UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM

~~FORM~~ 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2021~~2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ~~__________________________~~

Commission File Number

0-18277

VICOR CORPORATION

(Exact name of registrant as specified in its charter)


Delaware		04-2742817
(State of Incorporation)		(I.R.S. Employer Identification No.)

25 Frontage Road, Andover,

, Massachusetts 01810

(Address of Principal Executive Office)

(978)

~~(978)~~ 470-2900

(Registrant’s telephone number)

Securities registered pursuant to Section 12(b) of the Act:


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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation

S-T (§

(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes

☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a

non-accelerated

filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule

12b-2

of the Exchange Act.


Large accelerated filer	☒	~~Smaller reporting company~~	☐

Accelerated filer	☐	~~Emerging growth company~~	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule

12b-2

of the Exchange Act). Yes ☐ No

☒

The number of shares outstanding of each of the issuer’s classes of Common Stock as of October

~~, 2021~~ 25, 2022 was:


Common Stock, $.01 par value			~~32,010,275~~32,305,315
Class B Common Stock, $.01 par value			~~11,758,218~~11,743,218

VICOR CORPORATION

Part I – Financial Information

Item 1 – Financial Statements

Condensed Consolidated Balance Sheets

(In ~~thousands)~~thousands, except share data)

(Unaudited)

   September 30, 2021 December 31, 2020
Assets

Current assets:

Cash and cash equivalents
   $ 178,663 $ 161,742
Short-term investments
   50,217 50,166
Accounts receivable,
net
   51,080 40,999
Inventories, net
   63,409 57,269
Other current assets
   6,633 6,756


Total current assets
   350,002 316,932
Long-term deferred tax assets, net
   221 226
Long-term investments, net
   2,598 2,517
Property, plant and equipment, net
   104,446 74,843
Other assets
   1,563 1,721


Total assets
   $ 458,830 $ 396,239


Liabilities and Equity

Current liabilities:

Accounts payable
   $ 18,346 $ 14,121
Accrued compensation and benefits
   13,994 14,094
Accrued expenses
   3,589 2,624
Short-term lease liabilities
   1,625 1,629
Sales allowances
   1,661 597
Income taxes payable
   10 139
Short-term deferred revenue and customer prepayments
   3,390 7,309


Total current liabilities
   42,615 40,513
Long-term deferred revenue
   493 733
Contingent consideration obligations
   —   227
Long-term income taxes payable
   564 643
Long-term lease liabilities
   3,504 2,968


Total liabilities
   47,176 45,084
Commitments and contingencies (Note 10)
   0 0
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 2021 and 2020
   118 118
Common Stock: 1 vote per share, $.01 par value, 62,000,000 shares authorized 43,635,881 shares issued and 32,001,075 shares outstanding in 2021; 43,204,671 shares issued and 31,569,865 shares outstanding in 2020
   437 433
Additional paid-in capital
   342,014 328,392
Retained earnings
   208,753 161,008
Accumulated other comprehensive loss
   (1,040 ) (204 )
Treasury stock at cost: 11,634,806 shares in 2021 and 2020
   (138,927 ) (138,927 )


Total Vicor Corporation stockholders’ equity
   411,355 350,820
Noncontrolling interest
   299 335


Total equity
   411,654 351,155


Total liabilities and equity
   $ 458,830 $ 396,239


	September 30, 2022			December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	182,098		$	182,418
Short-term investments		19,949			45,215
Accounts receivable, net		56,287			55,097
Inventories		94,336			67,322
Other current assets		5,483			6,708

Total current assets		358,153			356,760
Long-term deferred tax assets, net		260			208
Long-term investment, net		2,552			2,639
Property, plant and equipment, net		163,198			115,975
Other assets		2,939			1,623

Total assets	$	527,102		$	477,205

Liabilities and Equity
Current liabilities:
Accounts payable	$	24,004		$	21,189
Accrued compensation and benefits		13,070			12,660
Accrued litigation		6,500			—
Accrued expenses		5,754			4,158
Short-term lease liabilities		1,449			1,551
Sales allowances		1,427			1,464
Accrued severance and other charges		—			93
Income taxes payable		7			66
Short-term deferred revenue and customer prepayments		12,148			7,912

Total current liabilities		64,359			49,093
Long-term deferred revenue		1,833			413
Long-term income taxes payable		529			569
Long-term lease liabilities		7,520			3,225

Total liabilities		74,241			53,300
Commitments and contingencies (Note 10)
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 2022 and 2021		118			118
Common Stock: 1 vote per share, $.01 par value, 62,000,000 shares authorized 43,923,786 shares issued and 32,288,980 shares outstanding in 2022; 43,789,528 shares issued and 32,154,722 shares outstanding in 2021		440			439
Additional paid-in capital		357,255			345,664
Retained earnings		235,017			217,633
Accumulated other comprehensive loss		(1,279	)		(1,328	)
Treasury stock at cost: 11,634,806 shares in 2022 and 2021		(138,927	)		(138,927	)

Total Vicor Corporation stockholders’ equity		452,624			423,599
Noncontrolling interest		237			306

Total equity		452,861			423,905

Total liabilities and equity	$	527,102		$	477,205

See accompanying notes.

-1-

VICOR CORPORATION

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

   Three Months Ended Nine Months Ended
   September 30, September 30,
   2021 2020 2021 2020
Net revenues
   $ 84,911 $ 78,112 $ 269,083 $ 212,274
Cost of revenues
   42,098 44,765 131,699 121,278


Gross margin
   42,813 33,347 137,384 90,996
Operating expenses:

Selling, general and administrative
   17,322 15,212 50,865 47,036
Research and development
   13,519 12,032 39,818 38,197


Total operating expenses
   30,841 27,244 90,683 85,233


Income from operations
   11,972 6,103 46,701 5,763
Other income (expense), net:

Total unrealized gains on available-for-sale securities, net
   37 36 81 81
Less: portion of gains recognized in other comprehensive income
   (36 ) (35 ) (78 ) (78 )


Net credit gains recognized in earnings
   1 1 3 3
Other income (expense), net
   393 333 996 712


Total other income (expense), net
   394 334 999 715


Income before income taxes
   12,366 6,437 47,700 6,478
(Benefit) provision for income taxes
   (886 ) 651 (30 ) (249 )


Consolidated net income
   13,252 5,786 47,730 6,727
Less: Net (loss) income attributable to noncontrolling interest
   (7 ) 1 (15 ) 10


Net income attributable to Vicor Corporation
   $ 13,259 $ 5,785 $ 47,745 $ 6,717


Net income per common share attributable to Vicor Corporation:

Basic
   $ 0.30 $ 0.13 $ 1.10 $ 0.16
Diluted
   $ 0.29 $ 0.13 $ 1.06 $ 0.15
Shares used to compute net income per common share attributable to Vicor Corporation:

Basic
   43,710 43,164 43,573 41,814
Diluted
   45,034 44,743 44,905 43,567


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2022			2021			2022			2021
Net revenues	$	103,118		$	84,911		$	293,586		$	269,083
Cost of revenues		56,148			42,098			162,166			131,699

Gross margin		46,970			42,813			131,420			137,384
Operating expenses:
Selling, general and administrative		22,719			17,322			61,322			50,865
Research and development		14,747			13,519			44,516			39,818
Litigation-related		6,500			—			6,500			—

Total operating expenses		43,966			30,841			112,338			90,683

Income from operations		3,004			11,972			19,082			46,701
Other income (expense), net:
Total unrealized gains (losses) on available-for-sale securities, net		—			37			(87	)		81
Less: portion of losses (gains) recognized in other comprehensive income		1			(36	)		90			(78	)

Net credit gains recognized in earnings		1			1			3			3
Other income (expense), net		(569	)		393			(325	)		996

Total other income (expense), net		(568	)		394			(322	)		999

Income before income taxes		2,436			12,366			18,760			47,700
Provision for income (benefit) taxes		641			(886	)		1,395			(30	)

Consolidated net income		1,795			13,252			17,365			47,730
Less: Net income (loss) attributable to noncontrolling interest		3			(7	)		(19	)		(15	)

Net income attributable to Vicor Corporation	$	1,792		$	13,259		$	17,384		$	47,745

Net income per common share attributable to Vicor Corporation:
Basic	$	0.04		$	0.30		$	0.40		$	1.10
Diluted	$	0.04		$	0.29		$	0.39		$	1.06
Shares used to compute net income per common share attributable to Vicor Corporation:
Basic		44,031			43,710			43,986			43,573
Diluted		44,898			45,034			44,906			44,905

See accompanying notes.

-2-

VICOR CORPORATION

Condensed Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)

   Three Months Ended    Nine Months Ended
   September 30,    September 30,
   2021 2020    2021 2020
Consolidated net income
   $ 13,252 $ 5,786    $ 47,730 $ 6,727
Foreign currency translation (losses) gains, net of tax (1)
   (12 ) 84    (283 ) 110
Unrealized (losses) gains on available-for-sale securities, net of tax (1)
   (215 ) 35    (574 ) 78




Other comprehensive (loss) income
   (227 ) 119    (857 ) 188




Consolidated comprehensive income
   13,025 5,905    46,873 6,915
Less: Comprehensive (loss) income attributable to noncontrolling interest
   (7 ) 7    (36 ) 18




Comprehensive income attributable to Vicor Corporation
   $ 13,032 $ 5,898    $ 46,909 $ 6,897


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2022			2021			2022			2021
Consolidated net income	$	1,795		$	13,252		$	17,365		$	47,730
Foreign currency translation losses, net of tax (1)		(94	)		(12	)		(672	)		(283	)
Unrealized income (loss) on available-for-sale securities, net of tax (1)		1,054			(215	)		671			(574	)

Other comprehensive income (loss)		960			(227	)		(1	)		(857	)

Consolidated comprehensive income		2,755			13,025			17,364			46,873
Less: Comprehensive loss attributable to noncontrolling interest		(4	)		(7	)		(69	)		(36	)

Comprehensive income attributable to Vicor Corporation	$	2,759		$	13,032		$	17,433		$	46,909

(1)

The deferred tax assets associated with foreign currency translation ~~(losses) gains~~losses and unrealized ~~(losses) gains~~losses on

available-for-sale

securities are completely offset by a tax valuation allowance as of September 30, ~~2021~~2022 and ~~2020.~~2021. Therefore, there is 0no income tax benefit (provision) recognized for the three and nine months ended September 30, ~~2021~~2022 and ~~2020.~~

2021.

See accompanying notes.

-3-

VICOR CORPORATION

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

   Nine Months Ended
   September 30,
   2021 2020
Operating activities:

Consolidated net income
   $ 47,730 $ 6,727
Adjustments to reconcile consolidated net income to net cash provided by (used for) operating activities:

Depreciation and amortization
   8,564 8,175
Stock-based compensation expense
   5,005 4,286
Decrease in long-term deferred revenue
   (240 ) (241 )
Decrease in contingent consideration obligations
   (74 ) —
Gain on disposal of equipment
   —   (9 )
Decrease in other assets
   56 135
(Decrease)
i
ncrease in long-term income taxes payable
   (79 ) 8
Deferred income taxes
   5 16
Credit gain on available-for-sale securities
   (3 ) (3 )
Provision for doubtful accounts
   —   23
Change in current assets and liabilities, net
   (20,737 ) (3,742 )


Net cash provided by operating activities
   40,227 15,375
Investing activities:

Purchases of short-term investments
   (50,706 ) —
Sales or maturities of short-term investments
   50,000 —
Additions to property, plant and equipment
   (30,942 ) (16,837 )
Proceeds from sale of equipment
   —   9


Net cash used for investing activities
   (31,648 ) (16,828 )
Financing activities:

Proceeds from employee stock plans
   8,621 10,836
Payment of contingent consideration obligations
   (153 ) (186 )
Proceeds from public offering of Common Stock
   —   109,681


Net cash provided by financing activities
   8,468 120,331
Effect of foreign exchange rates on cash
   (126 ) 59


Net increase in cash and cash equivalents
   16,921 118,937
Cash and cash equivalents at beginning of period
   161,742 84,668


Cash and cash equivalents at end of period
   $ 178,663 $ 203,605


	Nine Months Ended
	September 30,
	2022			2021
Operating activities:
Consolidated net income	$	17,365		$	47,730
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Depreciation and amortization		10,250			8,564
Stock-based compensation expense		7,445			5,005
Litigation-related expense		6,500			—
Increase (decrease) in long-term deferred revenue		1,420			(240	)
Amortization of bond premium		1,027			—
Decrease in contingent consideration obligations		—			(74	)
(Decrease) increase in other assets		(1,451	)		56
Decrease in long-term income taxes payable		(40	)		(79	)
Deferred income taxes		(52	)		5
Credit gain on available-for-sale securities		(3	)		(3	)
Provision for doubtful accounts		5			—
Change in current assets and liabilities, net		(20,456	)		(20,737	)

Net cash provided by operating activities		22,010			40,227
Investing activities:
Purchases of short-term investments		—			(50,706	)
Sales or maturities of short-term investments		25,000			50,000
Additions to property, plant and equipment		(51,279	)		(30,942	)

Net cash used for investing activities		(26,279	)		(31,648	)
Financing activities:
Proceeds from employee stock plans		4,147			8,621
Payment of contingent consideration obligations		—			(153	)

Net cash provided by financing activities		4,147			8,468
Effect of foreign exchange rates on cash		(198	)		(126	)

Net (decrease) increase in cash and cash equivalents		(320	)		16,921
Cash and cash equivalents at beginning of period		182,418			161,742

Cash and cash equivalents at end of period	$	182,098		$	178,663

See accompanying notes.

-4-

VICOR CORPORATION

Condensed Consolidated Statements of Equity

(In thousands)

(Unaudited)

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

Three months ended September 30, 2021

Balance on June 30, 2021
   $ 118    $ 436    $ 336,278    $ 195,494 $ (813 ) $ (138,927 ) $ 392,586 $ 306 $ 392,892
Issuance of Common Stock under employee stock plans
      1    3,869    3,870 3,870
Stock-based compensation expense
         1,867    1,867 1,867
Components of comprehensive income (loss), net of tax:

Net income
            13,259 13,259 (7 ) 13,252
Other comprehensive loss
         (227 ) (227 ) —   (227 )


Total comprehensive income (loss)
            13,032 (7 ) 13,025








Balance on September 30, 2021
   $ 118    $ 437    $ 342,014    $ 208,753 $ (1,040 ) $ (138,927 ) $ 411,355 $ 299 $ 411,654

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

Nine months ended September 30, 2021

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
      4    8,617    8,621 8,621
Stock-based compensation expense
         5,005    5,005 5,005
Components of comprehensive income (loss), net of tax:

Net income
            47,745 47,745 (15 ) 47,730
Other comprehensive loss


(836
)

(836 ) (21 ) (857 )

Total comprehensive income (loss)
            46,909 (36 ) 46,873

Balance on September 30, 2021
   $ 118    $ 437    $ 342,014    $ 208,753 $ (1,040 ) $ (138,927 ) $ 411,355 $ 299 $ 411,654


															Total
									Accumulated						Vicor
	Class B				Additional				Other						Corporation
	Common		Common		Paid-In		Retained		Comprehensive			Treasury			Stockholders’		Noncontrolling			Total
	Stock		Stock		Capital		Earnings		Income (loss)			Stock			Equity		Interest			Equity
Three months ended September 30, 2022
Balance on June 30, 2022	$	118	$	440	$	352,253	$	233,225	$	(2,246	)	$	(138,927	)	$	444,863	$	241		$	445,104
Issuance of Common Stock under employee stock plans						2,173										2,173					2,173
Stock-based compensation expense						2,829										2,829					2,829
Components of comprehensive income (loss), net of tax:
Net income								1,792								1,792		3			1,795
Other comprehensive income (loss)										967						967		(7	)		960

Total comprehensive income (loss)																2,759		(4	)		2,755

Balance on September 30, 2022	$	118	$	440	$	357,255	$	235,017	$	(1,279	)	$	(138,927	)	$	452,624	$	237		$	452,861

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

Three months ended September 30, 2020

Balance on June 30, 2020
   $ 118    $ 431    $ 320,988 $ 144,030    $ (316 ) $ (138,927 ) $ 326,324 $ 319    $ 326,643
Issuance of Common Stock under employee stock plans
      2    3,449    3,451    3,451
Additional expenses associated with issuance of Common Stock in public offering
         (51 )    (51 )    (51 )
Stock-based compensation expense
         1,640    1,640    1,640
Components of comprehensive income, net of tax:

Net income
         5,785    5,785 1    5,786
Other comprehensive income
            113 113 6    119




Total comprehensive income
            5,898 7    5,905










Balance on September 30, 2020
   $ 118    $ 433    $ 326,026 $ 149,815    $ (203 ) $ (138,927 ) $ 337,262 $ 326    $ 337,588


															Total
									Accumulated						Vicor
	Class B				Additional				Other						Corporation
	Common		Common		Paid-In		Retained		Comprehensive			Treasury			Stockholders’		Noncontrolling			Total
	Stock		Stock		Capital		Earnings		Income (loss)			Stock			Equity		Interest			Equity
Nine months ended September 30, 2022
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				1		4,146										4,147					4,147
Stock-based compensation expense						7,445										7,445					7,445
Components of comprehensive income (loss), net of tax:
Net income (loss)								17,384								17,384		(19	)		17,365
Other comprehensive income (loss)										49						49		(50	)		(1	)

Total comprehensive income (loss)																17,433		(69	)		17,364

Balance on September 30, 2022	$	118	$	440	$	357,255	$	235,017	$	(1,279	)	$	(138,927	)	$	452,624	$	237		$	452,861


															Total
									Accumulated						Vicor
	Class B				Additional				Other						Corporation
	Common		Common		Paid-In		Retained		Comprehensive			Treasury			Stockholders’			Noncontrolling			Total
	Stock		Stock		Capital		Earnings		Loss			Stock			Equity			Interest			Equity
Three months ended September 30, 2021
Balance on June 30, 2021	$	118	$	436	$	336,278	$	195,494	$	(813	)	$	(138,927	)	$	392,586		$	306		$	392,892
Issuance of Common Stock under employee stock plans				1		3,869										3,870						3,870
Stock-based compensation expense						1,867										1,867						1,867
Components of comprehensive income (loss), net of tax:
Net income (loss)								13,259								13,259			(7	)		13,252
Other comprehensive loss										(227	)					(227	)		—			(227	)

Total comprehensive income (loss)																13,032			(7	)		13,025

Balance on September 30, 2021	$	118	$	437	$	342,014	$	208,753	$	(1,040	)	$	(138,927	)	$	411,355		$	299		$	411,654

-5-

VICOR CORPORATION

Condensed Consolidated Statements of Equity

(In thousands)

(Unaudited)

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

Nine months ended September 30, 2020

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    10,826       10,836       10,836
Issuances of Common Stock in public offering
      18    109,663       109,681       109,681
Stock-based compensation expense
         4,286       4,286       4,286
Components of comprehensive income, net of tax:

Net income
            6,717    6,717    10    6,727
Other comprehensive income
               180 180    8    188






Total comprehensive income
               6,897    18    6,915














Balance on September 30, 2020
   $ 118    $ 433    $ 326,026    $ 149,815    $ (203 ) $ (138,927 ) $ 337,262    $ 326    $ 337,588


															Total
									Accumulated						Vicor
	Class B				Additional				Other						Corporation
	Common		Common		Paid-In		Retained		Comprehensive			Treasury			Stockholders’			Noncontrolling			Total
	Stock		Stock		Capital		Earnings		Loss			Stock			Equity			Interest			Equity
Nine months ended September 30, 2021
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				4		8,617										8,621						8,621
Stock-based compensation expense						5,005										5,005						5,005
Components of comprehensive income (loss), net of tax:
Net income (loss)								47,745								47,745			(15	)		47,730
Other comprehensive loss										(836	)					(836	)		(21	)		(857	)

Total comprehensive income (loss)																46,909			(36	)		46,873

Balance on September 30, 2021	$	118	$	437	$	342,014	$	208,753	$	(1,040	)	$	(138,927	)	$	411,355		$	299		$	411,654

See accompanying notes.

-6-

VICOR CORPORATION

Notes to Condensed Consolidated Financial Statements

September 30, ~~2021~~2022

(unaudited)

Basis of Presentation

The accompanying

unaudited Condensed Consolidated Financial Statements of Vicor Corporation and its consolidated subsidiaries (collectively, the “Company”) have been prepared in accordance with generally accepted accounting principles for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, these interim financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, ~~2021~~2022 are not necessarily indicative of the results that may be expected for any other interim period or the year ending December 31, ~~2021.~~2022. “Other income

(

expense

)

, net”, includes an immaterial error correction of $990,000 and $834,000 for the three and nine months ended September 30, 2022, respectively, related to the amortization of bond premiums on available for sale securities. The balance sheet at December 31, ~~2020~~2021 presented herein has been derived from the audited financial statements at that date bu

but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form

10-K

for the year ended December 31, ~~2020~~2021 filed by the Company with the SEC on March 1, 2022 (“2021 ~~(“2020~~Form

~~Form~~

10-K”).

Inventories

~~Inventories~~

are valued at the lower of cost (determined using the first-in, first-out method) or net realizable value. Fixed production overhead is allocated to the inventory cost per unit based on the normal capacity of the production facilities. Abnormal production costs, including fixed cost variances from normal production capacity, if any, are charged to cost of revenues in the period incurred. All shipping, handling and customs (e.g., tariff) costs incurred in connection with the sale of products are included in cost of revenues.

Inventory that is estimated to be excess, obsolete or unmarketable is written down to net realizable value. The Company’s estimation process for assessing net realizable value is based upon management’s estimate of expected future utility which is derived based on backlog, historical consumption and expected market conditions. If the Company’s estimated demand and/or market expectation were to change or if product sales were to decline, the Company’s estimation process may cause larger inventory reserves to be recorded, resulting in larger charges to cost of revenues.

Inventories were as follows (in thousands):

   September 30, 2021    December 31, 2020

Raw materials
   $ 46,912    $ 42,556
Work-in-process
   11,207    7,424
Finished goods
   5,290    7,289

   $ 63,409    $ 57,269


	September 30, 2022		December 31, 2021
Raw materials	$	73,940	$	51,289
Work-in-process		11,967		12,514
Finished goods		8,429		3,519

	$	94,336	$	67,322

Short-Term and Long-Term Investments

As of September 30, ~~2021~~2022 and December

31,

~~2020~~

, 2021, the Company held $

~~50,217~~

~~,000~~$19,949,000 and $

~~50,166~~

~~,000,~~$45,215,000, respectively, of short-term investments, consisting of obligations of the U.S. Treasury, all of which were debt securities with original maturities greater than

three

months but less than

one

year at the time of purchase.

~~-7-~~

~~Table of Contents~~

~~VICOR CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

~~September 30, 2021~~

~~(unaudited)~~

As of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company held one auction rate security with a par value of $3,000,000 and an estimated fair value of approximately $2,552,000 and $2,639,000, respectively, 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. The Failed Auction Security held by the Company is Aaa/AA+ rated by major credit rating agencies, is collateralized by student loans, and is guaranteed by the U.S. Department of Education under the Federal Family Education Loan Program. Management is not aware of any reason to believe the issuer of the Failed Auction Security is presently at risk of default. Through September 30, ~~2021,~~2022, the Company has continued to receive interest payments on the Failed Auction Security in accordance with the terms of its indenture. Management believes the Company ultimately should be able to liquidate the Failed Auction Security without significant loss primarily due to the overall quality of the issue held and the collateral securing the substantial majority of the underlying obligation. However, current conditions in the auction rate securities market have led management to conclude the recovery period for the Failed Auction Security exceeds 12 months. As a result, the Company continued to classify the Failed Auction Security as ~~long~~

~~-term~~long-term as of September 30, 2022.

-7-

Table of Contents

VICOR CORPORATION

Notes to Condensed Consolidated Financial Statements

September 30, ~~2021.~~2022

(unaudited)

Details of our investments are as follows (in thousands):


	September 30, 2021
	Cash and Cash Equivalents		Short-Term Investments		Long-Term Investments		September 30, 2022
							Cash and Cash Equivalents		Short-Term Investments		Long-Term Investment
Measured at fair value:
Available-for-sale debt securities:
Money market funds	$	89,254	$	—	$	—	$	120,217	$	—	$	—
U.S. Treasury Obligations		—		50,217		—		—		19,949		—
Failed Auction Security		—		—		2,598		—		—		2,552

Total		89,254		50,217		2,598		120,217		19,949		2,552
Other measurement basis:
Cash on hand		89,409		—		—		61,881		—		—

Total	$	178,663	$	50,217	$	2,598	$	182,098	$	19,949	$	2,552

December 31, 2020


Cash and
Cash
Equivalents

Short-Term
Investments

Long-Term
Investments


Measured at fair value:

Available-for-sale debt securities:

Money market funds
   $ 69,493    $ —      $ —
U.S. Treasury Obligations
   19,998    50,166    —
Failed Auction Security
   —      —      2,517






Total
   89,491    50,166    2,517
Other measurement basis:

Cash on hand
   72,251    —      —






Total
   $ 161,742    $ 50,166    $ 2,517


	December 31, 2021
	Cash and
	Cash		Short-Term		Long-Term
	Equivalents		Investments		Investment
Measured at fair value:
Available-for-sale debt securities:
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

-8-

Table of Contents

VICOR CORPORATION

Notes to Condensed Consolidated Financial Statements

September 30, ~~2021~~2022

(unaudited)

The following is a summary of the

available-for-sale

securities (in thousands):

September 30, 2021
   Cost    Gross
Unrealized
Gains    Gross
Unrealized
Losses    Estimated
Fair
Value

U.S. Treasury Obligations
   $ 50,216    $ 1    $ —      $ 50,217
Failed Auction Security
   3,000    —      402    2,598


			Gross		Gross		Estimated
			Unrealized		Unrealized		Fair
September 30, 2022	Cost		Gains		Losses		Value
U.S. Treasury Obligations	$	20,028	$	—	$	79	$	19,949
Failed Auction Security		3,000		—		448		2,552

December 31, 2020
   Cost    Gross
Unrealized
Gains    Gross
Unrealized
Losses    Estimated
Fair
Value

U.S. Treasury Obligations
   $ 70,172    $ —      $ 8    $ 70,164
Failed Auction Security
   3,000    —      483    2,517


			Gross		Gross		Estimated
			Unrealized		Unrealized		Fair
December 31, 2021	Cost		Gains		Losses		Value
U.S. Treasury Obligations	$	45,238	$	—	$	23	$	45,215
Failed Auction Security		3,000		—		361		2,639

As of September 30, ~~2021,~~

2022, the Failed Auction Security had be

nbeen in an unrealized loss position for greater than

months.

The amortized cost and estimated fair value of the

available-for-sale

securities on September 30, ~~2021,~~2022, by type and contractual maturities, are shown below (in thousands):

   Cost    Estimated
Fair Value

U.S. Treasury Obligations:

Maturities greater than three months but less than one year
   $ 50,216    $ 50,217




   $ 50,216    $ 50,217


	Cost		Estimated Fair Value
U.S. Treasury Obligations:
Maturities greater than three months but less than one year	$	20,028	$	19,949

   Cost    Estimated
Fair Value

Failed Auction Security:

Due in twenty to forty years
   $ 3,000    $ 2,598

Based on the fair value measurements described in Note 4, the fair value of the Failed Auction Security on September 30, 2021, with a par value of $3,000,000, was estimated by the Company to be approximately $2,598,000. The gross unrealized loss of $402,000 on the Failed Auction Security consists of two types of estimated loss: an aggregate credit loss of $30,000 and an aggregate temporary impairment of $372,000. In determining the amount of credit loss, the Company compared the present value of cash flows expected to be collected to the amortized cost basis of the security, considering credit default risk probabilities and changes in credit ratings as significant inputs, among other factors.

~~-9-~~

~~Table of Contents~~

~~VICOR CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

~~September 30, 2021~~

~~(unaudited)~~

~~The following table represents a rollforward of the activity related to the credit loss recognized in earnings on the Failed Auction Security for the nine months ended September 30 (in thousands):~~

   2021    2020

Balance at the beginning of the period
   $ 33    $ 37
Reductions in the amount related to credit gain for which other-than- temporary impairment was not previously recognized
   (3 )    (3 )




Balance at the end of the period
   $ 30    $ 34

At this time, the Company has no intent to sell the impaired Failed Auction Security and does not believe it is more likely than not the Company will be required to sell this security. If current market conditions deteriorate further, the Company may be required to record additional unrealized losses. If the credit rating of the security deteriorates, the Company may be required to adjust the carrying value of the investment through impairment charges recorded in the Condensed Consolidated Statements of Operations, and any such impairment adjustments may be material.

Based on the Company’s ability to access cash and cash equivalents, its short-term investments and its expected operating cash flows, management does not anticipate the current lack of liquidity associated with the Failed Auction Security held will affect the Company’s ability to

~~execute its current operating plan.~~


			Estimated
	Cost		Fair Value
Failed Auction Security:
Due in twenty years	$	3,000	$	2,552

Fair Value Measurements

The Company accounts for certain financial assets at fair value, defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions market participants would use in pricing an asset or liability. A three-level hierarchy is used to show the extent and level of judgment used to estimate fair value measurements.

-9-

Table of Contents

VICOR CORPORATION

Notes to Condensed Consolidated Financial Statements

September 30, 2022

(unaudited)

Assets and liabilities measured at fair value on a recurring basis included the following as of September 30, ~~2021~~2022 (in thousands):

   Using
   Quoted Prices
in Active
Markets
(Level 1)    Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level

3)
   Total Fair
Value as of
September 30, 2021

Cash equivalents:

Money market funds
   $ 89,254    $ —      $ —      $ 89,254
Short-term investments:

U.S. Treasury Obligations
   50,217    —      —      50,217
Long-term investment:

Failed Auction Security
   —      —      2,598    2,598

~~-10-~~

~~VICOR CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

~~September 30, 2021~~

~~(unaudited)~~


	Using
	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value as of September 30, 2022

Cash equivalents:
Money market funds	$	120,217	$	—	$	—	$	120,217
Short-term investments:
U.S. Treasury Obligations		19,949		—		—		19,949
Long-term investment:
Failed Auction Security		—		—		2,552		2,552

Assets and liabilities measured at fair value on a recurring basis included the following as of December 31, ~~2020~~2021 (in thousands):

   Using
   Significant
   Quoted Prices
in Active
Markets
(Level 1)    Other
Observable
Inputs
(Level 2)    Significant
Unobservable
Inputs
(Level 3)    Total Fair
Value as of
December 31, 2020

Cash equivalents:

Money market funds
   $ 69,493    $ —      $ —      $ 69,493
U.S. Treasury Obligations
   19,998    —      —      19,998
Short-term investments:

U.S. Treasury Obligations
   50,166    —      —      50,166
Long-term investment:

Failed Auction Security
   —      —      2,517    2,517
Liabilities:

Contingent consideration obligations
   —      —      (227 )    (227 )

As of September 30, 2021, there was insufficient observable auction rate security market information available to determine the fair value of the Failed Auction Security using Level 1 or Level 2 inputs. As such, the Company’s investment in the Failed Auction Security was deemed to require valuation using Level 3 inputs. Management, after consulting with advisors, valued the Failed Auction Security using analyses and pricing models similar to those used by market participants (i.e., buyers, sellers, and the broker-dealers responsible for execution of the Dutch auction pricing mechanism by which each issue’s interest rate was set). Management utilized a probability weighted discounted cash flow (“DCF”) model to determine the estimated fair value of this security as of September 30, 2021. The major assumptions used in preparing the DCF model were similar to those described in

~~Note 5 - Fair Value~~

~~Measurements in the Notes to the Consolidated Financial Statements contained in the Company’s 2020 Form 10-K.~~

~~Quantitative information about Level 3 fair value measurements as of September 30, 2021 is as follows (dollars in thousands):~~

   Fair Value
Valuation
Technique

Unobservable
Input
   Weighted
Average

Failed Auction Security
   $ 2,598 Discounted cash flow
Cumulative probability of earning the maximum rate until maturity 0.15%
   Cumulative probability of principal return prior to maturity 94.71%
   Cumulative probability of default 5.14%
   Liquidity risk premium 5.00%
   Recovery rate in default 40.00%

~~-11-~~

~~Table of Contents~~

~~VICOR CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

~~September 30, 2021~~

~~(unaudited)~~


	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 investment:
Failed Auction Security		—		—		2,639		2,639

The change in the estimated fair value calculated for the investment valued on a recurring basis utilizing Level 3 inputs (i.e., the Failed Auction Security) for the nine months ended September 30, ~~2021~~2022 was as follows (in thousands):

Balance at the beginning of the period
   $ 2,517
Credit gain on available-for-sale security included in Other income (expense), net
   3
Gain included in Other comprehensive income
   78


Balance at the end of the period
   $ 2,598


Balance at the beginning of the period	$	2,639
Credit gain on available-for-sale security included in Other income (expense), net		3
Loss included in Other comprehensive income		(90	)

Balance at the end of the period	$	2,552

~~There were no transfers between Level 1 and Level 2 of~~Management utilized a probability weighted discounted cash flow model to determine the estimated fair value ~~hierarchy during the nine months ended~~as of September 30, ~~2021.~~2022.

~~-12-~~-10-

VICOR CORPORATION

Notes to Condensed Consolidated Financial Statements

September 30, ~~2021~~2022

(unaudited)

Revenues

The following tables present the Company’s net revenues ~~disaggr~~

~~gated~~disaggregated by geography based on the location of the customer, by product line (in thousands):


	Three Months Ended September 30, 2022
	Brick Products		Advanced Products		Total
United States	$	21,559	$	9,303	$	30,862
Europe		7,101		1,954		9,055
Asia Pacific		14,800		47,704		62,504
All other		456		241		697

	$	43,916	$	59,202	$	103,118


	Nine Months Ended September 30, 2022
	Brick Products		Advanced Products		Total
United States	$	54,288	$	32,711	$	86,999
Europe		19,184		6,951		26,135
Asia Pacific		38,167		139,749		177,916
All other		2,157		379		2,536

	$	113,796	$	179,790	$	293,586


	Three Months Ended September 30, 2021
	Brick Products		Advanced Products		Total
United States	$	19,741	$	12,178	$	31,919
Europe		6,185		1,324		7,509
Asia Pacific		14,936		29,934		44,870
All other		582		31		613

	$	41,444	$	43,467	$	84,911

   Nine Months Ended September 30, 2021
   Brick Products    Advanced Products    Total

United States
   $ 58,032    $ 35,083    $ 93,115
Europe
   24,605    3,604    28,209
Asia Pacific
   66,309    79,926    146,235
All other
   1,309    215    1,524






   $ 150,255    $ 118,828    $ 269,083

   Three Months Ended September 30, 2020
   Brick Products    Advanced Products    Total

United States
   $ 16,905    $ 4,391    $ 21,296
Europe
   4,456    2,050    6,506
Asia Pacific
   25,878    23,926    49,804
All other
   454    52    506






   $ 47,693    $ 30,419    $ 78,112


	Nine Months Ended September 30, 2021
	Brick Products		Advanced Products		Total
United States	$	58,032	$	35,083	$	93,115
Europe		24,605		3,604		28,209
Asia Pacific		66,309		79,926		146,235
All other		1,309		215		1,524

	$	150,255	$	118,828	$	269,083

   Nine Months Ended September 30, 2020
   Brick Products    Advanced Products    Total

United States
   $ 57,880    $ 17,205    $ 75,085
Europe
   18,451    5,218    23,669
Asia Pacific
   60,917    50,076    110,993
All other
   2,390    137    2,527






   $ 139,638    $ 72,636    $ 212,274

~~-13-~~

-11-

Table of Contents

VICOR CORPORATION

Notes to Condensed Consolidated Financial Statements

September 30, ~~2021~~2022

(unaudited)

The following tables present the Company’s net revenues disaggregated by the category of revenue, by product line (in thousands):

   Three Months Ended September 30, 2021
   Brick Products    Advanced Products    Total

Direct customers, contract manufacturers and non-stocking distributors
   $ 29,801    $ 36,066    $ 65,867
Stocking distributors, net of sales allowances
   11,405    2,075    13,480
Non-recurring engineering
   238    3,846    4,084
Royalties
   —      1,462    1,462
Other
   —      18    18






   $ 41,444    $ 43,467    $ 84,911

   Nine Months Ended September 30, 2021
   Brick Products    Advanced Products    Total

Direct customers, contract manufacturers and non-stocking distributors
   $ 111,223    $ 97,767    $ 208,990
Stocking distributors, net of sales allowances
   38,586    10,847    49,433
Non-recurring engineering
   446    8,643    9,089
Royalties
   —      1,518    1,518
Other
   —      53    53






   $ 150,255    $ 118,828    $ 269,083


	Three Months Ended September 30, 2022
	Brick Products		Advanced Products		Total

Direct customers, contract manufacturers and non-stocking distributors	$	29,051	$	53,033	$	82,084
Stocking distributors, net of sales allowances		14,288		2,869		17,157
Non-recurring engineering		577		2,249		2,826
Royalties		—		1,033		1,033
Other		—		18		18

	$	43,916	$	59,202	$	103,118

   Three Months Ended September 30, 2020
   Brick Products    Advanced Products    Total

Direct customers, contract manufacturers and non-stocking distributors
   $ 40,916    $ 27,422    $ 68,338
Stocking distributors, net of sales allowances
   6,661    1,463    8,124
Non-recurring engineering
   116    1,499    1,615
Royalties
   —      17    17
Other
   —      18    18






   $ 47,693    $ 30,419    $ 78,112


	Nine Months Ended September 30, 2022
	Brick Products		Advanced Products		Total

Direct customers, contract manufacturers and non-stocking distributors	$	77,018	$	162,483	$	239,501
Stocking distributors, net of sales allowances		35,960		9,715		45,675
Non-recurring engineering		818		5,543		6,361
Royalties		—		1,995		1,995
Other		—		54		54

	$	113,796	$	179,790	$	293,586


	Three Months Ended September 30, 2021
	Brick Products		Advanced Products		Total

Direct customers, contract manufacturers and non-stocking distributors	$	29,801	$	36,066	$	65,867
Stocking distributors, net of sales allowances		11,405		2,075		13,480
Non-recurring engineering		238		3,846		4,084
Royalties		—		1,462		1,462
Other		—		18		18

	$	41,444	$	43,467	$	84,911

~~-14-~~

-12-

VICOR CORPORATION

Notes to Condensed Consolidated Financial Statements

September 30, ~~2021~~2022

(unaudited)

   Nine Months Ended September 30, 2020
   Brick Products    Advanced Products    Total

Direct customers, contract manufacturers and non-stocking distributors
   $ 116,127    $ 62,233    $ 178,360
Stocking distributors, net of sales allowances
   23,097    6,101    29,198
Non-recurring engineering
   414    4,231    4,645
Royalties
   —      17    17
Other
   —      54    54






   $ 139,638    $ 72,636    $ 212,274


	Nine Months Ended September 30, 2021
	Brick Products		Advanced Products		Total

Direct customers, contract manufacturers and non-stocking distributors	$	111,223	$	97,767	$	208,990
Stocking distributors, net of sales allowances		38,586		10,847		49,433
Non-recurring engineering		446		8,643		9,089
Royalties		—		1,518		1,518
Other		—		53		53

	$	150,255	$	118,828	$	269,083

The following table ~~prese~~

tspresents the changes in certain contract assets and (liabilities) (in thousands):

   September 30,
2021    December 31, 2020    Change
Accounts receivable
   $ 51,080    $ 40,999    $ 10,081
Short-term deferred revenue and customer prepayments
   (3,390 )    (7,309 )    3,919
Long-term deferred revenue
   (493 )    (733 )    240
Deferred expenses
   848    1,650    (802 )
Sales allowances
   (1,661 )    (597 )    (1,064 )


	September 30, 2022			December 31, 2021			Change

Short-term deferred revenue and customer prepayments	$	(12,148	)	$	(7,912	)	$	(4,236	)
Long-term deferred revenue		(1,833	)		(413	)		(1,420	)
Deferred expenses		588			560			28
Sales allowances		(1,427	)		(1,464	)		37

~~The increase in accounts receivable was primarily due to an increase in net revenues of approximately $9,224,000~~

in August through September 2021 compared to November through December 2020. The decrease in short-term deferred revenue and customer prepayments was primarily due to the recognition of approximately $2,410,000 of the associated revenue during the second quarter of 2021. The increase in sales allowances was primarily due to the increase in the

~~year-to-date~~

~~net revenues in 2021.~~

Deferred expenses are included in Other current assets in the accompanying Condensed Consolidated Balance Sheets.

The Company records deferred revenue, which represents a contract liability, when cash payments are received or due in advance of performance under a contract with a customer. The Company recognized revenue of approximately $1,149,000 and $2,015,000 for the three and nine months ended September 30, 2022, respectively, and $874,000 and $3,955,000 for the three and nine months ended September 30, 2021, respectively, ~~and $388,000 and $1,736,000 for the three and nine months ended September 30, 2020, respectively,~~ that was included in deferred revenue at the beginning of each respective period.

Table of Contents

VICOR CORPORATION

Notes to Condensed Consolidated Financial Statements

September 30, ~~2021~~2022

(unaudited)

~~(unaudited)~~

Stock-Based Compensation

The Company uses the Black-Scholes option pricing model to calculate the fair value of stock option awards, whether they possess time-based vesting provisions or performance-based vesting provisions, and awards granted under the Vicor Corporation 2017 Employee Stock Purchase Plan (“ESPP”), as of their grant date. Stock-based compensation expense was as follows (in thousands):

   Three Months Ended    Nine Months Ended

September 30,

September 30,


   2021    2020    2021    2020

Cost of revenues
   $ 259    $ 296    $ 739    $ 692
Selling, general and administrative
   1,033    846    2,665    2,313
Research and development
   575    498    1,601    1,281








Total stock-based compensation
   $ 1,867    $ 1,640    $ 5,005    $ 4,286


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021

Cost of revenues	$	479	$	259	$	1,161	$	739
Selling, general and administrative		1,537		1,033		4,184		2,665
Research and development		813		575		2,100		1,601

Total stock-based compensation	$	2,829	$	1,867	$	7,445	$	5,005

Compensation expense by type of award was as follows (in thousands):

Three Months Ended

Nine Months Ended

   September 30,    September 30,

   2021    2020    2021    2020

Stock options
   $ 1,661    $ 1,420    $ 4,328    $ 3,663
ESPP
   206    220    677    623








Total stock-based compensation
   $ 1,867    $ 1,640    $ 5,005    $ 4,286

The increase in stock option compensation expense for the three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020, was primarily due to an increase in the number of stock options granted and higher stock-based compensation expense associated with June 2021 stock opti

~~n awards.~~


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021

Stock options	$	2,531	$	1,661	$	6,641	$	4,328
ESPP		298		206		804		677

Total stock-based compensation	$	2,829	$	1,867	$	7,445	$	5,005

Rental Income

Income,

net under the Company’s operating lease agreement, for its owned facility leased to a third party in California, was approximately $

198,000

~~and $~~

~~594,000~~

for the three months ended September 30, 2022 and 2021 and

$594,000

for the nine months ended September 30, ~~2021~~2022 and ~~2020, respectively.~~2021.

~~-16-~~

The effective tax rates were lower than the statutory tax r

~~tes~~rates for the three and nine months ended September 30, ~~2021~~2022 and ~~2020~~2021 primarily due to the Company’s full valuation allowance position against domestic deferred tax ~~assets and excess tax benefits related to stock based compensation during those periods.~~assets. The provision (benefit) ~~provision~~ for income taxes for the three and nine months ended September 30, ~~2021~~2022 and ~~2020~~2021 included estimated federal, state and foreign income taxes in jurisdictions in which the Company does not have sufficient tax attributes, offset by excess tax benefits related to ~~fully offset taxable income.~~stock based compensation during those periods.

As of September 30, ~~2021,~~2022, the Company ~~had~~has a valuation allowance of approximately ~~$37,856,000~~$43,329,000 against all net domestic deferred tax assets, for which realization cannot be considered more likely than not at this time. Management assesses the need for the valuation allowance on a quarterly basis. In assessing the need for a valuation allowance, the Company considers all positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies, and past financial performance. ~~While~~Despite recent positive operating results, ~~as a result of increases in bookings, caused~~ the Company ~~to be~~is in a cumulative ~~income~~loss position as of September 30, 2022, primarily due to tax deductions on 2020 and 2021 ~~the~~exercises of stock-based compensation. The Company faces uncertainties in forecasting its operating results due to ~~continued negative impacts on the Company’s~~ supply ~~chain,~~and factory capacity constraints, certain process issues with the production of Advanced Products and the unpredictability in certain markets. This operating uncertainty also makes it difficult to predict the availability and utilization of tax benefits over the next several years. As a result, management has concluded, ~~at this time,~~as of September 30, 2022, it is more likely than not the Company’s net domestic deferred tax assets will not be realized, and a full valuation allowance against all net domestic deferred tax assets ~~was~~is still warranted as of September 30, ~~2021.~~2022. The valuation allowance against these deferred tax assets may require adjustment in the future based on changes in the mix of temporary differences, changes in tax laws, and operating performance. If the positive ~~quarterly earnings and increases in bookings~~operating results continue, and the Company’s concerns about industry uncertainty and world events, ~~including continued negative impacts on the Company’s~~ supply ~~chain,~~and factory capacity constraints, and process issues with the production of Advanced Products are resolved, and the amount of tax benefits the Company is able to utilize to the point that the Company believes future taxable income can be more reliably forecasted, the Company may release all or a portion of the valuation allowance in the near-term. ~~However, the valuation allowance against certain state tax credits will likely never be released due to uncertainty on the utilization of these credits.~~ If and when the 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 Company was informed in September 2021 by the Internal Revenue Service of their intention to examine the Company’s 2019 Federal income tax return. There are no other audits or examinations in process in any other jurisdiction.

~~-17-~~

-15-

Table of Contents

VICOR CORPORATION

Notes to Condensed Consolidated Financial Statements

September 30, ~~2021~~2022

(unaudited)

Net Income per Share

The following table sets forth the computation of basic and diluted net income per share (in thousands, except per share amounts):

   Three Months Ended    Nine Months Ended
   September 30,    September 30,
   2021    2020    2021    2020
Numerator:

Net income attributable to Vicor Corporation
   $ 13,259    $ 5,785    $ 47,745    $ 6,717








Denominator:

Denominator for basic net income per share-weighted average shares (1)
   43,710    43,164    43,573    41,814
Effect of dilutive securities:

Employee stock options (2)
   1,324    1,579    1,332    1,753








Denominator for diluted net income per share – adjusted weighted-average shares and assumed conversions
   45,034    44,743    44,905    43,567








Basic net income per share
   $ 0.30    $ 0.13    $ 1.10    $ 0.16








Diluted net income per share
   $ 0.29    $ 0.13    $ 1.06    $ 0.15


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Numerator:
Net income attributable to Vicor Corporation	$	1,792	$	13,259	$	17,384	$	47,745

Denominator:
Denominator for basic net income per share-weighted average shares (1)		44,031		43,710		43,986		43,573
Effect of dilutive securities:
Employee stock options (2)		867		1,324		920		1,332

Denominator for diluted net income per share – adjusted weighted-average shares and assumed conversions		44,898		45,034		44,906		44,905

Basic net income per share	$	0.04	$	0.30	$	0.40	$	1.10

Diluted net income per share	$	0.04	$	0.29	$	0.39	$	1.06

(1)	Denominator represents the weighted average number of shares of Common Stock and Class B Common Stock outstanding.

(2)

Options to purchase 1,037,640 and 772,240 shares of Common Stock for the three and nine months ended September 30, 2022, respectively, and options to purchase 76,114 and 134,822 shares of Common Stock for the three and nine months ended September 30, 2021, respectively, ~~and options to purchase 265,725 and 130,027 shares of Common Stock for the three and nine months ended September 30, 2020, respectively,~~ were not included in the calculations of net income per share as the effect would have been antidilutive.

10.

Commitments and Contingencies

At September 30, ~~2021,~~2022, the Company had approximately ~~$22,046,000~~

$27,804,000 of cancelable and

non-cancelable

capital expenditure commitments, principally for manufacturing equipment, and approximately

~~$6,607,000~~ $6,637,000 of

capital expenditure items which had been received and included in Property, plant and equipment in the accompanying Condensed Consolidated Balance Sheets, but not yet paid for. ~~In addition to these commitments, the Company has, in the aggregate, approximately~~

~~$20,000,000~~

~~of remaining budgeted capital expenditures expected to be incurred through the first half of 2022 associated with the construction of a~~

~~90,000~~

~~sq. ft. addition to the Company’s existing manufacturing facility and the installation of new production equipment.~~

The Company is the defendant in a patent infringement lawsuit originally filed on January 28, 2011 by SynQor, Inc. (“SynQor”) in the U.S. District Court (the “District Court”) for the Eastern District of ~~Texas (the “Texas Action”).~~Texas. The complaint, as amended, ~~alleges~~alleged that the Company’s ~~products, including but not limited to,~~ unregulated bus converters used in intermediate bus architecture power supply systems ~~infringe~~infringed SynQor’s U.S. patent numbers 7,072,190, 7,272,021, 7,564,702, and 8,023,290 (“the ‘190 patent”, “the ‘021 patent”, “the ‘702 patent”, and “the ‘290 patent”, respectively, and collectively the “SynQor Patents”). The Company asserted counterclaims against SynQor alleging unfair competition and tortious interference with business relations (the “Counterclaims”). As a result of certain actions by the United States Patent and Trademark Office (“USPTO”) and the District Court, SynQor’s infringement allegations regarding the ‘021 patent and the ‘290 patent were dismissed from the case prior to the beginning of trial. Specifically, the USPTO invalidated all the asserted claims of the ‘021 patent and that decision was upheld on appeal on August 30, 2017. In addition, on October 5, 2022, the District Court issued an order involuntarily dismissing the ‘290 patent infringement allegations on grounds of equitable and judicial estoppel, in view of representations by SynQor to the District Court agreeing to such dismissal as a condition of lifting a prior stay of the lawsuit.

~~-18-~~

-16-

VICOR CORPORATION

Notes to Condensed Consolidated Financial Statements

September 30, ~~2021~~2022

(unaudited)

“A trial in the District Court began on October 17, 2022 on the asserted claims of the ‘190 patent and the ‘702 ~~patent”, and “the ‘290 patent”, respectively).~~patent, as well as on the Company’s Counterclaims. The District Court dismissed the Company’s Counterclaims on October 25, 2022. On October 26, 2022, the jury returned a verdict on SynQor’s ~~complaint sought an injunction against further~~patent infringement ~~and an award~~claims, finding that the Company willfully infringed the ‘702 patent, but did not infringe the ‘190 patent. The jury awarded SynQor damages in the amount of ~~unspecified compensatory and enhanced damages, interest, costs and attorney fees. The Company has denied that its products infringe any~~$6,500,000 for infringement of the ‘702 patent. All of the SynQor patents, and has asserted that the SynQor patents are invalid and/or unenforceable. The Company has also asserted counterclaims seeking damages from SynQor for deceptive trade practices and tortious interference with prospective economic advantage arising from SynQor’s attempted enforcement of its patents against the Company.Patents expired in 2018.

The ~~Texas Action is currently stayed by~~Company anticipates filing a post-trial motion seeking entry of judgment of non-infringement of the ~~District Court pending completion~~‘702 patent as a matter of ~~certain inter partes reexamination (“IPRx”) proceedings initiated by the~~law. The Company ~~at the United States Patent and Trademark Office (“USPTO”) (including any appeals~~intends to appeal to the United States Court of Appeals for the Federal Circuit ~~(the “Federal Circuit”)). In these IPRx proceedings,~~ the ~~Company challenged the validity~~construction of claim limitations of the ~~SynQor patent claims asserted in the Texas Action. On March 17, 2021, SynQor filed a motion to lift the stay in~~

~~he Texas Action. The Company has opposed that motion, which remains pending.~~

~~The current status of the IPRx proceedings is as follows:~~

~~‘190 patent: Certain claims of the~~ ‘190 patent were found unpatentable by the Federal Circuit in a decision issued on March 13, 2015. The court remanded the remaining claims to the USPTO for further consideration. On February 20, 2019, the Patent Trial and Appeal Board (“PTAB”) of the USPTO issued a decision finding that all of the remaining challenged claims were unpatentable. SynQor appealed that decision. On February 22, 2021, the Federal Circuit issued a decision in that appeal. In a

~~2-1~~

ruling, the Federal Circuit vacated and remanded the PTAB’s decision, finding that the reasoning the PTAB had relied on in reaching its decision was precluded by certain prior PTAB rulings regarding the ‘290 and ‘702 patents and ~~remanded~~ the ~~case to the PTAB for further proceedings. On April 7, 2021, the Company filed a petition for panel rehearing and rehearing en banc~~dismissal of the ~~Federal Circuit’s February 22, 2021 decision. The Federal Circuit denied that petition on June 7, 2021. Accordingly, that matter has been remanded~~Company’s Counterclaims. SynQor may move the District Court to increase the ~~PTAB for further proceedings.~~

jury award and pursue its appellate options with respect to claims found to be invalid or not infringed.

~~‘021 patent: On August 30, 2017, the Federal Circuit issued a final decision finding all of the asserted claims of the ‘021 patent unpatentable.~~

~~‘702 patent: On August 30, 2017, the Federal Circuit issued a final decision finding all of the asserted claims of the ‘702 patent to be patentable.~~

‘290 patent: On June 16, 2021, the PTAB issued a decision finding all of the claims of the ‘290 patent unpatentable. SynQor has filed an appeal of that decision to the Federal Circuit, where it remains pending.

~~On January 23, 2018, the~~

~~20-year~~

~~terms of the ‘190 patent, the ‘021 patent, the ‘702 patent and the ‘290 patent expired. As a consequence of these expirations,~~In accordance with applicable accounting standards, the Company ~~cannot be liable under any~~has recorded a litigation related accrual of $6,500,000 in the ~~SynQor patents for allegedly infringing activities occurring after that date. In addition, any amended claims that may issue~~third quarter of 2022 as ~~a result of any of~~its estimate based on the ~~still-pending IPRx proceedings will have no effective term and cannot be the basis for any liability by the Company. As noted above, the IPRx’s relating~~jury award, using estimated outcomes ranging from $0 to the asserted claims of the ‘190 and ‘290 patents remain pending or on appeal. In addition, SynQor attempted to add new claims during the IPRx of the ‘021 patent. Those claims were rejected by the PTAB. SynQor subsequently filed an appeal with the Federal Circuit seeking to vacate that rejection as moot, in view of the expiry of the term of the ‘021 patent, and that appeal remains pending.treble damages plus attorney fees.

The Company continues to believe none of its products, including its unregulated bus converters, infringe any valid claim of the asserted SynQor patents, either alone or when used in an intermediate bus architecture implementation. The Company believes SynQor’s claims lack merit and, therefore, it continues to vigorously defend itself against SynQor’s patent infringement allegations. The Company does not believe a loss is probable for this matter. If a loss were to be incurred, however, the Company cannot estimate the amount of possible loss or range of possible loss at this time.

~~-19-~~

~~Table of Contents~~

~~VICOR CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

~~September 30, 2021~~

~~(unaudited)~~

In addition, ~~to the SynQor matter,~~ the Company is involved in certain other litigation and claims incidental to the conduct of its business. While the outcome of such other lawsuits and claims against the Company cannot be predicted with certainty, management does not expect ~~any current~~such litigation or claims will have a material adverse impact on the Company’s financial position or results of operations.

11.

Impact of Recently Issued Accounting Standards

In December 2019, the Financial Accounting Standards Board (“FASB”) issued guidance designed to simplify the accounting for income taxes by eliminating certain exceptions to the general principles in Topic 740, Income Taxes, and also improve consistent application of and simplify U.S. GAAP for other areas of Topic 740 by clarifying and amending existing guidance. This new guidance was effective for the Company for its fiscal year beginning after December 15, 2020, with early adoption permitted. The Company adopted the new guidance as of January 1, 2021. The adoption did not have a material impact on the Company’s consolidated financial statements and disclosures.

~~Other new~~New pronouncements issued but not effective until after September 30, ~~2021~~2022 are not expected to have a material impact on the Company’s consolidated financial statements.

~~-20-~~

~~Table of Contents~~

-17-

VICOR CORPORATION

Management’s Discussion and Analysis of

Financial Condition and Results of Operation

September 30, ~~2021~~

2022

Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Note Regarding Forward-Looking Statements

The Company’s 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 the Company’s Annual Report on Form

10-K

for the year ended December 31, ~~2020.~~2021 and the risk factors described in this Quarterly Report on Form 10-Q. As a result of these and other factors, the Company may experience material fluctuations in future operating results on a quarterly or annual basis, which could materially and adversely affect its business, consolidated financial condition, and operating results, and the share price of its Common Stock. This document and other documents filed by the Company with the Securities and Exchange Commission (“SEC”) include forward-looking statements regarding future events and the Company’s future results that are subject to the safe harbor afforded under the Private Securities Litigation Reform Act of 1995 and other safe harbors afforded under the Securities Act of 1933 and the Securities Exchange Act of 1934. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. Forward-looking statements are based on our current beliefs, expectations, estimates, forecasts, and projections for the future performance of the Company and are subject to risks and uncertainties. Forward-looking statements are identified by the use of words denoting uncertain, future events, such as “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “future,” “goal,” “if,” “intend,” “may,” “plan,” “potential,” “project,” “prospective,” “seek,” “should,” “target,” “will,” or “would,” as well as similar words and phrases, including the negatives of these terms, or other variations thereof. Forward-looking statements also include, but are not limited to, statements regarding: our expectations that the Company has adequate resources to respond to financial and operational risks associated with the novel coronavirus

~~“COVID-19,”~~

(“COVID-19”)and regarding our and our customers’ ability to effectively conduct business during the pandemic; our ability to address certain supply chain risks; our ongoing development of power conversion architectures, switching topologies, materials, packaging, and products; the ongoing transition of our business strategically, organizationally, and operationally from serving a large number of relatively

low-volume

customers across diversified markets and geographies to serving a small number of relatively large volume customers; our intent to enter new market segments; the levels of customer orders overall and, in particular, from large customers and the delivery lead times associated therewith; anticipated new and existing customer wins; the financial and operational impact of customer changes to shipping schedules; the derivation of a portion of our sales in each quarter from orders booked in the same quarter; our intent to expand the percentage of revenue associated with licensing our intellectual property to third parties; our plans to invest in expanded manufacturing capacity, including the expansion of our Andover facility and the introduction of new manufacturing processes, and the timing, location, and funding thereof; our belief that cash generated from operations together with our available cash and cash equivalents and short-term investments will be sufficient to fund planned operational needs, capital equipment purchases, and planned construction, for the foreseeable future; our outlook regarding tariffs and the impact thereof on our business; our belief that we have limited exposure to currency risks; our intentions regarding the declaration and payment of cash dividends; our intentions regarding protecting our rights under our patents; and our expectation that no current litigation or claims will have a material adverse impact on our financial position or results of operations. These forward-looking statements are based upon our current expectations and estimates associated with prospective events and circumstances that may or may not be within our control and as to which there can be no assurance. Actual results could differ materially from those implied by forward-looking statements as a result of various factors, including but not limited to those described above, as well as those described in the Company’s Annual Report on Form

10-K

for the year ended December 31, ~~2020~~2021 under Part I, Item 1 — “Business,” under Part I, Item 1A — “Risk Factors,” under Part I, Item 3 — “Legal Proceedings,” and under Part II, Item 7 — “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and those described in this Quarterly Report on Form

10-Q,

particularly under Part I, Item 2 – “Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations.~~Operations” and under Part II, Item 1A – “Risk Factors.” The discussion of our business contained herein, including the identification and assessment of factors that may influence actual results, may not be exhaustive. Therefore, the information presented should be read together with other documents we file with the SEC from time to time, including our Annual Reports on Form

10-K,

our Quarterly Reports on Form

10-Q

and our Current Reports on Form

8-K,

which may supplement, modify, supersede, or update the factors discussed in this Quarterly Report on Form

10-Q.

Any forward-looking statement made in this Quarterly Report on Form

10-Q

is based on information currently available to us and speaks only as of the date on which it is made. We do not undertake any obligation to update any forward-looking statements as a result of future events or developments, except as required by law.

-18-

~~-21-~~

VICOR CORPORATION

Management’s Discussion and Analysis of

Financial Condition and Results of Operation

September 30, ~~2021~~

2022

Overview

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, and a compelling total cost of ownership. While we offer a wide range of alternating current (“AC”) and direct current (“DC”) power conversion products, we consider our core competencies to be associated with 48V DC distribution, which offers numerous inherent cost and performance advantages over lower distribution voltages. However, we also offer products addressing other DC voltage standards (e.g., 380V for power distribution in data centers, 110V for rail applications, 28V for military and avionics applications, and 24V for industrial automation).

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

^™

(“FPA”), an innovative power distribution architecture enabling flexible, rapid power system design using individual components optimized to perform a specific conversion function.

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. Given the growth profiles of the markets we serve with our Advanced Products line and our Brick Products line, our strategy involves a transition in organizational focus, emphasizing investment in our Advanced Products line and targeting high growth market segments with a

low-mix,

high-volume operational model, while maintaining a profitable business in the mature market segments we serve with our Brick Products line with a

high-mix,

low-volume

operational model.

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 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. 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 (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 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 quarterly consolidated operating results can be difficult to 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 their zero-COVID policy, those associated with our reliance on outsourced package process steps that are essential in the production of some of our Advanced Products,

-19-

VICOR CORPORATION

Management’s Discussion and Analysis of

Financial Condition and Results of Operation

September 30, 2022

and those relating, for example, to the procurement of raw material, have in the past negatively impacted and may in the future negatively impact our operating results. We have taken steps to mitigate the impact of supply chain disruptions by, among other things and in varying degrees, moving outsourced manufacturing steps in-house to the Company, 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 the steps taken to mitigate supply chain disruptions have, to varying degrees and at different times, reduced our revenue, gross margin, operating profit and cash flow and may continue to do so in the future. While we continue to make progress in moving 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 China as a result of their zero-COVID policy, and uncertainty of output from our outsourced manufacturing supplier. Our quarterly gross margin as a percentage of net revenues may vary, depending on production volumes, average selling prices, average unit costs, the mix of products sold during that quarter, and the level of importation of raw materials subject to tariffs. Our quarterly operating margin as a percentage of net revenues also may vary with changes in revenue and product level profitability, but our operating costs, aside from recent increases in legal expense associated with the intellectual property litigation with SynQor Inc., are largely associated with compensation and related employee costs, which are not subject to sudden or significant changes.

~~-22-~~

~~VICOR CORPORATION~~

~~Management’s Discussion and Analysis of~~

~~Financial Condition and Results of Operation~~

~~September 30, 2021~~

Ongoing / Potential Impacts of the

COVID-19

Pandemic on the Company

As of the date of this report, the number of Company employees diagnosed with

COVID-19

and the corresponding absenteeism due to

COVID-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 safety measures, including factory closure. We continue to operate with three shifts in our factory, and, with ~~very~~ few exceptions, our engineering, sales, and administrative personnel are working from the Company’s offices.

We are closely monitoring the operating performance and financial health of our customers, 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, ~~could~~have resulted and may continue to result in higher costs and inbound and outbound delays. We have taken steps to address certain supply chain risks, and we believe our actions have mitigated those risks to date; however, there are no assurances that those steps will continue to mitigate risks for the remainder of 2021 and beyond.

Although there is uncertainty regarding the extent to which the pandemic will continue to impact our operational and financial results in the future, the Company’s high level of liquidity, flexible operational model, existing raw material inventories, and increased use of second sources for critical manufacturing inputs together support management’s belief the Company will be able to effectively conduct business until the pandemic passes.

We are monitoring the rapidly changing circumstances, and may take additional actions to address

COVID-19

risks as they ~~evolve and/or increase again.~~evolve. Because much of the potential negative impact of the pandemic is associated with risks outside of our control, we cannot estimate the extent of such impact on our financial or operational performance, or when such impact might occur.

Changes from Previously Disclosed Results

As discussed below, we reported net income for the third quarter of 2022 of $1,792,000, or $0.04 per diluted share, compared to $13,259,000, or $0.29 per diluted share, for the third quarter of 2021. Initially, in our earnings release issued on October 25, 2022, we had disclosed net income for the third quarter of 2022 of $8,091,000, or $0.18 per diluted share. On October 26, 2022, after the earnings release and related earnings call, the jury in the patent litigation with SynQor, Inc. (“SynQor”) awarded SynQor damages in the amount of $6,500,000 for infringement of a SynQor patent. The Company anticipates filing a post-trial motion seeking entry of judgment of non-infringement of the SynQor patent as a matter of law. The Company intends to appeal to the United States Court of Appeals for the Federal Circuit the construction of claim limitations of the SynQor patents and the dismissal of the Company’s counterclaims against SynQor. In light of the jury award, the Company has recorded a litigation related accrual of $6,500,000 in the third quarter of 2022, resulting in the decrease in our reported net income and net income per share from the amounts previously disclosed in our earnings release, as well as a corresponding $6,500,000 increase in operating expenses to $43,966,000 from the previously disclosed $37,466,000. See Note 10 to the Condensed Consolidated Financial Statements for additional information regarding the SynQor litigation related accrual.

-20-

VICOR CORPORATION

Management’s Discussion and Analysis of

Financial Condition and Results of Operation

September 30, 2022

Summary of Third Quarter ~~2021~~2022 Financial Performance Compared to Second Quarter ~~2021~~2022 Financial Performance

The following summarizes our financial performance for the third quarter of ~~2021,~~2022, compared to the second quarter of ~~2021:~~

2022:

Net revenues ~~decreased 11.0%~~increased 0.9% to ~~$84,911,000~~$103,118,000 for the third quarter of ~~2021,~~2022, from ~~$95,376,000~~$102,186,000 for the second quarter of ~~2021.~~2022. Net revenues for Brick Products ~~decreased 23.7%, primarily due to market conditions in Europe and Asia Pacific. Advanced Products revenue rose 6.0% sequentially~~increased 27.2% compared to the second quarter of ~~2021. This growth, though, continued to be constrained by limited component availability~~2022, primarily due to ~~global semiconductor~~the ability to shift manufacturing resources to focus on available backlog, as well as, favorable market conditions in North America and Europe for Brick Products. Advanced Products net revenue decreased 12.5% compared to the second quarter of 2022 primarily due to continued supply ~~allocation issues experienced during~~constraints leading to longer cycle-times and schedule delays, as well as, the impact of issuing a return material authorization in the third quarter ~~along with certain internal processing and testing constraints.~~for approximately $6,000,000.

Export sales represented approximately ~~62.4%~~70.1% of total net revenues in the third quarter of ~~2021~~2022 as compared to ~~64.3%~~69.2% in the second quarter of ~~2021.~~2022.

Gross margin ~~decreased~~increased to ~~$42,813,000~~$46,970,000 for the third quarter of ~~2021~~2022 from ~~$49,871,000~~$46,849,000 for the second quarter of ~~2021, and~~2022, but gross margin, as a percentage of net revenues, decreased to ~~50.4%~~45.5% for the third quarter of ~~2021~~2022 from ~~52.3%~~45.8% for the second quarter of ~~2021. Both the~~2022. The decrease in gross margin ~~dollars~~percentage was primarily a net result of favorable overhead absorption offset by increased tariff costs and ~~the decreased gross margin percentage were primarily due to the decrease in net revenues and lower absorption of overhead expenses.~~higher processing costs at outside vendors.

Backlog, which represents the total value of orders for products for which shipment is scheduled within the next 12 months, was approximately ~~$295,695,000~~$371,637,000 at the end of the third quarter of ~~2021,~~2022, as compared to ~~$210,565,000~~$410,015,000 at the end of the second quarter of ~~2021.~~

~~-23-~~

~~VICOR CORPORATION~~

~~Management’s Discussion and Analysis of~~

~~Financial Condition and Results of Operation~~

~~September 30, 2021~~

Operating expenses for the third quarter of 2021 increased $979,000, or 3.3%, to $30,841,000 from $29,862,000 for the second quarter of 2021. Selling, general, and administrative expenses increased approximately $733,000, primarily due to increases2022. The decrease in ~~compensation, outside services, legal fees and sales commissions. Research and development expenses increased approximately $246,000,~~backlog was primarily due to an increase in ~~compensation expense, partially offset by~~net revenues combined with a ~~decrease~~decline in ~~project and pre-production materials.~~bookings during the quarter as a result of securing bookings in prior quarters that now form a large part of our backlog.

•

Operating expenses for the third quarter of 2022 increased $8,415,000, or 23.7%, to $43,966,000 from $35,551,000 for the second quarter of 2022. Selling, general, and administrative expenses increased approximately $2,684,000, primarily due to an increase in legal fees. Research and development expenses decreased approximately $769,000, primarily due to a decrease in project and pre-production materials. Litigation-related expense related to the SynQor litigation was $6,500,000 for the third quarter of 2022. See Note 10 to the Condensed Consolidated Financial Statements for additional information.

We reported net income for the third quarter of ~~2021~~2022 of ~~$13,259,000,~~$1,792,000, or ~~$0.29~~$0.04 per diluted share, compared to net income of ~~$19,394,000~~$10,593,000, or ~~$0.43~~$0.24 per diluted share, for the second quarter of ~~2021.~~2022.

For the third quarter of ~~2021,~~2022, depreciation and amortization totaled ~~$2,946,000~~$3,585,000 and capital additions totaled ~~$15,160,000~~$14,401,000 as compared to depreciation and amortization of ~~$2,812,000~~$3,369,000 and ~~$6,518,000~~capital additions of ~~capital additions~~$14,195,000 for the second quarter of ~~2021.~~2022.

Inventories increased by approximately ~~$6,280,000,~~$11,281,000, or ~~11.0%~~13.6%, to ~~$63,409,000~~$94,336,000 at September 30, ~~2021,~~2022, compared to ~~$57,129,000~~$83,055,000 at June 30, ~~2021,~~2022, primarily ~~with~~consisting of raw ~~materials, due to the revenue in the third quarter~~materials.

-21-

VICOR CORPORATION

Management’s Discussion and Analysis of ~~2021 falling below expectations, primarily caused by component~~

Financial Condition and ~~capacity issues which contributed to production delays.~~

Results of Operation

September 30, 2022

Three Months Ended September 30, ~~2021~~2022 Compared to Three Months Ended September 30, ~~2020~~

2021

Net revenues for the third quarter of ~~2021~~2022 were ~~$84,911,000,~~$103,118,000, an increase of ~~$6,799,000,~~$18,207,000, or ~~8.7%~~21.4%, as compared to ~~$78,112,000~~$84,911,000 for the third quarter of ~~2020.~~2021. Net revenues, by product line, for the three months ended September 30, ~~2021~~2022 and ~~2020~~2021 were as follows (dollars in thousands):

         Increase (decrease)
   2021    2020    $    %
Brick Products
   $ 41,444    $ 47,693    $ (6,249 )    (13.1 )%
Advanced Products
   43,467    30,419    13,048    42.9 %







Total
   $ 84,911    $ 78,112    $ 6,799    8.7 %


					Increase
	2022		2021		$		%
Brick Products	$	43,916	$	41,444	$	2,472		6.0	%
Advanced Products		59,202		43,467		15,735		36.2	%

Total	$	103,118	$	84,911	$	18,207		21.4	%

The increase in net revenues for Advanced Products was primarily the result of growth in the data center and high performance computing ~~business, primarily in the United States and Asia Pacific markets.~~business. The ~~decrease~~increase in net revenues for Brick Products was primarily due to ~~unfavorable~~favorable market conditions in ~~the Asia Pacific markets, offset by increases from customers~~North America and Europe and a rebound in the ~~United States and Europe.~~

business after several quarters of declining revenues.

Gross margin for the third quarter of ~~2021~~2022 increased ~~$9,466,000,~~$4,157,000, or ~~28.4%~~9.7%, to ~~$42,813,000,~~$46,970,000, from ~~$33,347,000~~$42,813,000 for the third quarter of ~~2020.~~2021. Gross margin, as a percentage of net revenues, ~~increased~~decreased to 45.5% for the third quarter of 2022, compared to 50.4% for the third quarter of ~~2021, compared to 42.7% for the third quarter of 2020.~~2021. The increase in gross margin dollars ~~and~~was due to the increase in net revenues. The decrease in gross margin percentage was primarily due to ~~the increase~~unfavorable changes in ~~net revenues~~product mix, a negative impact from production inefficiencies associated with initial production volumes of new products, and ~~an improved mix of higher-margin products shipped.~~certain supply chain cost increases.

-22-

~~-24-~~

VICOR CORPORATION

Management’s Discussion and Analysis of

Financial Condition and Results of Operation

September 30, ~~2021~~

2022

Selling, general, and administrative expenses were $22,719,000 for the third quarter of 2022, an increase of $5,397,000, or 31.2%, from $17,322,000 for the third quarter of ~~2021, an increase of $2,110,000, or 13.9%, from $15,212,000 for the third quarter of 2020.~~2021. Selling, general, and administrative expenses as a percentage of net revenues increased to 22.0% for the third quarter of 2022 from 20.4% for the third quarter of ~~2021 from 19.5% for the third quarter of 2020.~~2021. The components of the ~~$2,110,000~~$5,397,000 increase in selling, general and administrative expenses for the third quarter of ~~2021~~2022 from the third quarter of ~~2020~~2021 were as follows (dollars in thousands):

   Increase
Compensation
   $ 725    7.0 % (1)
Legal fees
   568    178.7 % (2)
Commissions
   205    29.5 % (3)
Travel expense
   169    94.7 % (4)
Outside services
   152    29.9 % (5)
Advertising
   148    22.9 % (6)
Employment recruiting
   131    179.1 % (7)
Other, net
   12    0.5 %



   $ 2,110    13.9 %


	Increase (decrease)
Legal fees	$	3,538	399.4	%(1)
Compensation		694	6.3	%(2)
Advertising		546	68.7	%(3)
Depreciation and amortization		300	36.3	%(4)
Audit and accounting fees		236	48.1	%(5)
Travel expense		235	67.4	%(6)
Other, net		(152)	(5.1)	%

	$	5,397	31.2	%

(1)	~~Increase primarily attributable to annual compensation adjustments in May 2021 and higher stock-based compensation expense associated with stock options awarded in June 2021.~~

~~(2)~~

Increase primarily attributable to an increase in activity related to the SynQor litigation (see Note 10 to the Condensed Consolidated Financial Statements) and for certain corporate legal matters.

~~(3)~~(2)

Increase primarily attributable to an increase in ~~net revenues subject to commissions.~~

headcount, annual compensation adjustments in May 2022, and higher stock-based compensation expense associated with stock options awarded in April 2022.

~~(4)~~(3)

~~Increase primarily attributable to a resumption of travel by the Company’s sales and marketing personnel, though still at levels significantly lower than prior to the COVID 19 pandemic.~~

~~(5)~~

~~Increase primarily attributable to an increase in the use of outside service providers at our Andover, MA facility.~~

~~(6)~~

Increase primarily attributable to increases in sales support expenses, direct mailings, and advertising in trade publications.

~~(7)~~(4)

Increase attributable to net additions of furniture and fixtures and capitalization of building improvements.

(5)	Overall increase in audit and tax fees.

(6)	Increase primarily attributable to an increase in ~~employee recruitment activities at Andover.~~travel by the Company’s sales and marketing personnel.

-23-

~~-25-~~

VICOR CORPORATION

Management’s Discussion and Analysis of

Financial Condition and Results of Operation

September 30, ~~2021~~

2022

Research and development expenses were $14,747,000 for the third quarter of 2022, an increase of $1,228,000, or 9.1%, compared to $13,519,000 for the third quarter of ~~2021, an increase of $1,487,000, or 12.4%, compared to $12,032,000 for the third quarter of 2020.~~2021. As a percentage of net revenues, research and development expenses ~~increased~~decreased to 14.3% for the third quarter of 2022 from 15.9% for the third quarter of ~~2021 from 15.4% for the third quarter of 2020.~~2021. The components of the ~~$1,487,000~~$1,228,000 increase in research and development expenses were as follows (dollars in thousands):

   Increase (decrease)
Compensation
   $ 710    7.9 % (1)
Project and
pre-production
materials
   583    42.3 % (2)
Deferred costs
   149    43.2 % (3)
Employment recruiting
   99    464.7 %
Outside services
   42    57.1 %
Overhead absorption
   (209 )    (69.7) % (4)
Other, net
   113    5.1 %



   $ 1,487    12.4 %


	Increase (decrease)
Compensation	$	654		6.7	%(1)
Supplies		348		91.8	%(2)
Facilities allocations		139		19.8	%
Computer and software expense		136		74.1	%
Depreciation and amortization		116		22.9	%
Outside services		96		82.6	%
Overhead absorption		(146	)	(28.7	)%
Project and pre-production materials		(387	)	(19.7	)%(3)
Other, net		272		56.8	%

	$	1,228		9.1	%

(1)	Increase primarily attributable to an increase in headcount, annual compensation adjustments in May ~~2021~~2022, and higher stock-based compensation expense associated with stock options awarded in ~~June 2021.~~ April 2022.

(2)	Increase in engineering supplies.

(3)	Decrease primarily attributable to ~~increased~~decreased prototype development costs for Advanced Products.

~~(3)~~

~~Increase primarily attributable to a decrease in deferred costs capitalized for certain~~

~~non-recurring~~

~~engineering projects for which the related revenues had been deferred.~~

~~(4)~~

~~Decrease primarily attributable to an increase in research and development (“R&D”) personnel incurring time on production activities, compared to R&D activities.~~

Litigation-related expense was $6,500,000 for the third quarter of 2022 which related to the SynQor litigation, as compared to $0 for the third quarter of 2021. See Note 10 to the Condensed Consolidated Financial Statements for additional information.

The significant components of ~~‘‘Other~~“Other income (expense), ~~net’’~~net” for the three months ended September 30, and the changes between the periods were as follows (in thousands):


	2022			2021			Increase (decrease)
Foreign currency losses, net	$	(453	)	$	(110	)	$	(343	)
Interest income (expense), net		(315	)		267			(582	)
Rental income		198			198			—
Other, net		2			39			(37	)

	$	(568	)	$	394		$	(962	)

-24-

   2021    2020    Increase
(decrease)
Interest income
   $ 267    $ 7    $ 260
Rental income
   198    198    —
Foreign currency (losses) gains, net
   (110 )    140    (250 )
Gains on disposals of equipment
   39    3    36
Other, net
   —      (14 )    14






   $ 394    $ 334    $ 60

~~Interest income increased due to an increase in interest bearing investments in the third quarter~~

VICOR CORPORATION

Management’s Discussion and Analysis of ~~2021 compared to the third quarter~~

Financial Condition and Results of ~~2020, due to the investment of the net proceeds of approximately $109.7 million from our underwritten public offering of our Common Stock completed in June 2020.~~ Operation

September 30, 2022

Our exposure to market risk fluctuations in foreign currency exchange rates relates to the operations of Vicor Japan Company, Ltd. (“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 subsidiaries in Europe and Asia experienced more unfavorable foreign currency exchange rate fluctuations in the third quarter of ~~2021~~2022 compared to the third quarter of ~~2020.~~

~~-26-~~

~~VICOR CORPORATION~~

~~Management’s Discussion and Analysis~~$990,000 related to the amortization of

~~Financial Condition and Results of Operation~~

~~September 30, 2021~~

bond premiums on available for sale securities.

Income before income taxes was $2,436,000 for the third quarter of 2022, as compared to $12,366,000 for the third quarter of ~~2021, as compared to $6,437,000 for the third quarter of 2020.~~

2021.

The provision (benefit) ~~provision~~ for income taxes and the effective income tax rates for the three months ended September 30, ~~2021~~2022 and ~~2020~~2021 were as follows (dollars in thousands):

   2021 2020
(Benefit) provision for income taxes
   $ (886 ) $ 651
Effective income tax rate
   (7.2 )% 10.1 %


	2022			2021
Provision (benefit) for income taxes	$	641		$	(886	)
Effective income tax rate		26.3	%		(7.2	)%

The effective tax rates were lower than the statutory tax rates for the three months ended September 30, ~~2021~~2022 and ~~2020~~2021 primarily due to the Company’s full valuation allowance position against domestic deferred tax ~~assets and excess tax benefits related to stock based compensation during those periods.~~assets. The provision (benefit) ~~provision~~ for income taxes for the three months ended September 30, ~~2021~~2022 and ~~2020~~2021 included estimated federal, state and foreign income taxes in jurisdictions in which the Company does not have sufficient tax attributes, offset by excess tax benefits related to ~~fully offset taxable income.~~

stock based compensation during those periods.

See Note 8 to the Condensed Consolidated Financial Statements for disclosure regarding our current assessment of the valuation allowance against all domestic deferred tax assets, and the possible release (i.e., reduction) of the allowance in the future.

We reported net income for the third quarter of ~~2021~~2022 of ~~$13,259,000,~~$1,792,000, or ~~$0.29~~$0.04 per diluted share, compared to ~~$5,785,000,~~$13,259,000, or ~~$0.13~~$0.29 per diluted share, for the third quarter of ~~2020.~~

2021.

Nine Months Ended September 30, ~~2021~~2022 Compared to Nine Months Ended September 30, ~~2020~~

2021

Net revenues for the nine

months ended September 30, ~~2021~~2022 were ~~$269,083,000,~~$293,586,000, an increase of ~~$56,809,000,~~$24,503,000, or ~~26.8%~~9.1%, from ~~$212,274,000~~$269,083,000 for the nine months ended September 30, ~~2020.~~2021. Net revenues, by product line, for the nine months ended September 30, ~~2021~~2022 and the nine months ended September 30, ~~2020~~2021 were as follows (dollars in thousands):

         Increase
   2021    2020    $    %
Brick Products
   $ 150,255    $ 139,638    $ 10,617    7.6 %
Advanced Products
   118,828    72,636    46,192    63.6 %







Total
   $ 269,083    $ 212,274    $ 56,809    26.8 %


					(Decrease) increase
	2022		2021		$			%
Brick Products	$	113,796	$	150,255	$	(36,459	)		(24.3	)%
Advanced Products		179,790		118,828		60,962			51.3	%

Total	$	293,586	$	269,083	$	24,503			9.1	%

The increase in net revenues for Advanced Products was primarily the result of growth in the data center and high performance computing ~~business, in the United States and Asia Pacific markets.~~business. The ~~increase~~decrease in net revenues for Brick Products was primarily due to ~~increases from customers~~unfavorable market conditions in the ~~United States~~Asia Pacific region and ~~Europe, offset by~~ a ~~decrease~~shift in net revenues from customers in the European markets. The increases in net revenues for both Brick Products and Advanced Products were also the result of increases in new orders for Advanced Products and Brick Products for the nine months ended September 30, 2021 comparedresource allocation to the nine months ended September 30, 2020. The increase in bookings largely reflected our customers’ response to the 20% to 30% increase in lead-times for our Brick Products and Advanced Products, respectively, plus growth in our data center business, for Advanced Products.

-25-

~~-27-~~

VICOR CORPORATION

Management’s Discussion and Analysis of

Financial Condition and Results of Operation

September 30, ~~2021~~

2022

Gross margin for the nine months ended September 30, ~~2021 increased $46,388,000,~~2022 decreased $5,964,000, or ~~51.0%~~4.3%, to ~~$137,384,000~~$131,420,000 from ~~$90,996,000~~$137,384,000 for the nine months ended September 30, ~~2020.~~2021. Gross margin, as a percentage of net revenues, ~~increased~~decreased to 44.8% for the nine month period ended September 30, 2022, as compared to 51.1% for the nine month period ended September 30, ~~2021, as compared to 42.9% for the nine month period ended September 30, 2020.~~2021. The ~~increase~~decrease in gross margin dollars and gross margin percentage was primarily due to ~~the increase~~changes in ~~net revenues, an improved~~product mix, a negative impact from production inefficiencies associated with initial production volumes of ~~higher-margin~~new products, ~~shipped, process yield improvements~~ and ~~lower tariff charges.~~

certain supply chain cost increases.

Selling, general and administrative expenses were $61,322,000 for the nine months ended September 30, 2022, an increase of $10,457,000, or 20.6%, compared to $50,865,000 for the nine months ended September 30, ~~2021, an increase of $3,829,000, or 8.1%, compared to $47,036,000 for the nine months ended September 30, 2020.~~2021. Selling, general and administrative expenses as a percentage of net revenues ~~decreased~~increased to 20.9% for the nine months ended September 30, 2022 from 18.9% for the nine months ended September 30, ~~2021 from 22.2% for the nine months ended September 30, 2020, primarily due to the overall increase in net revenues.~~2021. The components of the ~~$3,829,000~~$10,457,000 increase in selling, general and administrative expenses for the nine months ended September 30, ~~2021~~2022 compared to the nine months ended September 30, ~~2020~~2021 were as follows (dollars in thousands):

   Increase (decrease)
Compensation
   $ 1,920    6.2 % (1 )
Legal fees
   756    51.5 % (2 )
Advertising expense
   399    20.0 % (3 )
Outside services
   224    15.1 % (4 )
Employment recruiting
   210    112.9 % (5 )
Depreciation and amortization
   155    6.7 % (6 )
Commissions
   129    5.2 %
Facilities allocations
   127    11.6 %
Other, net
   (91 )    (1.9 )%



   $ 3,829    8.1 %


	Increase (decrease)
Legal fees	$	5,562		250.0	%(1)
Compensation		2,645		8.0	%(2)
Outside services		804		45.0	%(3)
Depreciation and amortization		732		29.8	%(4)
Travel expense		621		75.1	%(5)
Advertising		522		21.8	%(6)
Commissions		(365	)	(13.9	)%(7)
Other, net		(64	)	(1.2	)%

	$	10,457		20.6	%

(1)	~~Increase primarily attributable to annual compensation adjustments in May 2021 and higher stock-based compensation expense associated with stock options awarded in June 2021.~~

~~(2)~~

Increase primarily attributable to an increase in activity related to the SynQor litigation (see Note 10 to the Condensed Consolidated Financial Statements) and for certain corporate legal matters.

~~(3)~~(2)

Increase primarily attributable to ~~increases~~an increase in ~~sales support expenses, direct mailings,~~headcount, annual compensation adjustments in May 2022, and ~~advertising~~higher stock-based compensation expense associated with stock options awarded in ~~trade publications.~~

April 2022.

~~(4)~~(3)

Increase primarily attributable to an increase in the use of outside service providers at our Andover, MA facility.

~~(5)~~(4)

~~Increase primarily attributable to an increase in employee recruitment activities at Andover.~~

~~(6)~~

Increase attributable to net additions of furniture and fixtures and capitalization of building improvements.

(5)	Increase primarily attributable to an increase in travel by the Company’s sales and marketing personnel.

(6)	Increase primarily attributable to increases in sales support expenses, direct mailings, and advertising in trade publications.

(7)	Decrease primarily attributable to a decrease in net revenues subject to commissions.

-26-

~~-28-~~

VICOR CORPORATION

Management’s Discussion and Analysis of

Financial Condition and Results of Operation

September 30, ~~2021~~

2022

Research and development expenses were $44,516,000 for the nine months ended September 30, 2022, an increase of $4,698,000, or 11.8%, from $39,818,000 for the nine months ended September 30, 2021 ~~an increase of $1,621,000, or 4.2%, from $38,197,000 for the nine months ended September 30, 2020.~~ As a percentage of net revenues, research and development expenses ~~decreased~~increased to 15.2% for the nine month period ended September 30, 2022 from 14.8% for the nine month period ended September 30, ~~2021 from 18.0% for the nine month period ended September 30, 2020, primarily due to the overall increase in net revenues.~~2021. The components of the ~~$1,621,000~~$4,698,000 increase in research and development expenses for the nine months ended September 30, ~~2021~~2022 compared to the nine months ended September 30, ~~2020~~2021 were as follows (dollars in thousands):

   Increase (decrease)
Compensation
   $ 1,678    6.2 % (1)
Project and
pre-production
materials
   229    3.9 % (2)
Facilities allocations
   206    11.1 % (3)
Deferred costs
   166    25.7 % (4)
Supplies
   92    9.4 %
Employment recruiting
   85    169.6 %
Freight
   74    72.6 %
Computer expense
   73    15.0 %
Overhead absorption
   (1,039 )    (133.8 )% (5)
Other, net
   57    1.7 %



   $ 1,621    4.2 %


	Increase
Compensation	$	1,865	6.5	%(1)
Supplies		821	76.8	%(2)
Overhead absorption		413	22.8	%(3)
Depreciation and amortization		297	19.6	%(4)
Facilities allocations		271	13.1	%(5)
Computer and software expense		219	39.2	%(6)
Travel expense		156	143.8	%
Deferred costs		140	29.2	%
Other, net		516	6.3	%

	$	4,698	11.8	%

(1)	Increase primarily attributable to an increase in headcount, annual compensation adjustments in May ~~2021~~2022, and higher stock-based compensation expense associated with stock options awarded in ~~June 2021.~~ April 2022.

(2)	Increase ~~primarily attributable to increased prototype development costs for Advanced Products.~~ in engineering supplies.

(3)	~~Increase primarily attributable to an increase in utilities and building maintenance expenses.~~

~~(4)~~

Increase primarily attributable to a decrease ~~in deferred costs capitalized for certain~~

~~non-recurring~~

~~engineering projects for which the related revenues had been deferred.~~

~~(5)~~

~~Decrease primarily attributable to an increase~~ in R&D personnel incurring time on production activities, compared to R&D activities.

(4)	Increase attributable to net additions of furniture and fixtures and capitalization of building improvements.

(5)	Increase primarily attributable to an increase in utilities and building maintenance expenses.

(6)	Increase primarily attributable to an increase in computer and software expenses.

-27-

~~The significant components~~

VICOR CORPORATION

Management’s Discussion and Analysis of ~~‘‘Other income (expense), net’’~~

Financial Condition and Results of Operation

September 30, 2022

Litigation-related expense was $6,500,000 for the nine months ended September 30, ~~2021~~2022 which related to the SynQor litigation, as compared to $0 for the nine months ended September 30, 2021. See Note 10 to the Condensed Consolidated Financial Statements for additional information.

The significant components of “Other income (expense), net” for the nine months ended September 30, 2022 and the nine months ended September 30, ~~2020~~2021 and the changes from period to period were as follows (in thousands):

   2021    2020    Increase
(decrease)
Interest income
   $ 736    $ 77    $ 659
Rental income
   594    594    —
Foreign currency (losses) gains, net
   (285 )    23    (308 )
(Losses) gains on disposals of equipment
   (67 )    9    (76 )
Other, net
   21    12    9






   $ 999    $ 715    $ 284

~~-29-~~

~~VICOR CORPORATION~~

~~Management’s Discussion and Analysis of~~

~~Financial Condition and Results of Operation~~

~~September 30, 2021~~

Interest income increased due to an increase in interest bearing investments in 2021 compared to 2020, due to the investment of the net proceeds of approximately $109.7 million from our underwritten public offering of our Common Stock completed in June 2020.


	2022			2021			Increase (decrease)
Foreign currency losses, net	$	(1,057	)	$	(285	)	$	(772	)
Rental income		594			594			—
Interest income (expense), net		107			757			(650	)
Other, net		34			(67	)		101

	$	(322	)	$	999		$	(1,321	)

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 subsidiaries in Europe and Asia have experienced more unfavorable foreign currency exchange rate fluctuations in ~~2021~~2022 compared to ~~2020.~~

2021. “Interest income (expense), net” includes an immaterial error correction of $834,000 related to the amortization of bond premiums on available for sale securities.

Income before income taxes was $18,760,000 for the nine months ended September 30, 2022, as compared to $47,700,000 for the nine months ended September 30, ~~2021, as compared to $6,478,000 for the nine months ended September 30, 2020.~~

2021.

The ~~benefit~~provision (benefit) for income taxes and the effective income tax rates for the nine months ended September 30, ~~2021~~2022 and ~~2020~~2021 were as follows (dollars in thousands):

   2021 2020
Benefit for income taxes
   $ (30 ) $ (249 )
Effective income tax rate
   (0.1 )% (3.8 )%


	2022			2021
Provision (benefit) for income taxes	$	1,395		$	(30	)
Effective income tax rate		7.4	%		(0.1	)%

The effective tax rates were lower than the statutory tax rates for the nine months ended September 30, ~~2021~~2022 and ~~2020~~2021 primarily due to the Company’s full valuation allowance position against domestic deferred tax ~~assets and excess tax benefits related to stock based compensation during those periods.~~assets. The ~~benefit~~provision (benefit) for income taxes for the nine months ended September 30, ~~2021~~2022 and ~~2020~~2021 included estimated federal, state and foreign income taxes in jurisdictions in which the Company does not have sufficient tax attributes, offset by excess tax benefits related to ~~fully offset taxable income.~~

stock based compensation during those periods.

We reported net income for the nine months ended September 30, ~~2021~~2022 of ~~$47,745,000,~~$17,384,000, or ~~$1.06~~$0.39 per diluted share, as compared to ~~$6,717,000,~~$47,745,000, or ~~$0.15~~$1.06 per diluted share, for the nine months ended September 30, ~~2020.~~2021.

-28-

~~-30-~~

VICOR CORPORATION

Management’s Discussion and Analysis of

Financial Condition and Results of Operation

September 30, ~~2021~~

2022

Liquidity and Capital Resources

As of September 30, ~~2021,~~2022, we had ~~$178,663,000~~$182,098,000 in cash and cash equivalents and ~~$50,217,000~~$19,949,000 of highly liquid short-term investments. The ratio of total current assets to total current liabilities was ~~8.2:~~5.6:1 as of September 30, ~~2021~~2022 and ~~7.8:~~7.3:1 as of December 31, ~~2020.~~2021. Working capital, defined as total current assets less total current liabilities, ~~increased $30,968,000~~decreased $13,873,000 to ~~$307,387,000~~$293,794,000 as of September 30, ~~2021~~2022 from ~~$276,419,000~~$307,667,000 as of December 31, ~~2020.~~

2021.

The changes in working capital from December 31, ~~2020~~2021 to September 30, ~~2021~~2022 were as follows (in thousands):

   Increase
(decrease)
Cash and cash equivalents
   $ 16,921
Short-term investments
   51
Accounts receivable
   10,081
Inventories, net
   6,140
Other current assets
   (123)
Accounts payable
   (4,225)
Accrued compensation and benefits
   100
Accrued expenses
   (965)
Sales allowances
   (1,064)
Short-term lease liabilities
   4
Income taxes payable
   129
Short-term deferred revenue
   3,919


   $ 30,968


	Increase (decrease)
Cash and cash equivalents	$	(320	)
Short-term investments		(25,266	)
Accounts receivable		1,190
Inventories		27,014
Other current assets		(1,225	)
Accounts payable		(2,815	)
Accrued compensation and benefits		(410	)
Accrued expenses		(1,596	)
Accrued litigation		(6,500	)
Short-term deferred revenue		(4,236	)
Other		291

	$	(13,873	)

The primary sources of cash for the nine months ended September 30, ~~2021~~2022 were ~~$50,000,000~~$25,000,000 from the sale or maturities of short-term investments, ~~$40,227,000 of cash~~$22,010,000 generated from operations, and ~~$8,621,000 of cash~~$4,147,000 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. The primary uses of cash during the nine months ended September 30, ~~2021~~2022 were ~~$50,706,000 for the purchases of short-term investments and $30,942,000~~ for the purchase of property and ~~equipment.~~

equipment of $51,279,000.

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. We did not repurchase shares of Common Stock under the November 2000 Plan during the nine months ended September 30, ~~2021.~~2022. As of September 30, ~~2021,~~2022, we had approximately $8,541,000 remaining available for repurchases of our Common Stock under the November 2000 Plan.

As of September 30, ~~2021,~~2022, we had a total of approximately ~~$22,046,000~~$27,804,000 of cancelable and non-cancelable capital expenditure commitments, principally for manufacturing and production equipment, which we intend to fund with existing cash, and approximately ~~$6,607,000~~$6,637,000 of capital expenditure items which had been received and included in Property, plant and equipment in the accompanying Condensed Consolidated Balance Sheets, but not yet paid for. ~~In addition to these commitments,~~As of September 30, 2022, we ~~have, in aggregate,~~had approximately ~~$20,000,000~~$7,627,000 of remaining ~~budgeted~~ capital expenditures expected to be incurred through the ~~first half~~remainder of 2022 associated with the construction of a 90,000 sq. ft. addition to the Company’s existing manufacturing facility and the installation of new manufacturing and production equipment. Our primary needs for liquidity are for making continuing investments in manufacturing and production equipment and for funding the construction of the additional manufacturing space adjoining our existing Andover manufacturing facility ~~noted above,~~(as described above), including architectural and construction costs. We believe cash generated from operations together with our available cash and cash equivalents and short-term investments will be sufficient to fund planned operational needs, capital equipment purchases, and the planned construction, for the foreseeable future.

-29-

~~-31-~~

~~Vicor Corporation~~

Financial Condition and Results of Operation

September 30, ~~2021~~2022

We do not consider the impact of inflation or fluctuations in the exchange rates for foreign currency transactions to have been significant during the last three fiscal years.

Critical Accounting Policies and Estimates

There have been no material changes in our judgments and assumptions associated with the development of our critical accounting estimates during the period ended September 30, 2022. Refer to the section entitled “Critical Accounting Policies and Estimates” in Part II, Item 7 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

-30-

Vicor Corporation

September 30, 2022

Item 3 — 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, our 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, 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 September 30, ~~2021,~~2022, our long-term investment portfolio, recorded on our Condensed Consolidated Balance Sheet as “Long-term ~~investments,~~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

“mark-to-market”

carrying value adjustments) recorded in “Accumulated other comprehensive loss”, a component of Stockholders’ Equity. Should we conclude a decline in the fair value of the Failed Auction Security is other than temporary, such losses would be recorded through earnings as a component of “Other income (expense), net”. We do not believe there was an “other-than-temporary” decline in value in this security as of September 30, ~~2021.~~

2022.

Our exposure to market risk for fluctuations in foreign currency exchange rates relates to the operations of VJCL, for which the functional currency is the Japanese Yen, and changes in the relative value of the Yen to the U.S. Dollar. The functional currency of all other subsidiaries in Europe and other subsidiaries in Asia is the U.S. Dollar. While we believe the risk of fluctuations in foreign currency exchange rates for these subsidiaries is generally not significant, they can be subject to substantial currency changes, and therefore foreign exchange exposures.

Item 4 — Controls and Procedures

~~(a) Disclosure regarding controls and procedures.~~

(a)	Disclosure regarding controls and procedures.

As required by

Rule 13a-15

under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), management, with the participation of our Chief Executive Officer (“CEO”) (who is our principal executive officer) and Chief Financial Officer (“CFO”) (who is our principal financial officer), conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the last fiscal quarter (i.e., September 30, ~~2021)~~2022). The term “disclosure controls and procedures,” as defined in

Rules 13a-15(e)

and

15d-15(e)

under the Exchange Act, means controls and other procedures of a company that are designed to ensure information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure information required to be disclosed by a company in the reports it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of September 30, ~~2021,~~2022, our CEO and CFO concluded, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

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. Accordingly, management, including the CEO and CFO, recognizes our disclosure controls or our internal control over financial reporting may not prevent or detect all errors and all fraud. The design of a control system must reflect the fact 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 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

-31-

Vicor Corporation

September 30, 2022

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 control’s 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.

~~-32-~~

Vicor Corporation

Part II – Other Information

September 30, ~~2021~~

2022

Item 1 — Legal Proceedings

See Note 10.

Commitments and Contingencies

in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 – “Financial Statements.”

Item 1A — Risk Factors

There have been no material changes in the risk factors described in Part I, Item 1A – “Risk Factors” of the Company’s Annual Report on

~~Form10-K~~

Form 10-Kfor the year ended December 31, ~~2020.~~2021, except for the following additional risk factor, which supplements and updates those risk factors discussed in our Form 10-K.

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 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.

-33-

Vicor Corporation

Part II – Other Information

September 30, 2022

Item 6 — Exhibits


Exhibit Number		Description

3.1		Restated Certificate of Incorporation, dated February 28, 1990 (1)

3.2		Certificate of Ownership and Merger Merging Westcor Corporation, a Delaware Corporation, into Vicor Corporation, a Delaware corporation, dated December 3, 1990 (1)

3.3		Certificate of Amendment of Restated Certificate of Incorporation, dated May 10, 1991 (1)

3.4		Certificate of Amendment of Restated Certificate of Incorporation, dated June 23, 1992 (1)

3.5		Bylaws, as amended (2)

31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act.

31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act.

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL 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) (1) Filed as an exhibit to the Company’s Annual Report on Form 10-K filed on March 29, 2001 (File No. 000-18277) and incorporated herein by reference. (2) 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.

-34-


	Page
Part I — Financial Information:
Item 1 - Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets at September 30, ~~2021~~2022 and December 31, ~~2020~~2021		1
Condensed Consolidated Statements of Operations for the three and nine months ended September 30, ~~2021~~2022 and ~~2020~~2021		2
Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, ~~2021~~2022 and ~~2020~~2021		3
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, ~~2021~~2022 and ~~2020~~2021		4
Condensed Consolidated Statements of Equity for the three and nine months ended September 30, ~~2021~~2022 and ~~2020~~2021		5
Notes to Condensed Consolidated Financial Statements		7
Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations		2118
Item 3 - Quantitative and Qualitative Disclosures About Market Risk		3231
Item 4 - Controls and Procedures		3231
Part II — Other Information:
Item 1 - Legal Proceedings		33
Item 1A - Risk Factors		33
Item 6 - Exhibits		34
~~Item 1A - Risk Factors~~		34
~~Item 6 - Exhibits~~		34
Signature(s)		35
EX-31.1 SECTION 302 CERTIFICATION OF CEO
EX-31.2 SECTION 302 CERTIFICATION OF CFO
EX-32.1 SECTION 906 CERTIFICATION OF CEO
EX-32.2 SECTION 906 CERTIFICATION OF CFO


	September 30, 2021			December 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	178,663		$	161,742
Short-term investments		50,217			50,166
Accounts receivable, net		51,080			40,999
Inventories, net		63,409			57,269
Other current assets		6,633			6,756

Total current assets		350,002			316,932
Long-term deferred tax assets, net		221			226
Long-term investments, net		2,598			2,517
Property, plant and equipment, net		104,446			74,843
Other assets		1,563			1,721

Total assets	$	458,830		$	396,239

Liabilities and Equity
Current liabilities:
Accounts payable	$	18,346		$	14,121
Accrued compensation and benefits		13,994			14,094
Accrued expenses		3,589			2,624
Short-term lease liabilities		1,625			1,629
Sales allowances		1,661			597
Income taxes payable		10			139
Short-term deferred revenue and customer prepayments		3,390			7,309

Total current liabilities		42,615			40,513
Long-term deferred revenue		493			733
Contingent consideration obligations		—			227
Long-term income taxes payable		564			643
Long-term lease liabilities		3,504			2,968

Total liabilities		47,176			45,084
Commitments and contingencies (Note 10)		0			0
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 2021 and 2020		118			118
Common Stock: 1 vote per share, $.01 par value, 62,000,000 shares authorized 43,635,881 shares issued and 32,001,075 shares outstanding in 2021; 43,204,671 shares issued and 31,569,865 shares outstanding in 2020		437			433
Additional paid-in capital		342,014			328,392
Retained earnings		208,753			161,008
Accumulated other comprehensive loss		(1,040	)		(204	)
Treasury stock at cost: 11,634,806 shares in 2021 and 2020		(138,927	)		(138,927	)

Total Vicor Corporation stockholders’ equity		411,355			350,820
Noncontrolling interest		299			335

Total equity		411,654			351,155

Total liabilities and equity	$	458,830		$	396,239


	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
Three months ended September 30, 2021
Balance on June 30, 2021	$	118	$	436	$	336,278	$	195,494	$	(813	)	$	(138,927	)	$	392,586		$	306		$	392,892
Issuance of Common Stock under employee stock plans				1		3,869										3,870						3,870
Stock-based compensation expense						1,867										1,867						1,867
Components of comprehensive income (loss), net of tax:
Net income								13,259								13,259			(7	)		13,252
Other comprehensive loss										(227	)					(227	)		—			(227	)

Total comprehensive income (loss)																13,032			(7	)		13,025

Balance on September 30, 2021	$	118	$	437	$	342,014	$	208,753	$	(1,040	)	$	(138,927	)	$	411,355		$	299		$	411,654


September 30, 2021	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value

U.S. Treasury Obligations	$	50,216	$	1	$	—	$	50,217
Failed Auction Security		3,000		—		402		2,598


	2021			2020

Balance at the beginning of the period	$	33		$	37
Reductions in the amount related to credit gain for which other-than- temporary impairment was not previously recognized		(3	)		(3	)

Balance at the end of the period	$	30		$	34


	Using
	Significant
	Quoted Prices in Active Markets (Level 1)		Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Total Fair Value as of December 31, 2020

Cash equivalents:
Money market funds	$	69,493	$	—	$	—		$	69,493
U.S. Treasury Obligations		19,998		—		—			19,998
Short-term investments:
U.S. Treasury Obligations		50,166		—		—			50,166
Long-term investment:
Failed Auction Security		—		—		2,517			2,517
Liabilities:
Contingent consideration obligations		—		—		(227	)		(227	)


	Fair Value		Valuation Technique	Unobservable Input	Weighted Average

Failed Auction Security	$	2,598	Discounted cash flow	Cumulative probability of earning the maximum rate until maturity	0.15%
				Cumulative probability of principal return prior to maturity	94.71%
				Cumulative probability of default	5.14%
				Liquidity risk premium	5.00%
				Recovery rate in default	40.00%


Balance at the beginning of the period	$	2,517
Credit gain on available-for-sale security included in Other income (expense), net		3
Gain included in Other comprehensive income		78

Balance at the end of the period	$	2,598


	Three Months Ended September 30, 2020
	Brick Products		Advanced Products		Total

United States	$	16,905	$	4,391	$	21,296
Europe		4,456		2,050		6,506
Asia Pacific		25,878		23,926		49,804
All other		454		52		506

	$	47,693	$	30,419	$	78,112


	Nine Months Ended September 30, 2020
	Brick Products		Advanced Products		Total

United States	$	57,880	$	17,205	$	75,085
Europe		18,451		5,218		23,669
Asia Pacific		60,917		50,076		110,993
All other		2,390		137		2,527

	$	139,638	$	72,636	$	212,274


	September 30, 2021			December 31, 2020			Change
Accounts receivable	$	51,080		$	40,999		$	10,081
Short-term deferred revenue and customer prepayments		(3,390	)		(7,309	)		3,919
Long-term deferred revenue		(493	)		(733	)		240
Deferred expenses		848			1,650			(802	)
Sales allowances		(1,661	)		(597	)		(1,064	)


	Three Months Ende d				Nine Months Ended
	September 30,				September 30,

	2021		2020		2021		2020

(Benefit) provision for income taxes	$	(886)	$	651	$	(30)	$	(249)
Effective income tax rate		(7.2)%		10.1%		(0.1)%		(3.8)%


	Increase
Compensation	$	725	7.0	% (1)
Legal fees		568	178.7	% (2)
Commissions		205	29.5	% (3)
Travel expense		169	94.7	% (4)
Outside services		152	29.9	% (5)
Advertising		148	22.9	% (6)
Employment recruiting		131	179.1	% (7)
Other, net		12	0.5	%

	$	2,110	13.9	%


	Increase (decrease)
Compensation	$	1,920		6.2	%	(1	)
Legal fees		756		51.5	%	(2	)
Advertising expense		399		20.0	%	(3	)
Outside services		224		15.1	%	(4	)
Employment recruiting		210		112.9	%	(5	)
Depreciation and amortization		155		6.7	%	(6	)
Commissions		129		5.2	%
Facilities allocations		127		11.6	%
Other, net		(91	)	(1.9	)%

	$	3,829		8.1	%


	Increase (decrease)
Compensation	$	1,678		6.2	% (1)
Project and pre-production materials		229		3.9	% (2)
Facilities allocations		206		11.1	% (3)
Deferred costs		166		25.7	% (4)
Supplies		92		9.4	%
Employment recruiting		85		169.6	%
Freight		74		72.6	%
Computer expense		73		15.0	%
Overhead absorption		(1,039	)	(133.8	)% (5)
Other, net		57		1.7	%

	$	1,621		4.2	%


	2021			2020
Benefit for income taxes	$	(30	)	$	(249	)
Effective income tax rate		(0.1	)%		(3.8	)%


			VICOR CORPORATION

Date: November 3, ~~2021~~	2022	By:	/s/ Patrizio Vinciarelli
			Patrizio Vinciarelli
			Chairman of the Board, President and
			Chief Executive Officer
			(Principal Executive Officer)

Date: November 3, ~~2021~~	2022	By:	/s/ James F. Schmidt
			James F. Schmidt
			Vice President, Chief Financial Officer
			(Principal Financial Officer)