VICOR CORPORATION

Condensed Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
Consolidated net income	$	17,102		$	10,580		$	28,353		$	15,570
Foreign currency translation losses, net of tax (1)		(175	)		(385	)		(190	)		(579	)
Unrealized loss on available-for-sale securities, net of tax (1)		(40	)		(66	)		(31	)		(382	)
Other comprehensive loss		(215	)		(451	)		(221	)		(961	)
Consolidated comprehensive income		16,887			10,129			28,132			14,609
Less: Comprehensive loss attributable to noncontrolling interest		(12	)		(42	)		(6	)		(65	)
Comprehensive income attributable to
Vicor Corporation	$	16,899		$	10,171		$	28,138		$	14,674

(1)

The deferred tax assets associated with foreign currency translation losses and unrealized loss on available-for-sale securities are completely offset by a tax valuation allowance as of June 30, 2023 and 2022. Therefore, there is no income tax benefit (provision) recognized for the three and six months ended June 30, 2023 and 2022.

~~(Unaudited)~~

   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 and unrealized losses on~~

~~available-for-sale~~

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

See accompanying notes.

-3-

VICOR CORPORATION

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

   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


	Six Months Ended
	June 30,
	2023			2022

Operating activities:
Consolidated net income	$	28,353		$	15,570
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Depreciation and amortization		8,648			6,665
Stock-based compensation expense		5,829			4,616
Increase (decrease) in long-term deferred revenue		1,616			(143	)
(Decrease) increase in other assets		(103	)		133
Provision for doubtful accounts		43			—
Increase in long-term income taxes payable		13			8
Deferred income taxes		(63	)		(58	)
Credit gain on available-for-sale securities		—			(2	)
Change in current assets and liabilities, net		(15,183	)		(11,381	)
Net cash provided by operating activities		29,153			15,408

Investing activities:
Sales or maturities of short-term investments		—			25,000
Additions to property, plant and equipment		(18,627	)		(36,878	)
Net cash used for investing activities		(18,627	)		(11,878	)

Financing activities:
Proceeds from employee stock plans		2,722			1,974
Net cash provided by financing activities		2,722			1,974

Effect of foreign exchange rates on cash		(30	)		(245	)
Net increase in cash and cash equivalents		13,218			5,259
Cash and cash equivalents at beginning of period		190,611			182,418
Cash and cash equivalents at end of period	$	203,829		$	187,677

See accompanying notes.

-4-

VICOR CORPORATION

Condensed Consolidated Statements of Equity

(In thousands)

(Unaudited)

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

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


															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 June 30, 2023
Balance on March 31, 2023	$	118	$	442	$	365,442	$	254,323	$	(993	)	$	(138,927	)	$	480,405		$	254		$	480,659
Issuance of Common Stock under employee stock plans				1		460										461						461
Stock-based compensation expense						3,012										3,012						3,012
Components of comprehensive income (loss), net of tax:
Net income								17,101								17,101			1			17,102
Other comprehensive loss										(202	)					(202	)		(13	)		(215	)
Total comprehensive income (loss)																16,899			(12	)		16,887
Balance on June 30, 2023	$	118	$	443	$	368,914	$	271,424	$	(1,195	)	$	(138,927	)	$	500,777		$	242		$	501,019


															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
Six months ended June 30, 2023
Balance on December 31, 2022	$	118	$	441	$	360,365	$	243,079	$	(988	)	$	(138,927	)	$	464,088		$	248		$	464,336
Issuance of Common Stock under employee stock plans				2		2,720										2,722						2,722
Stock-based compensation expense						5,829										5,829						5,829
Components of comprehensive income (loss), net of tax:
Net income								28,345								28,345			8			28,353
Other comprehensive loss										(207	)					(207	)		(14	)		(221	)
Total comprehensive income (loss)																28,138			(6	)		28,132
Balance on June 30, 2023	$	118	$	443	$	368,914	$	271,424	$	(1,195	)	$	(138,927	)	$	500,777		$	242		$	501,019

-5-

VICOR CORPORATION

Condensed Consolidated Statements of Equity

(In thousands)

(Unaudited)

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


															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 June 30, 2022
Balance on March 31, 2022	$	118	$	440	$	349,467	$	222,632	$	(1,824	)	$	(138,927	)	$	431,906		$	283		$	432,189
Issuance of Common Stock under employee stock plans				—		164										164						164
Stock-based compensation expense						2,622										2,622						2,622
Components of comprehensive income (loss), net of tax:
Net income (loss)								10,593								10,593			(13	)		10,580
Other comprehensive loss										(422	)					(422	)		(29	)		(451	)
Total comprehensive income (loss)																10,171			(42	)		10,129
Balance on June 30, 2022	$	118	$	440	$	352,253	$	233,225	$	(2,246	)	$	(138,927	)	$	444,863		$	241		$	445,104


															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
Six months ended June 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		1,973										1,974						1,974
Stock-based compensation expense						4,616										4,616						4,616
Components of comprehensive income (loss), net of tax:
Net income (loss)								15,592								15,592			(22	)		15,570
Other comprehensive loss										(918	)					(918	)		(43	)		(961	)
Total comprehensive income (loss)																14,674			(65	)		14,609
Balance on June 30, 2022	$	118	$	440	$	352,253	$	233,225	$	(2,246	)	$	(138,927	)	$	444,863		$	241		$	445,104

See accompanying notes.

-6-

VICOR CORPORATION

Notes to Condensed Consolidated Financial Statements

~~September~~

June 30, ~~2022~~

2023

(unaudited)

~~(unaudited)~~

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements of Vicor Corporation and its consolidated subsidiaries (collectively, the ~~“Company”~~"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~~six months ended ~~September~~June 30, ~~2022~~2023 are not necessarily indicative of the results that may be expected for any other interim period or the year ending December 31, ~~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.2023. The balance sheet at December 31, ~~2021~~2022 presented herein has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form

10-K

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

February 28, 2023.

~~10-K”).~~

2. Inventories

~~Inventories~~

Inventories were as follows (in thousands):


	June 30, 2023		December 31, 2022
Raw materials	$	85,404	$	82,181
Work-in-process		11,257		10,456
Finished goods		9,945		8,773
	$	106,606	$	101,410

   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~~June 30, ~~2022~~2023 and December 31, 2021, the Company held $19,949,000 and $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.

~~As of September 30,~~ 2022, ~~and December 31, 2021,~~ the Company held one auction rate security with a par value of ~~$3,000,000~~$3,000,000 and an estimated fair value of approximately ~~$2,552,000~~$2,591,000 and ~~$2,639,000,~~$2,622,000, 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~~June 30, ~~2022,~~2023, 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.~~months. As a result, the Company continued to classify the Failed Auction Security as long-term as of ~~September~~June 30, ~~2022.~~

2023.

-7-

VICOR CORPORATION

Notes to Condensed Consolidated Financial Statements

~~September~~

June 30, ~~2022~~

2023

(unaudited)

~~(unaudited)~~

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


	June 30, 2023
	Cash and Cash		Long-Term
	Equivalents		Investment
Measured at fair value:
Available-for-sale debt securities:
Money market funds	$	146,425	$	—
Failed Auction Security		—		2,591
Total		146,425		2,591

Other measurement basis:
Cash on hand		57,404		—
Total	$	203,829	$	2,591


	December 31, 2022
	Cash and Cash		Long-Term
	Equivalents		Investment
Measured at fair value:
Available-for-sale debt securities:
Money market funds	$	143,274	$	—
Failed Auction Security		—		2,622
Total		143,274		2,622

Other measurement basis:
Cash on hand		47,337		—
Total	$	190,611	$	2,622

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    $ 120,217    $ —      $ —
U.S. Treasury Obligations    —      19,949    —
Failed Auction Security    —      —      2,552

Total    120,217    19,949    2,552
Other measurement basis:

Cash on hand    61,881    —      —

Total    $ 182,098    $ 19,949    $ 2,552

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, 2022~~

~~(unaudited)~~

The following is a summary of the

available-for-sale

securities (in thousands):

Gross

Estimated

Unrealized

Fair

June 30, 2023

Cost

Gains

Losses

Value

Failed Auction Security

3,000

—

409

2,591

Gross

Estimated

Unrealized

Fair

December 31, 2022

Cost

Gains

Losses

Value

Failed Auction Security

3,000

—

378

2,622

      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

      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~~June 30, ~~2022,~~2023, the Failed Auction Security had been in an unrealized loss position for greater than 12 months.

The amortized cost and estimated fair value of the

available-for-sale

securities on ~~September~~June 30, ~~2022,~~2023, by type and contractual maturities, are shown below (in thousands):


			Estimated
	Cost		Fair Value
Failed Auction Security:

Due in twenty years	$	3,000	$	2,591

-8-

VICOR CORPORATION

Notes to Condensed Consolidated Financial Statements

June 30, 2023

(unaudited)

   Cost    Estimated
Fair Value
U.S. Treasury Obligations:

Maturities greater than three months but less than one year    $ 20,028    $ 19,949

      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~~June 30, ~~2022~~2023 (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, 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

Using

Significant

Quoted Prices

Other

Significant

in Active

Observable

Unobservable

Total Fair

Markets

Inputs

Value as of

(Level 1)

(Level 2)

(Level 3)

June 30, 2023

Cash equivalents:

Money market funds

146,425

—

146,425

Long-term investment:

Failed Auction Security

—

2,591

Assets and liabilities measured at fair value on a recurring basis included the following as of December 31, ~~2021~~2022 (in thousands):

Using

Significant

Quoted Prices

Other

Significant

in Active

Observable

Unobservable

Total Fair

Markets

Inputs

Value as of

(Level 1)

(Level 2)

(Level 3)

December 31, 2022

Cash equivalents:

Money market funds

143,274

—

143,274

Long-term investment:

Failed Auction Security

—

2,622

   Using
   Quoted Prices
in Active
Markets
(Level 1)    Significant
Other
Observable
Inputs
(Level 2)    Significant
Unobservable
Inputs
(Level 3)    Total Fair
Value as of
December 31, 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~~six months ended ~~September~~June 30, ~~2022~~2023 was as follows (in thousands):


Balance at the beginning of the period	$	2,622
Loss included in Other comprehensive income		(31	)
Balance at the end of the period	$	2,591

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

Management utilized a probability weighted discounted cash flow model to determine the estimated fair value as of ~~September~~June 30, ~~2022.~~2023.

~~-10-~~

-9-

VICOR CORPORATION

Notes to Condensed Consolidated Financial Statements

~~September~~

June 30, ~~2022~~

2023

(unaudited)

~~(unaudited)~~

5. Revenues

~~Revenues~~

The following tables present the Company’s net revenues disaggregated by geography based on the location of the customer, by product line (in thousands):


	Three Months Ended June 30, 2023
	Brick Products		Advanced Products		Total
United States	$	18,229	$	15,827	$	34,056
Europe		6,955		6,034		12,989
Asia Pacific		13,127		45,619		58,746
All other		923		33		956
	$	39,234	$	67,513	$	106,747


	Six Months Ended June 30, 2023
	Brick Products		Advanced Products		Total
United States	$	39,485	$	29,537	$	69,022
Europe		14,501		10,061		24,562
Asia Pacific		29,974		79,063		109,037
All other		1,799		143		1,942
	$	85,759	$	118,804	$	204,563


	Three Months Ended June 30, 2022
	Brick Products		Advanced Products		Total
United States	$	18,668	$	12,782	$	31,450
Europe		5,041		2,229		7,270
Asia Pacific		9,846		52,550		62,396
All other		968		102		1,070
	$	34,523	$	67,663	$	102,186


	Six Months Ended June 30, 2022
	Brick Products		Advanced Products		Total
United States	$	32,729	$	23,408	$	56,137
Europe		12,083		4,997		17,080
Asia Pacific		23,367		92,045		115,412
All other		1,701		138		1,839
	$	69,880	$	120,588	$	190,468

   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

~~-11-~~

~~Table of Contents~~

~~VICOR CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

~~September 30, 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, 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

   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

~~-12-~~


	Three Months Ended June 30, 2023
	Brick Products		Advanced Products		Total
Direct customers, contract manufacturers and non-stocking distributors	$	24,435	$	55,556	$	79,991
Stocking distributors, net of sales allowances		14,338		6,345		20,683
Non-recurring engineering		461		2,796		3,257
Royalties		—		2,456		2,456
Other		—		360		360
	$	39,234	$	67,513	$	106,747

-10-

VICOR CORPORATION

Notes to Condensed Consolidated Financial Statements

~~September~~

June 30, ~~2022~~2023

(unaudited)


	Six Months Ended June 30, 2023
	Brick Products		Advanced Products		Total
Direct customers, contract manufacturers and non-stocking distributors	$	54,921	$	97,569	$	152,490
Stocking distributors, net of sales allowances		30,075		11,397		41,472
Non-recurring engineering		763		4,924		5,687
Royalties		—		4,476		4,476
Other		—		438		438
	$	85,759	$	118,804	$	204,563


	Three Months Ended June 30, 2022
	Brick Products		Advanced Products		Total
Direct customers, contract manufacturers and non-stocking distributors	$	23,566	$	61,979	$	85,545
Stocking distributors, net of sales allowances		10,908		3,102		14,010
Non-recurring engineering		49		1,908		1,957
Royalties		—		656		656
Other		—		18		18
	$	34,523	$	67,663	$	102,186


	Six Months Ended June 30, 2022
	Brick Products		Advanced Products		Total
Direct customers, contract manufacturers and non-stocking distributors	$	47,967	$	109,450	$	157,417
Stocking distributors, net of sales allowances		21,672		6,846		28,518
Non-recurring engineering		241		3,294		3,535
Royalties		—		962		962
Other		—		36		36
	$	69,880	$	120,588	$	190,468

~~(unaudited)~~

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


	June 30, 2023			December 31, 2022			Change
Short-term deferred revenue and customer prepayments	$	(6,620	)	$	(13,197	)	$	6,577
Long-term deferred revenue		(1,761	)		(145	)	$	(1,616	)
Deferred expenses		30			577		$	(547	)
Sales allowances		(2,571	)		(1,661	)	$	(910	)

   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

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~~$2,236,000 and ~~$2,015,000~~$3,845,000 for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, respectively, and ~~$874,000~~$1,136,000 and ~~$3,955,000~~$931,000 for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021, respectively,~~2022 that was included in deferred revenue at the beginning of ~~each~~the respective period.

~~-13-~~

-11-

VICOR CORPORATION

Notes to Condensed Consolidated Financial Statements

~~September~~

June 30, ~~2022~~

2023

(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				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Cost of revenues	$	570	$	431	$	1,056	$	682
Selling, general and administrative		1,626		1,440		3,146		2,647
Research and development		816		751		1,627		1,287
Total stock-based compensation	$	3,012	$	2,622	$	5,829	$	4,616

   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				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Stock options	$	2,701	$	2,351	$	5,197	$	4,110
ESPP		311		271		632		506
Total stock-based compensation	$	3,012	$	2,622	$	5,829	$	4,616

   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

for each of the three ~~months~~month periods ended ~~September~~June 30, 2023 and 2022 and ~~2021~~$396,000 for each of the six month periods ended June 30, 2023 and

~~$594,000~~

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

2022.

Income Taxes

The provision ~~(benefit)~~ for income taxes is based on the estimated annual effective tax rate for the year, which includes estimated federal, state and foreign income taxes on the Company’s projected pre-tax income.

~~pre-tax~~

~~income.~~

~~-14-~~

~~Table of Contents~~

~~VICOR CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

~~September 30, 2022~~

~~(unaudited)~~

The provision ~~(benefit)~~ for income taxes and the effective income tax rates were as follows (dollars in thousands):


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
Provision for income taxes	$	2,537		$	802		$	3,678		$	754
Effective income tax rate		12.9	%		7.0	%		11.5	%		4.6	%

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

Provision (benefit) for income taxes    $ 641 $ (886 ) $ 1,395 $ (30 )
Effective income tax rate    26.3 % (7.2 )% 7.4 % (0.1 )%

The effective tax rates were lower than the statutory tax rates for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 primarily due to the Company’s full valuation allowance position against domestic deferred tax assets. The provision ~~(benefit)~~ for income taxes for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 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 stock based compensation during those periods.~~

attributes.

As of ~~September~~June 30, ~~2022,~~2023, the Company has a valuation allowance of approximately ~~$43,329,000~~$47,413,000 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. Despite recent positive operating results, the Company ~~is in a cumulative loss position as of September 30, 2022, primarily due to tax deductions on 2020 and 2021 exercises of stock-based compensation. The Company~~ faces uncertainties in forecasting its operating results due to supply 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

-12-

VICOR CORPORATION

Notes to Condensed Consolidated Financial Statements

June 30, 2023

(unaudited)

benefits over the next several years. As a result, management has concluded, as of ~~September~~June 30, ~~2022,~~2023, 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 is still warranted as of ~~September~~June 30, ~~2022.~~2023. 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 operating results continue, and the Company’s concerns about industry uncertainty and world events, supply 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. 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 Condensed 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. The IRS is in the process of closing examination of the 2019 tax year with no material adjustments. There are no other audits or examinations in process in any other jurisdiction.

~~-15-~~

~~Table of Contents~~

~~VICOR CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

~~September 30, 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				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022

Numerator:
Net income attributable to Vicor Corporation	$	17,101	$	10,593	$	28,345	$	15,592
Denominator:
Denominator for basic net income per share-weighted average shares (1)		44,230		43,973		44,196		43,963
Effect of dilutive securities:
Employee stock options (2)		676		893		711		947
Denominator for diluted net income per share – adjusted weighted-average shares and assumed conversions		44,906		44,866		44,907		44,910

Basic net income per share	$	0.39	$	0.24	$	0.64	$	0.35
Diluted net income per share	$	0.38	$	0.24	$	0.63	$	0.35

(1)

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

(2)

Options to purchase 1,574,000 and 1,307,000 shares of Common Stock for the three and six months ended June 30, 2023, respectively, and options to purchase 898,640 and 658,014 shares of Common Stock for the three and six months ended June 30, 2022, respectively, were not included in the calculations of net income per share as the effect would have been antidilutive.

   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, were not included in the calculations of net income per share as the effect would have been antidilutive.

10.

Commitments and Contingencies

At ~~September~~June 30, ~~2022,~~2023, the Company had approximately ~~$27,804,000~~$16,768,000 of cancelable and

non-cancelable

capital expenditure commitments, principally for manufacturing equipment, and approximately ~~$6,637,000~~$1,883,000 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.

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 complaint, as amended, alleged that the Company’s unregulated bus converters used in intermediate bus architecture power supply systems infringed SynQor’s U.S. patent

-13-

VICOR CORPORATION

Notes to Condensed Consolidated Financial Statements

June 30, 2023

(unaudited)

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.

~~-16-~~

~~Table~~ On January 18, 2023, the United States Court of ~~Contents~~

~~VICOR CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

~~September 30, 2022~~

~~(unaudited)~~

Appeals for the Federal Circuit issued a decision upholding a decision of the Patent Trial and Appeal Board of the USPTO invalidating all claims of the ‘290 patent.

A trial in the District Court began on October 17, 2022 on the asserted claims of the ‘190 patent and the ‘702 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 patent infringement 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 ~~$6,500,000~~$6,500,000 for infringement of the ‘702 patent. All of the SynQor Patents expired in 2018.

~~The Company anticipates filing~~

On December 23, 2022, SynQor filed in the District Court (a) a ~~post-trial~~ motion ~~seeking entry of~~for judgment ~~of non-infringement of the ‘702 patent~~ as a matter of ~~law.~~law that the Company infringed the ‘190 patent, (b) a motion requesting the District Court to award SynQor treble damages, as well as pre- and post-judgment interest, (c) a motion requesting the District Court to award SynQor its attorneys’ fees, and (d) a motion for a new trial. On December 23, 2022, the Company filed in the District Court (a) a motion requesting judgment as a matter of law that it did not infringe the ‘702 patent, and (b) a motion requesting judgment with respect to its defenses of equitable estoppel and waiver. The Court has not yet acted on any of these motions. To the extent that the District Court ultimately rules against the Company ~~intends~~with respect to ~~appeal~~any of the aforementioned motions, the Company anticipates appealing those rulings to the United States Court of Appeals for the Federal ~~Circuit~~Circuit. The Company similarly anticipates appealing the ~~construction of claim limitations of the ‘190 and ‘702 patents and the dismissal of~~District Court’s order dismissing the Company’s ~~Counterclaims. SynQor may move the District Court to increase the jury award and pursue its appellate options with respect to claims found to be invalid or not infringed.~~

Counterclaims against SynQor.

In accordance with applicable accounting standards, the Company ~~has~~ recorded a litigation related accrual of ~~$6,500,000~~$6,500,000 in the third quarter of 2022 as its estimate based on the jury award, using estimated outcomes ranging from $0$0 to treble damages plus attorney fees.

In addition, the Company is involved in certain other litigation and claims incidental to the conduct of its ~~business.~~business, both as a defendant and a plaintiff. While the outcome of such other lawsuits and claims against the Company cannot be predicted with certainty, management does not expect 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

New pronouncements issued but not effective until after ~~September~~June 30, ~~2022~~2023 are not expected to have a material impact on the Company’s consolidated financial statements.

~~-17-~~

-14-

VICOR CORPORATION

Management’s Discussion and Analysis of

Financial Condition and Results of Operation

~~September~~June 30, ~~2022~~2023

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, ~~2021 and the risk factors described in this Quarterly Report on Form~~ ~~10-Q.~~2022. 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”)~~ ~~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, ~~2021~~2022 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” and under Part II, Item 1A – “Risk Factors.~~Operations.” 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-~~

-15-

VICOR CORPORATION

Management’s Discussion and Analysis of

Financial Condition and Results of Operation

~~September~~June 30, ~~2022~~2023

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~~^™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

-16-

VICOR CORPORATION

Management’s Discussion and Analysis of

Financial Condition and Results of Operation

June 30, 2023

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.

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.~~were to increase. We continue to operate with three shifts in our factory, and, with 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, have resulted and may continue to result in higher costs and inbound and outbound delays.

Although there is uncertainty ~~regarding~~as to whether COVID-19 levels will rise back to the ~~extent to which~~levels seen during the pandemic ~~will continue to~~that would 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 that the Company will be able to effectively continue to conduct ~~business until the pandemic passes.~~business.

~~We are monitoring the rapidly changing circumstances, and may take additional actions to address~~ ~~COVID-19~~ risks as they 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~~Second Quarter ~~2022~~2023 Financial Performance Compared to ~~Second~~First Quarter ~~2022~~2023 Financial Performance

The following summarizes our financial performance for the ~~third~~second quarter of ~~2022,~~2023, compared to the ~~second~~first quarter of ~~2022:~~

2023:

•

Net revenues increased ~~0.9%~~9.1% to ~~$103,118,000 for the third quarter of 2022, from $102,186,000~~$106,747,000 for the second quarter of ~~2022.~~2023, from $97,816,000 for the first quarter of 2023. Net revenues for Brick Products ~~increased 27.2%~~decreased 15.7% compared to the ~~second~~first quarter of ~~2022,~~2023, primarily due to market conditions and a shift in resource allocation to the Advanced Products. Advanced Products net revenues increased 31.6% compared to the first quarter of 2023 primarily due to improved supply chain cycle-times and 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 constraints leading to longer cycle-times and schedule delays, as well as, the impact of issuing a return material authorization in the third quarter for approximately $6,000,000.

backlog.

•

Export sales represented approximately ~~70.1%~~68.1% of total net revenues in the ~~third~~second quarter of ~~2022~~2023 as compared to ~~69.2%~~64.3% in the ~~second~~first quarter of ~~2022.~~

2023.

•

Gross margin increased to ~~$46,970,000 for the third quarter of 2022 from $46,849,000~~$55,173,000 for the second quarter of ~~2022, but~~2023 from $46,534,000 for the first quarter of 2023, with gross margin, as a percentage of net revenues, ~~decreased~~increasing to ~~45.5% for the third quarter of 2022 from 45.8%~~51.7% for the second quarter of ~~2022.~~2023 from 47.6% for the first quarter of 2023. The ~~decrease~~increase in gross margin dollars and gross margin percentage was primarily due to the favorable changes in higher sales volume and improved sales mix, and certain reductions in supply chain costs, including a ~~net result~~reduction of ~~favorable overhead absorption~~$851,000 in outsourced manufacturing costs partially offset by ~~increased~~incremental costs of bringing production in-house for certain Advanced Products, and a reduction of freight-in and tariff ~~costs~~spending of $529,000 (net of approximately $2,800,000 in duty drawback recovery of previously paid tariffs in the second quarter of 2023 and ~~higher processing costs at outside vendors.~~

$3,000,000 in duty drawback recovery in the first quarter of 2023).

•

Backlog, which represents the total value of orders for products for which shipment is scheduled within the next 12 months, was approximately ~~$371,637,000 at the end of the third quarter of 2022, as compared to $410,015,000~~$217,275,000 at the end of the second quarter of ~~2022. The decrease in backlog was~~2023, as compared to $271,283,000 at the end of the first quarter of 2023.

•

Operating expenses for the second quarter of 2023 increased $1,218,000, or 3.4%, to $37,310,000 from $36,092,000 for the first quarter of 2023. Selling, general and administrative expenses increased approximately $152,000. Research and development expenses increased approximately $1,066,000, primarily due to ~~an increase~~increases in ~~net revenues combined with a decline in bookings during the quarter as a result of securing bookings in prior quarters that now form a large part of our backlog.~~

project and pre-production materials and engineering supplies.

•

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~~second quarter of ~~2022~~2023 of ~~$1,792,000,~~$17,101,000, or ~~$0.04~~$0.38 per diluted share, compared to net income of ~~$10,593,000,~~$11,244,000, or ~~$0.24~~$0.25 per diluted share, for the first quarter of 2023.

-17-

VICOR CORPORATION

Management’s Discussion and Analysis of

Financial Condition and Results of Operation

June 30, 2023

•

For the second quarter of ~~2022.~~

~~For the third quarter of 2022,~~2023, depreciation and amortization totaled ~~$3,585,000~~$4,449,000 and capital additions totaled ~~$14,401,000~~$8,538,000 as compared to depreciation and amortization of ~~$3,369,000~~$4,199,000 and capital additions of ~~$14,195,000~~$10,089,000 for the first quarter of 2023.

•

Inventories decreased by approximately $776,000, or 0.7%, to $106,606,000 at June 30, 2023, compared to $107,382,000 at March 31, 2023.

Three Months Ended June 30, 2023 Compared to Three Months Ended June 30, 2022

Net revenues for the second quarter of ~~2022.~~

~~Inventories increased by approximately $11,281,000, or 13.6%, to $94,336,000 at September 30, 2022, compared to $83,055,000 at June 30, 2022, primarily consisting of raw materials.~~

~~-21-~~

~~VICOR CORPORATION~~

~~Management’s Discussion and Analysis of~~

~~Financial Condition and Results of Operation~~

~~September 30, 2022~~

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

~~Net revenues for the third quarter of 2022~~2023 were ~~$103,118,000,~~$106,747,000, an increase of ~~$18,207,000,~~$4,561,000, or ~~21.4%~~4.5%, as compared to ~~$84,911,000~~$102,186,000 for the ~~third~~second quarter of ~~2021.~~2022. Net revenues, by product line, for the three months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 were as follows (dollars in thousands):


					Increase									Increase (decrease)
	2022		2021		$		%			2023		2022		$			%
Advanced Products										$	67,513	$	67,663	$	(150	)		(0.2	)%
Brick Products	$	43,916	$	41,444	$	2,472		6.0	%		39,234		34,523		4,711			13.6	%
Advanced Products		59,202		43,467		15,735		36.2	%

Total	$	103,118	$	84,911	$	18,207		21.4	%	$	106,747	$	102,186	$	4,561			4.5	%

~~The increase in net revenues for Advanced Products was primarily the result of growth in the data center and high performance computing business.~~

The increase in net revenues for Brick Products was primarily due to favorable market conditions and available capacity in ~~North America and Europe and a rebound in the business after several quarters of declining revenues.~~manufacturing.

Gross margin for the ~~third~~second quarter of ~~2022~~2023 increased ~~$4,157,000,~~$8,324,000, or ~~9.7%~~17.8%, to ~~$46,970,000,~~$55,173,000, from ~~$42,813,000~~$46,849,000 for the ~~third~~second quarter of ~~2021.~~2022. Gross margin, as a percentage of net revenues, ~~decreased~~increased to ~~45.5%~~51.7% for the ~~third~~second quarter of ~~2022,~~2023, compared to ~~50.4%~~45.8% for the ~~third~~second quarter of ~~2021.~~2022. The increase in gross margin dollars ~~was due to the increase in net revenues. The decrease in~~and gross margin percentage was primarily due to ~~unfavorable~~favorable changes in ~~product mix, a negative impact from production inefficiencies associated with initial production volumes of new products,~~higher sales volume and certain reductions in supply chain ~~cost increases.~~costs, including a reduction of $3,904,000 in outsourced manufacturing costs partially offset by incremental costs of bringing production in-house for certain Advanced Products, and a reduction of freight-in and tariff spending of $4,142,000 (net of approximately $2,800,000 in duty drawback recovery of previously paid tariffs in the second quarter of 2023 and $0 in duty drawback recovery in the second quarter of 2022).

~~-22-~~

~~VICOR CORPORATION~~

~~Management’s Discussion and Analysis of~~

~~Financial Condition and Results of Operation~~

~~September 30, 2022~~

Selling, general and administrative expenses were ~~$22,719,000~~$20,375,000 for the ~~third~~second quarter of ~~2022,~~2023, an increase of ~~$5,397,000,~~$340,000, or ~~31.2%~~1.7%, from ~~$17,322,000~~$20,035,000 for the ~~third~~second quarter of ~~2021.~~2022. Selling, general and administrative expenses as a percentage of net revenues ~~increased~~decreased to ~~22.0%~~19.1% for the ~~third~~second quarter of ~~2022~~2023 from ~~20.4%~~19.6% for the ~~third~~second quarter of ~~2021.~~2022. The components of the ~~$5,397,000~~$340,000 increase in selling, general and administrative expenses for the ~~third~~second quarter of ~~2022~~2023 from the ~~third~~second quarter of ~~2021~~2022 were as follows (dollars in thousands):


	Increase (decrease)				Increase (decrease)
Legal fees	$	3,538	399.4	%(1)
Compensation		694	6.3	%(2)
Advertising		546	68.7	%(3)	$	430		46.5	%	(1	)
Depreciation and amortization		300	36.3	%(4)		237		25.1	%	(2	)
Audit and accounting fees		236	48.1	%(5)
Audit fees						176		69.9	%	(3	)
Travel expense		235	67.4	%(6)		165		32.6	%	(4	)
Outside services						150		21.5	%	(5	)
Project materials						131		301.3	%
Compensation						125		1.0	%
Legal fees						(1,426	)	(62.5	)%	(6	)
Other, net		(152)	(5.1)	%		352		16.2	%
					$	340		1.7	%
	$	5,397	31.2	%

~~(1)~~

~~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.~~

~~(2)~~

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

~~(3)~~

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

~~(4)~~

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

~~(5)~~

~~Overall~~

(1)

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

(2)

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

(3)

Represents overall increase in audit and tax fees.

~~(6)~~

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

~~-23-~~

-18-

VICOR CORPORATION

Management’s Discussion and Analysis of

Financial Condition and Results of Operation

~~September~~June 30, ~~2022~~2023

(4)

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

(5)

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

(6)

Decrease primarily attributable to a decrease in activity related to the SynQor litigation (see Note 10 to the Condensed Consolidated Financial Statements).

Research and development expenses were ~~$14,747,000~~$16,935,000 for the ~~third~~second quarter of ~~2022,~~2023, an increase of ~~$1,228,000,~~$1,419,000, or 9.1%, compared to ~~$13,519,000~~$15,516,000 for the ~~third~~second quarter of ~~2021.~~2022. As a percentage of net revenues, research and development expenses ~~decreased~~increased to ~~14.3% for the third quarter of 2022 from~~ 15.9% for the ~~third~~second quarter of ~~2021.~~2023 from 15.2% for the second quarter of 2022. The components of the ~~$1,228,000~~$1,419,000 increase in research and development expenses were as follows (dollars in thousands):


	Increase (decrease)					Increase (decrease)
Compensation	$	654		6.7	%(1)	$	826		8.0	%	(1	)
Project and pre-production materials							561		22.6	%	(2	)
Computer and software expense							121		53.4	%
Supplies		348		91.8	%(2)		114		16.4	%
Facilities allocations		139		19.8	%
Computer and software expense		136		74.1	%
Depreciation and amortization		116		22.9	%		92		15.4	%
Outside services		96		82.6	%
Deferred costs							(167	)	(167.0	)%	(3	)
Overhead absorption		(146	)	(28.7	)%		(326	)	(79.2	)%	(4	)
Project and pre-production materials		(387	)	(19.7	)%(3)
Other, net		272		56.8	%		198		11.5	%
						$	1,419		9.1	%
	$	1,228		9.1	%

~~(1)~~

~~Increase primarily attributable to an increase in headcount, annual compensation adjustments in May 2022,~~

(1)

Increase primarily attributable to an increase in headcount, annual compensation adjustments in May 2023, and higher stock-based compensation ~~expense associated with stock options awarded in April 2022.~~

~~(2)~~

~~Increase in engineering supplies.~~

~~(3)~~

~~Decrease primarily attributable to decreased prototype development costs for Advanced Products.~~

~~Litigation-related~~ expense ~~was $6,500,000~~associated with stock options awarded in May 2023.

(2)

Increase primarily attributable to increased prototype development costs for Advanced Products.

(3)

Decrease primarily attributable to an increase in deferred costs capitalized for certain non-recurring engineering projects for which the ~~third quarter of 2022 which~~ related revenues had been deferred.

(4)

Decrease primarily attributable to ~~the SynQor litigation, as~~an increase in research and development (“R&D”) personnel incurring time on production activities, compared to ~~$0 for the third quarter of 2021. See Note 10 to the Condensed Consolidated Financial Statements for additional information.~~

R&D activities.

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


	2022			2021			Increase (decrease)			2023			2022			Increase (decrease)
Foreign currency losses, net	$	(453	)	$	(110	)	$	(343	)
Interest income (expense), net		(315	)		267			(582	)	$	1,785		$	274		$	1,511
Rental income		198			198			—			198			198			—
Foreign currency losses, net											(212	)		(397	)		185
Other, net		2			39			(37	)		5			9			(4	)
										$	1,776		$	84		$	1,692
	$	(568	)	$	394		$	(962	)

~~-24-~~

~~VICOR CORPORATION~~

~~Management’s Discussion and Analysis of~~

~~Financial Condition and Results of 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~~favorable foreign currency exchange rate fluctuations in the ~~third~~second quarter of ~~2022~~2023 compared to the ~~third~~second quarter of ~~2021. “Interest~~2022. Interest income ~~(expense), net” includes an immaterial error correction of $990,000 related~~for the three months ended June 30, 2023 has increased due to higher interest rates received on the ~~amortization of bond premiums on available for sale securities.~~cash and cash equivalents balance the Company holds.

Income before income taxes was ~~$2,436,000~~$19,639,000 for the ~~third~~second quarter of ~~2022,~~ 2023,as compared to ~~$12,366,000~~$11,382,000 for the ~~third~~ secondquarter of ~~2021.~~2022.

-19-

VICOR CORPORATION

Management’s Discussion and Analysis of

Financial Condition and Results of Operation

June 30, 2023

The provision ~~(benefit)~~ for income taxes and the effective income tax rates for the three months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 were as follows (dollars in thousands):


	2022			2021			2023			2022
Provision (benefit) for income taxes	$	641		$	(886	)
Provision for income taxes							$	2,537		$	802
Effective income tax rate		26.3	%		(7.2	)%		12.9	%		7.0	%

The effective tax rates were lower than the statutory tax rates for the three months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 primarily due to the Company’s full valuation allowance position against domestic deferred tax assets. The provision ~~(benefit)~~ for income taxes for the three months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 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 stock based compensation during those periods.~~attributes.

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~~second quarter of ~~2022~~2023 of ~~$1,792,000,~~$17,101,000, or ~~$0.04~~$0.38 per diluted share, compared to ~~$13,259,000,~~$10,593,000, or ~~$0.29~~$0.24 per diluted share, for the ~~third~~second quarter of ~~2021.~~2022.

~~Nine~~Six Months Ended ~~September~~June 30, ~~2022~~2023 Compared to ~~Nine~~Six Months Ended ~~September~~June 30, ~~2021~~2022

Net revenues for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 were ~~$293,586,000,~~$204,563,000, an increase of ~~$24,503,000,~~$14,095,000, or ~~9.1%~~7.4%, from ~~$269,083,000~~$190,468,000 for the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. Net revenues, by product line, for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 were as follows (dollars in thousands):


					(Decrease) increase										(Decrease) increase
	2022		2021		$			%			2023		2022		$			%
Advanced Products											$	118,804	$	120,588	$	(1,784	)		(1.5	)%
Brick Products	$	113,796	$	150,255	$	(36,459	)		(24.3	)%		85,759		69,880		15,879			22.7	%
Advanced Products		179,790		118,828		60,962			51.3	%

Total	$	293,586	$	269,083	$	24,503			9.1	%	$	204,563	$	190,468	$	14,095			7.4	%

The ~~increase~~decrease in net revenues for Advanced Products was primarily ~~the result of growth in the data center~~due to manufacturing constraints and ~~high performance computing business.~~schedule delays. The ~~decrease~~increase in net revenues for Brick Products was primarily due to ~~unfavorable~~favorable market conditions and available capacity in ~~the Asia Pacific region and a shift in resource allocation to the Advanced Products.~~manufacturing.

~~-25-~~

~~VICOR CORPORATION~~

~~Management’s Discussion and Analysis of~~

~~Financial Condition and Results of Operation~~

~~September 30, 2022~~

Gross margin for the ~~nine~~six months ended ~~September~~June 30, ~~2022 decreased $5,964,000,~~2023 increased $17,257,000, or ~~4.3%~~20.4%, to ~~$131,420,000~~$101,707,000 from ~~$137,384,000~~$84,450,000 for the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. Gross margin, as a percentage of net revenues, ~~decreased~~increased to ~~44.8%~~49.7% for the ~~nine~~six-month period ended June 30, 2023, as compared to 44.3% for the six month period ended ~~September~~June 30, ~~2022, as compared to 51.1% for the nine month period ended September 30, 2021.~~2022. The ~~decrease~~increase in gross margin dollars and gross margin percentage was primarily due to favorable changes in ~~product mix, a negative impact from production inefficiencies associated with initial production volumes of new products,~~higher sales volume, and certain reductions in supply chain ~~cost increases.~~costs, including a reduction of $5,444,000 in outsourced manufacturing costs partially offset by incremental costs of bringing production in-house for certain Advanced Products, and a reduction of freight-in and tariff spending of $7,934,000 (net of approximately $5,800,000 in duty drawback recovery of previously paid tariffs in the six months ended June 30, 2023 and $0 in duty drawback recovery in the six months ended June 30, 2022), partially offset by an unfavorable sales mix.

Selling, general and administrative expenses were ~~$61,322,000~~$40,598,000 for the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, an increase of ~~$10,457,000,~~$1,995,000, or ~~20.6%~~5.2%, compared to ~~$50,865,000~~$38,603,000 for the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. Selling, general and administrative expenses as a percentage of net revenues ~~increased~~decreased to ~~20.9%~~19.8% for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 from ~~18.9%~~20.3% for the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. The components of the ~~$10,457,000~~$1,995,000 increase in selling, general and administrative expenses for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 were as follows (dollars in thousands):

   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)~~

~~(2)~~

~~(3)~~

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

~~(4)~~

~~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-~~-20-

VICOR CORPORATION

Management’s Discussion and Analysis of

Financial Condition and Results of Operation

~~September~~June 30, ~~2022~~2023


	Increase (decrease)
Advertising	$	792		50.1	%	(1	)
Compensation		666		2.8	%	(2	)
Commissions		338		23.6	%	(3	)
Travel expense		268		30.9	%	(4	)
Depreciation and amortization		261		12.7	%	(5	)
Bank fees		147		45.7	%
Project materials		119		183.5	%
Outside services		116		7.6	%
Consultants		(319	)	(88.2	)%	(6	)
Legal fees		(1,150	)	(34.2	)%	(7	)
Other, net		757		24.9	%
	$	1,995		5.2	%

(1)

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

(2)

Increase primarily attributable to an increase in headcount, annual compensation adjustments in May 2023, and higher stock-based compensation expense associated with stock options awarded in May 2023.

(3)

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

(4)

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

(5)

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

(6)

Decrease primarily attributable to a decrease in the use of consultants at our Andover, MA facility.

(7)

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

Research and development expenses were ~~$44,516,000~~$32,804,000 for the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, an increase of ~~$4,698,000,~~$3,035,000, or ~~11.8%~~10.2%, from ~~$39,818,000~~$29,769,000 for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022. As a percentage of net revenues, research and development expenses increased to ~~15.2%~~16.0% for the ~~nine month period~~six months ended ~~September~~June 30, ~~2022~~2023 from ~~14.8%~~15.6% for the ~~nine month period~~six months ended ~~September~~June 30, ~~2021.~~2022. The components of the ~~$4,698,000~~$3,035,000 increase in research and development expenses for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 were as follows (dollars in thousands):


	Increase				Increase (decrease)
Compensation	$	1,865	6.5	%(1)	$	1,888		9.4	%	(1	)
Supplies		821	76.8	%(2)
Project and pre-production materials						1,254		29.0	%	(2	)
Computer and software expense						199		43.4	%	(3	)
Depreciation and amortization						164		13.8	%	(4	)
Gases						138		41.0	%
Outside services						125		46.4	%
Deferred costs						(107	)	(66.9	)%
Overhead absorption		413	22.8	%(3)		(866	)	(115.9	)%	(5	)
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	%		240		6.1	%
					$	3,035		10.2	%
	$	4,698	11.8	%

~~(1)~~

~~(2)~~

~~Increase in engineering supplies.~~

~~(3)~~

~~Increase primarily attributable to a decrease 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-~~

(1)

(2)

Increase primarily attributable to increased prototype development costs for Advanced Products.

(3)

Increase primarily due to increased activities to upgrade computer and software systems.

-21-

VICOR CORPORATION

Management’s Discussion and Analysis of

Financial Condition and Results of Operation

~~September~~June 30, ~~2022~~2023

~~Litigation-related expense was $6,500,000 for the nine months ended September 30, 2022 which related~~

(4)

Increase attributable to ~~the SynQor litigation, as~~net additions of furniture and fixtures and capitalization of building improvements.

(5)

Decrease primarily attributable to an increase in R&D personnel incurring time on production activities, compared to ~~$0 for the nine months ended September 30, 2021. See Note 10 to the Condensed Consolidated Financial Statements for additional information.~~

R&D activities.

The significant components of ~~“Other~~''Other income (expense), ~~net”~~net'' for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and the changes from period to period were as follows (in thousands):


	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	)							Increase
										2023			2022			(decrease)
Interest income (expense), net										$	3,511		$	415		$	3,096
Rental income											396			396			-
Foreign currency losses, net											(193	)		(604	)		411
Other, net											12			39			(27	)
										$	3,726		$	246		$	3,480

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~~favorable foreign currency exchange rate fluctuations in ~~2022~~the first six months of 2023 compared to ~~2021. “Interest~~the first six months of 2022. Interest income ~~(expense), net” includes an immaterial error correction of $834,000 related~~for the six months ended June 30, 2023 has increased due to higher interest rates received on the ~~amortization of bond premiums on available for sale securities.~~cash and cash equivalents balance the Company holds.

Income before income taxes was ~~$18,760,000~~$32,031,000 for the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, as compared to ~~$47,700,000~~$16,324,000 for the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022.

The provision ~~(benefit)~~ for income taxes and the effective income tax rates for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 were as follows (dollars in thousands):


	2022			2021			2023			2022
Provision (benefit) for income taxes	$	1,395		$	(30	)
Provision for income taxes							$	3,678		$	754
Effective income tax rate		7.4	%		(0.1	)%		11.5	%		4.6	%

The effective tax rates were lower than the statutory tax rates for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 primarily due to the Company’s full valuation allowance position against domestic deferred tax assets. The provision ~~(benefit)~~ for income taxes for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 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 stock based compensation during those periods.~~attributes.

We reported net income for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 of ~~$17,384,000,~~$28,345,000, or ~~$0.39~~$0.63 per diluted share, as compared to ~~$47,745,000,~~$15,592,000, or ~~$1.06~~$0.35 per diluted share, for the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~

~~-28-~~

~~VICOR CORPORATION~~

~~Management’s Discussion and Analysis of~~

~~Financial Condition and Results of Operation~~

~~September 30, 2022~~

2022.

Liquidity and Capital Resources

As of ~~September~~June 30, ~~2022,~~2023, we had ~~$182,098,000~~$203,829,000 in cash and cash ~~equivalents and $19,949,000 of highly liquid short-term investments.~~equivalents. The ratio of total current assets to total current liabilities was ~~5.6:~~7.6:1 as of ~~September~~June 30, ~~2022~~2023 and ~~7.3:~~5.6:1 as of December 31, ~~2021.~~2022. Working capital, defined as total current assets less total current liabilities, ~~decreased $13,873,000~~increased $30,755,000 to ~~$293,794,000~~$328,810,000 as of ~~September~~June 30, ~~2022~~2023 from ~~$307,667,000~~$298,055,000 as of December 31, ~~2021.~~2022.

-22-

VICOR CORPORATION

Management’s Discussion and Analysis of

Financial Condition and Results of Operation

June 30, 2023

The changes in working capital from December 31, ~~2021~~2022 to ~~September~~June 30, ~~2022~~2023 were as follows (in thousands):


	Increase (decrease)			Increase (decrease)
Cash and cash equivalents	$	(320	)	$	13,218
Short-term investments		(25,266	)
Accounts receivable		1,190			(1,611	)
Inventories		27,014			5,196
Other current assets		(1,225	)		(621	)
Accounts payable		(2,815	)		6,882
Accrued compensation and benefits		(410	)		(1,254	)
Accrued expenses		(1,596	)		4,329
Accrued litigation		(6,500	)
Short-term deferred revenue		(4,236	)		6,577
Other		291			(1,961	)
				$	30,755
	$	(13,873	)

The primary sources of cash for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 were ~~$25,000,000 from the sale or maturities of short-term investments, $22,010,000~~$29,153,000 generated from operations, and ~~$4,147,000~~$2,722,000 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~~six months ended ~~September~~June 30, ~~2022~~2023 were for the purchase of property and equipment of ~~$51,279,000.~~$18,627,000.

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~~six months ended ~~September~~June 30, ~~2022.~~2023. As of ~~September~~June 30, ~~2022,~~2023, we had approximately $8,541,000 remaining available for repurchases of our Common Stock under the November 2000 Plan.

As of ~~September~~June 30, ~~2022,~~2023, we had a total of approximately ~~$27,804,000~~$16,768,000 of cancelable and non-cancelable capital expenditure commitments, principally for manufacturing and production equipment, which we intend to fund with existing cash, and approximately ~~$6,637,000~~$1,883,000 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. As of September 30, 2022, we had approximately $7,627,000 of remaining capital expenditures expected to be incurred through the 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, ~~(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 both the ~~foreseeable future.~~short and long term.

~~-29-~~

~~VICOR CORPORATION~~

~~Management’s Discussion and Analysis of~~

~~Financial Condition and Results of Operation~~

~~September 30, 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~~June 30, ~~2022.~~2023. 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.~~2022.

-23-

~~-30-~~

Vicor Corporation

~~September~~June 30, ~~2022~~2023

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~~June 30, ~~2022,~~2023, our long-term investment portfolio, recorded on our Condensed Consolidated Balance Sheet as “Long-term investment, net”, consisted of a single auction rate security with a par value of $3,000,000, purchased through and held in custody by a broker-dealer affiliate of Bank of America, N.A., that has experienced failed auctions (the “Failed Auction Security”) since February 2008. While the Failed Auction Security is Aaa/AA+ rated by major credit rating agencies, collateralized by student loans and guaranteed by the U.S. Department of Education under the Federal Family Education Loan Program, continued failure to sell at its periodic auction dates (i.e., reset dates) could negatively impact the carrying value of the investment, in turn leading to impairment charges in future periods. Periodic changes in the fair value of the Failed Auction Security attributable to credit loss (i.e., risk of the issuer’s default) are recorded through earnings as a component of “Other income (expense), net”, with the remainder of any periodic change in fair value not related to credit loss (i.e., temporary ~~“mark-to-market”~~“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~~June 30, ~~2022.~~2023.

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.

-24-

Vicor Corporation

June 30, 2023

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~~June 30, ~~2022)~~2023). 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~~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~~June 30, ~~2022,~~2023, 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.

(b)

Changes in internal control over financial reporting.

~~(b)~~

~~Changes in internal control over financial reporting.~~

There was no change in our internal control over financial reporting that occurred during the fiscal quarter ended ~~September~~June 30, ~~2022,~~2023, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

-25-

~~-32-~~

Vicor Corporation

Part II – Other Information

~~September~~June 30, ~~2022~~2023

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 ~~Form~~ ~~10-K~~Form10-K for the year ended December 31, ~~2021, except for~~2022.

Item 5 — Other Information

During 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 amendedthree months ended June 30, 2023, no director 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 abilitySection 16 officer of the ~~People’s Republic~~Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) 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~~

Regulation S-K.

Item 6 — Exhibits


Exhibit Number	Description
3.1
~~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.

-26-


		(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.

-27-

~~-34-~~

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	VICOR CORPORATION

Date: ~~November 3, 2022~~	~~By:~~	August 4, 2023		By:	/s/ Patrizio Vinciarelli
			Patrizio Vinciarelli
			Chairman of the Board, President and
			Chief Executive Officer
			(Principal Executive Officer)

Date: ~~November 3, 2022~~	~~By:~~	August 4, 2023		By:	/s/ James F. Schmidt
			James F. Schmidt
			Vice President, Chief Financial Officer
			(Principal Financial Officer)

~~-35-~~-28-


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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	VICR	The NASDAQ Stock Market LLC


Large accelerated filer	☑	☒	~~Accelerated filer~~		☐

~~Non-accelerated filer~~		☐	Smaller reporting company		☐
Accelerated filer	☐
			Emerging growth company	☐
Non-accelerated filer	☐


Common Stock, $.01 par value	~~32,305,315~~	32,513,278
Class B Common Stock, $.01 par value	11,743,218


		Page
Part I — Financial Information:
Item 1 - Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets at ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021~~2022			1
Condensed Consolidated Statements of Operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022			2
Condensed Consolidated Statements of Comprehensive Income for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022			3
Condensed Consolidated Statements of Cash Flows for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022			4
Condensed Consolidated Statements of Equity for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022			5
Notes to Condensed Consolidated Financial Statements			7
Item 2 -— Management’s Discussion and Analysis of Financial Condition and Results of Operations			18	15
Item 3 -— Quantitative and Qualitative Disclosures About Market Risk			31	24
Item 4 -— Controls and Procedures			31	25
Part II — Other Information:				26
Item 1 -— Legal Proceedings			33	26
Item 1A -— Risk Factors			33	26
Item ~~6 - Exhibits~~5 — Other Information			34	26
~~Signature(s)~~Item 6 — Exhibits	26
Signature(s)		35	28
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

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

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


	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


	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


	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	$	120,217	$	—	$	—
U.S. Treasury Obligations		—		19,949		—
Failed Auction Security		—		—		2,552

Total		120,217		19,949		2,552
Other measurement basis:
Cash on hand		61,881		—		—

Total	$	182,098	$	19,949	$	2,552


	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


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


	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


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


	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,				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


	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	%