VICOR CORPORATION

~~INDEX~~

INDEX


		Page
Part I — Financial Information:
Item 1 - Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets at March 31, ~~2023~~2024 and December 31, ~~2022~~2023			1
Condensed Consolidated Statements of Operations for the three months ended March 31, ~~2023~~2024 and ~~2022~~2023			2
Condensed Consolidated Statements of Comprehensive (Loss) Income for the three months ended March 31, ~~2023~~2024 and ~~2022~~2023			3
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, ~~2023~~2024 and ~~2022~~2023			4
Condensed Consolidated Statements of Equity for the three months ended March 31, ~~2023~~2024 and ~~2022~~2023			5
Notes to Condensed Consolidated Financial Statements			6
Item 2 -— Management’s Discussion and Analysis of Financial Condition and Results of Operations			16	14
Item 3 -— Quantitative and Qualitative Disclosures About Market Risk			24	21
Item 4 -— Controls and Procedures			24	22
Part II — Other Information:				23
Item 1 -— Legal Proceedings			26	23
Item 1A -— Risk Factors			26	23
Item 5 — Other Information	23
Item 6 — Exhibits			26	23
~~Signature(s)~~Signatures			27
	25
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

VICOR CORPORATION

Part I – Financial Information

Item 1 – Financial Statements

Condensed Consolidated Balance Sheets

(In thousands, except share data)

(Unaudited)

   March 31, 2023 December 31, 2022
Assets
Current assets:

Cash and cash equivalents    $ 192,897 $ 190,611
Accounts receivable, net    61,061 65,429
Inventories    107,382 101,410
Other current assets    5,030 5,154

Total current assets    366,370 362,604
Long-term deferred tax assets, net    280 280
Long-term investment, net    2,631 2,622
Property, plant and equipment, net    167,812 166,009
Other assets    7,162 5,386

Total assets    $ 544,255 $ 536,901

Liabilities and Equity
Current liabilities:
Accounts payable    $ 16,790 $ 22,207
Accrued compensation and benefits    11,324 10,849
Accrued litigation    6,500 6,500
Accrued expenses    4,769 8,613
Short-term lease liabilities    1,459 1,450
Sales allowances    2,389 1,661
Accrued severance and other charges    13 —
Income taxes payable    663 72
Short-term deferred revenue and customer prepayments    9,765 13,197

Total current liabilities    53,672 64,549
Long-term deferred revenue    2,183 145
Long-term income taxes payable    869 862
Long-term lease liabilities    6,872 7,009

Total liabilities    63,596 72,565
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,
11,743,218 shares issued and outstanding in 2023 and 2022    118 118
Common Stock: 1 vote per share, $.01 par value, 62,000,000 shares authorized 44,104,331

shares

issued and 32,469,525 shares outstanding in 2023; 43,976,336

shares issued and

32,341,530
shares outstanding in 2022
   442 441
Additional
paid-in
capital
   365,442 360,365
Retained earnings    254,323 243,079
Accumulated other comprehensive loss    (993 ) (988 )
Treasury stock at cost: 11,634,806 shares in 2023 and 2022    (138,927 ) (138,927 )

Total Vicor Corporation stockholders’ equity    480,405 464,088
Noncontrolling interest    254 248

Total equity    480,659 464,336

Total liabilities and equity    $ 544,255 $ 536,901


	March 31, 2024			December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	239,172		$	242,219
Accounts receivable, net		57,604			52,631
Inventories		112,316			106,579
Other current assets		19,173			18,937
Total current assets		428,265			420,366
Long-term deferred tax assets, net		277			296
Long-term investment, net		2,622			2,530
Property, plant and equipment, net		157,677			157,689
Other assets		16,276			14,006
Total assets	$	605,117		$	594,887
Liabilities and Equity
Current liabilities:
Accounts payable	$	12,439		$	12,100
Accrued compensation and benefits		11,636			11,227
Accrued litigation		23,700			6,500
Accrued expenses		7,078			5,093
Short-term lease liabilities		1,812			1,864
Sales allowances		3,130			3,482
Income taxes payable		1,602			746
Short-term deferred revenue and customer prepayments		2,684			3,157
Total current liabilities		64,081			44,169
Long-term deferred revenue		660			1,020
Long-term income taxes payable		2,236			2,228
Long-term lease liabilities		6,094			6,364
Total liabilities		73,071			53,781
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, 11,743,218 shares issued and outstanding in 2024 and 2023		118			118
Common Stock: 1 vote per share, $.01 par value, 62,000,000 shares authorized 44,434,840 shares issued and 32,800,034 shares outstanding in 2024; 44,354,394 shares issued and 32,719,588 shares outstanding in 2023		446			445
Additional paid-in capital		389,367			383,832
Retained earnings		282,201			296,674
Accumulated other comprehensive loss		(1,390	)		(1,273	)
Treasury stock at cost: 11,634,806 shares in 2024 and 2023		(138,927	)		(138,927	)
Total Vicor Corporation stockholders’ equity		531,815			540,869
Noncontrolling interest		231			237
Total equity		532,046			541,106
Total liabilities and equity	$	605,117		$	594,887

See accompanying notes.

-1-

VICOR CORPORATION

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

   Three Months Ended
March 31,
   2023 2022
Net revenues    $ 97,816 $ 88,282
Cost of revenues    51,282 50,681

Gross margin    46,534 37,601
Operating expenses:
Selling, general and administrative    20,223 18,568
Research and development    15,869 14,253

Total operating expenses    36,092 32,821

Income from operations    10,442 4,780
Other income (expense), net:
Total unrealized gains (losses) on
available-for-sale
securities, net
   9 (103 )
Less: portion of (gains) losses recognized in other comprehensive income    (9 ) 104

Net credit gains recognized in earnings    —   1
Other income, net    1,950 161

Total other income, net    1,950 162

Income before income taxes    12,392 4,942
Provision (benefit) for income taxes    1,141 (48 )

Consolidated net income    11,251 4,990
Less: Net income (loss) attributable to noncontrolling interest    7 (9 )

Net income attributable to Vicor Corporation    $ 11,244 $ 4,999

Net income per common share attributable to Vicor Corporation:
Basic    $ 0.25 $ 0.11
Diluted    $ 0.25 $ 0.11
Shares used to compute net income per common share attributable to Vicor Corporation:
Basic    44,162 43,952
Diluted    44,907 44,954


	Three Months Ended
	March 31,
	2024			2023
Net revenues	$	83,872		$	97,816
Cost of revenues		38,749			51,282
Gross margin		45,123			46,534
Operating expenses:
Selling, general and administrative		25,999			20,223
Research and development		18,039			15,869
Litigation-contingency expense		17,200			—
Total operating expenses		61,238			36,092
(Loss) income from operations		(16,115	)		10,442
Other income (expense), net:
Total unrealized gains on available-for-sale securities, net		92			9
Less: portion of gains recognized in other comprehensive income		(92	)		(9	)
Net credit gains recognized in earnings		—			—
Other income (expense), net		2,724			1,950
Total other income (expense), net		2,724			1,950
(Loss) income before income taxes		(13,391	)		12,392
Provision for income taxes		1,071			1,141
Consolidated net (loss) income		(14,462	)		11,251
Less: Net income attributable to noncontrolling interest		11			7
Net (loss) income attributable to Vicor Corporation	$	(14,473	)	$	11,244

Net (loss) income per common share attributable to Vicor Corporation:
Basic	$	(0.33	)	$	0.25
Diluted	$	(0.33	)	$	0.25
Shares used to compute net (loss) income per common share attributable to Vicor Corporation:
Basic		44,516			44,162
Diluted		44,516			44,907

See accompanying notes.

-2-

VICOR CORPORATION

Condensed Consolidated Statements of Comprehensive (Loss) Income

(In thousands)

(Unaudited)


	Three Months Ended
	March 31,
	2024			2023
Consolidated net (loss) income	$	(14,462	)	$	11,251
Foreign currency translation losses, net of tax (1)		(226	)		(15	)
Unrealized gains on available-for-sale securities, net of tax (1)		92			9
Other comprehensive loss		(134	)		(6	)
Consolidated comprehensive (loss) income		(14,596	)		11,245
Less: Comprehensive (loss) income attributable to noncontrolling interest		(6	)		6
Comprehensive (loss) income attributable to
Vicor Corporation	$	(14,590	)	$	11,239

~~(Unaudited)~~

(1)

   Three Months Ended
March 31,
   2023 2022
Consolidated net income    $ 11,251 $ 4,990
Foreign currency translation losses, net of tax (1)    (15 ) (194 )
Unrealized income (loss) on
available-for-sale
securities, net of tax (1)
   9 (316 )

Other comprehensive loss    (6 ) (510 )

Consolidated comprehensive income    11,245 4,480
Less: Comprehensive income (loss) attributable to noncontrolling interest    6 (23 )

Comprehensive income attributable to Vicor Corporation    $ 11,239 $ 4,503

~~(1)~~

~~The deferred tax assets associated with foreign currency translation losses and unrealized~~

~~income (loss)~~

~~available-for-sale~~

securities are completely offset by a tax valuation allowance as of March 31, 2023 and 2022. Therefore, there is no income tax benefit (provision) recognized for the three months ended March 31, 2023 and 2022.

The deferred tax assets associated with foreign currency translation losses and unrealized gains on available-for-sale securities are completely offset by a tax valuation allowance as of March 31, 2024 and 2023. Therefore, there is no income tax benefit (provision) recognized for the three months ended March 31, 2024 and 2023.

See accompanying notes.

-3-

VICOR CORPORATION

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

   Three Months Ended
March 31,
   2023 2022
Operating activities:
Consolidated net income    $ 11,251 $ 4,990
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Depreciation and amortization    4,199 3,296
Stock-based compensation expense    2,817 1,994
Increase (decrease) in long-term deferred revenue    2,038 (81 )
Increase in other assets    33 62
Increase in long-term income taxes payable    7 5
Deferred income taxes    —   2
Credit gain on
available-for-sale
securities
   —   (1 )
Change in current assets and liabilities, net    (10,232 ) (5,682 )

Net cash provided by operating activities
   10,113 4,585
Investing activities:
Sales or maturities of short-term investments    —   25,000
Additions to property, plant and equipment    (10,089 ) (22,683 )

Net cash (used for) provided by investing activities    (10,089 ) 2,317
Financing activities:
Proceeds from employee stock plans    2,261 1,810

Net cash provided by financing activities    2,261 1,810
Effect of foreign exchange rates on cash    1 (80 )

Net increase in cash and cash equivalents    2,286 8,632
Cash and cash equivalents at beginning of period    190,611 182,418

Cash and cash equivalents at end of period    $ 192,897 $ 191,050


	Three Months Ended
	March 31,
	2024			2023

Operating activities:
Consolidated net (loss) income	$	(14,462	)	$	11,251
Adjustments to reconcile consolidated net (loss) income to net cash provided by operating activities:
Depreciation and amortization		4,614			4,199
Stock-based compensation expense		3,780			2,817
Litigation-contingency expense		17,200			—
(Decrease) increase in long-term deferred revenue		(360	)		2,038
(Decrease) increase in other assets		(99	)		33
Deferred income taxes		4			—
Increase in long-term income taxes payable		8			7
Change in current assets and liabilities, net		(8,103	)		(10,232	)
Net cash provided by operating activities		2,582			10,113
Investing activities:
Additions to property, plant and equipment and internal-use software		(7,270	)		(10,089	)
Net cash used for investing activities		(7,270	)		(10,089	)
Financing activities:
Proceeds from employee stock plans		1,756			2,261
Net cash provided by financing activities		1,756			2,261
Effect of foreign exchange rates on cash		(115	)		1
Net (decrease) increase in cash and cash equivalents		(3,047	)		2,286
Cash and cash equivalents at beginning of period		242,219			190,611
Cash and cash equivalents at end of period	$	239,172		$	192,897
Supplemental disclosure:
Purchases of property, plant and equipment and internal-use software incurred but not yet paid	$	1,983		$	2,083

See accompanying notes.

-4-

VICOR CORPORATION

Condensed Consolidated Statements of Equity

(In thousands)

(Unaudited)

Class B

Common

Stock

Common

Stock

Additional

Paid-In

Capital

Retained

Earnings

Accumulated

Other

Comprehensive

Loss

Treasury

Stock

Total

Vicor

Corporation

Stockholders’

Equity

Noncontrolling

Interest

Total

Equity

Three months ended March 31, 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       1    2,260       2,261 2,261
Stock-based compensation expense          2,817       2,817 2,817
Components of comprehensive income, net of tax:
Net income             11,244    11,244 7 11,251
Other comprehensive loss                (5 ) (5 ) (1 ) (6 )

Total comprehensive income                11,239 6 11,245

Balance on March 31, 2023    $ 118    $ 442    $ 365,442    $ 254,323    $ (993 ) $ (138,927 ) $ 480,405 $ 254 $ 480,659


Class B

Common

Stock

Common

Stock

Additional

Paid-In

Capital

Retained

Earnings

Accumulated

Other

Comprehensive

Loss

Treasury

Stock

Total

Vicor

Corporation

Stockholders’

Equity

Noncontrolling

Interest

Total

Equity

Three months ended March 31, 2022

Balance on December 31, 202
1
   $ 118    $ 439    $ 345,664    $ 217,633    $ (1,328 ) $ (138,927 ) $ 423,599 $ 306 $ 423,905
Issuance of Common Stock under employee stock plans       1    1,809       1,810 1,810
Stock-based compensation expense          1,994       1,994 1,994
Components of comprehensive income (loss), net of tax:
Net income (loss)             4,999    4,999 (9 ) 4,990
Other comprehensive loss                (496 ) (496 ) (14 ) (510 )

Total comprehensive income (loss)                4,503 (23 ) 4,480

Balance on March 31, 2022    $ 118    $ 440    $ 349,467    $ 222,632    $ (1,824 ) $ (138,927 ) $ 431,906 $ 283 $ 432,189


																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 March 31, 2024
Balance on December 31, 2023	$	118	$	445	$	383,832	$	296,674		$	(1,273	)	$	(138,927	)	$	540,869		$	237		$	541,106
Issuance of Common Stock under employee stock plans				1		1,755											1,756						1,756
Stock-based compensation expense						3,780											3,780						3,780
Components of comprehensive income (loss), net of tax:
Net (loss) income								(14,473	)								(14,473	)		11			(14,462	)
Other comprehensive loss											(117	)					(117	)		(17	)		(134	)
Total comprehensive (loss)																	(14,590	)		(6	)		(14,596	)
Balance on March 31, 2024	$	118	$	446	$	389,367	$	282,201		$	(1,390	)	$	(138,927	)	$	531,815		$	231		$	532,046


															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 March 31, 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				1		2,260										2,261						2,261
Stock-based compensation expense						2,817										2,817						2,817
Components of comprehensive income (loss), net of tax:
Net income								11,244								11,244			7			11,251
Other comprehensive loss										(5	)					(5	)		(1	)		(6	)
Total comprehensive income																11,239			6			11,245
Balance on March 31, 2023	$	118	$	442	$	365,442	$	254,323	$	(993	)	$	(138,927	)	$	480,405		$	254		$	480,659

See accompanying notes.

-5-

~~Table of Contents~~

VICOR CORPORATION

Notes to Condensed Consolidated Financial Statements

March 31, ~~2023~~

2024

(unaudited)

~~(unaudited)~~

1.	~~Basis of Presentation~~

1. 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 months ended March 31, ~~2023~~2024 are not necessarily indicative of the results that may be expected for any other interim period or the year ending December 31, ~~2023.~~2024. The balance sheet at December 31, ~~2022~~2023 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, ~~2022~~2023 filed by the Company with the SEC on February 28, ~~2023 (“2022 Form~~

~~10-K”).~~

2024.

2.	~~Inventories~~

2. Inventories

Inventories were as follows (in thousands):


	March 31, 2024		December 31, 2023
Raw materials	$	88,365	$	88,716
Work-in-process		15,113		10,525
Finished goods		8,838		7,338
	$	112,316	$	106,579

   March 31, 2023    December 31, 2022
Raw materials    $ 85,833    $ 82,181
Work-in-process
   12,101    10,456
Finished goods    9,448    8,773

   $ 107,382    $ 101,410

3.	~~Long-Term Investments~~

3. Long-Term Investments

As of March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, 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 ~~$2,631,000~~$2,622,000 and ~~$2,622,000,~~$2,530,000, 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 March 31, ~~2023,~~2024, 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 March 31, ~~2023.~~

2024.

-6-

VICOR CORPORATION

Notes to Condensed Consolidated Financial Statements

March 31, ~~2023~~2024

(unaudited)

~~(unaudited)~~

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


	March 31, 2024
	Cash and Cash		Long-Term
	Equivalents		Investment
Measured at fair value:
Available-for-sale securities:
Money market funds	$	209,702	$	—
Failed Auction Security		—		2,622
Total		209,702		2,622

Other measurement basis:
Cash on hand		29,470		—
Total	$	239,172	$	2,622


	December 31, 2023
	Cash and Cash		Long-Term
	Equivalents		Investment
Measured at fair value:
Available-for-sale securities:
Money market funds	$	209,489	$	—
Failed Auction Security		—		2,530
Total		209,489		2,530

Other measurement basis:
Cash on hand		32,730		—
Total	$	242,219	$	2,530

March 31, 2023


Cash and

Cash

Equivalents

Long-Term

Investment

Measured at fair value:

Available-for-sale
debt securities:

Money market funds    $ 144,725    $ —
Failed Auction Security    —      2,631

Total    144,725    2,631

Other measurement basis:

Cash on hand    48,172    —

Total    $ 192,897    $ 2,631



December 31, 2022


Cash and

Cash

Equivalents

Long-Term

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

The following is a summary of the

available-for-sale

securities (in thousands):

Gross

Estimated

Unrealized

Fair

March 31, 2024

Cost

Gains

Losses

Value

Failed Auction Security

3,000

—

378

2,622

Gross

Estimated

Unrealized

Fair

December 31, 2023

Cost

Gains

Losses

Value

Failed Auction Security

3,000

—

470

2,530

March 31, 2023    Cost    Gross
Unrealized
Gains    Gross
Unrealized
Losses    Estimated
Fair
Value
Failed Auction Security    $ 3,000    —      369    $ 2,631

~~-7-~~

~~Table of Contents~~

~~VICOR CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

~~March 31, 2023~~

~~(unaudited)~~

December 31, 2022    Cost    Gross
Unrealized
Gains    Gross
Unrealized
Losses    Estimated
Fair
Value
Failed Auction Security    3,000    —      378    2,622

As of March 31, ~~2023,~~2024, 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 March 31, ~~2023,~~2024, by type and

contractual maturities, are shown below (in thousands):


			Estimated
	Cost		Fair Value
Failed Auction Security:

Due in nineteen years	$	3,000	$	2,622

-7-

VICOR CORPORATION

Notes to Condensed Consolidated Financial Statements

March 31, 2024

(unaudited)

   Cost Estimated
Fair Value
Failed Auction Security:

Due in twenty years    $ 3,000    $ 2,631

4.	~~Fair Value Measurements~~

4. 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.

Assets and liabilities measured at fair value on a recurring basis included the following as of March 31, ~~2023~~2024 (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
March 31, 2023
Cash equivalents:

Money market funds    $ 144,725    $ —      $ —      $ 144,725
Long-term investment:
Failed Auction Security    —      —      2,631    2,631

~~-8-~~

~~Table of Contents~~

~~VICOR CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

~~March 31, 2023~~

~~(unaudited)~~

Using

Significant

Quoted Prices

Other

Significant

in Active

Observable

Unobservable

Total Fair

Markets

Inputs

Value as of

(Level 1)

(Level 2)

(Level 3)

March 31, 2024

Cash equivalents:

Money market funds

209,702

—

209,702

Long-term investment:

Failed Auction Security

—

2,622

Assets and liabilities measured at fair value on a recurring basis included the following as of December 31, ~~2022~~2023 (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, 2023

Cash equivalents:

Money market funds

209,489

—

209,489

Long-term investment:

Failed Auction Security

—

2,530

   Using
   Quoted Prices
in Active
Markets
(Level 1)    Significant
Other
Observable
Inputs
(Level 2)    Significant
Unobservable
Inputs
(Level 3)    Total Fair
Value as of
December 31, 2022
Cash equivalents:

Money market funds    $ 143,274    $ —      $ —      $ 143,274
Long-term investment:
Failed Auction Security    —      —      2,622    2,622

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 three months ended March 31, ~~2023~~2024 was as follows (in thousands):


Balance at the beginning of the period	$	2,530
Gain included in Other comprehensive loss		92
Balance at the end of the period	$	2,622

Balance at the beginning of the period    $ 2,622
Credit gain on
available-for-sale
security included in Other income (expense), net
   9

Balance at the end of the period    $ 2,631

Management utilized a probability weighted discounted cash flow model to determine the estimated fair value as of March 31, ~~2023.~~2024.

~~-9-~~

-8-

VICOR CORPORATION

Notes to Condensed Consolidated Financial Statements

March 31, ~~2023~~2024

(unaudited)

~~(unaudited)~~

5. Revenues

5.	~~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 March 31, 2024
	Brick Products		Advanced Products		Total
United States	$	20,974	$	27,186	$	48,160
Europe		6,857		3,999		10,856
Asia Pacific		12,268		12,052		24,320
All other		493		43		536
	$	40,592	$	43,280	$	83,872


	Three Months Ended March 31, 2023
	Brick Products		Advanced Products		Total
United States	$	21,256	$	13,710	$	34,966
Europe		7,546		4,027		11,573
Asia Pacific		16,847		33,444		50,291
All other		876		110		986
	$	46,525	$	51,291	$	97,816

   Three Months Ended March 31, 2023
   Brick Products    Advanced Products    Total
United States    $ 21,256    $ 13,710    $ 34,966
Europe    7,546    4,027    11,573
Asia Pacific    16,847    33,444    50,291
All other    876    110    986

   $ 46,525    $ 51,291    $ 97,816


   Three Months Ended March 31, 2022
   Brick Products    Advanced Products    Total
United States    $ 14,061    $ 10,626    $ 24,687
Europe    7,042    2,768    9,810
Asia Pacific    13,521    39,495    53,016
All other    733    36    769

   $ 35,357    $ 52,925    $ 88,282

~~-10-~~

~~Table of Contents~~

~~VICOR CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

~~March 31, 2023~~

~~(unaudited)~~

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


	Three Months Ended March 31, 2024
	Brick Products		Advanced Products		Total
Direct customers, contract manufacturers and non-stocking distributors	$	20,810	$	21,640	$	42,450
Stocking distributors, net of sales allowances		19,407		9,632		29,039
Non-recurring engineering		375		3,468		3,843
Royalties		—		8,180		8,180
Other		—		360		360
	$	40,592	$	43,280	$	83,872


	Three Months Ended March 31, 2023
	Brick Products		Advanced Products		Total
Direct customers, contract manufacturers and non-stocking distributors	$	30,486	$	42,013	$	72,499
Stocking distributors, net of sales allowances		15,737		5,052		20,789
Non-recurring engineering		302		2,128		2,430
Royalties		—		2,020		2,020
Other		—		78		78
	$	46,525	$	51,291	$	97,816

-9-

VICOR CORPORATION

Notes to Condensed Consolidated Financial Statements

March 31, 2024

(unaudited)

   Three Months Ended March 31, 2023
   Brick Products    Advanced Products    Total
Direct customers, contract manufacturers and
non-stocking
distributors
   $ 30,486    $ 42,013    $ 72,499
Stocking distributors, net of sales allowances    15,737    5,052    20,789
Non-recurring
engineering
   302    2,128    2,430
Royalties    —      2,020    2,020
Other    —      78    78

   $ 46,525    $ 51,291    $ 97,816


   Three Months Ended March 31, 2022
   Brick Products    Advanced Products    Total
Direct customers, contract manufacturers and
non-stocking
distributors
   $ 24,401    $ 47,471    $ 71,872
Stocking distributors, net of sales allowances    10,764    3,744    14,508
Non-recurring
engineering
   192    1,386    1,578
Royalties    —      306    306
Other    —      18    18

   $ 35,357    $ 52,925    $ 88,282

The following table presents the changes in certain contract ~~assets and (liabilities)~~liabilities (in thousands):


	March 31, 2024			December 31, 2023			Change
Short-term deferred revenue and customer prepayments	$	(2,684	)	$	(3,157	)	$	473
Long-term deferred revenue		(660	)		(1,020	)		360
Sales allowances		(3,130	)		(3,482	)		352

   March 31, 2023    December 31, 2022    Change
Short-term deferred revenue and customer prepayments    $ (9,765 )    $ (13,197 )    $ 3,432
Long-term deferred revenue    (2,183 )    (145 )    (2,038 )
Deferred expenses    98    577    (479 )
Sales allowances    (2,389 )    (1,661 )    (728 )

~~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 $360,000 and approximately $

1,609,000

~~and $~~

~~155,000~~

for the three months ended March 31, ~~2023~~2024 and ~~2022,~~2023, respectively, that was included in deferred revenue at the beginning of the respective period.

~~-11-~~

~~Table of Contents~~

~~VICOR CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

~~March 31, 2023~~

~~(unaudited)~~

6.	~~Stock-Based Compensation~~

6. 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
	March 31,
	2024		2023
Cost of revenues	$	754	$	486
Selling, general and administrative		1,919		1,520
Research and development		1,107		811
Total stock-based compensation	$	3,780	$	2,817

   Three Months Ended
March 31,
   2023    2022
Cost of revenues    $ 486    $ 251
Selling, general and administrative    1,520    1,207
Research and development    811    536

Total stock-based compensation    $ 2,817    $ 1,994

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


	Three Months Ended
	March 31,
	2024		2023
Stock options	$	3,466	$	2,496
ESPP		314		321
Total stock-based compensation	$	3,780	$	2,817

   Three Months Ended
March 31,
   2023    2022
Stock options    $ 2,496    $ 1,759
ESPP    321    235

Total stock-based compensation    $ 2,817    $ 1,994

7.	~~Rental Income~~

7. 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~~$198,000 for each of the three ~~months~~month periods ended March 31, ~~2023~~2024 and ~~2022.~~2023.

8.	~~Income Taxes~~

8. 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 (loss).

~~pre-tax~~

~~income.~~

~~-12-~~

~~Table of Contents~~

~~VICOR CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

~~March 31, 2023~~

~~(unaudited)~~

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

-10-

VICOR CORPORATION

Notes to Condensed Consolidated Financial Statements

March 31, 2024

(unaudited)


	Three Months Ended
	March 31,
	2024			2023
Provision for income taxes	$	1,071		$	1,141
Effective income tax rate		(8.0	)%		9.2	%

   Three Months Ended
March 31,
   2023 2022
Provision (benefit) for income taxes    $ 1,141 $ (48 )
Effective income tax rate    9.2 % (1.0 )%

The effective tax rates ~~were lower than~~differ from the statutory tax rates for the three months ended March 31, ~~2023~~2024 and ~~2022~~2023 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 March 31, ~~2023~~2024 and ~~2022~~2023 included estimated federal, state and foreign income taxes in jurisdictions in which the Company does not have sufficient tax attributes.

As of March 31, ~~2023~~

2024, the Company ~~has~~had a valuation allowance of approximately ~~$47,413,000~~

$52,291,000against 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 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 benefits over the next several years. As a result, management has concluded, as of March 31, ~~2023,~~2024, 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 March 31, ~~2023.~~2024. 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.

9. Net (Loss) Income per Share

~~-13-~~

~~Table of Contents~~

~~VICOR CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

~~March 31, 2023~~

~~(unaudited)~~

9.	~~Net Income per Share~~

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

-11-

VICOR CORPORATION

Notes to Condensed Consolidated Financial Statements

March 31, 2024

(unaudited)


	Three Months Ended
	March 31,
	2024			2023

Numerator:
Net (loss) income attributable to Vicor Corporation	$	(14,473	)	$	11,244
Denominator:
Denominator for basic net (loss) income per share-weighted average shares (1)		44,516			44,162
Effect of dilutive securities:
Employee stock options (2)		—			745
Denominator for diluted net (loss) income per share – adjusted weighted-average shares and assumed conversions		44,516			44,907

Basic net (loss) income per share	$	(0.33	)	$	0.25
Diluted net (loss) income per share	$	(0.33	)	$	0.25

(1)

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

(2)

Options to purchase 2,500,448 and 1,035,618 shares of Common Stock for the three months ended March 31, 2024 and 2023, respectively, were not included in the calculations of net (loss) income per share as the effect would have been antidilutive.

Three Months Ended
March 31,


2023


2022

Numerator:
Net income attributable to Vicor Corporation    $ 11,244    $ 4,999

Denominator:
Denominator for basic net income per share-weighted average shares (1)    44,162    43,952
Effect of dilutive securities:
Employee stock options (2)    745    1,002

Denominator for diluted net income per share – adjusted weighted-average shares and assumed conversions    44,907    44,954

Basic net income per share    $ 0.25    $ 0.11

Diluted net income per share    $ 0.25    $ 0.11

~~(1)~~

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

~~(2)~~

Options to purchase 1,035,618 and 291,880 shares of Common Stock for the three months ended March 31, 2023 and 2022, respectively, were not included in the calculations of net income per share as the effect would have been antidilutive.

~~10.~~

~~Commitments and Contingencies~~

10. Commitments and Contingencies

At March 31, ~~2023,~~2024, the Company had approximately ~~$19,325,000~~$11,475,000 of cancelable and

non-cancelable

capital expenditure commitments, principally for manufacturing equipment, and approximately $2,083,000 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.

equipment.

The Company is the defendant in a patent infringement lawsuit originally filed on January 28, 2011 by SynQor, Inc. (“SynQor”) in the U.S. District Court ~~(the “District Court”)~~ for the Eastern District of ~~Texas.~~Texas (the “District Court”). 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 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

~~-14-~~

~~Table of Contents~~

~~VICOR CORPORATION~~

~~Notes to Condensed Consolidated Financial Statements~~

~~March 31, 2023~~

~~(unaudited)~~

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. On January 18, 2023, the United States Court of 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~~

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 verdict 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.

On December 23, 2022, SynQor filed in the District Court (a) a motion for judgment as a matter of 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~~On January 8, 2024, the District Court ~~ultimately rules against~~issued orders denying (a) SynQor’s motion for judgment as a matter of law, (b) the ~~Company~~Company’s

-12-

VICOR CORPORATION

Notes to Condensed Consolidated Financial Statements

March 31, 2024

(unaudited)

motion for judgment as a matter of law, (c) the Company’s motion for judgment with respect to ~~any~~its defenses of equitable estoppel and waiver and (d) SynQor’s motion for a new trial.

On April 24, 2024, the District Court issued an order granting SynQor’s motions for enhanced damages, pre-judgment and post-judgment interest, costs and attorneys' fees. Specifically, the District Court determined that the jury’s damages award of $6,500,000 should be enhanced by $4,500,000. The District Court also granted SynQor an award of costs in the amount of approximately $87,000. The District Court also awarded SynQor pre-judgment interest at the 2009 prime rate, compounded quarterly beginning in July 2009, as well as post-judgment interest at the statutory rate. The District Court also awarded SynQor its attorneys' fees relating to the assertion of the ~~aforementioned motions,~~‘702 patent, in an amount to be determined based upon the District Court’s consideration of subsequent submissions by SynQor.

The Company anticipates appealing ~~those rulings~~the District Court’s final judgment to the United States Court of Appeals for the Federal Circuit. ~~The Company similarly anticipates appealing the District Court’s order dismissing the Company’s Counterclaims against SynQor.~~

In accordance with applicable accounting standards, the Company recorded a litigation related accrual of ~~$6,500,000~~$6,500,000 in the third quarter of 2022 and an incremental litigation related accrual of $17,200,000 in the first quarter of 2024 as its estimate based on the ~~jury award, using~~awarded judgments, including enhanced damages, pre-judgment interest, costs and estimated ~~outcomes ranging~~attorneys' fees. The final determination of attorneys' fees and any associated pre-judgment and post-judgment interest will depend on the District Court's determination of those fees and interest amounts, subject to appeal, and could differ from ~~$0 to treble damages plus attorney fees.~~

the recorded liability.

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 A~~

~~ccou~~

~~nting Standards~~

~~New~~

11. Impact of Recently Issued Accounting Standards

On November 27, 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which enhances segment disclosures and requires additional disclosures of segment expenses. This ASU is effective for annual periods in fiscal years beginning after December 15, 2023, and interim periods thereafter. Early adoption is permitted. The Company has not yet determined the impact of this ASU on the Company’s consolidated financial statements and disclosures.

In December 2023, FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which focuses on the rate reconciliation and income taxes paid. ASU No. 2023-09 requires a public business entity (PBE) to disclose, on an annual basis, a tabular rate reconciliation using both percentages and currency amounts, broken out into specified categories with certain reconciling items further broken out by nature and jurisdiction to the extent those items exceed a specified threshold. In addition, all entities are required to disclose income taxes paid, net of refunds received disaggregated by federal, state/local, and foreign and by jurisdiction if the amount is at least 5% of total income tax payments, net of refunds received. For PBEs, the new standard is effective for annual periods beginning after December 15, 2024, with early adoption permitted. An entity may apply the amendments in this ASU prospectively by providing the revised disclosures for the period ending December 31, 2025 and continuing to provide the pre-ASU disclosures for the prior periods, or may apply the amendments retrospectively by providing the revised disclosures for all period presented. The Company expects this ASU to impact disclosures with no impact to the Company’s consolidated financial statements.

Other new pronouncements issued but not effective until after March 31, ~~2023~~2024 are not expected to have a material impact on the Company’s consolidated financial statements.

-13-

~~-15-~~

VICOR CORPORATION

Management’s Discussion and Analysis of

Financial Condition and Results of Operation

March 31, ~~2023~~2024

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, ~~2022 and the risk factors described in this Quarterly Report on Form~~ ~~10-Q.~~2023. 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 will be sufficient to fund planned operational needs and 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, ~~2022~~2023 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.

~~-16-~~-14-

VICOR CORPORATION

Management’s Discussion and Analysis of

Financial Condition and Results of Operation

March 31, ~~2023~~2024

Overview

~~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~~power delivery 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~~serve applications in aerospace and aviation, defense electronics, ~~industrial~~satellites, factory automation, instrumentation, test equipment, ~~solid state lighting,~~transportation, 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 our reliance on outsourced package process steps that are essential in the production of some of our Advanced Products, and those relating, for example, to the procurement of raw material, have in the past negatively impacted and may in the

~~-17-~~

~~VICOR CORPORATION~~

~~Management’s Discussion and Analysis of~~

~~Financial Condition and Results of Operation~~

~~March 31, 2023~~

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

-15-

VICOR CORPORATION

Management’s Discussion and Analysis of

Financial Condition and Results of Operation

March 31, 2024

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, 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 are largely associated with compensation and related employee costs, which are not subject to sudden or significant changes.

~~Ongoing / Potential Impacts~~Changes from Previously Disclosed Results

As discussed below, we reported a net loss for the first quarter of 2024 of $(14,473,000), or $(0.33) per diluted share, compared to $11,244,000, or $0.25 per diluted share, for the first quarter of 2023. Initially, in our earnings release issued on April 23, 2024, we disclosed net income for the first quarter of 2024 of $2,604,000, or $0.06 per diluted share. On April 24, 2024, after the issuance of our earnings release and completion of the ~~COVID-19~~ ~~Pandemic on~~related earnings call, the U.S. District Court for the Eastern District of Texas (the "District Court") issued an order granting SynQor, Inc.’s motions for enhanced damages, pre-judgment and post-judgment interest, costs and attorneys' fees. The District Court also entered a final judgment reflecting these rulings. The Company anticipates appealing the District Court’s final judgment to the United States Court of Appeals for the Federal Circuit.

~~As of the date~~In light of this ~~report,~~judgment, in accordance with applicable accounting standards, we recorded an incremental litigation related loss reserve of $17,200,000 in the ~~number~~first quarter of ~~Company employees diagnosed with~~ ~~COVID-19~~ ~~and~~2024, resulting in the ~~corresponding absenteeism due to~~ ~~COVID-19~~ ~~are negligible. While the productivity of our factory is not currently impacted by~~ ~~COVID-19,~~ ~~productivity may be reduced if quarantine rates increase or if the number of employees diagnosed with~~ ~~COVID-19~~ ~~requires further implementation of restrictive health and safety measures, including factory closure. We continue to operate with three shifts~~decrease in our ~~factory,~~reported net income and ~~with few exceptions, our engineering, sales, and administrative personnel are working~~net income per share from the ~~Company’s offices.~~

~~We are closely monitoring~~amounts previously disclosed in our earnings release, as well as a corresponding $17,200,000 increase in operating expenses to $61,238,000 from the ~~operating performance and financial health of our customers, business partners, and suppliers, but an extended period of operational constraints brought about by~~previously disclosed $44,038,000. See Note 10 to 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~~Condensed Consolidated Financial Statements for additional information regarding the ~~extent to which the pandemic will continue to impact our operational~~SynQor litigation and financial results in the future, the Company’s high level of liquidity, flexible operational model, existing raw material inventories, and increased use of second sources for critical manufacturing inputs together support management’s belief the Company will be able to effectively conduct business until the pandemic passes.loss reserve.

~~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.

Summary of First Quarter ~~2023~~2024 Financial Performance Compared to Fourth Quarter ~~2022~~2023 Financial Performance

The following summarizes our financial performance for the first quarter of ~~2023,~~2024, compared to the fourth quarter of ~~2022:~~

2023:

•

Net revenues decreased ~~7.3%~~9.5% to ~~$97,816,000~~$83,872,000 for the first quarter of ~~2023,~~2024, from ~~$105,493,000~~$92,652,000 for the fourth quarter of ~~2022.~~2023. Net revenues for Brick Products ~~increased 10.9%~~decreased 11.7% compared to the fourth quarter of ~~2022,~~2023, primarily due to ~~the ability to shift manufacturing resources to focus on~~reduced market demand and lower available ~~backlog, as well as favorable market conditions.~~backlog. Advanced Products net ~~revenue~~revenues decreased ~~19.3%~~7.3% compared to the fourth quarter of ~~2022~~2023, primarily due to our continued ~~supply constraints leading to longer cycle-times and schedule delays.~~

softness in underpenetrated markets, partially offset by increased royalty revenue in the quarter.

•

Export sales represented approximately ~~64.3%~~42.6% of total net revenues in the first quarter of ~~2023~~2024 as compared to ~~59.8%~~56.5% in the fourth quarter of ~~2022.~~

2023.

•

Gross margin decreased to ~~$46,534,000~~$45,123,000 for the first quarter of ~~2023~~2024 from ~~$49,139,000~~$47,344,000 for the fourth quarter of ~~2022, but~~2023, with gross margin, as a percentage of net revenues, ~~increased~~increasing to ~~47.6%~~53.8% for the first quarter of ~~2023~~2024 from ~~46.6%~~51.1% for the fourth

~~-18-~~

quarter of 2023. The decrease in gross margin dollars was primarily the result of lower sales volume in the first quarter of 2024, with the increase in gross margin percentage primarily attributable to improved sales mix on that volume and a reduction of freight-in and tariff spending of $153,000 (net of approximately $0 in duty drawback recovery in the first quarter of 2024 and $1,239,000 in duty drawback recovery in the fourth quarter of 2023 of previously paid tariffs).

•

~~VICOR CORPORATION~~

~~Management’s Discussion and Analysis of~~

~~Financial Condition and Results of Operation~~

~~March 31, 2023~~

~~quarter of 2022. The decrease in gross margin dollars and the increase in gross margin percentage were primarily a result of the unfavorable impact from lower sales volume offset by reduced~~ ~~freight-in~~ ~~and tariff spending of $3,927,000 (net of approximately $3,000,000 in duty drawback recovery of previously paid tariffs).~~

Backlog, which represents the total value of orders for products for which shipment is scheduled within the next 12 months, was approximately ~~$271,283,000~~$150,340,000 at the end of the first quarter of ~~2023,~~2024, as compared to ~~$304,392,000~~$160,805,000 at the end of the fourth quarter of ~~2022.~~

2023.

•

Operating expenses for the first quarter of ~~2023 decreased $4,928,000,~~2024 increased $22,543,000, or ~~12.0%~~56.4%, to ~~$36,092,000~~$62,538,000 from ~~$41,020,000~~$39,995,000 for the fourth quarter of ~~2022.~~2023. Selling, general and administrative expenses ~~decreased~~increased approximately ~~$4,719,000,~~$3,305,000, primarily due to ~~a decrease~~an increase in legal ~~fees.~~expenses. Research and development expenses ~~decreased~~increased approximately ~~$209,000,~~$738,000, primarily due to ~~a decrease~~an increase in ~~engineering supplies.~~

~~We reported net income~~compensation expense. Litigation-contingency expense related to the SynQor litigation was $17,200,000 for the first quarter of ~~2023~~2024, with no comparable expense in the fourth quarter of ~~$11,244,000,~~2023. See Note 10 to the Condensed Consolidated Financial Statements for additional information.

-16-

VICOR CORPORATION

Management’s Discussion and Analysis of

Financial Condition and Results of Operation

March 31, 2024

•

We reported a net loss for the first quarter of 2024 of $(14,473,000), or ~~$0.25~~$(0.33) per diluted share, compared to net income of ~~$8,062,000,~~$8,668,000, or ~~$0.18~~$0.19 per diluted share, for the fourth quarter of ~~2022.~~

2023.

•

For the first quarter of ~~2023,~~2024, depreciation and amortization totaled ~~$4,199,000~~$4,614,000 and capital additions totaled ~~$10,089,000~~$7,270,000 as compared to depreciation and amortization of ~~$3,526,000~~$4,038,000 and capital additions of ~~$12,687,000~~$7,163,000 for the fourth quarter of ~~2022.~~

2023.

•

Inventories increased by approximately ~~$5,972,000,~~$5,737,000, or ~~5.9%~~5.4%, to ~~$107,382,000~~$112,316,000 at March 31, ~~2023,~~2024, compared to ~~$101,410,000~~$106,579,000 at December 31, ~~2022, primarily consisting of raw materials.~~

2023.

Three Months Ended March 31, ~~2023~~2024 Compared to Three Months Ended March 31, ~~2022~~2023

Net revenues for the first quarter of ~~2023~~2024 were ~~$97,816,000, an increase~~$83,872,000, a decrease of ~~$9,534,000,~~$13,944,000, or ~~10.8%~~14.3%, as compared to ~~$88,282,000~~$97,816,000 for the first quarter of ~~2022.~~2023. Net revenues, by product line, for the three months ended March 31, ~~2023~~2024 and ~~2022~~2023 were as follows (dollars in thousands):


					Increase (decrease)										Decrease
	2023		2022		$			%			2024		2023		$			%
Advanced Products	$	51,291	$	52,925	$	(1,634	)		(3.1	)%	$	43,280	$	51,291	$	(8,011	)		(15.6	)%
Brick Products		46,525		35,357		11,168			31.6	%		40,592		46,525		(5,933	)		(12.8	)%

Total	$	97,816	$	88,282	$	9,534			10.8	%	$	83,872	$	97,816	$	(13,944	)		(14.3	)%

The decrease in net revenues for Advanced Products was primarily due to ~~manufacturing constraints and schedule delays.~~our continued softness in underpenetrated markets, partially offset by increased royalty revenue in the quarter. The ~~increase~~decrease in net revenues for Brick Products was primarily due to ~~the ability to shift manufacturing resources to focus on~~reduced market demand and lower available ~~backlog, as well as favorable market conditions.~~backlog.

Gross margin for the first quarter of ~~2023 increased $8,933,000,~~2024 decreased $1,411,000, or ~~23.8%~~3.0%, to ~~$46,534,000,~~$45,123,000, from ~~$37,601,000~~$46,534,000 for the first quarter of ~~2022.~~2023. Gross margin, as a percentage of net revenues, increased to 53.8% for the first quarter of 2024, compared to 47.6% for the first quarter of ~~2023, compared to 42.6% for~~2023. The decrease in gross margin dollars was primarily the result of lower sales volume in the first quarter of ~~2022. The~~2024, with the increase in gross margin ~~dollars~~percentage primarily attributable to improved sales mix on that volume, including royalty revenue, compared to the first quarter of 2023 and ~~gross margin percentage was primarily due to favorable higher sales volume, improved~~certain reductions in supply chain costs, including a reduction of $1,185,000 in outsourced manufacturing costs partially offset by incremental costs of bringing production ~~efficiencies,~~in-house for certain Advanced Products, and ~~reduced~~ an increase in freight-in and tariff spending of ~~$3,791,000~~$1,222,000 (net of approximately ~~$3,000,000~~$0 in duty drawback recovery in the first quarter of 2024 and $2,965,000 in duty drawback recovery in the first quarter of 2023 of previously paid tariffs)~~, partially offset by an unfavorable sales mix.~~.

~~-19-~~

~~VICOR CORPORATION~~

~~Management’s Discussion and Analysis of~~

~~Financial Condition and Results of Operation~~

~~March 31, 2023~~

Selling, general and administrative expenses were $25,999,000 for the first quarter of 2024, an increase of $5,776,000, or 28.6%, from $20,223,000 for the first quarter of ~~2023, an increase of $1,655,000, or 8.9%, from $18,568,000 for the first quarter of 2022.~~2023. Selling, general and administrative expenses as a percentage of net revenues ~~decreased~~increased to 31.0% for the first quarter of 2024 from 20.7% for the first quarter of ~~2023 from 21.0% for the first quarter of 2022.~~2023. The components of the ~~$1,655,000~~$5,776,000 increase in selling, general and administrative expenses for the first quarter of ~~2023~~2024 from the first quarter of ~~2022~~2023 were as follows (dollars in thousands):


	Increase						Increase (decrease)
Legal							$	5,170		380.7	%	(1	)
Advertising								404		39.7	%	(2	)
Compensation	$	542	4.6	%	(1	)		348		2.8	%	(3	)
Advertising		361	55.1	%	(2	)
Outside services								184		23.4	%	(4	)
Audit fees								142		22.2	%
Training and professional development								128		1667.6	%	(5	)
Travel								123		26.6	%
Commissions		306	47.9	%	(3	)		(745	)	(78.8	)%	(6	)
Legal fees		277	25.6	%	(4	)
Other, net		169	3.8	%				22		0.8	%
							$	5,776		28.6	%
	$	1,655	8.9	%

~~(1)~~

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.

~~(2)~~

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

~~(3)~~

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

~~(4)~~

~~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.~~

-17-

~~-20-~~

VICOR CORPORATION

Management’s Discussion and Analysis of

Financial Condition and Results of Operation

March 31, ~~2023~~2024

(1)

Increase primarily attributable to an increase in activity related to corporate legal matters, asserting our intellectual property rights.

(2)

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

(3)

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

(4)

Increase primarily attributable to an increase in the use of consultants.

(5)

Increase primarily attributable to training for new internal-use software implementation.

(6)

Decrease primarily attributable to a reduced use of outside sales representatives.

Research and development expenses were $18,039,000 for the first quarter of 2024, an increase of $2,170,000, or 13.7%, compared to $15,869,000 for the first quarter of ~~2023, an increase of $1,616,000, or 11.3%, compared to $14,253,000 for the first quarter of 2022.~~2023. As a percentage of net revenues, research and development expenses increased to 21.5% for the first quarter of 2024 from 16.2% for the first quarter of ~~2023 from 16.1% for the first quarter of 2022.~~2023. The components of the ~~$1,616,000~~$2,170,000 increase in research and development expenses were as follows (dollars in thousands):


	Increase (decrease)							Increase (decrease)
Project and pre-production materials								$	922		36.5	%	(1	)
Overhead absorption									714		81.6	%	(2	)
Compensation	$	1,062		10.8	%	(1	)		421		3.9	%	(3	)
Project and pre-production materials		692		37.8	%	(2	)
Outside services		121		72.5	%
Overhead absorption		(539	)	(161.0	)%	(3	)
Depreciation and amortization									106		16.0	%
Equipment set-up and calibration									99		51.0	%
Deferred costs									(350	)	(100.0	)%	(4	)
Other, net		280		10.3	%				258		10.5	%
								$	2,170		13.7	%
	$	1,616		11.3	%

~~(1)~~

~~(2)~~

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

~~(3)~~

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

(1)

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

(2)

Increase primarily attributable to a decrease in research and development (“R&D”) personnel incurring time on production activities, compared to R&D activities.

(3)

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

(4)

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

Litigation-contingency expense was $17,200,000 for the first quarter of 2024 which related to the SynQor litigation, as compared to $0 for the first quarter of 2023. See Note 10 to the Condensed Consolidated Financial Statements for additional information.

The significant components of ~~“Other~~''Other income (expense), ~~net”~~net'' for the three months ended March 31, and the changes between the periods were as follows (in thousands):


	2023		2022			Increase (decrease)			2024			2023		Increase (decrease)
Interest income (expense), net	$	1,732	$	142		$	1,590
Interest income, net									$	2,787		$	1,732	$	1,055
Rental income		198		198			—			198			198		—
Foreign currency gains (losses), net		19		(207	)		226
Foreign currency (losses) gains, net										(279	)		19		(298	)
Other, net		1		29			(28	)		18			1		17

	$	1,950	$	162		$	1,788

-18-

VICOR CORPORATION

Management’s Discussion and Analysis of

Financial Condition and Results of Operation

March 31, 2024


		$	2,724			$	1,950			$	774

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 ~~favorable~~unfavorable foreign currency exchange rate fluctuations in the first quarter of ~~2023~~2024 compared to the first quarter of ~~2022.~~2023. Interest income for the three months ended March 31, 2024 increased due to higher interest rates received on the cash and cash equivalents balance the Company holds.

~~Income~~Loss before income taxes was $(13,391,000) for the first quarter of 2024,as compared to income before taxes of $12,392,000 for the first quarter of ~~2023, as compared to $4,942,000 for the first quarter of 2022.~~2023.

~~-21-~~

~~VICOR CORPORATION~~

~~Management’s Discussion and Analysis of~~

~~Financial Condition and Results of Operation~~

~~March 31, 2023~~

The provision ~~(benefit)~~ for income taxes and the effective income tax rates for the three months ended March 31, ~~2023~~2024 and ~~2022~~2023 were as follows (dollars in thousands):


	2023			2022			2024			2023
Provision (benefit) for income taxes	$	1,141		$	(48	)
Provision for income taxes							$	1,071		$	1,141
Effective income tax rate		9.2	%		(1.0	)%		(8.0	)%		9.2	%

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~~loss for the first quarter of ~~2023~~2024 of ~~$11,244,000,~~$(14,473,000), or ~~$0.25~~$(0.33) per diluted share, compared to ~~$4,999,000,~~$11,244,000, or ~~$0.11~~$0.25 per diluted share, for the first quarter of ~~2022.~~2023.

Liquidity and Capital Resources

As of March 31, ~~2023,~~2024, we had ~~$192,897,000~~$239,172,000 in cash and cash equivalents. The ratio of total current assets to total current liabilities was ~~6.8:~~6.7:1 as of March 31, ~~2023~~2024 and ~~5.6:~~9.5:1 as of December 31, ~~2022.~~2023. Working capital, defined as total current assets less total current liabilities, ~~increased $14,643,000~~decreased $12,013,000 to ~~$312,698,000~~$364,184,000 as of March 31, ~~2023~~2024 from ~~$298,055,000~~$376,197,000 as of December 31, ~~2022.~~2023.

The changes in working capital from December 31, ~~2022~~2023 to March 31, ~~2023~~2024 were as follows (in thousands):


	Increase (decrease)			Increase (decrease)
Cash and cash equivalents	$	2,286		$	(3,047	)
Accounts receivable		(4,368	)		4,973
Inventories		5,972			5,737
Other current assets		(124	)		236
Accounts payable		5,417			(339	)
Accrued compensation and benefits		(475	)		(418	)
Accrued expenses		3,844			(1,976	)
Accrued litigation					(17,200	)
Short-term deferred revenue		3,432			473
Other		(1,341	)		(452	)
				$	(12,013	)
	$	14,643

-19-

VICOR CORPORATION

Management’s Discussion and Analysis of

Financial Condition and Results of Operation

March 31, 2024

The primary sources of cash for the three months ended March 31, ~~2023~~2024 were ~~$10,113,000~~$2,582,000 generated from operations, and ~~$2,261,000~~$1,756,000 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 three months ended March 31, ~~2023~~2024 were for the purchase of property and equipment of ~~$10,089,000.~~$7,270,000.

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

~~-22-~~

~~VICOR CORPORATION~~

~~Management’s Discussion and Analysis of~~

~~Financial Condition and Results of Operation~~

~~March 31, 2023~~

on its view of economic and financial market conditions. We did not repurchase shares of Common Stock under the November 2000 Plan during the three months ended March 31, ~~2023.~~2024. As of March 31, ~~2023,~~2024, we had approximately $8,541,000 remaining available for repurchases of our Common Stock under the November 2000 Plan.

As of March 31, ~~2023,~~2024, we had a total of approximately ~~$19,325,000~~$11,475,000 of cancelable and non-cancelable capital expenditure commitments, principally for manufacturing and production equipment, which we intend to fund with existing cash, and approximately ~~$2,083,000~~$1,983,000 of capital expenditure items and internal-use software which had been received and included in Property, plant and equipment, net in the accompanying Condensed Consolidated Balance Sheets, but not yet paid for. 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, including architectural and construction costs.~~equipment. We believe cash generated from operations together with our available cash and cash equivalents will be sufficient to fund planned operational needs and capital equipment purchases, ~~and the planned construction,~~ for both the short and long term.

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 March 31, ~~2023.~~2024. 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, ~~2022.~~2023.

-20-

~~-23-~~

Vicor Corporation

March 31, ~~2023~~2024

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 March 31, ~~2023,~~2024, 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 March 31, ~~2023.~~2024.

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.

-21-

Vicor Corporation

March 31, 2024

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., March 31, ~~2023)~~2024). 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 March 31, ~~2023,~~2024, 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

~~-24-~~

~~Vicor Corporation~~

~~March 31, 2023~~

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 March 31, ~~2023,~~2024, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

-22-

~~-25-~~

Vicor Corporation

Part II – Other Information

March 31, ~~2023~~2024

Item 1 — Legal Proceedings

See Note 10. Commitments and Contingencies in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 – “Financial Statements.”

Item 1A — Risk Factors

There have been no material changes in the risk factors described in Part I, Item 1A – “Risk Factors” of the Company’s Annual Report on ~~Form10-K~~Form 10-K for the year ended December 31, ~~2022.~~2023.

Item 5 — Other Information

During the three months ended March 31, 2024, no director or Section 16 officer of the 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 Regulation S-K.

Item 6 — Exhibits


Exhibit Number		Description
Exhibit Number 3.1		~~Description~~

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

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

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

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

3.5		Bylaws, as amended (2)

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

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

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

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

101.INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH		Inline XBRL Taxonomy Extension Schema Document.

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

~~(1)~~
		(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.

-23-

~~(2)~~
		(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.

-24-

~~-26-~~

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
	~~VICOR CORPORATION~~

Date: May ~~3, 2023~~	~~By:~~	1, 2024		By:		/s/ Patrizio Vinciarelli
			Patrizio Vinciarelli
			Chairman of the Board, President and
			Chief Executive Officer
			(Principal Executive Officer)

Date: May ~~3, 2023~~	~~By:~~	1, 2024		By:		/s/ James F. Schmidt
			James F. Schmidt
			Vice President, Chief Financial Officer
			(Principal Financial Officer)

-25-

~~-27-~~


Delaware		04-2742817
~~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~~ $0.01 per share	VICR	The NASDAQ Stock Market LLC


Large accelerated filer	☑	☒	Smaller reporting company	☐

Accelerated filer	☐	☐	Emerging growth company	☐

Non-accelerated filer	☐	☐


Common Stock, $.01 par value	~~32,471,065~~	32,808,042
Class B Common Stock, $.01 par value	~~11,743,218~~	11,738,718

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


	March 31, 2023			December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	192,897		$	190,611
Accounts receivable, net		61,061			65,429
Inventories		107,382			101,410
Other current assets		5,030			5,154

Total current assets		366,370			362,604
Long-term deferred tax assets, net		280			280
Long-term investment, net		2,631			2,622
Property, plant and equipment, net		167,812			166,009
Other assets		7,162			5,386

Total assets	$	544,255		$	536,901

Liabilities and Equity
Current liabilities:
Accounts payable	$	16,790		$	22,207
Accrued compensation and benefits		11,324			10,849
Accrued litigation		6,500			6,500
Accrued expenses		4,769			8,613
Short-term lease liabilities		1,459			1,450
Sales allowances		2,389			1,661
Accrued severance and other charges		13			—
Income taxes payable		663			72
Short-term deferred revenue and customer prepayments		9,765			13,197

Total current liabilities		53,672			64,549
Long-term deferred revenue		2,183			145
Long-term income taxes payable		869			862
Long-term lease liabilities		6,872			7,009

Total liabilities		63,596			72,565
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, 11,743,218 shares issued and outstanding in 2023 and 2022		118			118
Common Stock: 1 vote per share, $.01 par value, 62,000,000 shares authorized 44,104,331 shares issued and 32,469,525 shares outstanding in 2023; 43,976,336 shares issued and 32,341,530 shares outstanding in 2022		442			441
Additional paid-in capital		365,442			360,365
Retained earnings		254,323			243,079
Accumulated other comprehensive loss		(993	)		(988	)
Treasury stock at cost: 11,634,806 shares in 2023 and 2022		(138,927	)		(138,927	)

Total Vicor Corporation stockholders’ equity		480,405			464,088
Noncontrolling interest		254			248

Total equity		480,659			464,336

Total liabilities and equity	$	544,255		$	536,901


	Three Months Ended March 31,
	2023			2022
Net revenues	$	97,816		$	88,282
Cost of revenues		51,282			50,681

Gross margin		46,534			37,601
Operating expenses:
Selling, general and administrative		20,223			18,568
Research and development		15,869			14,253

Total operating expenses		36,092			32,821

Income from operations		10,442			4,780
Other income (expense), net:
Total unrealized gains (losses) on available-for-sale securities, net		9			(103	)
Less: portion of (gains) losses recognized in other comprehensive income		(9	)		104

Net credit gains recognized in earnings		—			1
Other income, net		1,950			161

Total other income, net		1,950			162

Income before income taxes		12,392			4,942
Provision (benefit) for income taxes		1,141			(48	)

Consolidated net income		11,251			4,990
Less: Net income (loss) attributable to noncontrolling interest		7			(9	)

Net income attributable to Vicor Corporation	$	11,244		$	4,999

Net income per common share attributable to Vicor Corporation:
Basic	$	0.25		$	0.11
Diluted	$	0.25		$	0.11
Shares used to compute net income per common share attributable to Vicor Corporation:
Basic		44,162			43,952
Diluted		44,907			44,954


	Class B Common Stock		Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss			Treasury Stock			Total Vicor Corporation Stockholders’ Equity			Noncontrolling Interest			Total Equity
Three months ended March 31, 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				1		2,260										2,261						2,261
Stock-based compensation expense						2,817										2,817						2,817
Components of comprehensive income, net of tax:
Net income								11,244								11,244			7			11,251
Other comprehensive loss										(5	)					(5	)		(1	)		(6	)

Total comprehensive income																11,239			6			11,245

Balance on March 31, 2023	$	118	$	442	$	365,442	$	254,323	$	(993	)	$	(138,927	)	$	480,405		$	254		$	480,659


	Class B Common Stock		Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss			Treasury Stock			Total Vicor Corporation Stockholders’ Equity			Noncontrolling Interest			Total Equity
Three months ended March 31, 2022
Balance on December 31, 202 1	$	118	$	439	$	345,664	$	217,633	$	(1,328	)	$	(138,927	)	$	423,599		$	306		$	423,905
Issuance of Common Stock under employee stock plans				1		1,809										1,810						1,810
Stock-based compensation expense						1,994										1,994						1,994
Components of comprehensive income (loss), net of tax:
Net income (loss)								4,999								4,999			(9	)		4,990
Other comprehensive loss										(496	)					(496	)		(14	)		(510	)

Total comprehensive income (loss)																4,503			(23	)		4,480

Balance on March 31, 2022	$	118	$	440	$	349,467	$	222,632	$	(1,824	)	$	(138,927	)	$	431,906		$	283		$	432,189


	March 31, 2023
	Cash and Cash Equivalents		Long-Term Investment
Measured at fair value:
Available-for-sale debt securities:
Money market funds	$	144,725	$	—
Failed Auction Security		—		2,631

Total		144,725		2,631

Other measurement basis:
Cash on hand		48,172		—

Total	$	192,897	$	2,631


	December 31, 2022
	Cash and Cash Equivalents		Long-Term 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


March 31, 2023	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Failed Auction Security	$	3,000		—		369	$	2,631


	Cost		Estimated Fair Value
Failed Auction Security:

Due in twenty years	$	3,000	$	2,631


	Using
	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value as of March 31, 2023
Cash equivalents:

Money market funds	$	144,725	$	—	$	—	$	144,725
Long-term investment:
Failed Auction Security		—		—		2,631		2,631

Balance at the beginning of the period	$	2,622
Credit gain on available-for-sale security included in Other income (expense), net		9

Balance at the end of the period	$	2,631