructure to achieve our business objectives, particularly for our financial and operational record keeping, our computer-integrated manufacturing processes controlling all aspects of our operations in our manufacturing facility in Andover, Massachusetts, our public
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website, and our email communications. We also rely on trusted third parties to provide certain infrastructure support services to us. If we or a third party service provider encounter a problem that impairs this infrastructure, the resulting disruption could impede the accuracy and timeliness of our financial reporting processes, and our ability to record or process customer orders, manufacture, and ship in a timely manner, or otherwise carry on business in the normal course. Our image and reputation also could be negatively affected by such circumstances. Additionally, we could incur material liabilities associated with the harm such impairment and disruption of our infrastructure may have on third parties including those associated with the unintentional release of confidential information and or sensitive data. While we carry business interruption insurance to offset financial losses from such an interruption, and cyber-risk insurance to address potential liabilities from such circumstances, such insurance may be insufficient to compensate us for the potentially significant costs or liabilities incurred. Any such events, if prolonged, could have a material and adverse effect on our operating results and financial condition.
On December 24, 2019, elements of our network were compromised by a form of malware referred to as “ransomware.” In close collaboration with our service provider, we had restored computing and network functions to full operational status by the afternoon of December 27, 2019. Subsequent analysis by management and the forensic specialists we retained allowed us to conclude the incident had no material impact on our operations, financial condition and performance, or the integrity of our financial reporting systems.
Our systems are designed to protect us from network security incidents and associated disruptions. However, as evidenced by the ransomware incident described above, we remain vulnerable to computer viruses and related software-based challenges to the integrity of our systems, unauthorized or illegal break-ins, or malicious network hacking, equipment or software sabotage, acts of vandalism to our systems by third parties, and, in the extreme, forms of cyber-terrorism. Our security measures or those of our third party service provider detected, but did not prevent, the network security incident and the associated disruptions described above and may not detect or prevent such incidents and disruptions in the future.
The Company provides confidential information to third party business partners and/or receives confidential information from third party business partners in certain circumstances, when doing so is necessary to conduct business, particularly with departments of agencies of the U.S. Government. While we employ confidentiality agreements to protect other sensitive information (i.e., information not considered CUI), our own security measures or those of our third party service providers may not be sufficient to protect such information in the event the computing infrastructure of these third party business partners is compromised. Security incidents involving our computing and communications infrastructure or that of a third party business partner or service provider could result in the misappropriation or unauthorized release of confidential information belonging to us or to our employees, partners, customers or suppliers, which could result in an interruption to our operations, result in a violation of privacy or other laws, expose us to a risk of litigation, or damage our reputation, any of which could have a material and adverse effect on our operating results and financial condition. Our network segmented NIST 800-171 environment was not impacted by the December 2019 ransomware incident, but there can be no assurance that it will not be impacted by similar incidents in the future, which could have a material and adverse effect on our operating results and financial condition for the reasons described above.
We may face legal claims and litigation from product warranty or other claims that could be costly to resolve.
We have in the past and may in the future encounter legal action from customers, vendors, or others concerning product warranty or other claims. We generally offer a two-year warranty from the date title passes from us for all of our standard products. The warranty period is three years for a range of H Grade, M Grade and MI Family DC-DC legacy products. In a limited number of circumstances, we have entered into supply contracts with certain high-volume customers calling for extended warranty terms. With our distribution partners, we also enter into contracts providing for our product warranties to transfer to the end customer upon final sale of our product(s) by the distributor.
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We invest significant resources in the testing of our products; however, if any of our products contain defects, we may be required to incur additional development and remediation costs, pursuant to our warranty policies. These issues may divert our technical and other resources from other product development efforts and could result in claims against us by our customers or others, including liability for costs associated with product returns, which may adversely influence our operating results. If any of our products contain defects, or have reliability, quality, or compatibility problems, the Company’s reputation may be damaged, which could make it more difficult for us to sell our products to existing and prospective customers and could adversely affect our operating results. We are currently party to a limited number of supply agreements with certain customers contractually committing us to warranty and indemnification requirements exceeding those to which we have been exposed in the past. While we maintain insurance coverage for such exposure, we could incur significant financial cost beyond the limits of such coverage, as well as operational disruption and damage to our competitive position and image if faced with a significant product warranty or other claim.
Our ability to successfully implement our business strategy may be limited if we do not retain our key personnel and attract and retain skilled and experienced personnel.
Our success depends on our ability to retain the services of our executive officers. The loss of one or more members of senior management could materially adversely influence our business and financial results. In particular, we are dependent on the services of Dr. Vinciarelli, our founder, Chairman of the Board, Chief Executive Officer, and President. The loss of the services of Dr. Vinciarelli could have a material adverse effect on our development of new products and on our results of operations. In addition, our research and development and marketing and sales activities depend on highly skilled engineers and other personnel with technical skills, who are in high demand and are difficult to replace. Our continued operations and growth depend on our ability to attract and retain skilled and experienced personnel in a very competitive employment market. If we are unable to attract and retain such employees, our ability to successfully implement our business strategy may be harmed. The labor market for skilled and unskilled workers has been very tight over the past year, and at times we have experienced longer than normal times in recruiting necessary resources, and have had to increase compensation to attract and retain employees.
Our operations could be affected by the complex laws, rules and regulations to which our business is subject, and political and other actions may adversely impact our business.
We are subject to laws and regulations domestically and worldwide, affecting our operations in areas including, but not limited to, intellectual property ownership and infringement; taxes; import and export requirements and tariffs; anti-corruption; business acquisitions; foreign exchange controls and cash repatriation restrictions; data privacy requirements; employment; product regulations; cybersecurity; environmental, health, and safety requirements; and climate change. Compliance with such requirements can be onerous and expensive and may impact our business operations negatively. Should any of these laws, rules and regulations be amended or expanded, or new ones enacted, we could incur materially greater compliance costs and/or restrictions on our ability to manufacture our products and operate our business.
Government actions, including trade protection and national security policies of U.S. and foreign government bodies, such as tariffs, import or export regulations, including deemed export restrictions, trade and economic sanctions, decrees, quotas or other trade barriers and restrictions could affect our ability or the ability of our customers and end users to sell products in certain countries and thereby have a material adverse effect on our business, revenue and results of operations. For example, in 2022, the U.S. government imposed additional export controls on certain advanced computing semiconductor chips (chips, advanced computing chips, integrated circuits (“ICs”)), certain semiconductor manufacturing items and transactions for certain IC end use, including supercomputer end uses. Furthermore, the U.S. government has continued to expand, the number of foreign entities on the Entity List (a restricted party list that imposes additional licensing requirements on shipments to listed parties). These recent export controls are, in part, intended to restrict the ability of the People’s Republic of China to obtain advanced computing chips, develop and maintain supercomputers, and
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manufacture advanced semiconductors. The implementation, interpretation and impact on our business of these rules and other regulatory actions taken by the U.S. government is uncertain and evolving, and these rules, other regulatory actions or changes, and other actions taken by the governments of either the U.S. or China, or both, that have occurred and may occur in the future could materially and adversely affect our business, revenue and results of operations.
While we have policies and procedures in place to ensure compliance with sanctions and trade restrictions and other applicable laws, our employees, contractors, partners, and agents may take actions in violation of such policies and applicable law, for which we may be ultimately held responsible. Intentional and unintentional violations of these laws can result in fines and penalties; criminal sanctions against us, our officers, or our employees; prohibitions on the conduct of our business; and damage to our reputation, any of which could have a material and adverse impact on our business, operating results and financial condition.
Global economic uncertainty associated with the COVID-19 pandemic could materially and adversely affect our business and consolidated operating results.
During 2020, global economic conditions varied by region, and were rapidly and significantly influenced by the COVID-19 pandemic. The COVID-19 pandemic and the response of governments worldwide to contain its spread negatively influenced our financial and operational performance for all four quarters of 2020, and in subsequent years including in 2022, and future developments may have a potentially more substantial negative influence on our financial and operational performance over an unknown period of time.
Our deliveries to and orders from North American industrial and defense electronics customers declined sharply at the onset of the pandemic, during the first quarter of 2020, given reduced manufacturing activity and broad uncertainty. The second half of 2020 saw a recovery of North American activity to pre-pandemic levels. Further growth continued through 2021. In 2022, our revenue increased but the order rate declined.
Trading conditions in China (inclusive of Hong Kong), had deteriorated through 2019 due to macroeconomic and trade-related uncertainties. At the beginning of 2020, trading conditions were significantly further affected by the COVID-19 pandemic, with much of the country’s manufacturing disrupted for January and February 2020. By late March 2020, after aggressive measures to contain the coronavirus, the Chinese government quickly implemented economic stimulus measures, and we experienced a rapid recovery of demand from China and Hong Kong. This demand was sustained through the first part of 2021 before subsiding in late 2021. As addressed in our discussion herein of market characteristics, exports to China and Hong Kong for 2022 totaled approximately $75,194,000, representing approximately 18.8% of total revenue for the year, and a reduction from the prior year. It’s not possible for us to predict whether this market will rebound as the Chinese government has eliminated their zero-COVID policy.
We have taken action to protect the health and safety of our workforce and to otherwise minimize the potential impact of the coronavirus on our operations, the costs of which, to date, have not had a material effect on our financial performance. We expect to maintain the measures put in place until we determine the COVID-19 pandemic is adequately contained for purposes of our business, and we may take further actions we consider to be in the best interests of our employees, customers, business partners, and suppliers or in response to government mandate or requirement. Such further actions may have a negative influence on our costs and productivity and, in turn, our financial and operational performance.
Our customers, business partners, and suppliers have been and may continue to be adversely affected by the COVID-19 pandemic, which also may contribute to a negative influence on our future financial and operational performance.
Competitive Risks
We compete with many companies possessing far greater resources.
Some of our competitors have far greater financial, manufacturing, technical, and sales and marketing resources than we possess or have access to. Our Brick Products compete with those products offered by
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domestic and foreign manufacturers of integrated power supplies and related power conversion components. With our Advanced Product lines, we compete with global IDMs and fabless developers of semiconductor-based power management modules and power management ICs. These competitors have far larger organizations and broader semiconductor-based product lines. Competition is generally based on product performance, design flexibility (i.e., ease of use), product price, and product availability, but with the relative importance of these factors varying among products, markets, and customers.
Existing or new competitors may develop products or technologies that more effectively address the demands of our customers and markets with enhanced performance, features and functionality, or lower cost. Larger competitors frequently seek to maintain market share and protect customer relationships through heavily-discounted pricing, which we may not be able to match. If we fail to develop and commercialize leading-edge technologies and products that are cost effective and maintain high standards of quality, and introduce them to the market on a timely basis, our competitive position and results of operations could be materially adversely affected.
Our future success depends upon our ability to develop and market differentiated, leading-edge power conversion products for larger customers, potentially contributing to lengthy product development and sales cycles that may result in significant expenditures before revenues are generated. Our future operating results are dependent on the growth in such customers’ businesses and on our ability to profitably develop and deliver products meeting customer requirements.
The power system industry and the industries in which many of our customers operate are characterized by intense competition, rapid technological change, quickened product obsolescence, and price erosion for mature products, each of which could have an adverse effect on our results of operations. We are following a strategy based on the development of differentiated Advanced Products addressing what we believe to be the long-term limitations of traditional power architectures, while at the same time sustaining sales and profitability of our well-established Brick Products. The development of new, innovative products is often a complex, time-consuming, and costly process involving significant investment in research and development, with no assurance of return on investment. Although we have introduced many Advanced Products over recent years, there can be no assurance we will be able to continue to develop and introduce new and improved products and power system concepts in a timely or efficient manner. Similarly, there can be no assurance recently introduced or to be developed products will achieve customer acceptance.
Our future success depends substantially upon further customer acceptance of our innovative Advanced Products notablyincluding our
In 2022, we continued our expansion of a dedicated sales effort to penetrate the automotive market with our Advanced Products, notably in the electrification of passenger automobiles. Our Power Component Design Methodology provides conversion solutions for 800V, 400V, and 48V within advanced electric vehicles. The automotive market is dominated by relatively few global OEMs and “tiers” of well-established suppliers. Penetrating this market will be challenging and we may not be successful in doing so.
We continue to shiftfocus our
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their own new products; the acceptance of our Advanced Products by these OEMs and ODMs; and the success of the customers’ products incorporating our Advanced Products. If we fail to anticipate changes in our customers’ businesses and their changing product needs or do not successfully identify and enter new markets, our results of operations and financial position could be negatively impacted.
We cannot offer any assurance the markets we currently serve will grow in the future, our Advanced Products or Brick Products will meet respective market requirements, or we can maintain adequate gross margins or operating profits in these markets.
Intellectual Property Risks
We may be unable to adequately protect our proprietary rights, which may limit our ability to compete effectively.
We operate in an industry in which the ability to compete depends on the development or acquisition of proprietary technologies that must be protected to preserve the exclusive use of such technologies. We devote substantial resources to establish and protect our patents and proprietary rights, and we rely on patent and intellectual property law to protect such rights. This protection, however, may not prevent competitors from independently developing products similar or superior to our products. We may be unable to protect or enforce current patents, may rely on unpatented technology that competitors could restrict or replicate, or may be unable to acquire patents in the future, all of which may have a material adverse effect on our competitive position. In addition, the intellectual property laws of foreign countries may not protect our rights to the same extent as those of the United States. We have been defending and may need to continue to defend or challenge patents. We have incurred and expect to incur significant financial costs in the defense of our patented technologies and have devoted and expect to devote significant resources to these efforts which, if unsuccessful, may have a material adverse effect on our operating results and financial position.
We face intellectual property infringement claims that could be disruptive to operations and costly to resolve and may encounter similar infringement claims in the future.
The power supply industry is characterized by vigorous protection and pursuit of intellectual property rights. We have in the past and may in the future receive communications from third parties asserting that our products or manufacturing processes infringe on a third party’s patent or other intellectual property rights. Such assertions, if publicly disclosed, have in the past and may in the future inhibit the willingness of potential customers to purchase certain of our products. In the event a third party makes a valid intellectual property claim against us and a license is not available to us on commercially reasonable terms, or at all, we could be forced to either redesign or stop production of products incorporating that technology, and our operating results could be materially and adversely affected. In addition, litigation may be necessary to defend us against claims of infringement, and this litigation could be costly, extend over a lengthy period of time, and divert the attention of key personnel. An adverse outcome in these types of matters could have a material adverse impact on our operating results and financial condition.
Please see Part I, Item 3 — “Legal Proceedings”Note 15 – Commitments and Contingencies, to the Consolidated Financial Statements for information regarding current litigation related to our intellectual property.
Any expenses or liability resulting from the outcome of litigation could adversely influence our operating results and financial condition.
From time to time, we may be subject to claims or litigation, including intellectual property litigation as described elsewhere in this Annual Report on Form
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The outcomes of legal proceedings and claims brought against us are subject to significant uncertainty. An estimated loss from a loss contingency such as a legal proceeding or claim is accrued by a charge to income if it is considered probable an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated. Disclosure of a contingency is required if there is at least a reasonable possibility that a loss has been incurred. In determining whether a loss should be accrued, we evaluate, among other factors, the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss. Changes in these factors could materially impact our financial statements. As of December 31, 2019, our evaluation led us to conclude no accrual of a loss contingency was warranted.
Please see Note 15 – Commitments and litigation from product warranty or other claims that could be costly to resolve.
Regulatory Risks
If we fail to maintain an effective system of internal controls over financial reporting or discover material weaknesses in our internal controls over financial reporting, we may not be able to report our financial results accurately or timely or detect fraud, which could have a material adverse effect on our business.
An effective internal control environment is necessary for us to produce reliable financial reports and is an important part of our effort to prevent financial fraud. Section 404 of the Sarbanes-Oxley Act of 2002 (“SOX”) requires our management to report on, and our independent registered public accounting firm to attest to, the effectiveness of our internal control over financial reporting.
We have an ongoing program to perform the system and process evaluation and testing necessary to comply with the requirements of SOX and to continuously improve and, when necessary, remediate internal controls over financial reporting.
While management evaluates the effectiveness of our internal controls on a regular basis, these controls may not always be effective. There are inherent limitations on the effectiveness of internal controls, including collusion, management override, and failure in human judgment. In addition, control procedures are designed to reduce rather than eliminate business risks. In the event our Chief Executive Officer or Chief Financial Officer, our certifying officers under SOX, or our independent registered public accounting firm determines our internal controls over financial reporting are not effective as defined under Section 404, we may be unable to produce reliable financial reports or prevent fraud, which could materially harm our business. In addition, we may be subject to sanctions or investigation by government authorities or self-regulatory organizations, such as the SEC, the Financial Industry Regulatory Authority, or The NASDAQ Stock Market LLC. Any such actions could affect investor perceptions of the Company and result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements, which could cause the market price of our Common Stock to decline or limit our access to capital.
Regulations related to conflict minerals could adversely impact our business.
The Dodd-Frank Wall Street Reform and Consumer Protection Act contains provisions to improve transparency and accountability concerning the supply of certain minerals, known as conflict minerals (including gold, tantalum, tin, and tungsten, and their related ores), originating from the Democratic Republic of Congo (“DRC”) and adjoining countries. As a result, in August 2012 the SEC released final rules for annual disclosure and reporting for those companies who use conflict minerals mined from the DRC and adjoining countries in their products. We began to implement processes within our supply chain to comply with these rules beginning in 2012, and filed our initial Form SD in May 2014.2014, and have filed Form SD annually since then. There have been and will continue to be costs associated with complying with these disclosure requirements, including due diligence to determine the sources of conflict minerals used in our products and other potential changes to products, processes, or sources of supply as a consequence of such verification activities. The implementation of these rules could adversely affect the sourcing, supply, and pricing of materials used in our products. As there may be
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only a limited number of suppliers offering “conflict free” conflict minerals, we cannot be certain we will be able to obtain necessary conflict minerals from such suppliers in sufficient quantities or at competitive prices. Also, we may face reputational challenges if we determine that certain of our products contain minerals not determined to be conflict free or if we are unable to sufficiently verify the origins for all conflict minerals used in our products through the procedures we may implement.
Risks Related to successfully implementShare Value
The price of our business strategyCommon Stock has been volatile and may be limited iffluctuate in the future.
Because of the factors set forth above and below, among others, the trading price of our Common Stock has fluctuated and may continue to fluctuate significantly:
volatility of the financial markets, notably the equity markets in the U.S.;
uncertainty regarding the prospects of domestic and foreign economies, including the impact of volatile currency exchange rates;
uncertainty regarding domestic and international political conditions, including tax, trade, and tariff policies;
actual or anticipated fluctuations in our operating performance or that of our competitors;
the performance and prospects of our major customers, including their adoption of technologies or standards other than those in which we do not retainspecialize;
announcements by us or our key personnelcompetitors of significant new products, technical innovations, or litigation;
investor perception of the Company and attractthe industry in which we operate;
the liquidity of the market for our Common Stock, reflecting a relatively low trading float and retain skilledrelatively low average trading volumes;
the uncertainty of the declaration and experienced personnel.
the servicesconcentration of ownership of our executive officers. The loss of one or more members of senior management could materially adversely influence our business and financial results. In particular, we are dependent on the services ofCommon Stock by Dr. Vinciarelli, our founder, Chairman of the Board, Chief Executive Officer, and President.
In the past, we have declared and paid cash dividends on our Common Stock. The losspayment of dividends is based on the periodic determination by our Board of Directors that we have adequate capital to fund anticipated operating requirements and that excess cash is available for distribution to stockholders via a dividend. We have no formal policy regarding dividends and, as such, investors cannot make assumptions regarding the possibility of future dividend payments nor the amounts and timing thereof. As of December 31, 2022, we have no plans to declare or pay a cash dividend.
The ownership of our Common Stock is concentrated between Dr. Vinciarelli and a limited number of institutional investors. As of December 31, 2022, Dr. Vinciarelli was the beneficial owner of 9,592,017 shares of our Common Stock, plus 429,371 shares which Dr. Vinciarelli has the right to acquire upon exercise of options to purchase Common Stock within 60 days of December 31, 2022. He also holds 11,023,648 shares of our unregistered Class B Common Stock (which may only be sold or transferred after required conversion, on a one-for-one basis, into registered shares of Common Stock), which together with his ownership of Common Stock, represents 48.1% of our total issued and outstanding shares of capital stock. Accordingly, the market float for our Common Stock and average daily trading volumes are relatively small, which may negatively impact investors’ ability to buy or sell shares of our Common Stock in a timely manner.
Dr. Vinciarelli owns 93.8% of the servicesissued and outstanding shares of our Class B Common Stock, which possess 10 votes per share. Dr. Estia J. Eichten, a member of our Board of Directors, owns the majority of the balance of the Class B Common Stock issued and outstanding. As such, Dr. Vinciarelli, could have a material adverse effect oncontrolling in aggregate 80.0% of our developmentoutstanding voting securities, has effective control of new products and on our results of operations. In addition, our research and developmentgovernance.
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ITEM 1B. | UNRESOLVED STAFF COMMENTS |
None.
ITEM 2. | PROPERTIES |
Our corporate headquarters building in Andover, Massachusetts, which we own, provides approximately 90,000 square feet of office space for our sales, marketing, engineering, and administrative personnel. We also own a building of approximately 230,000320,000 square feet (which includes the 90,000 square foot expansion described below) in Andover, Massachusetts, which houses all Massachusetts manufacturing activities.
Current capital investments are focused on the expansion of manufacturing capacity for the production of Advanced Products at our Andover facility. Based onDuring 2020, we began construction of a two-story addition to our long-term forecast of production levels, we anticipate substantial additional capacity will be requiredAndover manufacturing facility that is intended to meet expected requirements. We believe the most appropriate manner of meeting our long-term capacity requirements will be to initially expand the Advanced Products production area of our Andover facility by approximately 90,000 square feet, throughfeet. Completion of the addition of a two story wing.construction and production have been delayed from 2021 to 2023. We have completed the design and permitting phase for this project, have entered intoreceived an agreement to acquire approximately three acres adjacent to our facility, and expect to begin construction of this new addition to our existing plant in the spring of 2020 and take occupancy later in the year. We also are proceeding with the evaluation of alternative projectspermit for the addition of another, larger manufacturing facility, should we anticipate the need based on our forecasts for capacity beyond 2021.
We own and lease a single-story industrial building of approximately 31,000 square feet in Sunnyvale, California, which we lease on a long-term basis to a corporate tenant, whowhich has occupied the building beginning insince June 2016.
All other domestic and foreign facilities are leased from third-party lessors on arms’ length terms. We believe our owned and leased facilities are adequate for our present needsforeseeable needs.
ITEM 3. | LEGAL PROCEEDINGS |
See Note 15 — Commitments and expect themContingencies, to remain adequatethe Consolidated Financial Statements for the foreseeable future.
ITEM 4. | MINE SAFETY DISCLOSURES |
Not Applicable.
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PART II
ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
Our Common Stock is listed on The NASDAQ Stock Market LLC, under the trading symbol “VICR.” Shares of our Class B Common Stock are not registered with the Securities and Exchange Commission, are not listed on any exchange nor traded on any market, and are subject to transfer restrictions under our Restated Certificate of Incorporation, as amended.
As of February 19, 2020,16, 2023, there were 14695 holders of record of our Common Stock and 1312 holders of record of our Class B Common Stock. These numbers do not reflect persons or entities that hold their shares in nominee or “street name” through various brokerage firms.
Issuer Purchases of Equity Securities
Number of Shares Purchased | per Share | Shares Purchased as Part of Publicly Announced Plans or Programs | Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs | |||||||||||||
In November 2000, our Board of Directors authorized the repurchase of up to $30,000,000 of our Common Stock (the “November 2000 Plan”). The November 2000 Plan authorizes us to make such repurchases from time to time in the open market or through privately negotiated transactions. The timing and amounts of Common Stock repurchases are at the discretion of management based on its view of economic and financial market conditions.
Month of Fourth Quarter 2022 | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased Pursuant to November 2000 Plan | Remaining Dollar Value of Shares Authorized For Purchase Pursuant to November 2000 Plan | ||||||||||||
October 1 — 31, 2022 | — | $ | — | — | $ | 8,541,000 | ||||||||||
November 1 — 30, 2022 | — | $ | — | — | $ | 8,541,000 | ||||||||||
December 1 — 31, 2022 | — | $ | — | — | $ | 8,541,000 | ||||||||||
Total | — | $ | — | — | $ | 8,541,000 | ||||||||||
Stockholder Return Performance Graph
The graph set forth below presents the cumulative, five-year stockholder return for each of (i) the Company’s Common Stock, (ii) the Standard & Poor’s 500 Index (“S&P 500 Index”), a value-weighted index made up of 500 of the largest, by market capitalization, listed companies, and(iii) the Standard & Poor’s SmallCap 600 Index (“S&P SmallCap 600 Index”), a value-weighted index of 600 listed companies with market capitalizations between $200,000,000 and $1,000,000,000.$1,000,000,000, and (iv) the Standard & Poor’s MidCap 400 Index (“S&P MidCap 400 Index”), a value-weighted index of 400 listed companies with market capitalizations between $3,700,000,000 and $14,600,000,000. Due to the potential growth of the market capitalization of the Company, we were included within the S&P MidCap 400 Index and removed from the S&P SmallCap 600 Index in December 2021.
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The graph assumes an investment of $100 on December 31, 2014,2017, in each of our Common Stock, the S&P 500 Index, and the S&P SmallCap 600 Index, and the S&P MidCap 400 Index, and assumes reinvestment of all dividends. The historical information set forth below is not necessarily indicative of future performance.
Comparison of Five Year Cumulative Return
Among Vicor Corporation, S&P 500 Index,
S&P SmallCap 600 Index,
2014 | 2015 | 2016 | 2017 | 2018 | 2019 | ||||||||||||||||||||
Vicor Corporation | $100.00 | $ | 75.37 | $ | 124.79 | $ | 172.73 | $ | 312.31 | $ | 386.12 | ||||||||||||||
S&P 500 Index | $100.00 | $ | 101.38 | $ | 113.51 | $ | 138.29 | $ | 132.23 | $ | 173.86 | ||||||||||||||
S&P SmallCap 600 Index | $100.00 | $ | 98.03 | $ | 124.06 | $ | 140.48 | $ | 128.56 | $ | 157.85 |
2017 | 2018 | 2019 | 2020 | 2021 | 2022 | |||||||||||||||||
Vicor Corporation | $100.00 | $ | 180.81 | $ | 223.54 | $ | 441.24 | $ | 607.56 | $ | 257.15 | |||||||||||
S&P 500 Index | $100.00 | $ | 95.62 | $ | 125.72 | $ | 148.85 | $ | 191.58 | $ | 156.88 | |||||||||||
S&P SmallCap 600 Index | $100.00 | $ | 91.52 | $ | 112.37 | $ | 125.05 | $ | 158.59 | $ | 133.06 | |||||||||||
S&P MidCap 400 Index | $100.00 | $ | 88.92 | $ | 112.21 | $ | 127.54 | $ | 159.12 | $ | 138.34 |
Our equity plan information required by this item is incorporated by reference to the information in Part III, Item 12 of this Annual Report on Form
ITEM 6. | [RESERVED] |
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Year Ended December 31, | ||||||||||||||||||||
Statement of Operations Data | 2019 | 2018 | 2017 | 2016 | 2015 | |||||||||||||||
(In thousands, except per share data) | ||||||||||||||||||||
Net revenues | $ | 262,977 | $ | 291,220 | $ | 227,830 | $ | 200,280 | $ | 220,194 | ||||||||||
Net income (loss) from operations | 13,821 | 32,059 | (1,360 | ) | (6,314 | ) | (267 | ) | ||||||||||||
Consolidated net income (loss) | 14,109 | 31,846 | 258 | (6,261 | ) | 5,159 | ||||||||||||||
Net income (loss) attributable to noncontrolling interest | 11 | 121 | 91 | (14 | ) | 232 | ||||||||||||||
Net income (loss) attributable to Vicor Corporation | 14,098 | 31,725 | 167 | (6,247 | ) | 4,927 | ||||||||||||||
Net income (loss) per share — basic attributable to Vicor Corporation | 0.35 | 0.80 | 0.00 | (0.16 | ) | 0.13 | ||||||||||||||
Net income (loss) per share — diluted attributable to Vicor Corporation | 0.34 | 0.78 | 0.00 | (0.16 | ) | 0.13 | ||||||||||||||
Weighted average shares — basic | 40,330 | 39,872 | 39,228 | 38,842 | 38,754 | |||||||||||||||
Weighted average shares — diluted | 41,677 | 40,729 | 39,933 | 38,842 | 39,146 |
As of December 31, | ||||||||||||||||||||
Balance Sheet Data | 2019 | 2018 | 2017 | 2016 | 2015 | |||||||||||||||
(In thousands) | ||||||||||||||||||||
Working capital | $ | 149,136 | $ | 129,062 | $ | 90,796 | $ | 89,545 | $ | 94,905 | ||||||||||
Total assets | 240,727 | 221,068 | 165,724 | 154,067 | 157,545 | |||||||||||||||
Total liabilities | 34,857 | 36,978 | 29,305 | 23,050 | 21,460 | |||||||||||||||
Total equity | 205,870 | 184,090 | 136,419 | 131,017 | 136,085 |
ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Overview
A discussion regarding our results of operations for the year ended December 31, 20182021, compared to the year ended December 31, 20172020, was included in the Company’s Annual Report on Form20182021, on pages
We design, develop, manufacture, and market modular power components and power systems for converting electrical power for use in electrically-powered devices. Our competitive position is supported by innovations in product design and achievements in product performance, largely enabled by our focus on the research and development of advanced technologies and processes, often implemented in proprietary semiconductor circuitry, materials, and packaging. Many of our products incorporate patented or proprietary implementations of high-frequency switching topologies enabling power system solutions that are more efficient and much smaller than conventional alternatives. Our strategy emphasizes demonstrable product differentiation and a value proposition based on competitively superior solution performance, advantageous design flexibility,
Based on design, performance, and form factor considerations, as well as the range of evolving applications for which our products are appropriate, we categorize our product portfolios as either “Advanced Products” or “Brick Products.” The Advanced Products category consists of our more recently introduced products, which are largely used to implement our proprietary Factorized Power Architecture
The Brick Products category largely consists of our broad and well-established families of integrated power converters, incorporating multiple conversion stages, used in conventional power systems architectures.
The applications in which our Advanced Products and Brick Products are used are typically in the higher-performance, higher-power segments of the market segments we serve. With our Advanced Products, we generally serve large Original Equipment Manufacturers (“OEMs”), Original Design Manufacturers (“ODMs”), and their contract manufacturers, with sales currently are concentrated in the data center and hyperscaler segments of enterprise computing, in which our products are used for voltage distribution on server motherboards, in server racks, and across datacenter infrastructure, although weinfrastructure. We have established a leadership position in the emerging market segment for powering high-performance processors used for acceleration of applications associated with artificial intelligence (“AI”). Our customers in the AI market segment include the leading innovators in processor and accelerator design, as well as early adopters in cloud computing and high performance computing. We also target applications in aerospace and aviation, defense electronics, industrial automation, instrumentation, test equipment, solid state lighting, telecommunications and networking infrastructure, and vehicles (notablyvehicles(notably in the autonomous driving, electric vehicle, and hybrid vehicle niches of the vehicle segment). With our Brick Products, we generally serve a fragmented base of large and small customers, concentrated in aerospace and
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defense electronics, industrial automation, industrial equipment, instrumentation and test equipment, and transportation (notably in rail and heavy equipment applications). With our strategic emphasis on larger, high-volume customers, we expect to experience over time a greater concentration of sales among relatively fewer customers.
Our overallquarterly consolidated operating results declined for 2019, comparedcan be difficult to 2018,forecast and have been subject to significant fluctuations. We plan our production and inventory levels based on management’s estimates of customer demand, customer forecasts, and other information sources. Customer forecasts, particularly those of OEM, ODM, and contract manufacturing customers to which we supply Advanced Products in high volumes, are subject to scheduling changes on short notice, contributing to operating inefficiencies and excess costs. In addition, external factors such as supply chain uncertainties, which are often associated with the cyclicality of the electronics industry, regional macroeconomic and trade-related circumstances, and force majeure events (most recently evidenced by the COVID-19 pandemic), have caused our operating results to vary meaningfully. Supply chain disruptions, including those associated with lockdowns in China due to an overall 17.7 % year over year decreasetheir zero-COVID policy, those associated with our reliance on outsourced package process steps that are essential in bookings, with 31.2% and 10.1% decreases inthe production of some of our Advanced Products, and Brick Products bookings, respectively. Consolidated revenuethose relating, for 2019 declined 9.7%. Factors contributingexample, to the decline in bookings and revenue were customer delaysprocurement of raw material, have in the launch of new Advanced Products programs for use in Artificial Intelligence (“AI”)past negatively impacted and supercomputing, for which we had achieved design wins, reduced shipments of Advanced Products for existing data center applications due to excess inventorymay in the serverfuture negatively impact our operating results. We have taken steps to mitigate the impact of supply chain reduced bookingsdisruptions by, among other things and shipments of Brick Products to Chinese customers duein varying degrees, moving outsourced manufacturing steps in-house to the costsCompany, ordering supplies with extended lead times, paying higher prices for certain supplies or outsourced production, and expediting deliveries at a cost premium. The resulting impact of import tariffsthe steps taken to mitigate supply chain disruptions have, to varying degrees and uncertainties associated withat different times, reduced our revenue, gross margin, operating profit and cash flow and may continue to do so in the China — U.S. trade dispute, and continued weaknessfuture. While we continue to make progress in industrial market segments served with Brick Productsmoving outsourced manufacturing steps in-house to the Company, we are still experiencing long lead times on certain raw material components, sporadic disruptions related to shutdowns in Japan and certain European countries. We experienced increased bookings and revenue for 2019 in recently targeted market segments (e.g., Advanced Products applications in automotive and commercial lighting applications), but such increases were not of sufficient volume to meaningfully offset declines in larger, established market segments and geographies.
Ongoing / Potential Impacts of the COVID-19 Pandemic on the Company
As of the date of this report, the number of full-timeCompany employees totaled 993 at December 31, 2019, an increase of 17 employees, or 1.7% year over year. In aggregate, Marketingdiagnosed with COVID-19 and Sales expenses and Administrative expenses were essentially unchanged, while Research and Development expenses increased year over year,the corresponding absenteeism due to higher compensation costsCOVID-19 are negligible. While the productivity of our factory is not currently impacted by COVID-19, productivity may be reduced if quarantine rates increase or if the number of employees diagnosed with COVID-19 requires further implementation of restrictive health and higher prototyping and related engineering material costs.
We are closely monitoring the operating performance and specialized equipment necessary to enhance the efficiencyfinancial health of our current manufacturing capacity. However, if sustained, uniform, high-volume production levels are not achieved, notablycustomers, business partners, and suppliers, but an extended period of operational constraints brought about by the pandemic could cause financial hardship within our customer base and supply chain. Such hardship may continue to disrupt customer demand and limit our customers’ ability to meet their obligations to us. Similarly, such hardship within our supply chain could continue to restrict our access to raw materials or services. Additionally, restrictions or disruptions of transportation, such as reduced availability of cargo transport by ship or air, have resulted and may continue to result in Advanced Products, our product-level profitability likely will not reach the levels necessary to adequately cover our fixed spending, consisting of manufacturing overheadhigher costs and operating costs.
Although there is uncertainty regarding the extent to achieve sustained, high volume production levels is tied to our ability to forecast manufacturing requirements for, andwhich the availability of, a range of inputs, notably raw material inventories. Because we utilize a number of components and other materials of proprietary design, our ability to sustain targeted production schedules and meet customer delivery requirements has been vulnerable to delays or shortages of such inventories, which often cause prices of these components and materials to rise. With the implementation in 2018 of Section 301 Tariffs on certain Chinese goods imported into the United States, we are now exposed to higher costs on certain electronic components and devices we import from China for use in the manufacture of our products. For the year ended December 31, 2019, costs associated with duties and tariffs totaled approximately $5,280,000. We continue to assess the impact of these costs and are actively evaluating alternative sources of raw materials. We also have engaged a consultant to assist us with implementing a “duty drawback” process, by which we may file with U.S. Customs and Border Protection for the recovery of tariffs paid on raw materials used to produce products we subsequently exported. At this time, we are not able to estimate the amount of such recovery or the timing thereof.
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We are monitoring the rapidly changing circumstances, and the status of our Brick Products in long-standing customer applications, we anticipate maintaining our share in many of these mature markets. While we are
2022 Financial Highlights
Net revenues increased 11.1% to $399,079,000 for 2022, from $359,364,000 for 2021. The increase was primarily in sales of Advanced Products, due to growth in the foreseeable future. We also believe demand for certain products may not fully recover if tariffs are reduced or eliminated, as the Chinese government increased its pressure on Chinese manufacturers during 2019 to meet the “China 2025” mandate for targeted development of Chinese technology sectors, whereby domestic technology vendors are explicitly favored over foreign vendors such as Vicor. We believe we have experienced reduced demand in certain market segments (e.g., rail), reflecting the significant role of state-owned enterprises in those market segments, and also believe such demand that may not recover for the foreseeable future to historical levels, even if tariffs on Vicor products are reduced or eliminated.
Export sales, as a percentage of total revenues, represented approximately 53.7%67.6% in 20192022 and 62.0%67.0% in 2018.2021.
Gross margin decreasedincreased to $122,966,000$180,559,000 for 2019,2022, from $138,971,000$178,200,000 for 2018.2021. Gross margin, as a percentage of net revenues decreased to 46.8%45.2% for 20192022 from 47.7%49.6% for 2018.2021. The decreases were primarily due to theincrease in gross margin dollars and decrease in net revenues.gross margin percentage was attributable to favorable higher volumes, offset by production inefficiencies and certain supply chain costs.
Backlog, representing the total of orders received for products received for which shipment is scheduled within the next 12 months, was approximately $104,164,000$304,392,000 at the end of 2019,2022, as compared to $102,963,000$345,594,000 at the end of 2018.2021.
• | Operating expenses for 2022 increased $30,760,000, or 25.1%, to $153,358,000 from $122,598,000 for 2021, due to increases in selling, general, and administrative expenses of $16,780,000 and research and development expenses of $7,480,000. The increase in selling, general, and administrative expenses was primarily due to an increase in legal fees of $11,083,000 and compensation expense of $2,772,000. The increase in research and development expenses was primarily due to increases in compensation expense of $2,540,000, supplies of $1,233,000 and project and pre-production materials of $1,130,000. In addition, litigation-related expense related to the SynQor litigation was $6,500,000 for 2022. See Note 15 to the Consolidated Financial Statements for additional information. |
We reported net income for 20192022 of $14,098,000,$25,446,000, or $0.34$0.57 per diluted share, compared to net income of $31,725,000,$56,625,000, or $0.78$1.26 per diluted share, for 2018.2021.
In 2019,2022, as a result of activities associated with our construction and capacity expansion, depreciation and amortization totaled $10,334,000,$13,776,000, and capital expenditures were $12,485,000,$63,966,000, compared to $9,254,000$11,705,000 and $18,211,000,$47,761,000, respectively, for 2018.2021.
Inventories increased by approximately $1,817,000,$34,088,000, or 3.8%50.6%, to $49,187,000$101,410,000 at the end of 2019,2022, as compared to $47,370,000$67,322,000 at the end of 2018.
The following table sets forth certain items of selected consolidated financial information as a percentage of net revenues for the years shown, ended December 31.31, 2022, 2021, and 2020. This table and the subsequent discussion should be read in conjunction with the selected financial data and the Consolidated Financial Statements and related footnotes contained elsewhere in this report.
Year Ended December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Net revenues | 100.0 | % | 100.0 | % | 100.0 | % | ||||||
Gross margin | 45.2 | % | 49.6 | % | 44.3 | % | ||||||
Selling, general and administrative expenses | 21.6 | % | 19.3 | % | 21.3 | % | ||||||
Research and development expenses | 15.2 | % | 14.8 | % | 17.2 | % | ||||||
Income before income taxes | 7.2 | % | 15.8 | % | 6.2 | % |
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Year Ended December 31, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Net revenues | 100.0 | % | 100.0 | % | 100.0 | % | ||||||
Gross margin | 46.8 | % | 47.7 | % | 44.6 | % | ||||||
Selling, general and administrative expenses | 23.8 | % | 21.4 | % | 25.5 | % | ||||||
Research and development expenses | 17.7 | % | 15.2 | % | 19.7 | % | ||||||
Income (loss) before income taxes | 5.7 | % | 11.3 | % | (0.0 | )% |
Critical Accounting Policies and Estimates
Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates and assumptions, and our associated judgments, including those related to inventories, income taxes, contingencies, and litigation. We base our estimates, assumptions, and judgments on historical experience, knowledge of current conditions, and on various other factors we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We also have other policies we consider key accounting policies (See Note 2 to the Consolidated Financial Statements —
Inventories
We employ a variety of methodologies to evaluate inventory that is estimated to be excess, obsolete or unmarketable, in order to write down that inventory to net realizable value. Our estimation process for assessing net realizable value is based upon forecasted future usage which we derive based on backlog, historical consumption, and expected market conditions. For both Brick and Advanced product lines, the methodology used compares
Evaluation of the Realizability of Deferred Tax Assets
Significant management judgment is required in determining whether deferred tax assets will be realized in full or in part. We assess the need for a valuation allowance on a quarterly basis. We record a valuation allowance to reduce our deferred tax assets to the amount we believe is more likely than not to be realized. In assessing the need for a valuation allowance, we consider all positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies, and past financial performance. WhileDespite recent positive operating results, caused the Company to beis in a cumulative incomeloss position
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likely never be uncoveredreleased by the valuation allowance. If and when we determinethe Company determines the valuation allowance should be released (i.e., reduced), the adjustment would result in a tax benefit reported in that period’s Consolidated Statements of Operations, the effect of which would be an increase in reported net income.
The amount of any such tax benefit associated with release of our valuation allowance in a particular quarter may be material.
New Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) that we adopt as of the specified effective date. Unless otherwise discussed, we believe the impact of recently issued accounting standards will not have a material impact on our future financial condition and results of operations. See Note 2 —
Other new pronouncements issued but not effective until after December 31, 20192022 are not expected to have a material impact on our consolidated financial statements.
Year ended December 31, 20192022 compared to Year ended December 31, 2018
Consolidated net revenues for 20192022 were $262,977,000, a decrease$399,079,000, an increase of $28,243,000,$39,715,000, or 9.7%11.1%, as compared to $291,220,000$359,364,000 for 2018.
Net revenues, by product line, for the years ended December 31 were as follows (dollars in thousands):
Increase (decrease) | ||||||||||||||||
2019 | 2018 | $ | % | |||||||||||||
Brick Products | $ | 187,896 | $ | 186,704 | $ | 1,192 | 0.6 | % | ||||||||
Advanced Products | 75,081 | 104,516 | (29,435 | ) | (28.2 | )% | ||||||||||
Total | $ | 262,977 | $ | 291,220 | $ | (28,243 | ) | (9.7 | )% | |||||||
Increase (decrease) | ||||||||||||||||
2022 | 2021 | $ | % | |||||||||||||
Advanced Products | $ | 243,321 | $ | 170,220 | $ | 73,101 | 42.9 | % | ||||||||
Brick Products | 155,758 | 189,144 | (33,386 | ) | (17.7 | )% | ||||||||||
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Total | $ | 399,079 | $ | 359,364 | $ | 39,715 | 11.1 | % | ||||||||
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Changes in our net revenues are primarily attributable to fluctuations in shipment volumes. Our net revenue can be affected by changes in demand for higher priced or lower priced products, which we refer to as changes in the mix of products shipped. The overallincrease in net revenues for Advanced Products was primarily the result of growth in the high performance compute business, in the United States and Asia Pacific markets. The decrease in consolidated net revenues for Brick Products was primarily due to an overall 17.7% decrease in bookings for the year ended December 31, 2019, compared to the year ended December 31, 2018, as bookings declined by 31.2% and 10.1% for Advanced Products and Brick Products, respectively, for reasons described in the
Gross margin for 2019 decreased $16,005,000,2022 increased $2,359,000, or 11.5%1.3%, to $122,966,000$180,559,000 from $138,971,000$178,200,000 in 2018.2021. Gross margin as a percentage of net revenues decreased to 46.8%45.2% in 20192022 from 47.7%49.6% in 2018. Both decreases were primarily due to the2021. The increase in gross margin dollars and decrease in net revenues,gross margin percentage was attributable to favorable higher tariff charges of approximately $5,089,000 and lower production volume on absorption of manufacturing overhead costs, partiallyvolumes, offset by production inefficiencies and certain increases in supply chain costs, including an improved mixincrease of higher-margin products shipped.
Selling, general, and administrative expenses were $62,557,000$86,264,000 for 2019,2022, an increase of $333,000,$16,780,000, or 0.5%24.1%, as compared to $62,224,000$69,484,000 for 2018.2021. As a percentage of net revenues, selling, general, and administrative expenses increased to 23.8%21.6% in 20192022 from 21.4%19.3% in 2018, primarily due to the decrease in net revenues.2021.
32
The components of the $333,000$16,780,000 increase in selling, general, and administrative expenses were as follows (dollars in thousands):
Increase (decrease) | ||||||||
Depreciation and amortization | $ | 384 | 15.8 | %(1) | ||||
Outside services | 285 | 15.0 | %(2) | |||||
Advertising expenses | 217 | 7.1 | %(3) | |||||
Facilities allocations | 156 | 10.4 | %(4) | |||||
Commissions | 104 | 3.0 | % | |||||
Bad debt expense | (209 | ) | (321.7 | )%(5) | ||||
Legal fees | (223 | ) | (12.2 | )%(6) | ||||
Compensation | (362 | ) | (0.9 | )%(7) | ||||
Other, net | (19 | ) | (0.2 | )% | ||||
$ | 333 | 0.5 | % | |||||
Increase (decrease) | ||||||||
Legal fees | $ | 11,083 | 341.5 | %(1) | ||||
Compensation | 2,772 | 6.2 | %(2) | |||||
Advertising expenses | 924 | 27.3 | %(3) | |||||
Depreciation and amortization | 907 | 26.6 | %(4) | |||||
Travel expense | 894 | 68.5 | %(5) | |||||
Outside services | 598 | 23.5 | %(6) | |||||
Audit, tax, and accounting fees | 447 | 21.2 | %(7) | |||||
Computer and software expense | 293 | 24.2 | %(8) | |||||
Commissions | (349 | ) | (10.8 | )%(9) | ||||
Facilities allocations | (845 | ) | (51.9 | )%(10) | ||||
Other, net | 56 | 2.0 | % | |||||
|
| |||||||
$ | 16,780 | 24.1 | % | |||||
|
|
(1) | Increase primarily attributable to an increase in |
(2) | Increase primarily attributable to an increase in |
(3) | Increase primarily |
(4) | Increase attributable to net additions of furniture and fixtures and capitalization of building improvements. |
(5) | Increase primarily attributable to an increase in |
(6) | Increase primarily attributable to an increase in the use of outside service providers at our Andover, MA facility. |
(7) | Overall increase in audit and tax fees. |
(8) | Increase primarily attributable to an increase in computer and software expenses. |
(9) | Decrease primarily attributable to a decrease in |
Decrease primarily attributable to |
Research and development expenses increased $2,302,000,$7,480,000, or 5.2%14.1%, to $46,588,000$60,594,000 in 20192022 from $44,286,000$53,114,000 in 2018.2021. As a percentage of net revenues, research and development expenses increased to 17.7% in 2019 from 15.2% in 2018, primarily due to the decrease2022 from 14.8% in net revenues, an increase in prototype development costs, and a net increase in headcount.2021.
33
The components of the $2,302,000$7,480,000 increase in research and development expenses were as follows (dollars in thousands):
Increase (decrease) | ||||||||
Compensation | $ | 1,580 | 5.0 | %(1) | ||||
Project and pre-production materials | 1,548 | 28.4 | %(2) | |||||
Depreciation and amortization | (141 | ) | (7.3 | )% | ||||
Deferred costs | (761 | ) | (77.5 | )%(3) | ||||
Other, net | 76 | 1.2 | % | |||||
$ | 2,302 | 5.2 | % | |||||
Increase | ||||||||
Compensation | $ | 2,540 | 6.6 | %(1) | ||||
Supplies | 1,233 | 79.4 | %(2) | |||||
Project and pre-production materials | 1,130 | 15.1 | %(3) | |||||
Overhead absorption | 499 | 20.8 | %(4) | |||||
Depreciation and amortization | 332 | 15.8 | %(5) | |||||
Facilities allocations | 320 | 11.7 | %(6) | |||||
Computer and software expense | 316 | 42.3 | %(7) | |||||
Outside services | 219 | 38.1 | % | |||||
Freight | 155 | 60.9 | % | |||||
Travel expense | 130 | 67.1 | % | |||||
Other, net | 606 | 37.5 | % | |||||
|
| |||||||
$ | 7,480 | 14.1 | % | |||||
|
|
(1) | Increase |
(2) | Increase in engineering supplies. |
(3) | Increase primarily attributable to increased prototype development costs |
(4) | Increase primarily attributable to a decrease in R&D personnel incurring time on production activities, compared to R&D activities. |
(5) | Increase attributable to net additions of furniture and fixtures and capitalization of building improvements. |
(6) | Increase primarily attributable to an increase in utilities and building maintenance expenses. |
(7) | Increase primarily attributable to an increase in computer and software expenses. |
Litigation-related expense was $6,500,000 for 2022 which related to the SynQor litigation, as compared to $0 for 2021. See Note 15 to the Consolidated Financial Statements for additional information.
The significant changes in the components of “Other income (expense), net” for the years ended December 31 were as follows (in thousands):
2019 | 2018 | Increase (decrease) | ||||||||||
Rental income | $ | 792 | $ | 792 | $ | — | ||||||
Interest income | 300 | 257 | 43 | |||||||||
Foreign currency losses, net | (108 | ) | (260 | ) | 152 | |||||||
Gain on disposal of equipment | 38 | 57 | (19 | ) | ||||||||
Credit gains on available-for-sale securities | 4 | 7 | (3 | ) | ||||||||
Other | 40 | 21 | 19 | |||||||||
$ | 1,066 | $ | 874 | $ | 192 | |||||||
�� |
Increase | ||||||||||||
2022 | 2021 | (decrease) | ||||||||||
Interest income, net | $ | 1,313 | $ | 930 | $ | 383 | ||||||
Rental income, net | 792 | 792 | — | |||||||||
Foreign currency losses, net | (653 | ) | (336 | ) | (317 | ) | ||||||
Other, net | 34 | (183 | ) | 217 | ||||||||
|
|
|
|
|
| |||||||
$ | 1,486 | $ | 1,203 | $ | 283 | |||||||
|
|
|
|
|
|
Our exposure to market risk fluctuations in foreign currency exchange rates relates to the operations of VJCL, for which the functional currency is the Japanese Yen, and all other subsidiaries in Europe and Asia, for which the functional currency is the U.S. Dollar. These other subsidiaries in Europe and Asia experienced favorablemore unfavorable foreign currency exchange rate fluctuations in 20192022 compared to 2018. Interest2021. “Interest income increased due(expense), net” includes an immaterial error correction of $834,000 related to an increase in interest rates.
Income before income taxes was $14,887,000$28,687,000 in 2019,2022, as compared to $32,933,000$56,805,000 in 2018.2021.
34
The provision for income taxes and the effective income tax rate for the years ended December 31 were as follows (dollars in thousands):
2019 | 2018 | |||||||
Provision for income taxes | $ | 778 | $ | 1,087 | ||||
Effective income tax rate | 5.2 | % | 3.3 | % |
2022 | 2021 | |||||||
Provision for income taxes | $ | 3,261 | $ | 176 | ||||
Effective income tax rate | 11.4 | % | 0.3 | % |
The 2019effective tax rates were lower than the statutory tax rates for the year ended December 31, 2022 and 20182021 primarily due to the Company’s full valuation allowance position against domestic deferred tax assets during both years. The provision for income tax provisions includetaxes for the years ended December 31, 2022 and 2021 included estimated federal, state and foreign income taxes onin jurisdictions in which the Company’s
See Note 1614 to the Consolidated Financial Statements for disclosure regarding our current assessment of the full valuation allowance against all domestic net deferred tax assets, and the possible release (i.e., reduction) of the allowance in the future.
We reported net income per diluted share attributable to Vicor Corporation was $0.34 for the year ended December 31, 2019, compared to net income2022 of $25,446,000, or $0.57 per diluted share, of $0.78as compared to $56,625,000, or $1.26 per diluted share, for the year ended December 31, 2018.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 2019,2022, we had $84,668,000$190,611,000 in cash and cash equivalents. The ratio of current assets to current liabilities was 6.0:5.6:1 at December 31, 2019,2022, as compared to 4.6:7.3:1 at December 31, 2018.2021. Net working capital increased $20,074,000decreased $9,612,000 to $149,136,000$298,055,000 at December 31, 20192022 from $129,062,000$307,667,000 at December 31, 2018.
The primary working capital changes were due to the following (in thousands):
Increase (decrease) | ||||
Cash and cash equivalents | $ | 14,111 | ||
Accounts receivable | (5,558 | ) | ||
Inventories | 1,817 | |||
Other current assets | 3,636 | |||
Accounts payable | 7,144 | |||
Accrued compensation and benefits | 247 | |||
Accrued expenses | (59 | ) | ||
Sales allowances | (193 | ) | ||
Accrued severance and other charges | 234 | |||
Short-term lease liabilities | (1,520 | ) | ||
Income taxes payable | 653 | |||
Short-term deferred revenue and customer prepayments | (438 | ) | ||
$ | 20,074 | |||
Increase (decrease) | ||||
Cash and cash equivalents | $ | 8,193 | ||
Short-term investments | (45,215 | ) | ||
Accounts receivable | 10,332 | |||
Inventories | 34,088 | |||
Other current assets | (1,554 | ) | ||
Accounts payable | (1,018 | ) | ||
Accrued compensation and benefits | 1,904 | |||
Accrued expenses | (4,455 | ) | ||
Sales allowances | (197 | ) | ||
Accrued litigation | (6,500 | ) | ||
Short-term lease liabilities | 101 | |||
Income taxes payable | (6 | ) | ||
Short-term deferred revenue and customer prepayments | (5,285 | ) | ||
|
| |||
$ | (9,612 | ) | ||
|
|
The primary sources of cash for the year ended December 31, 20192022 were $22,939,000 of cash generated from operating activitiesoperations, $45,000,000 of $22,208,000, and proceedscash from the issuancesale or maturities of Common Stock uponshort-term investments, and $4,439,000 of cash received in connection with the exercise of options to purchase our Common Stock awarded under our stock option plans and the issuance of Common Stock under our 2017 Employee Stock Purchase Plan of $4,742,000.Plan. The primary usesuse of cash forduring the year ended December 31, 20192022 was $63,966,000 for the purchase of property and equipment of $12,485,000.and internal-use software.
35
In November 2000, our Board of Directors authorized the repurchase of up to $30,000,000 of Common Stock (the “November 2000 Plan”). The November 2000 Plan authorizes us to make such repurchases from time to time in the open market or through privately negotiated transactions. The timing of such repurchases and the
As of December 31, 2019,2022, we had no
Payments Due by Period | ||||||||||||||||||||
Contractual Obligations | Total | Less than 1 Year | Years 2 & 3 | Years 4 & 5 | More Than 5 Years | |||||||||||||||
Operating lease obligations (1) | $ | 4,711 | $ | 1,657 | $ | 1,690 | $ | 1,193 | $ | 171 | ||||||||||
We do not consider the impact of inflation and changing prices on our business activities or fluctuations in the exchange rates for foreign currency transactions to have been significant during the last three fiscal years.
ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
We are exposed to a variety of market risks, including changes in interest rates affecting the return on our cash and cash equivalents, short-term investments and fluctuations in foreign currency exchange rates. As our cash and cash equivalents and short-term investments consist principally of cash accounts, and money market securities and U.S. Treasury securities, which are short-term in nature, we believe our exposure to market risk on interest rate fluctuations for these investments is not significant. As of December 31, 2019,2022, our long-term investment portfolio, recorded on our Consolidated Balance Sheet as “Long-term investment, net”, consisted of a single auction rate security with a par value of $3,000,000, purchased through and held in custody by a broker-dealer affiliate of Bank of America, N.A., that has experienced failed auctions (the “Failed Auction Security”) since February 2008. While the Failed Auction Security is Aaa/AA+ rated by major credit rating agencies, collateralized by student loans and guaranteed by the U.S. Department of Education under the Federal Family Education Loan Program, continued failure to sell at its periodic auction dates (i.e., reset dates) could negatively impact the carrying value of the investment, in turn leading to impairment charges in future periods. Periodic changes in the fair value of the Failed Auction Security attributable to credit loss (i.e., risk of the issuer’s default) are recorded through earnings as a component of “Other income (expense), net”, with the remainder of any periodic change in fair value not related to credit loss (i.e., temporary
We estimate our annual interest income would change by approximately $30,000 in 20192022 for each 100 basis point increase or decrease in interest rates.
Our exposure to market risk for fluctuations in foreign currency exchange rates relates primarily to the operations of VJCL, for which the functional currency is the Japanese Yen, and changes in the relative value of
36
the Yen to the U.S. Dollar. Relative to our Yen exposure as of December 31, 2019,2022, we estimate a 10% unfavorable movement in the value of the Yen relative to the U.S. Dollar would increase our foreign currency loss by approximately $54,000.$30,000. The functional currency of all other subsidiaries in Europe and other subsidiaries in Asia is the U.S. Dollar. While we believe risk to fluctuations in foreign currency rates for these subsidiaries is generally not significant, they can be subject to substantial currency changes, and therefore foreign exchange exposures.
37
ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
Page | |||||
2019 | 2018 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 84,668 | $ | 70,557 | ||||
Accounts receivable, less allowance of $59 in 2019 and $224 in 2018 | 38,115 | 43,673 | ||||||
Inventories, net | 49,187 | 47,370 | ||||||
Other current assets | 7,096 | 3,460 | ||||||
Total current assets | 179,066 | 165,060 | ||||||
Long-term deferred tax assets | 205 | 265 | ||||||
Long-term investment, net | 2,510 | 2,526 | ||||||
Property, plant and equipment, net | 56,952 | 50,432 | ||||||
Other assets | 1,994 | 2,785 | ||||||
Total assets | $ | 240,727 | $ | 221,068 | ||||
LIABILITIES AND EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 9,005 | $ | 16,149 | ||||
Accrued compensation and benefits | 10,410 | 10,657 | ||||||
Accrued expenses | 2,690 | 2,631 | ||||||
Sales allowances | 741 | 548 | ||||||
Short-term lease liabilities | 1,520 | — | ||||||
Accrued severance and other charges | — | 234 | ||||||
Income taxes payable | 57 | 710 | ||||||
Short-term deferred revenue and customer prepayments | 5,507 | 5,069 | ||||||
Total current liabilities | 29,930 | 35,998 | ||||||
Long-term deferred revenue | 1,054 | 232 | ||||||
Contingent consideration obligations | 451 | 408 | ||||||
Long-term income taxes payable | 567 | 238 | ||||||
Long-term lease liabilities | 2,855 | 102 | ||||||
Total liabilities | 34,857 | 36,978 | ||||||
Commitments and contingencies (Note 17) | ||||||||
Equity: | ||||||||
Vicor Corporation stockholders’ equity: | ||||||||
Class B Common Stock: 10 votes per share, $.01 par value, 14,000,000 shares authorized, 11,758,218 shares issued and outstanding in 2019 and 2018 | 118 | 118 | ||||||
Common Stock: 1 vote per share, $.01 par value, 62,000,000 shares authorized 40,403,058 shares issued and 28,768,252 shares outstanding in 2019; 40,066,710 shares issued and 28,430,971 shares outstanding in 2018 | 405 | 402 | ||||||
Additional paid-in capital | 201,251 | 193,457 | ||||||
Retained earnings | 143,098 | 129,000 | ||||||
Accumulated other comprehensive loss | (383 | ) | (394 | ) | ||||
Treasury stock at cost: 11,634,806 shares in 2019 and 11,635,739 shares in 2018 | (138,927 | ) | (138,927 | ) | ||||
Total Vicor Corporation stockholders’ equity | 205,562 | 183,656 | ||||||
Noncontrolling interest | 308 | 434 | ||||||
Total equity | 205,870 | 184,090 | ||||||
Total liabilities and equity | $ | 240,727 | $ | 221,068 | ||||
2022 | 2021 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 190,611 | $ | 182,418 | ||||
Short-term investments | — | 45,215 | ||||||
Accounts receivable, less allowance of $87 in 2022 and $ 82 in 2021 | 65,429 | 55,097 | ||||||
Inventories | 101,410 | 67,322 | ||||||
Other current assets | 5,154 | 6,708 | ||||||
Total current assets | 362,604 | 356,760 | ||||||
Deferred tax assets | 280 | 208 | ||||||
Long-term investment, net | 2,622 | 2,639 | ||||||
Property, plant and equipment, net | 166,009 | 115,975 | ||||||
Other assets | 5,386 | 1,623 | ||||||
Total assets | $ | 536,901 | $ | 477,205 | ||||
LIABILITIES AND EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 22,207 | $ | 21,189 | ||||
Accrued compensation and benefits | 10,849 | 12,753 | ||||||
Accrued litigation | 6,500 | — | ||||||
Accrued expenses | 8,613 | 4,158 | ||||||
Sales allowances | 1,661 | 1,464 | ||||||
Short-term lease liabilities | 1,450 | 1,551 | ||||||
Income taxes payable | 72 | 66 | ||||||
Short-term deferred revenue and customer prepayments | 13,197 | 7,912 | ||||||
Total current liabilities | 64,549 | 49,093 | ||||||
Long-term deferred revenue | 145 | 413 | ||||||
Long-term income taxes payable | 862 | 569 | ||||||
Long-term lease liabilities | 7,009 | 3,225 | ||||||
Total liabilities | 72,565 | 53,300 | ||||||
Commitments and contingencies (Note 15) | ||||||||
Equity: | ||||||||
Vicor Corporation stockholders’ equity: | ||||||||
Class B Common Stock: 10 votes per share, $ .01 par value,14,000,000 shares authorized, 11,743,218 shares issued and outstanding in 2022; 14,000,000 shares authorized, 11,758,218 shares issued and outstanding in 2021 | 118 | 118 | ||||||
Common Stock: 1 vote per share, $ .01 par value, 62,000,000 shares authorized 43,976,336 shares issued and 32,341,530 shares outstanding in 2022; 43,789,528 shares issued and 32,154,722 shares outstanding in 2021 | 441 | 439 | ||||||
Additional paid-in capital | 360,365 | 345,664 | ||||||
Retained earnings | 243,079 | 217,633 | ||||||
Accumulated other comprehensive loss | (988 | ) | (1,328 | ) | ||||
Treasury stock at cost: 11,634,806 shares in 2022 and 2021 | (138,927 | ) | (138,927 | ) | ||||
Total Vicor Corporation stockholders’ equity | 464,088 | 423,599 | ||||||
Noncontrolling interest | 248 | 306 | ||||||
Total equity | 464,336 | 423,905 | ||||||
Total liabilities and equity | $ | 536,901 | $ | 477,205 | ||||
2019 | 2018 | 2017 | 2022 | 2021 | 2020 | |||||||||||||||||||
Net revenues | $ | 262,977 | $ | 291,220 | $ | 227,830 | $ | 399,079 | $ | 359,364 | $ | 296,576 | ||||||||||||
Cost of revenues | 140,011 | 152,249 | 126,174 | 218,520 | 181,164 | 165,129 | ||||||||||||||||||
Gross margin | 122,966 | 138,971 | 101,656 | 180,559 | 178,200 | 131,447 | ||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Selling, general and administrative | 62,557 | 62,224 | 58,092 | 86,264 | 69,484 | 63,163 | ||||||||||||||||||
Research and development | 46,588 | 44,286 | 44,924 | 60,594 | 53,114 | 50,916 | ||||||||||||||||||
Severance and other charges | — | 402 | — | |||||||||||||||||||||
Litigation-related | 6,500 | — | — | |||||||||||||||||||||
Total operating expenses | 109,145 | 106,912 | 103,016 | 153,358 | 122,598 | 114,079 | ||||||||||||||||||
Income (loss) from operations | 13,821 | 32,059 | (1,360 | ) | ||||||||||||||||||||
Income from operations | 27,201 | 55,602 | 17,368 | |||||||||||||||||||||
Other income (expense), net: | ||||||||||||||||||||||||
Total unrealized (losses) gains on available-for-sale securities, net | (16 | ) | 1 | 17 | (17 | ) | 122 | 7 | ||||||||||||||||
Portion of losses (gains) recognized in other comprehensive income (loss) | 20 | 6 | (6 | ) | ||||||||||||||||||||
Portion of losses (gains) recognized in other comprehensive income | 20 | (118 | ) | (3 | ) | |||||||||||||||||||
Net credit gains recognized in earnings | 4 | 7 | 11 | 3 | 4 | 4 | ||||||||||||||||||
Other income (expense), net | 1,062 | 867 | 1,251 | 1,483 | 1,199 | 1,089 | ||||||||||||||||||
Total other income (expense), net | 1,066 | 874 | 1,262 | 1,486 | 1,203 | 1,093 | ||||||||||||||||||
Income (loss) before income taxes | 14,887 | 32,933 | (98 | ) | ||||||||||||||||||||
Less: Provision (benefit) for income taxes | 778 | 1,087 | (356 | ) | ||||||||||||||||||||
Income before income taxes | 28,687 | 56,805 | 18,461 | |||||||||||||||||||||
Less: Provision for income taxes | 3,261 | 176 | 539 | |||||||||||||||||||||
Consolidated net income | 14,109 | 31,846 | 258 | 25,426 | 56,629 | 17,922 | ||||||||||||||||||
Less: Net income attributable to noncontrolling interest | 11 | 121 | 91 | |||||||||||||||||||||
Less: Net (loss) income attributable to noncontrolling interest | (20 | ) | 4 | 12 | ||||||||||||||||||||
Net income attributable to Vicor Corporation | $ | 14,098 | $ | 31,725 | $ | 167 | $ | 25,446 | $ | 56,625 | $ | 17,910 | ||||||||||||
Net income per common share attributable to Vicor Corporation: | ||||||||||||||||||||||||
Basic | $ | 0.35 | $ | 0.80 | $ | 0.00 | $ | 0.58 | $ | 1.30 | $ | 0.42 | ||||||||||||
Diluted | $ | 0.34 | $ | 0.78 | $ | 0.00 | $ | 0.57 | $ | 1.26 | $ | 0.41 | ||||||||||||
Shares used to compute net income per common share attributable to Vicor Corporation: | ||||||||||||||||||||||||
Basic | 40,330 | 39,872 | 39,228 | 44,005 | 43,651 | 42,186 | ||||||||||||||||||
Diluted | 41,677 | 40,729 | 39,933 | 44,894 | 44,966 | 43,869 | ||||||||||||||||||
2019 | 2018 | 2017 | ||||||||||
Consolidated net income | $ | 14,109 | $ | 31,846 | $ | 258 | ||||||
Foreign currency translation gains, net of tax benefit (1) | 33 | 98 | 83 | |||||||||
Unrealized (losses) gains on available-for-sale securities, net of tax (1) | (20 | ) | (6 | ) | 6 | |||||||
Other comprehensive income | 13 | 92 | 89 | |||||||||
Consolidated comprehensive income | 14,122 | 31,938 | 347 | |||||||||
Less: Comprehensive income attributable to noncontrolling interest | 13 | 129 | 97 | |||||||||
Comprehensive income attributable to Vicor Corporation | $ | 14,109 | $ | 31,809 | $ | 250 | ||||||
2022 | 2021 | 2020 | ||||||||||
Consolidated net income | $ | 25,426 | $ | 56,629 | $ | 17,922 | ||||||
Foreign currency translation (losses) gains, net of tax benefit (1) | (519 | ) | (425 | ) | 200 | |||||||
Unrealized gains (losses) on available-for-sale | 821 | (732 | ) | (6 | ) | |||||||
Other comprehensive income (loss) | 302 | (1,157 | ) | 194 | ||||||||
Consolidated comprehensive income | 25,728 | 55,472 | 18,116 | |||||||||
Less: Comprehensive (loss) income attributable to noncontrolling interest | (58 | ) | (29 | ) | 27 | |||||||
Comprehensive income attributable to Vicor Corporation | $ | 25,786 | $ | 55,501 | $ | 18,089 | ||||||
(1) | The deferred tax assets associated with cumulative foreign currency translation (losses) gains and cumulative unrealized gains (losses) available-for-sale |
2019 | 2018 | 2017 | ||||||||||
Operating activities: | ||||||||||||
Consolidated net income | $ | 14,109 | $ | 31,846 | $ | 258 | ||||||
Adjustments to reconcile consolidated net income to net cash provided by (used for) operating activities: | ||||||||||||
Depreciation and amortization | 10,334 | 9,254 | 8,893 | |||||||||
Stock-based compensation expense | 3,036 | 3,396 | 1,735 | |||||||||
Increase (decrease) in long-term income taxes payable | 329 | 43 | (1 | ) | ||||||||
Deferred income taxes | 60 | (55 | ) | (172 | ) | |||||||
Increase (decrease) in long-term deferred revenue | 822 | (71 | ) | (71 | ) | |||||||
Increase in other long-term liabilities | — | 9 | 93 | |||||||||
Gain on disposal of equipment | (38 | ) | (57 | ) | (14 | ) | ||||||
(Benefit) provision for doubtful accounts | (144 | ) | 65 | 6 | ||||||||
Credit gain on available-for-sale securities | (4 | ) | (7 | ) | (11 | ) | ||||||
Increase in refundable income taxes | — | — | (736 | ) | ||||||||
Increase in contingent consideration obligations | 280 | — | 650 | |||||||||
Change in current assets and liabilities, net | (6,576 | ) | (8,252 | ) | (13,094 | ) | ||||||
Net cash provided by (used for) operating activities | 22,208 | 36,171 | (2,464 | ) | ||||||||
Investing activities: | ||||||||||||
Additions to property, plant and equipment | (12,485 | ) | (18,211 | ) | (12,545 | ) | ||||||
Proceeds from sale of equipment | 38 | 57 | 14 | |||||||||
(Decrease) increase in other assets | (35 | ) | (85 | ) | 5 | |||||||
Net cash used for investing activities | (12,482 | ) | (18,239 | ) | (12,526 | ) | ||||||
Financing activities: | ||||||||||||
Proceeds from issuance of Common Stock | 4,742 | 8,656 | 3,300 | |||||||||
Payment of contingent consideration obligations | (237 | ) | (270 | ) | (225 | ) | ||||||
Noncontrolling interest dividend paid | (139 | ) | — | — | ||||||||
Net cash provided by financing activities | 4,366 | 8,386 | 3,075 | |||||||||
Effect of foreign exchange rates on cash | 19 | 9 | (25 | ) | ||||||||
Net increase (decrease) in cash and cash equivalents | 14,111 | 26,327 | (11,940 | ) | ||||||||
Cash and cash equivalents at beginning of year | 70,557 | 44,230 | 56,170 | |||||||||
Cash and cash equivalents at end of year | $ | 84,668 | $ | 70,557 | $ | 44,230 | ||||||
Change in current assets and liabilities, excluding effects of deconsolidation of subsidiary: | ||||||||||||
Accounts receivable | $ | 5,714 | $ | (8,834 | ) | $ | (9,210 | ) | ||||
Inventories, net | (1,812 | ) | (10,827 | ) | (9,309 | ) | ||||||
Other current assets | (2,895 | ) | 176 | (357 | ) | |||||||
Accounts payable and accrued liabilities | (7,339 | ) | 7,450 | 3,186 | ||||||||
Accrued severance and other charges | (234 | ) | 234 | — | ||||||||
Short-term lease payable | 12 | — | — | |||||||||
Income taxes payable | (653 | ) | 410 | 208 | ||||||||
Deferred revenue | 631 | 3,139 | 2,388 | |||||||||
Change in current assets and liabilities, net | $ | (6,576 | ) | $ | (8,252 | ) | $ | (13,094 | ) | |||
Supplemental disclosures: | ||||||||||||
Cash paid during the year for income taxes, net of refunds | $ | 2,194 | $ | 743 | $ | 373 |
2022 | 2021 | 2020 | ||||||||||
Operating activities: | ||||||||||||
Consolidated net income | $ | 25,426 | $ | 56,629 | $ | 17,922 | ||||||
Adjustments to reconcile consolidated net income to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 13,776 | 11,705 | 11,056 | |||||||||
Stock-based compensation expense | 10,264 | 7,035 | 5,883 | |||||||||
Litigation-related expense | 6,500 | — | — | |||||||||
Decrease in long-term deferred revenue | (268 | ) | (320 | ) | (321 | ) | ||||||
Amortization of bond premium | 1,056 | — | — | |||||||||
(Decrease) increase in other assets | (692 | ) | (43 | ) | 182 | |||||||
Increase (decrease) in long-term income taxes payable | 293 | (74 | ) | 76 | ||||||||
Deferred income taxes | (72 | ) | 18 | (21 | ) | |||||||
Provision for doubtful accounts | 5 | — | 23 | |||||||||
Credit gain on available-for-sale | (3 | ) | (4 | ) | (4 | ) | ||||||
Decrease in contingent consideration obligations | — | (74 | ) | — | ||||||||
Change in current assets and liabilities, net | (33,346 | ) | (20,428 | ) | (54 | ) | ||||||
Net cash provided by operating activities | 22,939 | 54,444 | 34,742 | |||||||||
Investing activities: | ||||||||||||
Purchases of short-term investments | — | (70,900 | ) | (50,166 | ) | |||||||
Additions to property, plant and equipment and internal-use software | (63,966 | ) | (47,761 | ) | (28,653 | ) | ||||||
Sales and maturities of short-term investments | 45,000 | 75,000 | — | |||||||||
Net cash used for investing activities | (18,966 | ) | (43,661 | ) | (78,819 | ) | ||||||
Financing activities: | ||||||||||||
Proceeds from employee stock plans | 4,439 | 10,243 | 11,585 | |||||||||
Proceeds from public offering of Common Stock | — | — | 109,681 | |||||||||
Payment of contingent consideration obligations | — | (153 | ) | (224 | ) | |||||||
Net cash provided by financing activities | 4,439 | 10,090 | 121,042 | |||||||||
Effect of foreign exchange rates on cash | (219 | ) | (197 | ) | 109 | |||||||
Net increase in cash and cash equivalents | 8,193 | 20,676 | 77,074 | |||||||||
Cash and cash equivalents at beginning of year | 182,418 | 161,742 | 84,668 | |||||||||
Cash and cash equivalents at end of year | $ | 190,611 | $ | 182,418 | $ | 161,742 | ||||||
Change in current assets and liabilities: | ||||||||||||
Accounts receivable | $ | (10,586 | ) | $ | (14,301 | ) | $ | (2,816 | ) | |||
Inventories, net | (34,204 | ) | (10,134 | ) | (8,049 | ) | ||||||
Other current assets | 1,547 | 10 | 369 | |||||||||
Accounts payable and accrued liabilities | 4,399 | 2,503 | 8,668 | |||||||||
Accrued severance and other charges | (93 | ) | 93 | — | ||||||||
Short-term lease payable | 103 | 4 | 34 | |||||||||
Income taxes payable | 6 | (73 | ) | 82 | ||||||||
Deferred revenue | 5,482 | 1,470 | 1,658 | |||||||||
Change in current assets and liabilities, net | $ | (33,346 | ) | $ | (20,428 | ) | $ | (54 | ) | |||
Supplemental disclosures: | ||||||||||||
Cash paid during the year for income taxes, net of refunds | $ | 1,263 | $ | 645 | $ | 79 |
Class B Common Stock | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Total Vicor Corporation Stockholders’ Equity | Noncontrolling Interest | Total Equity | ||||||||||||||||||||||||||||
Balance on December 31, 2016 | $ | 118 | $ | 397 | $ | 176,344 | $ | 93,438 | $ | (561 | ) | $ | (138,927 | ) | $ | 130,809 | $ | 208 | $ | 131,017 | ||||||||||||||||
Sales of Common Stock | 4 | 3,296 | 3,300 | 3,300 | ||||||||||||||||||||||||||||||||
Stock-based compensation expense | 1,735 | 1,735 | 1,735 | |||||||||||||||||||||||||||||||||
Other | 20 | 20 | 20 | |||||||||||||||||||||||||||||||||
Components of comprehensive income, net of tax | ||||||||||||||||||||||||||||||||||||
Net income | 167 | 167 | 91 | 258 | ||||||||||||||||||||||||||||||||
Other comprehensive income | 83 | 83 | 6 | 89 | ||||||||||||||||||||||||||||||||
Total comprehensive income | 250 | 97 | 347 | |||||||||||||||||||||||||||||||||
Balance on December 31, 2017 | 118 | 401 | 181,395 | 93,605 | (478 | ) | (138,927 | ) | 136,114 | 305 | 136,419 | |||||||||||||||||||||||||
Sales of Common Stock | 6 | 6,776 | 6,782 | 6,782 | ||||||||||||||||||||||||||||||||
Stock-based compensation expense | 3,396 | 3,396 | 3,396 | |||||||||||||||||||||||||||||||||
Issuances of stock through employee stock purchase plan | 1 | 1,873 | 1,874 | 1,874 | ||||||||||||||||||||||||||||||||
Cumulative effect of adoption of new accounting principle (Topic 606) | 3,670 | 3,670 | 3,670 | |||||||||||||||||||||||||||||||||
Other | (6 | ) | 17 | 11 | 11 | |||||||||||||||||||||||||||||||
Components of comprehensive income, net of tax | ||||||||||||||||||||||||||||||||||||
Net income | 31,725 | 31,725 | 121 | 31,846 | ||||||||||||||||||||||||||||||||
Other comprehensive income | 84 | 84 | 8 | 92 | ||||||||||||||||||||||||||||||||
Total comprehensive income | 31,809 | 129 | 31,938 | |||||||||||||||||||||||||||||||||
Balance on December 31, 2018 | 118 | 402 | 193,457 | 129,000 | (394 | ) | (138,927 | ) | 183,656 | 434 | 184,090 | |||||||||||||||||||||||||
Sales of Common Stock | 2 | 2,435 | 2,437 | 2,437 | ||||||||||||||||||||||||||||||||
Stock-based compensation expense | 3,036 | 3,036 | 3,036 | |||||||||||||||||||||||||||||||||
Issuances of stock through employee stock purchase plan | 1 | 2,304 | 2,305 | 2,305 | ||||||||||||||||||||||||||||||||
Noncontrolling interest dividend paid | — | (139 | ) | (139 | ) | |||||||||||||||||||||||||||||||
Other | 19 | 19 | 19 | |||||||||||||||||||||||||||||||||
Components of comprehensive income, net of tax | ||||||||||||||||||||||||||||||||||||
Net income | 14,098 | 14,098 | 11 | 14,109 | ||||||||||||||||||||||||||||||||
Other comprehensive income | 11 | 11 | 2 | 13 | ||||||||||||||||||||||||||||||||
Total comprehensive income | 14,109 | 13 | 14,122 | |||||||||||||||||||||||||||||||||
Balance on December 31, 2019 | $ | 118 | $ | 405 | $ | 201,251 | $ | 143,098 | $ | (383 | ) | $ | (138,927 | ) | $ | 205,562 | $ | 308 | $ | 205,870 | ||||||||||||||||
Class B Common Stock | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Total Vicor Corporation Stockholders’ Equity | Noncontrolling Interest | Total Equity | ||||||||||||||||||||||||||||
Balance on December 31, 2019 | $ | 118 | $ | 405 | $ | 201,251 | $ | 143,098 | $ | (383 | ) | $ | (138,927 | ) | $ | 205,562 | $ | 308 | $ | 205,870 | ||||||||||||||||
Issuance of Common Stock under employee stock plans | 10 | 11,575 | 11,585 | 11,585 | ||||||||||||||||||||||||||||||||
Issuance of Common Stock in public offering, net | 18 | 109,663 | 109,681 | 109,681 | ||||||||||||||||||||||||||||||||
Stock-based compensation expense | 5,883 | 5,883 | 5,883 | |||||||||||||||||||||||||||||||||
Other | 20 | 20 | 20 | |||||||||||||||||||||||||||||||||
Components of comprehensive income, net of tax | ||||||||||||||||||||||||||||||||||||
Net income | 17,910 | 17,910 | 12 | 17,922 | ||||||||||||||||||||||||||||||||
Other comprehensive income | 179 | 179 | 15 | 194 | ||||||||||||||||||||||||||||||||
Total comprehensive income | 18,089 | 27 | 18,116 | |||||||||||||||||||||||||||||||||
Balance on December 31, 2020 | 118 | 433 | 328,392 | 161,008 | (204 | ) | (138,927 | ) | 350,820 | 335 | 351,155 | |||||||||||||||||||||||||
Issuance of Common Stock under employee stock plans | 6 | 10,237 | 10,243 | 10,243 | ||||||||||||||||||||||||||||||||
Stock-based compensation expense | 7,035 | 7,035 | 7,035 | |||||||||||||||||||||||||||||||||
Components of comprehensive income, net of tax | ||||||||||||||||||||||||||||||||||||
Net income | 56,625 | 56,625 | 4 | 56,629 | ||||||||||||||||||||||||||||||||
Other comprehensive loss | (1,124 | ) | (1,124 | ) | (33 | ) | (1,157 | ) | ||||||||||||||||||||||||||||
Total comprehensive income (loss) | 55,501 | (29 | ) | 55,472 | ||||||||||||||||||||||||||||||||
Balance on December 31, 2021 | 118 | 439 | 345,664 | 217,633 | (1,328 | ) | (138,927 | ) | 423,599 | 306 | 423,905 | |||||||||||||||||||||||||
Issuance of Common Stock under employee stock plans | 2 | 4,437 | 4,439 | 4,439 | ||||||||||||||||||||||||||||||||
Stock-based compensation expense | 10,264 | 10,264 | 10,264 | |||||||||||||||||||||||||||||||||
Components of comprehensive income, net of tax | ||||||||||||||||||||||||||||||||||||
Net income (loss) | 25,446 | 25,446 | (20 | ) | 25,426 | |||||||||||||||||||||||||||||||
Other comprehensive income (loss) | 340 | 340 | (38 | ) | 302 | |||||||||||||||||||||||||||||||
Total comprehensive income (loss) | 25,786 | (58 | ) | 25,728 | ||||||||||||||||||||||||||||||||
Balance on December 31, 2022 | $ | 118 | $ | 441 | $ | 360,365 | $ | 243,079 | $ | (988 | ) | $ | (138,927 | ) | $ | 464,088 | $ | 248 | $ | 464,336 | ||||||||||||||||
As of December 31, 2018 | ||||||||||||
As reported | Adjustments | Balances without adoption of Topic 606 | ||||||||||
Accounts receivable, net | $ | 43,673 | $ | (72 | ) | $ | 43,601 | |||||
Inventories, net | 47,370 | (110 | ) | 47,260 | ||||||||
Total assets | 221,068 | (182 | ) | 220,886 | ||||||||
Income taxes payable | 710 | (59 | ) | 651 | ||||||||
Deferred revenue | 5,069 | 5,768 | 10,837 | |||||||||
Sales allowances | 548 | (483 | ) | 65 | ||||||||
Total liabilities | 36,978 | 5,226 | 42,204 | |||||||||
Retained earnings | 129,000 | (5,408 | ) | 123,592 | ||||||||
Total equity | 184,090 | (5,408 | ) | 178,682 | ||||||||
Total liabilities and equity | 221,068 | (182 | ) | 220,886 |
Year Ended December 31, 2018 | ||||||||||||
As reported | Adjustments | Balances without adoption of Topic 606 | ||||||||||
Net revenues | $ | 291,220 | $(3,946) | $ | 287,274 | |||||||
Cost of revenues | 152,249 | (2,149 | ) | 150,100 | ||||||||
Gross margin | 138,971 | (1,797 | ) | 137,174 | ||||||||
Income before income taxes | 32,933 | (1,797 | ) | 31,136 | ||||||||
Provision for income taxes | 1,087 | (59 | ) | 1,028 | ||||||||
Consolidated net income | 31,846 | (1,738 | ) | 30,108 | ||||||||
Net income attributable to Vicor Corporation | 31,725 | (1,738 | ) | 29,987 |
Level 1 | Inputs used to measure fair value are unadjusted quoted prices available in active markets for the identical assets or liabilities as of the reporting date. |
Level 2 | ||
Inputs used to measure fair value, other than quoted prices included in Level 1, are either directly or indirectly observable as of the reporting date through correlation with market data, including quoted prices for similar assets and liabilities in active markets and quoted prices in inactive markets. Level 2 also includes assets and liabilities valued using models or other pricing methodologies that do not require significant judgment since the input assumptions used in the models, such as interest rates and volatility factors, are corroborated by readily observable data from actively quoted markets for substantially the full term of the financial instrument. | ||
Level 3 | ||
Inputs used to measure fair value are unobservable inputs supported by little or no market activity and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions. |
2019 | 2018 | 2017 | ||||||||||
Numerator: | ||||||||||||
Net income attributable to Vicor Corporation | $ | 14,098 | $ | 31,725 | $ | 167 | ||||||
Denominator: | ||||||||||||
Denominator for basic net income per share-weighted average shares (1) | 40,330 | 39,872 | 39,228 | |||||||||
Effect of dilutive securities: | ||||||||||||
Employee stock options (2) | 1,347 | 857 | 705 | |||||||||
Denominator for diluted net income per share-adjusted weighted-average shares and assumed conversions (3) | 41,677 | 40,729 | 39,933 | |||||||||
Basic net income per share | $ | 0.35 | $ | 0.80 | $ | 0.00 | ||||||
Diluted net income per share | $ | 0.34 | $ | 0.78 | $ | 0.00 | ||||||
2022 | 2021 | 2020 | ||||||||||
Numerator: | ||||||||||||
Net income attributable to Vicor Corporation | $ | 25,446 | $ | 56,625 | $ | 17,910 | ||||||
Denominator: | ||||||||||||
Denominator for basic net income per share - weighted average shares (1) | 44,005 | 43,651 | 42,186 | |||||||||
Effect of dilutive securities: | ||||||||||||
Employee stock options (2) | 889 | 1,315 | 1,683 | |||||||||
Denominator for diluted net income per share - adjusted weighted-average shares and assumed conversions (3) | 44,894 | 44,966 | 43,869 | |||||||||
Basic net income per share | $ | 0.58 | $ | 1.30 | $ | 0.42 | ||||||
Diluted net income per share | $ | 0.57 | $ | 1.26 | $ | 0.41 | ||||||
(1) | Denominator represents weighted average number of Common Shares and Class B Common Shares outstanding. |
(2) | Options to purchase 879,228, 60,736 and 181,196 shares of Common Stock in 2022, 2021, and 2020, respectively, were not included in the calculation of net income per share as the effect would have been antidilutive. |
(3) Denominator represents weighted average number of Common Shares and Class B Common Shares outstanding for the year, adjusted to include the dilutive effect, if any, of outstanding op tio ns. |
2019 | 2018 | |||||||
Raw materials | $ | 35,901 | $ | 37,696 | ||||
Work-in-process | 5,184 | 4,740 | ||||||
Finished goods | 8,102 | 4,934 | ||||||
$ | 49,187 | $ | 47,370 | |||||
2022 | 2021 | |||||||
Raw materials | $ | 82,181 | $ | 51,289 | ||||
Work-in-process | 10,456 | 12,514 | ||||||
Finished goods | 8,773 | 3,519 | ||||||
$ | 101,410 | $ | 67,322 | |||||
December 31, 2019 | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||
Failed Auction Security | $ | 3,000 | $ | — | $ | 490 | $ | 2,510 | ||||||||
December 31, 2018 | ||||||||||||||||
Failed Auction Security | $ | 3,000 | $ | — | $ | 474 | $ | 2,526 | ||||||||
Cost | Estimated Fair Value | |||||||
Due in twenty to forty years | $ | 3,000 | $ | 2,510 | ||||
2019 | 2018 | 2017 | ||||||||||
Balance at the beginning of the period | $ | 41 | $ | 48 | $ | 59 | ||||||
Reductions in the amount related to credit gain for which other-than-temporary impairment was not previously recognized | (4 | ) | (7 | ) | (11 | ) | ||||||
Balance at the end of the period | $ | 37 | $ | 41 | $ | 48 | ||||||
December 31, 2022 | ||||||||||||
Cash and Cash Equivalents | Short-Term Investments | Long-Term Investments | ||||||||||
Measured at fair value: | ||||||||||||
Available-for-sale | ||||||||||||
Money Market Funds | $ | 143,274 | $ | — | $ | — | ||||||
Failed Auction Security | — | — | 2,622 | |||||||||
Total | 143,274 | — | 2,622 | |||||||||
Other measurement basis: | ||||||||||||
Cash on hand | 47,337 | — | — | |||||||||
Total | $ | 190,611 | $ | — | $ | 2,622 | ||||||
December 31, 2021 | ||||||||||||
Cash and Cash Equivalents | Short-Term Investments | Long-Term Investments | ||||||||||
Measured at fair value: | ||||||||||||
Available-for-sale | ||||||||||||
Money Market Funds | $ | 94,282 | $ | — | $ | — | ||||||
U.S. Treasury Obligations | — | 45,215 | — | |||||||||
Failed Auction Security | — | — | 2,639 | |||||||||
Total | 94,282 | 45,215 | 2,639 | |||||||||
Other measurement basis: | ||||||||||||
Cash on hand | 88,136 | — | — | |||||||||
Total | $ | 182,418 | $ | 45,215 | $ | 2,639 | ||||||
December 31, 2022 | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||
Failed Auction Security | $ | 3,000 | $ | — | $ | 378 | $ | 2,622 | ||||||||
December 31, 2021 | ||||||||||||||||
U.S. Treasury Obligations | $ | 45,238 | $ | — | $ | 23 | $ | 45,215 | ||||||||
Failed Auction Security | 3,000 | — | 361 | 2,639 |
Failed Auction Security: | ||||||||
Cost | Estimated Fair Value | |||||||
Due in twenty years | $ | 3,000 | $ | 2,622 | ||||
Using | ||||||||||||||||
Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total Fair Value as of December 31, 2019 | |||||||||||||
Cash equivalents: | ||||||||||||||||
Money market funds | $ | 9,630 | $ | — | $ | — | $ | 9,630 | ||||||||
Long-term investments: | ||||||||||||||||
Failed Auction Security | — | — | 2,510 | 2,510 | ||||||||||||
Liabilities: | ||||||||||||||||
Contingent consideration obligations | — | — | (451 | ) | (451 | ) |
Using | ||||||||||||||||
Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total Fair Value as of December 31, 2022 | |||||||||||||
Cash equivalents: | ||||||||||||||||
Money market funds | $ | 143,274 | $ | — | $ | — | $ | 143,274 | ||||||||
Long-term investments: | ||||||||||||||||
Failed Auction Security | — | — | 2,622 | 2,622 |
Using | ||||||||||||||||
Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total Fair Value as of December 31, 2018 | |||||||||||||
Cash equivalents: | ||||||||||||||||
Money market funds | $ | 9,433 | $ | — | $ | — | $ | 9,433 | ||||||||
Long-term investments: | ||||||||||||||||
Failed Auction Security | — | — | 2,526 | 2,526 | ||||||||||||
Liabilities: | ||||||||||||||||
Contingent consideration obligations | — | — | (408 | ) | (408 | ) |
Using | ||||||||||||||||
Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total Fair Value as of December 31, 2021 | |||||||||||||
Cash equivalents: | ||||||||||||||||
Money market funds | $ | 94,282 | $ | — | $ | — | $ | 94,282 | ||||||||
Short-term investments: | ||||||||||||||||
U.S. Treasury Obligations | 45,215 | — | — | 45,215 | ||||||||||||
Long-term investments: | ||||||||||||||||
Failed Auction Security | — | — | 2,639 | 2,639 |
Fair Value | Valuation | Unobservable Input | Weighted Average | |||||||||||
Failed Auction Security | $ | 2,510 | Discounted cash flow | Cumulative probability of earning the maximum rate until maturity | 0.11 | % | ||||||||
Cumulative probability of principal return prior to maturity | 93.66 | % | ||||||||||||
Cumulative probability of default | 6.24 | % | ||||||||||||
Liquidity risk premium | 5.00 | % | ||||||||||||
Recovery rate in default | 40.00 | % |
Balance at the beginning of the period | $ | 2,526 | ||
Credit gain on available-for-sale security included in Other income (expense), net | 4 | |||
Gain included in Other comprehensive income (loss) | (20 | ) | ||
Balance at the end of the period | $ | 2,510 | ||
Balance at the beginning of the period | $ | 2,639 | ||
Credit gain on available-for-sale | 3 | |||
Loss included in Other comprehensive income | (20 | ) | ||
Balance at the end of the period | $ | 2,622 | ||
Balance at the beginning of the period | $ | 408 | ||
Increase in estimated contingent consideration obligations (see Note 9) | 280 | |||
Payments | (237 | ) | ||
Balance at the end of the period | $ | 451 | ||
2019 | 2018 | |||||||
Land | $ | 3,600 | $ | 2,089 | ||||
Buildings and improvements | 45,791 | 45,170 | ||||||
Machinery and equipment | 220,405 | 208,135 | ||||||
Furniture and fixtures | 8,231 | 7,239 | ||||||
Construction in-progress and deposits | 4,362 | 9,251 | ||||||
282,389 | 271,884 | |||||||
Accumulated depreciation and amortization | (229,698 | ) | (221,452 | ) | ||||
Right of use asset — net | 4,261 | — | ||||||
Net balance | $ | 56,952 | $ | 50,432 | ||||
2022 | 2021 | |||||||
Land | $ | 3,600 | $ | 3,600 | ||||
Buildings and improvements | 73,520 | 50,138 | ||||||
Machinery and equipment | 271,021 | 247,926 | ||||||
Furniture and fixtures | 15,297 | 9,825 | ||||||
Construction in-progress and deposits | 52,937 | 48,088 | ||||||
416,375 | 359,577 | |||||||
Accumulated depreciation and amortization | (258,570 | ) | (248,226 | ) | ||||
Right of use asset — net | 8,204 | 4,624 | ||||||
Net balance | $ | 166,009 | $ | 115,975 | ||||
2019 | 2018 | |||||||
Patent costs | $ | 1,992 | $ | 1,979 | ||||
Accumulated amortization | (1,483 | ) | (1,380 | ) | ||||
$ | 509 | $ | 599 | |||||
2022 | 2021 | |||||||
Patent costs | $ | 1,030 | $ | 1,686 | ||||
Accumulated amortization | (772 | ) | (1,354 | ) | ||||
$ | 258 | $ | 332 | |||||
2019 | 2018 | 2017 | ||||||||||
Balance at the beginning of the period | $ | 268 | $ | 290 | $ | 214 | ||||||
Accruals for warranties for products sold in the period | 250 | 173 | 346 | |||||||||
Fulfillment of warranty obligations | (140 | ) | (117 | ) | (194 | ) | ||||||
Revisions of estimated obligations | (6 | ) | (78 | ) | (76 | ) | ||||||
Balance at the end of the period | $ | 372 | $ | 268 | $ | 290 | ||||||
2022 | 2021 | 2020 | ||||||||||
Balance at the beginning of the period | $ | 292 | $ | 308 | $ | 372 | ||||||
Accruals for warranties for products sold in the period | 376 | 158 | 366 | |||||||||
Fulfillment of warranty obligations | (131 | ) | (151 | ) | (398 | ) | ||||||
Revisions of estimated obligations | (40 | ) | (23 | ) | (32 | ) | ||||||
Balance at the end of the period | $ | 497 | $ | 292 | $ | 308 | ||||||
Twelve Months Ended December 31, 2019 | ||||||||||||
Brick Products | Advanced Products | Total | ||||||||||
United States | $ | 98,822 | $ | 22,806 | $ | 121,628 | ||||||
Europe | 22,172 | 5,090 | 27,262 | |||||||||
Asia Pacific | 62,720 | 46,107 | 108,827 | |||||||||
All other | 4,182 | 1,078 | 5,260 | |||||||||
$ | 187,896 | $ | 75,081 | $ | 262,977 | |||||||
Twelve Months Ended December 31, 2018 | ||||||||||||
Brick Products | Advanced Products | Total | ||||||||||
United States | $ | 77,995 | $ | 32,784 | $ | 110,779 | ||||||
Europe | 23,484 | 4,205 | 27,689 | |||||||||
Asia Pacific | 80,097 | 66,981 | 147,078 | |||||||||
All other | 5,128 | 546 | 5,674 | |||||||||
$ | 186,704 | $ | 104,516 | $ | 291,220 | |||||||
Year Ended December 31, 2022 | ||||||||||||
Brick Products | Advanced Products | Total | ||||||||||
United States | $ | 76,306 | $ | 53,116 | $ | 129,422 | ||||||
Europe | 27,856 | 10,522 | 38,378 | |||||||||
Asia Pacific | 49,076 | 179,259 | 228,335 | |||||||||
All other | 2,520 | 424 | 2,944 | |||||||||
$ | 155,758 | $ | 243,321 | $ | 399,079 | |||||||
Year Ended December 31, 2021 | ||||||||||||
Brick Products | Advanced Products | Total | ||||||||||
United States | $ | 74,280 | $ | 44,360 | $ | 118,640 | ||||||
Europe | 32,762 | 5,145 | 37,907 | |||||||||
Asia Pacific | 80,344 | 120,459 | 200,803 | |||||||||
All other | 1,758 | 256 | 2,014 | |||||||||
$ | 189,144 | $ | 170,220 | $ | 359,364 | |||||||
Year Ended December 31, 2020 | ||||||||||||
Brick Products | Advanced Products | Total | ||||||||||
United States | $ | 80,065 | $ | 25,493 | $ | 105,558 | ||||||
Europe | 23,491 | 6,641 | 30,132 | |||||||||
Asia Pacific | 83,985 | 73,899 | 157,884 | |||||||||
All other | 2,715 | 287 | 3,002 | |||||||||
$ | 190,256 | $ | 106,320 | $ | 296,576 | |||||||
Twelve Months Ended December 31, 2019 | ||||||||||||
Brick Products | Advanced Products | Total | ||||||||||
Direct customers, contract manufacturers and non-stocking distributors | $ | 159,135 | $ | 63,567 | $ | 222,702 | ||||||
Stocking distributors, net of sales allowances | 27,797 | 9,802 | 37,599 | |||||||||
Non-recurring engineering | 843 | 1,614 | 2,457 | |||||||||
Royalties | 121 | 24 | 145 | |||||||||
Other | — | 74 | 74 | |||||||||
$ | 187,896 | $ | 75,081 | $ | 262,977 | |||||||
Year Ended December 31, 2022 | ||||||||||||
Brick Products | Advanced Products | Total | ||||||||||
Direct customers, contract manufacturers and non-stocking distributors | $ | 102,905 | $ | 216,685 | $ | 319,590 | ||||||
Stocking distributors, net of sales allowances | 51,819 | 13,831 | 65,650 | |||||||||
Non-recurring e ngineering | 1,034 | 9,933 | 10,967 | |||||||||
Royalties | — | 2,801 | 2,801 | |||||||||
Other | — | 71 | 71 | |||||||||
$ | 155,758 | $ | 243,321 | $ | 399,079 | |||||||
Twelve Months Ended December 31, 2018 | ||||||||||||
Brick Products | Advanced Products | Total | ||||||||||
Direct customers, contract manufacturers and non-stocking distributors | $ | 163,206 | $ | 91,579 | $ | 254,785 | ||||||
Stocking distributors, net of sales allowances | 22,362 | 9,370 | 31,732 | |||||||||
Non-recurring engineering | 1,066 | 3,356 | 4,422 | |||||||||
Royalties | 70 | 140 | 210 | |||||||||
Othe r | — | 71 | 71 | |||||||||
$ | 186,704 | $ | 104,516 | $ | 291,220 | |||||||
Year Ended December 31, 2021 | ||||||||||||
Brick Products | Advanced Products | Total | ||||||||||
Direct customers, contract manufacturers and non-stocking distributors | $ | 139,099 | $ | 144,180 | $ | 283,279 | ||||||
Stocking distributors, net of sales allowances | 49,359 | 14,123 | 63,482 | |||||||||
Non-recurring engineering | 686 | 10,027 | 10,713 | |||||||||
Royalties | — | 1,819 | 1,819 | |||||||||
Other | — | 71 | 71 | |||||||||
$ | 189,144 | $ | 170,220 | $ | 359,364 | |||||||
Year Ended December 31, 2020 | ||||||||||||
Brick Products | Advanced Products | Total | ||||||||||
Direct customers, contract manufacturers and non-stocking distributors | $ | 160,004 | $ | 91,405 | $ | 251,409 | ||||||
Stocking distributors, net of sales allowances | 29,411 | 8,510 | 37,921 | |||||||||
Non-recurring engineering | 841 | 6,181 | 7,022 | |||||||||
Royalties | — | 152 | 152 | |||||||||
Other | — | 72 | 72 | |||||||||
$ | 190,256 | $ | 106,320 | $ | 296,576 | |||||||
December 31, 2019 | December 31, 2018 | Change | ||||||||||
Accounts receivable | $ | 38,115 | $ | 43,673 | $ | (5,558 | ) | |||||
Short-term deferred revenue and customer prepayment s | (5,507 | ) | (5,069 | ) | (438 | ) | ||||||
Long-term deferred revenue | (1,054 | ) | (232 | ) | (822 | ) | ||||||
Deferred expenses | 1,897 | 501 | 1,396 | |||||||||
Sales allowances | (741 | ) | (548 | ) | (193 | ) |
December 31, 2022 | December 31, 2021 | Change | ||||||||||
Short-term deferred revenue and customer prepayments | $ | (13,197 | ) | $ | (7,912 | ) | $ | (5,285 | ) | |||
Long-term deferred revenue | (145 | ) | (413 | ) | 268 | |||||||
Deferred expenses | 577 | 560 | 17 | |||||||||
Sales allowances | (1,661 | ) | (1,464 | ) | (197 | ) |
2019 | 2018 | 2017 | ||||||||||
United States | $ | 121,628 | $ | 110,779 | $ | 83,871 | ||||||
Europe | 27,262 | 27,689 | 24,078 | |||||||||
Asia Pacific | 108,827 | 147,078 | 114,365 | |||||||||
All other | 5,260 | 5,674 | 5,516 | |||||||||
$ | 262,977 | $ | 291,220 | $ | 227,830 | |||||||
2019 | 2018 | 2017 | ||||||||||
Cost of revenues | $ | 342 | $ | 237 | $ | 187 | ||||||
Selling, general and administrative | 1,979 | 2,517 | 1,125 | |||||||||
Research and development | 715 | 642 | 423 | |||||||||
Total stock-based compensation | $ | 3,036 | $ | 3,396 | $ | 1,735 | ||||||
2022 | 2021 | 2020 | ||||||||||
Cost of revenues | $ | 1,648 | $ | 1,000 | $ | 934 | ||||||
Selling, general and administrative | 5,735 | 3,873 | 3,164 | |||||||||
Research and development | 2,881 | 2,162 | 1,785 | |||||||||
Total stock-based compensation | $ | 10,264 | $ | 7,035 | $ | 5,883 | ||||||
2019 | 2018 | 2017 | ||||||||||
Stock options | $ | 2,072 | $ | 2,649 | $ | 1,546 | ||||||
ESPP | 964 | 747 | 189 | |||||||||
Total stock-based compensation | $ | 3,036 | $ | 3,396 | $ | 1,735 | ||||||
2022 | 2021 | 2020 | ||||||||||
Stock options | $ | 9,093 | $ | 6,122 | $ | 4,982 | ||||||
ESPP | 1,171 | 913 | 901 | |||||||||
Total stock-based compensation | $ | 10,264 | $ | 7,035 | $ | 5,883 | ||||||
2019 | 2018 | 2017 | ||||||||||
Risk-free interest rate | 1.8 | % | 2.9 | % | 2.1 | % | ||||||
Expected dividend yield | — | — | — | |||||||||
Expected volatility | 42 | % | 44 | % | 43 | % | ||||||
Expected lives (years) | 6.3 | 6.4 | 7.1 |
2022 | 2021 | 2020 | ||||||||||
Risk-free interest rate | 2.8 | % | 0.8 | % | 0.5 | % | ||||||
Expected dividend yield | — | — | — | |||||||||
Expected volatility | 51 | % | 49 | % | 48 | % | ||||||
Expected term (years) | 4.4 | 4.9 | 6.1 |
Options Outstanding | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Life in Years | Aggregate Intrinsic Value | |||||||||||||
Outstanding on December 31, 2018 | 1,382,981 | $ | 13.41 | |||||||||||||
Granted | 115,753 | $ | 31.76 | |||||||||||||
Options transferred from VI Chip Merge r | 1,476,371 | $ | 6.79 | |||||||||||||
Forfeited and expired | (36,228 | ) | $ | 21.37 | ||||||||||||
Exercised | (250,981 | ) | $ | 9.71 | ||||||||||||
Outstanding on December 31, 2019 | 2,687,896 | $ | 10.81 | 4.65 | $ | 96,665 | ||||||||||
Exercisable on December 31, 2019 | 1,475,947 | $ | 8.74 | 4.10 | $ | 56,079 | ||||||||||
Vested or expected to vest as of December 31, 2019(1) | 2,601,076 | $ | 10.65 | 4.62 | $ | 93,938 | ||||||||||
Options Outstanding | Weighted- Average Exercise Price | Weighted -Average Remaining Contractual Life in Years | Aggregate Intrinsic Value | |||||||||||||
Outstanding on December 31, 2021 | 1,677,661 | $ | 33.48 | |||||||||||||
Granted | 568,727 | $ | 61.72 | |||||||||||||
Forfeited and expired | (94,807 | ) | $ | 59.78 | ||||||||||||
Exercised | (126,917 | ) | $ | 12.87 | ||||||||||||
Outstanding on December 31, 2022 | 2,024,664 | $ | 41.48 | 4.05 | $ | 42,160 | ||||||||||
Exercisable on December 31, 2022 | 1,046,092 | $ | 18.26 | 2.44 | $ | 40,376 | ||||||||||
Vested or expected to vest as of December 31, 2022(1) | 1,928,480 | $ | 40.20 | 3.95 | $ | 42,057 | ||||||||||
(1) | In addition to the vested options, the Company expects a portion of the unvested options to vest at some point in the future. The number of options expected to vest is calculated by applying an estimated forfeiture rate to the unvested options. |
Options Outstanding | Weighted- Average Exercise Price | |||||||
Outstanding on December 31, 2018 (1) | 10,414,000 | $ | 0.96 | |||||
Granted | — | |||||||
Forfeited and expired | — | |||||||
Exercised | — | |||||||
Options transferred in merger with Vicor | (10,414,000 | ) | $ | 0.96 | ||||
Outstanding on June 28, 2019 | — | |||||||
2020 | $ | 1,657 | ||
2021 | 995 | |||
2022 | 695 | |||
2023 | 606 | |||
2024 | 587 | |||
Thereafter | 171 | |||
Total lease payments | $ | 4,711 | ||
Less: Imputed interest | 336 | |||
Present value of lease liabilities | $ | 4,375 | ||
2023 | $ | 1,245 | ||
2024 | 1,786 | |||
2025 | 1,448 | |||
2026 | 1,094 | |||
2027 and beyond | 4,538 | |||
Total lease payments | $ | 10,111 | ||
Less: Imputed interest | 1,652 | |||
Present value of lease liabilities | $ | 8,459 | ||
Year | ||||
2019 | $ | 1,962 | ||
2020 | 1,502 | |||
2021 | 688 | |||
2022 | 447 | |||
2023 and thereafter | 830 | |||
$5,429 | ||||
2020 | $ | 874 | ||
2021 | 901 | |||
2022 | 928 | |||
2023 | 955 | |||
2024 | 402 | |||
Total lease payments to be received | $ | 4,060 | ||
2023 | $ | 955 | ||
2024 | 402 | |||
Total lease payments to be received | $ | 1,357 | ||
2019 | 2018 | 2017 | ||||||||||
Rental income | $ | 792 | $ | 792 | $ | 792 | ||||||
Interest income | 300 | 257 | 124 | |||||||||
Foreign currency losses, net | (108 | ) | (260 | ) | 323 | |||||||
Gain on disposal of equipment | 38 | 57 | 14 | |||||||||
Credit gains on available-for-sale securities | 4 | 7 | 11 | |||||||||
Other | 40 | 21 | (2 | ) | ||||||||
$ | 1,066 | $ | 874 | $ | 1,262 | |||||||
2022 | 2021 | 2020 | ||||||||||
Interest income, net | $ | 1,313 | $ | 930 | $ | 95 | ||||||
Rental income, net | 792 | 792 | 792 | |||||||||
Foreign currency (losses) gains, net | (653 | ) | (336 | ) | 181 | |||||||
Other , net | 34 | (183 | ) | 25 | ||||||||
$ | 1,486 | $ | 1,203 | $ | 1,093 | |||||||
2019 | 2018 | 2017 | ||||||||||
Statutory federal tax rate | 21.0 | % | 21.0 | % | (34.0 | )% | ||||||
State income taxes, net of federal income tax benefit | (8.1 | ) | 3.6 | 97.2 | ||||||||
Increase (decrease) in valuation allowance | 2.2 | (9.1 | ) | (936.1 | ) | |||||||
Permanent items | (3.9 | ) | (5.9 | ) | (861.2 | ) | ||||||
Tax credits | (15.6 | ) | (5.5 | ) | (1,222.3 | ) | ||||||
Provision vs. tax return differences | 9.0 | (1.7 | ) | — | ||||||||
Foreign rate differential and deferred items | 0.6 | 0.7 | (91.8 | ) | ||||||||
Change in tax reserves | — | 0.1 | (5.1 | ) | ||||||||
Rate change due to tax reform | — | — | 3,441.1 | |||||||||
Refundable income taxes—AMT credit | — | — | (751.0 | ) | ||||||||
Other | — | 0.1 | (0.1 | ) | ||||||||
5.2 | % | 3.3 | % | (363.3 | )% | |||||||
2022 | 2021 | 2020 | ||||||||||
Statutory federal tax rate | 21.0 | % | 21.0 | % | 21.0 | % | ||||||
State income taxes, net of federal income tax benefit | (2.4 | ) | (4.2 | ) | (0.5 | ) | ||||||
Increase in valuation allowance | 14.5 | 9.2 | 41.2 | |||||||||
Permanent items | (13.8 | ) | (17.9 | ) | (48.7 | ) | ||||||
Tax credits | (9.9 | ) | (5.7 | ) | (11.2 | ) | ||||||
Provision vs. tax return differences | 2.1 | (2.0 | ) | 0.7 | ||||||||
Foreign rate differential and deferred items | (0.2 | ) | — | 0.1 | ||||||||
Other | 0.1 | (0.1 | ) | 0.3 | ||||||||
11.4 | % | 0.3 | % | 2.9 | % | |||||||
2019 | 2018 | 2017 | ||||||||||
Domestic | $ | 13,493 | $ | 31,455 | $ | (1,591 | ) | |||||
Foreign | 1,394 | 1,478 | 1,493 | |||||||||
$ | 14,887 | $ | 32,933 | $ | (98 | ) | ||||||
2022 | 2021 | 2020 | ||||||||||
Domestic | $ | 29,157 | $ | 56,620 | $ | 17,688 | ||||||
Foreign | (470 | ) | 185 | 773 | ||||||||
$ | 28,687 | $ | 56,805 | $ | 18,461 | |||||||
2019 | 2018 | 2017 | ||||||||||
Current: | ||||||||||||
Federal | $ | — | $ | — | $ | (736 | ) | |||||
State | 268 | 231 | 156 | |||||||||
Foreign | 450 | 911 | 396 | |||||||||
718 | 1,142 | (184 | ) | |||||||||
Deferred: | ||||||||||||
Foreign | 60 | (55 | ) | (172 | ) | |||||||
60 | (55 | ) | (172 | ) | ||||||||
$ | 778 | $ | 1,087 | $ | (356 | ) | ||||||
2022 | 2021 | 2020 | ||||||||||
Current: | ||||||||||||
Federal | $ | 2,105 | $ | 1 | $ | 215 | ||||||
State | 955 | (14 | ) | 93 | ||||||||
Foreign | 298 | 171 | 252 | |||||||||
3,358 | 158 | 560 | ||||||||||
Deferred: | ||||||||||||
Foreign | (97 | ) | 18 | (21 | ) | |||||||
(97 | ) | 18 | (21 | ) | ||||||||
$ | 3,261 | $ | 176 | $ | 539 | |||||||
2019 | 2018 | |||||||
Deferred tax assets: | ||||||||
Research and development tax credit carryforwards | $ | 27,607 | $ | 23,244 | ||||
Investment tax credit carryforwards | 2,102 | 1,976 | ||||||
Stock-based compensation | 1,587 | 3,133 | ||||||
Inventory reserves | 1,522 | 2,109 | ||||||
Vacation accrual | 1,280 | 1,218 | ||||||
Deferred revenue, net | 796 | 66 | ||||||
Lease liabilities | 679 | — | ||||||
UNICAP | 351 | 275 | ||||||
Net operating loss carryforwards | 328 | 1,091 | ||||||
International deferred tax assets | 205 | 265 | ||||||
Sales allowances | 172 | 128 | ||||||
Unrealized loss on investments | 132 | 132 | ||||||
Contingent consideration liabilities | 98 | 88 | ||||||
Warranty reserves | 66 | 35 | ||||||
Bad debt reserves | 14 | 52 | ||||||
Other | 225 | 233 | ||||||
Total deferred tax assets | 37,164 | 34,045 | ||||||
Less: Valuation allowance for deferred tax assets | (30,363 | ) | (30,031 | ) | ||||
Net deferred tax assets | 6,801 | 4,014 | ||||||
Deferred tax liabilities: | ||||||||
Depreciation | (5,296 | ) | (3,144 | ) | ||||
ROU assets | (653 | ) | — | |||||
Prepaid expenses | (552 | ) | (473 | ) | ||||
Patent amortization | (91 | ) | (107 | ) | ||||
Other | (4 | ) | (25 | ) | ||||
Total deferred tax liabilities | (6,596 | ) | (3,749 | ) | ||||
Net deferred tax assets (liabilities) | $ | 205 | $ | 265 | ||||
2022 | 2021 | |||||||
Deferred tax assets: | ||||||||
Research and development tax credit carryforwards | $ | 33,764 | $ | 36,041 | ||||
Net operating loss carryforwards | 22 | 5,985 | ||||||
Stock-based compensation | 3,940 | 2,341 | ||||||
Inventory reserves | 2,303 | 2,268 | ||||||
Investment tax credit carryforwards | 2,461 | 1,928 | ||||||
UNICAP | 1,118 | 1,363 | ||||||
Vacation accrual | 1,248 | 1,338 | ||||||
Lease liabilities | 1,422 | 787 | ||||||
Accrued payroll tax deferral | — | 384 | ||||||
Capitalized research and development | 12,142 | — | ||||||
Other | 2,871 | 1,568 | ||||||
Total deferred tax assets | 61,291 | 54,003 | ||||||
Less: Valuation allowance for deferred tax assets | (47,413 | ) | (43,329 | ) | ||||
Net deferred tax assets | 13,878 | 10,674 | ||||||
Deferred tax liabilities: | ||||||||
Depreciation | (11,396 | ) | (9,048 | ) | ||||
ROU assets | (1,362 | ) | (756 | ) | ||||
Prepaid expenses | (751 | ) | (662 | ) | ||||
Other | (89 | ) | — | |||||
Total deferred tax liabilities | (13,598 | ) | (10,466 | ) | ||||
Net deferred tax assets (liabilities) | $ | 280 | $ | 208 | ||||
2019 | 2018 | 2017 | ||||||||||
Balance on January 1 | $ | 1,462 | $ | 1,104 | $ | 946 | ||||||
Additions based on tax positions related to the current year | 571 | 245 | 138 | |||||||||
Additions for tax positions of prior years | 43 | 120 | 29 | |||||||||
Settlements | — | — | (1 | ) | ||||||||
Lapse of statute | (6 | ) | (7 | ) | (8 | ) | ||||||
Balance on December 31 | $ | 2,070 | $ | 1,462 | $ | 1,104 | ||||||
2022 | 2021 | 2020 | ||||||||||
Balance on January 1 | $ | 3,246 | $ | 2,297 | $ | 2,070 | ||||||
Additions based on tax positions related to the current year | 319 | 625 | 244 | |||||||||
Additions (reductions) for tax positions of prior years | (54 | ) | 393 | (13 | ) | |||||||
Lapse of statute | (37 | ) | (69 | ) | (4 | ) | ||||||
Balance on December 31 | $ | 3,474 | $ | 3,246 | $ | 2,297 | ||||||
First | Second | Third | Fourth | Total | ||||||||||||||||
2019: | ||||||||||||||||||||
Net revenues | $ | 65,725 | $ | 63,355 | $ | 70,772 | $ | 63,125 | $ | 262,977 | ||||||||||
Gross margin | 31,086 | 29,117 | 33,002 | 29,761 | 122,966 | |||||||||||||||
Consolidated net income | 4,306 | 2,556 | 5,932 | 1,315 | 14,109 | |||||||||||||||
Net income (loss) attributable to noncontrolling interest | 20 | (7 | ) | (5 | ) | 3 | 11 | |||||||||||||
Net income attributable to Vicor Corporation | 4,286 | 2,563 | 5,937 | 1,312 | 14,098 | |||||||||||||||
Net income per share attributable to Vicor Corporation: | ||||||||||||||||||||
Basic | 0.11 | 0.06 | 0.15 | 0.03 | 0.35 | |||||||||||||||
Diluted | 0.10 | 0.06 | 0.14 | 0.03 | 0.34 |
First | Second | Third | Fourth | Total | ||||||||||||||||
2018: | ||||||||||||||||||||
Net revenues | $ | 65,269 | $ | 74,196 | $ | 78,035 | $ | 73,720 | $ | 291,220 | ||||||||||
Gross margin | 30,211 | 35,883 | 39,004 | 33,873 | 138,971 | |||||||||||||||
Consolidated net income | 3,982 | 7,909 | 13,048 | 6,907 | 31,846 | |||||||||||||||
Net income (loss) attributable to noncontrolling interest | 39 | 49 | 36 | (3 | ) | 121 | ||||||||||||||
Net income attributable to Vicor Corporation | 3,943 | 7,860 | 13,012 | 6,910 | 31,725 | |||||||||||||||
Net income per share attributable to Vicor Corporation: | ||||||||||||||||||||
Basic | 0.10 | 0.20 | 0.32 | 0.17 | 0.80 | |||||||||||||||
Diluted | 0.10 | 0.19 | 0.32 | 0.17 | 0.78 |
ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
None.
ITEM 9A. | CONTROLS AND PROCEDURES |
Attached as exhibits to this Annual Report on Form
(a) Evaluation of disclosure controls and procedures
As required by Rule
(b) Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures: (a) pertaining to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; (b) providing reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of our management and Board of Directors; and (c) providing reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on our financial statements.
Management assessed our internal control over financial reporting as of December 31, 2019,2022, the end of our fiscal year. Management based its assessment on criteria established in
Based on our assessment, management has concluded that our internal control over financial reporting was effective as of December 31, 2019.
The effectiveness of our internal control over financial reporting as of December 31, 20192022 has been audited by KPMG LLP, our independent registered public accounting firm, as stated in their report which is included immediately below.
70
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Vicor Corporation:
Opinion on Internal Control Over Financial Reporting
We have audited Vicor Corporation and subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2019,2022, based on criteria established in
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 20192022 and 2018,2021, the related consolidated statements of operations, comprehensive income, cash flows, and equity for each of the years in the three-year period ended December 31, 2019,2022, and the related notes and financial statement schedule listed in Item 15(a)(2) (collectively, the consolidated financial statements), and our report dated February 28, 20202023 expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ KPMG LLP
Boston, Massachusetts
February 28, 2020
(c) Inherent Limitations on Effectiveness of Controls
The Company’s management, including the CEO and CFO, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. 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 evaluation of 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.
(d) Changes in Internal Control Over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the fiscal quarter ended December 31, 2019,2022, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
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ITEM 9B. | OTHER INFORMATION |
None.
ITEM 9C. | DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS |
Not applicable.
PART III
ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
Incorporated by reference from the Company’s Definitive Proxy Statement for its 20202023 annual meeting of stockholders.
ITEM 11. | EXECUTIVE COMPENSATION |
Incorporated by reference from the Company’s Definitive Proxy Statement for its 20202023 annual meeting of stockholders.
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ANDRELATED STOCKHOLDER MATTERS |
Incorporated by reference from the Company’s Definitive Proxy Statement for its 20202023 annual meeting of stockholders.
ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR |
Incorporated by reference from the Company’s Definitive Proxy Statement for its 20202023 annual meeting of stockholders.
ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
Incorporated by reference from the Company’s Definitive Proxy Statement for its 20202023 annual meeting of stockholders.
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PART IV
ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES |
(a) (1)
See index in Item 8.
(a) (2)
Schedule II Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted.
(b)
Exhibits | Description of Document | |||
3.1 | ||||
3.2 | ||||
3.3 | ||||
3.4 | ||||
3.5 | ||||
4.1 | Specimen Common Stock Certificate (2) | |||
4.2 | ||||
10.1* | ||||
10.2* | ||||
10.3* | ||||
10.4* | ||||
10.5* | ||||
10.6* | ||||
10.7* | ||||
10.8* | ||||
10.9* | ||||
10.10* | ||||
10.11* | ||||
10.12* | ||||
Summary of Compensation Agreement between Vicor Corporation and Andrew D’Amico (19) | ||||
10.14* | Form of Stock Option Award Agreement under the Vicor Corporation Amended and Restated 2000 Stock Option and Incentive Plan, as amended and restated (17) | |||
21.1 | Subsidiaries of the Company | |||
23.1 | ||||
31.1 | ||||
31.2 |
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32.1 | ||||
32.2 | ||||
101.INS** | Inline XBRL Instance Document | |||
101.SCH** | Inline XBRL Taxonomy Extension Schema Document. | |||
101.CAL** | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |||
101.DEF** | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |||
101.LAB** | Inline XBRL Taxonomy Extension Label Linkbase Document. | |||
101.PRE** | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
* | Indicates a management contract or compensatory plan or arrangement required to be filled pursuant to Item 15(b) of Form 10-K. |
Filed with this Annual Report on Form 10-K for the year ended December 31, |
Balance Sheets for the years ended December 31, |
(1) | Filed as an exhibit to the Company’s Annual Report on Form |
(2) | Filed as an exhibit to the Company’s Registration Statement on Form 10, as amended, under the Securities Exchange Act of 1934 (File No. |
(3) | Filed as an exhibit to the Company’s Registration Statement on Form (No. 333-61177), and incorporated herein by reference. |
(4) | Filed as Appendix A to the Company’s Definitive Proxy Statement on Schedule 14A filed with the SEC on May 1, 2017 (File No. |
(5) | Filed as an exhibit to the Company’s Quarterly Report on Form |
(6) | Filed as an exhibit to the Company’s Annual Report on Form |
(7) | Filed as an exhibit to the Company’s Annual Report on Form |
(8) |
Filed as an exhibit to the Company’s Current Report on Form 8-K filed on June 4, 2020 (File No. 000-18277) and incorporated herein by reference. |
(9) | Filed as an exhibit to the Company’s Current Report on Form 8-K,dated June 6, 2007 (File No. |
(10) | Filed as an exhibit to the Company’s Current Report and Form |
(11) | Filed as Appendix B to the Company’s Definitive Proxy Statement on Schedule 14A filed with the SEC on May 1, 2017 (File No. |
(12) | Filed as Appendix C to the Company’s Definitive Proxy Statement on Schedule 14A filed with the SEC on May 1, 2017 (File No. |
(13) | Filed as Appendix D to the Company’s Definitive Proxy Statement on Schedule 14A filed with the SEC on May 1, 2017 (File No. 000-18277), and incorporated herein by reference. |
(14) | Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on June 5, 2018 (File No. 000-18277), and incorporated herein by reference. |
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(15) | Filed as Exhibit 10.1 to the Company’s Registration Statement on Form S-8, under the Securities Act of 1933 (No. 333-232864), and incorporated herein by reference. |
(16) | Filed as an exhibit to the Company’s Annual Report on Form 10-K filed on March 1, 2021 (File No. 000-18277) and incorporated herein by reference. |
(17) | Filed as an exhibit to the Company’s Current Report on Form 8-K filed on May 13, 2021 (File No. 000-18277) and incorporated herein by reference. |
(18) | Filed as an exhibit to the Company’s Annual Report on Form 10-K filed on March 1, 2022 (File No. 000-18277) and incorporated herein by reference. |
(19) | Filed herewith. |
ITEM 16. | FORM 10-K SUMMARY |
None.
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Description | Balance at Beginning of Period | Charge (Recovery) to Costs and Expenses | Other Charges, Deductions (1) | Balance at End of Period | ||||||||||||
Allowance for doubtful accounts: | ||||||||||||||||
Year ended: | ||||||||||||||||
December 31, 2019 | $ | 224,000 | $ | (144,000 | ) | $ | (21,000 | ) | $ | 59,000 | ||||||
December 31, 2018 | 159,000 | 65,000 | — | 224,000 | ||||||||||||
December 31, 2017 | 153,000 | 6,000 | — | 159,000 |
Description | Balance at Beginning of Period | Charge (Recovery) to Costs and Expenses | Other Charges, Deductions (1) | Balance at End of Period | ||||||||||||
Allowance for doubtful accounts: | ||||||||||||||||
Year ended: | ||||||||||||||||
December 31, 2022 | $ | 82,000 | $ | 5,000 | $ | — | $ | 87,000 | ||||||||
December 31, 2021 | 82,000 | — | — | 82,000 | ||||||||||||
December 31, 2020 | 59,000 | 23,000 | — | 82,000 |
(1) | Reflects uncollectible accounts written off, net of recoveries. |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 | ||
By: | ||
/s/ James | ||
James | ||
Vice President, Chief Financial Officer |
Date: February 28, 2020
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated.
Signature | Title | Date | ||||
/s/ Patrizio Vinciarelli Patrizio Vinciarelli | President, Chief Executive Officer and Chairman of the Board (Principal Executive Officer) | February 28, | ||||
/s/ James F. Schmidt James F. Schmidt | ||||||
Chief Financial Officer, and Director (Principal Financial Officer and Principal Accounting Officer) | February 28, | |||||
/s/ Estia J. Eichten Estia J. Eichten | Director | February 28, | ||||
/s/ Michael S. McNamara Michael S. McNamara | Director | February 28, | ||||
/s/ Samuel J. Anderson Samuel J. Anderson | Director | February 28, | ||||
/s/ Claudio Tuozzolo Claudio Tuozzolo | Director | February 28, | ||||
/s/ Jason L. Carlson Jason L. Carlson | Director | February 28, | ||||
/s/ Philip D. Davies Philip D. Davies | Director | February 28, | ||||
/s/ Andrew T. D’Amico Andrew T. D’Amico | Director | February 28, 2023 | ||||
/s/ M. Michael Ansour M. Michael Ansour | Director | February 28, 2023 | ||||
/s/ Zmira Lavie Zmira Lavie | Director | February 28, 2023 | ||||
/s/ John Shen John Shen | Director | February 28, 2023 |
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