UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2018

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

For the transition period from                                         

Commission File Number 0-18277

VICOR CORPORATION

(Exact name of registrant as specified in its charter)

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

25 Frontage Road, Andover, Massachusetts 01810

(Address of Principal Executive Office)

(978) 470-2900

(Registrant’s telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.)    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐  (Do not check if a smaller reporting company)	Smaller reporting company	☐
		Emerging growth company	☐

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

The number of shares outstanding of each of the issuer’s classes of Common Stock as of April 23, 2018 was:

Common Stock, $.01 par value	27,775,391
Class B Common Stock, $.01 par value	11,758,218

VICOR CORPORATION

INDEX TO FORM 10-Q

	Page
Part I — Financial Information:
Item 1—Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets at March  31, 2018 and December 31, 2017		1
Condensed Consolidated Statements of Operations for the three months ended March 31, 2018 and 2017		2
Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2018 and 2017		3
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2018 and 2017		4
Notes to Condensed Consolidated Financial Statements		5
Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations		21
Item 3—Quantitative and Qualitative Disclosures About Market Risk		29
Item 4—Controls and Procedures		29
Part II — Other Information:
Item 1—Legal Proceedings		31
Item 1A—Risk Factors		31
Item 6—Exhibits		31
Signature(s)		32
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)

(Unaudited)

	March 31, 2018			December 31, 2017
Assets
Current assets:
Cash and cash equivalents	$	42,678		$	44,230
Accounts receivable, less allowance of $191 in 2018 and $159 in 2017		41,634			34,487
Inventories, net		38,959			36,499
Other current assets		3,733			3,616
Total current assets		127,004			118,832
Long-term deferred tax assets, net		213			210
Long-term investments, net		2,548			2,525
Property, plant and equipment, net		40,973			41,356
Other assets		2,892			2,801
Total assets	$	173,630		$	165,724
Liabilities and Equity
Current liabilities:
Accounts payable	$	11,396		$	9,065
Accrued compensation and benefits		9,002			9,891
Accrued expenses		2,262			2,989
Income taxes payable		298			300
Deferred revenue		2,769			5,791
Sales allowances		384			—
Total current liabilities		26,111			28,036
Long-term deferred revenue		285			303
Contingent consideration obligations		584			678
Long-term income taxes payable		200			195
Other long-term liabilities		95			93
Total liabilities		27,275			29,305
Commitments and contingencies (Note 11)
Equity:
Vicor Corporation stockholders’ equity:
Class B Common Stock		118			118
Common Stock		402			401
Additional paid-in capital		183,415			181,395
Retained earnings		101,218			93,605
Accumulated other comprehensive loss		(234	)		(478	)
Treasury stock, at cost		(138,927	)		(138,927	)
Total Vicor Corporation stockholders’ equity		145,992			136,114
Noncontrolling interest		363			305
Total equity		146,355			136,419
Total liabilities and equity	$	173,630		$	165,724

See accompanying notes.

-1-

VICOR CORPORATION

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended March 31,
	2018			2017
Net revenues	$	65,269		$	54,462
Cost of revenues		35,058			30,810
Gross margin		30,211			23,652
Operating expenses:
Selling, general and administrative		15,399			14,023
Research and development		11,126			11,007
Total operating expenses		26,525			25,030
Income (loss) from operations		3,686			(1,378	)
Other income (expense), net:
Total unrealized gains on available-for-sale securities, net		23			18
Portion of losses recognized in other comprehensive income (loss)		(21	)		(15	)
Net credit gains recognized in earnings		2			3
Other income (expense), net		428			322
Total other income (expense), net		430			325
Income (loss) before income taxes		4,116			(1,053	)
Less: Provision (benefit) for income taxes		134			(99	)
Consolidated net income (loss)		3,982			(954	)
Less: Net income attributable to noncontrolling interest		39			20
Net income (loss) attributable to Vicor Corporation	$	3,943		$	(974	)
Net income (loss) per common share attributable to Vicor Corporation:
Basic	$	0.10		$	(0.02	)
Diluted	$	0.10		$	(0.02	)
Shares used to compute net income (loss) per common share attributable to Vicor Corporation:
Basic		39,479			39,070
Diluted		40,167			39,070

See accompanying notes.

-2-

VICOR CORPORATION

Condensed Consolidated Statements of Comprehensive Income (Loss)

(In thousands)

(Unaudited)

	Three Months Ended March 31,
	2018		2017
Consolidated net income (loss)	$	3,982	$	(954	)
Foreign currency translation gains, net of tax (1)		242		144
Unrealized gains on available-for-sale securities, net of tax (1)		21		15
Other comprehensive income		263		159
Consolidated comprehensive income (loss)		4,245		(795	)
Less: Comprehensive income attributable to noncontrolling interest		58		31
Comprehensive income (loss) attributable to Vicor Corporation	$	4,187	$	(826	)

(1) The deferred tax assets associated with cumulative foreign currency translation gains and cumulative unrealized gains on available-for-sale securities are completely offset by a tax valuation allowance as of March 31, 2018 and 2017. Therefore, there is no income tax benefit (provision) recognized for the three months ended March 31, 2018 and 2017.

See accompanying notes.

-3-

VICOR CORPORATION

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Three Months Ended March 31,
	2018			2017
Operating activities:
Consolidated net income (loss)	$	3,982		$	(954	)
Adjustments to reconcile consolidated net income (loss) to net cash used for operating activities:
Depreciation and amortization		2,269			2,157
Stock-based compensation expense, net		736			254
Provision for doubtful accounts		32			8
Increase in long-term income taxes payable		5			2
Increase in other long-term liabilities		2			64
Decrease in long-term deferred revenue		(18	)		(18	)
Gain on disposal of equipment		(14	)		(2	)
Deferred income taxes		(3	)		—
Credit gain on available-for-sale securities		(2	)		(3	)
Change in current assets and liabilities, net		(7,801	)		(2,855	)
Net cash used for operating activities		(812	)		(1,347	)
Investing activities:
Additions to property, plant and equipment		(1,858	)		(2,648	)
Proceeds from sale of equipment		14			2
Increase in other assets		(104	)		(65	)
Net cash used for investing activities		(1,948	)		(2,711	)
Financing activities:
Proceeds from issuance of Common Stock		1,285			760
Payment of contingent consideration obligations		(94	)		(45	)
Net cash provided by financing activities		1,191			715
Effect of foreign exchange rates on cash		17			—
Net decrease in cash and cash equivalents		(1,552	)		(3,343	)
Cash and cash equivalents at beginning of period		44,230			56,170
Cash and cash equivalents at end of period	$	42,678		$	52,827

See accompanying notes.

-4-

VICOR CORPORATION

Notes to Condensed Consolidated Financial Statements

March 31, 2018

(unaudited)

1. Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements of Vicor Corporation and its consolidated subsidiaries (collectively, the “Company”) have been prepared in accordance with generally accepted accounting principles for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission. 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, 2018 are not necessarily indicative of the results that may be expected for any other interim period or the year ending December 31, 2018. The balance sheet at December 31, 2017 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, 2017 filed by the Company with the Securities and Exchange Commission on March 9, 2018.

2. Recently Adopted Accounting Standard

In May 2014, the Financial Accounting Standards Board (“FASB”) issued new guidance for revenue recognition (“Topic 606”), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The new guidance, which includes several amendments, replaces most of the prior revenue recognition guidance under U.S. Generally Accepted Accounting Principles. The Company adopted the new guidance as of January 1, 2018 using the modified retrospective method, as applied to all contracts. As a result, the Company has changed its accounting policy for revenue recognition, as detailed below. The most significant impact of the adoption was on the timing of recognition of sales to its stocking distributors and including the additional required disclosures under the new standard. Through December 31, 2017, the Company deferred revenue and the related cost of sales on shipments to stocking distributors until the distributors resold the products to their customers. Upon adoption, the Company is no longer permitted to defer revenue until sale by the stocking distributor to the end customer, but rather, is required to estimate the effects of returns and allowances provided to stocking distributors and record revenue at the time of sale to the stocking distributor. In addition, the Company modified the accounting for a contractual arrangement due to a reassessment of the number of performance obligations in the arrangement, and adjusted for the timing of certain royalty revenue. The cumulative effect of adopting this guidance, recorded as an increase to the balance of retained earnings as of January 1, 2018, was approximately $3,670,000. The comparative information for the three months ended March 31, 2017, including disclosures, has not been restated and continues to be reported under the accounting standards in effect for that period.

-5-

VICOR CORPORATION

Notes to Condensed Consolidated Financial Statements

March 31, 2018

(unaudited)

The following tables summarize the impacts of adopting the new revenue recognition guidance on certain components of the Company’s consolidated financial statements as of and for the three months ended March 31, 2018 (in thousands):

a)    Consolidated Balance Sheet Items

	As reported		Adjustments			Balances without adoption of Topic 606
Accounts receivable, net	$	41,634	$	(74	)	$	41,560
Inventories, net		38,959		(44	)		38,915
Total assets		173,630		(118	)		173,512
Income taxes payable		298		(7	)		291
Deferred revenue		2,769		4,073			6,842
Sales allowances		384		(301	)		83
Total liabilities		27,275		3,765			31,040
Retained earnings		101,218		(3,883	)		97,335
Total equity		146,355		(3,883	)		142,472
Total liabilities and equity		173,630		(118	)		173,512

b)    Consolidated Statement of Operations Items

	As reported		Adjustments			Balances without adoption of Topic 606
Net revenues	$	65,269	$	(804	)	$	64,465
Cost of revenues		35,058		(584	)		34,474
Gross margin		30,211		(220	)		29,991
Income (loss) before income taxes		4,116		(220	)		3,896
Provision for income taxes		134		(7	)		127
Consolidated net income (loss)		3,982		(213	)		3,769
Net income (loss) attributable to Vicor Corporation		3,943		(213	)		3,730

The impact of the adoption of the new revenue recognition standard on the unaudited consolidated statements of comprehensive income (loss) and cash flows for the three months ended March 31, 2018 was not material.

3. Revenue Recognition

Prior to January 1, 2018

Product revenue was recognized in the period when persuasive evidence of an arrangement with a customer existed, the products were shipped and title was transferred to the customer, the price was fixed or determinable, and collection was considered probable.

The Company deferred revenue and the related cost of sales on shipments to stocking distributors until the distributors resold the products to their customers. The agreements with these stocking distributors allowed them to receive price adjustment credits or to return qualifying products for credit, as determined by the Company, in order to reduce the amounts of slow-moving, discontinued, or obsolete product from their inventory. These stocking distributors were also granted price adjustment credits in the event of a price decrease subsequent to the date the product was shipped and invoiced to the stocking distributor. Given the uncertainties associated with the levels of price adjustment credits to be granted to stocking distributors, the sales price to the stocking distributor was not fixed or determinable until the stocking distributor resold the products to its customers. Therefore,

-6-

VICOR CORPORATION

Notes to Condensed Consolidated Financial Statements

March 31, 2018

(unaudited)

the Company deferred revenue and the related cost of sales on shipments to stocking distributors until the stocking distributors resold the products to their customers. Accordingly, the Company’s revenue fully reflected end-customer purchases and was not impacted by stocking distributor inventory levels. Agreements with stocking distributors limited returns of qualifying product to the Company to a certain percentage of the value of the Company’s shipments to that stocking distributor during the prior quarter. In addition, stocking distributors were allowed to return unsold products if the Company terminated the relationship with the stocking distributor. Title to the inventory transferred to the stocking distributor at the time of shipment or delivery to the stocking distributor, as well as payment from the stocking distributor, were due in accordance with the Company’s standard payment terms. These payment terms were not contingent upon the stocking distributors’ sale of the products to their end-customers. Upon title transfer to stocking distributors, the Company reduced inventory for the cost of goods shipped, the margin (i.e., revenues less cost of revenues) was recorded as deferred revenue, and an account receivable was recorded. As of December 31, 2017, the Company had gross deferred revenue of approximately $4,659,000 and gross deferred cost of revenues of approximately $2,135,000 under agreements with stocking distributors.

The Company evaluated revenue arrangements with potential multi-element deliverables to determine if there were more than one unit of accounting. A deliverable constituted a separate unit of accounting when it had standalone value and there were no customer-negotiated refund or return rights for the undelivered elements. The Company entered into arrangements containing multiple elements that could include a combination of non-recurring engineering services (“NRE”), prototype units, and production units. The Company determined NRE and prototype units represented one unit of accounting and production units represented a separate unit of accounting, based on an assessment of the respective standalone value. The Company deferred revenue recognition for NRE and prototype units until completion of the final milestone under the NRE arrangement, which was generally the delivery of the prototype. Recognition generally took place within six to twelve months of the initiation of the arrangement. Revenue for the production units was recognized upon shipment, consistent with other product revenue summarized above.

License fees were recognized as earned. The Company recognized revenue on such arrangements only when the contract was signed, the license term had begun, all obligations had been delivered to the customer, and collection was probable.

Subsequent to January 1, 2018

Revenue is recognized when control of the promised goods or services is transferred to a customer, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Sales, value add, and other taxes collected concurrent with revenue-producing activities are excluded from revenue. The expected costs associated with product warranties continue to be recognized at the time product revenue is recognized. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in cost of revenues.

The Company’s primary source of net revenue comes from the sale of products, which are modular power components and power systems for converting, regulating and controlling electric current. The principal customers for the Company’s power converters and systems are large original equipment manufacturers and the original design manufacturers and contract manufacturers serving them, and smaller, lower volume users, which are broadly distributed across several major market areas. The Company recognizes revenue for product sales at a point in time following the transfer of control of such products to the customer, which typically occurs upon shipment or delivery, depending on the terms of the underlying contract. As noted above, the Company previously deferred revenue and the related cost of revenues on shipments to stocking distributors until the distributors resold the products to their customers. The Company now records revenue for such transactions at the time of sale to the stocking distributor. The Company establishes sales allowances for estimated future product returns including distributor returns and price adjustment credits, primarily based upon historical and anticipated rates of product returns and allowances.

Certain contracts with customers contain multiple performance obligations, which typically may include a combination of NRE, prototype units, and production units. For these contracts, the individual performance obligations are accounted for separately if they are distinct. Generally, the Company has determined the NRE and prototype units represent one distinct performance obligation and the production units represent a separate distinct performance obligation. For such arrangements, revenue is allocated to each performance obligation based on its relative standalone selling price, based on prices charged to customers or using the expected cost plus a margin approach. The Company defers revenue recognition for NRE and prototype

-7-

VICOR CORPORATION

Notes to Condensed Consolidated Financial Statements

March 31, 2018

(unaudited)

units until the point in time at which the final milestone under the NRE arrangement is completed and control is transferred to the customer, which is generally the delivery of the prototype. Revenue for production units is recognized upon shipment or delivery, consistent with product revenue summarized above.

The Company licenses its intellectual property under right to use licenses, in which royalties due to the Company are based upon a percentage of the licensee’s sales. The Company utilizes the exception under the revenue recognition guidance for the recognition of sales- or usage-based royalties, in which the royalties are not recognized until the later of when 1) the customer’s subsequent sales or usages occur, or 2) the performance obligation to which some or all of the sales- or usage-based royalty has been allocated is satisfied or partially satisfied.

The Company’s payment terms vary by the type and location of its customers and the products or services offered, although terms generally include a requirement of payment within 30 to 60 days. There are circumstances in which the Company has required cash in advance (i.e., a partial down-payment) to facilitate orders in excess of a customer’s established credit limit.    

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. During the three months ended March 31, 2018 under Topic 606, the Company recognized revenue of approximately $205,000 that was included in deferred revenue at the beginning of the period.

The Company applies the practical expedient allowed under the new guidance for the incremental costs of obtaining a contract for sales commissions, which are expensed when incurred because the amortization period is generally less than one year. These costs are included in selling, general and administrative expenses.

The Company also applies another practical expedient allowed under the new guidance and does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.

The following table presents the Company’s net revenues disaggregated by geography based on the location of the customer, by reportable segment, for the three months ended March 31, 2018 (in thousands):

Primary geographic markets	BBU		VI Chip		Picor		Total
United States	$	16,991	$	7,999	$	633	$	25,623
Europe		4,725		573		75		5,373
Asia Pacific		18,211		11,387		3,758		33,356
All other		710		180		27		917
	$	40,637	$	20,139	$	4,493	$	65,269

-8-

VICOR CORPORATION

Notes to Condensed Consolidated Financial Statements

March 31, 2018

(unaudited)

The following table presents the Company’s net revenues disaggregated by the category of revenue, by reportable segment, for the three months ended March 31, 2018 (in thousands):

Category of revenue	BBU		VI Chip		Picor		Total
Direct customers, contract manufacturers and non-stocking distributors	$	35,474	$	17,306	$	3,980	$	56,760
Stocking distributors, net of sales allowances		4,963		2,554		389		7,906
Non-recurring engineering		175		245		90		510
Royalties		25		25		25		75
Other		—		9		9		18
	$	40,637	$	20,139	$	4,493	$	65,269

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

	March 31, 2018			December 31, 2017			Increase (decrease)
Accounts receivable	$	41,634		$	34,487		$	7,147
Deferred revenue		(1,419	)		(5,015	)		(3,596	)
Deferred expenses		624			377			247
Customer prepayments		(1,350	)		(776	)		574
Sales allowances		(384	)		—			384

The increase in accounts receivable was primarily due to an increase in net revenues of approximately $6,498,000 in the first quarter of 2018 compared to the fourth quarter of 2017. The decrease in deferred revenue was primarily due to the adoption of the new revenue recognition guidance, as the balances related to stocking distributors were reversed as part of the transition adjustment recorded as of January 1, 2018 (see Note 2 to the Condensed Consolidated Financial Statements). The increase in deferred expenses is primarily due to additional work incurred on certain NRE projects during the first quarter of 2018 for which the associated revenue is being deferred. The increase in sales allowances was primarily due to the establishment of new allowances, in connection with the new revenue recognition guidance, for potential returns and price adjustment credits on sales to stocking distributors.

Deferred expenses are included in Other current assets, and customer prepayments are included in Deferred revenue, in the accompanying Condensed Consolidated Balance Sheets, respectively.

4. Long-Term Investments

As of March 31, 2018 and December 31, 2017, the Company held one 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. 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

-9-

VICOR CORPORATION

Notes to Condensed Consolidated Financial Statements

March 31, 2018

(unaudited)

Security is presently at risk of default. Through March 31, 2018, the Company has continued to receive interest payments on the Failed Auction Security in accordance with the terms of its indenture. Management believes the Company ultimately should be able to liquidate the Failed Auction Security without significant loss primarily due to the overall quality of the issue held and the collateral securing the substantial majority of the underlying obligation. However, current conditions in the auction rate securities market have led management to conclude the recovery period for the Failed Auction Security exceeds 12 months. As a result, the Company continued to classify the Failed Auction Security as long-term as of March 31, 2018.

The following is a summary of available-for-sale securities (in thousands):

March 31, 2018	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Failed Auction Security	$	3,000	$	—	$	452	$	2,548

December 31, 2017	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Failed Auction Security	$	3,000	$	—	$	475	$	2,525

As of March 31, 2018, 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 Failed Auction Security on March 31, 2018, by contractual maturity, is shown below (in thousands):

	Cost		Estimated Fair Value
Due in twenty-six years	$	3,000	$	2,548

Based on the fair value measurements described in Note 5, the fair value of the Failed Auction Security on March 31, 2018, with a par value of $3,000,000, was estimated by the Company to be approximately $2,548,000. The gross unrealized loss of $452,000 on the Failed Auction Security consists of two types of estimated loss: an aggregate credit loss of $46,000 and an aggregate temporary impairment of $406,000. In determining the amount of credit loss, the Company compared the present value of cash flows expected to be collected to the amortized cost basis of the security, considering credit default risk probabilities and changes in credit ratings as significant inputs, among other factors (See Note 5).

-10-

VICOR CORPORATION

Notes to Condensed Consolidated Financial Statements

March 31, 2018

(unaudited)

The following table represents a rollforward of the activity related to the credit loss recognized in earnings on the Failed Auction Security for the three months ended March 31 (in thousands):

	2018			2017
Balance at the beginning of the period	$	48		$	59
Reductions in the amount related to credit gain for which other-than- temporary impairment was not previously recognized		(2	)		(3	)
Balance at the end of the period	$	46		$	56

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

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

5. 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, 2018 (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, 2018
Cash equivalents:
Money market funds	$	9,506	$	—	$	—		$	9,506
Long-term investments:
Failed Auction Security		—		—		2,548			2,548
Liabilities:
Contingent consideration obligations		—		—		(584	)		(584	)

-11-

VICOR CORPORATION

Notes to Condensed Consolidated Financial Statements

March 31, 2018

(unaudited)

Assets and liabilities measured at fair value on a recurring basis included the following as of December 31, 2017 (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 December 31, 2017
Cash equivalents:
Money market funds	$	9,279	$	—	$	—		$	9,279
Long-term investments:
Failed Auction Security		—		—		2,525			2,525
Liabilities:
Contingent consideration obligations		—		—		(678	)		(678	)

As of March 31, 2018, there was insufficient observable auction rate security market information available to determine the fair value of the Failed Auction Security using Level 1 or Level 2 inputs. As such, the Company’s investment in the Failed Auction Security was deemed to require valuation using Level 3 inputs. Management, after consulting with advisors, valued the Failed Auction Security using analyses and pricing models similar to those used by market participants (i.e., buyers, sellers, and the broker-dealers responsible for execution of the Dutch auction pricing mechanism by which each issue’s interest rate was set). Management utilized a probability weighted discounted cash flow (“DCF”) model to determine the estimated fair value of this security as of March 31, 2018. The major assumptions used in preparing the DCF model included: estimates for the amount and timing of future interest and principal payments based on default probability assumptions used to measure the credit loss of 2.0%; the rate of return required by investors to own this type of security in the current environment, which management estimates to be 5.0% above the risk free rate of return; and an estimated timeframe of three to five years for successful auctions for this type of security to occur. In making these assumptions, management considered relevant factors including: the formula applicable to the security defining the interest rate paid to investors in the event of a failed auction (the “Penalty Rate”); forward projections of the interest rate benchmarks specified in such formulas; the likely timing of principal repayments; the probability of full repayment considering the guarantees by the U.S. Department of Education of the underlying student loans, guarantees by other third parties, and additional credit enhancements provided through other means; and publicly available pricing data for recently issued student loan asset-backed securities not subject to auctions. In developing its estimate of the rate of return required by investors to own the security, management compared the Penalty Rate of the Failed Auction Security with yields of actively traded long-term bonds with similar characteristics and, reflecting the limited liquidity for auction rate securities and the discounts to par value seen in recent tender offers by issuers and arm’s length market transactions between informed buyers and sellers, estimated the implied yield (i.e., the discount to par value) necessary to complete a sale of the Failed Auction Security. Management has calculated an increase or decrease in the liquidity risk premium of 5.0% referenced above of 1.0% (i.e., 100 basis points) as used in the model, would decrease or increase, respectively, the fair value of the Failed Auction Security by approximately $100,000.

The significant unobservable inputs used in the fair value measurement of the Failed Auction Security are the cumulative probability of earning the maximum rate until maturity, the cumulative probability of principal return prior to maturity, the cumulative probability of default, the liquidity risk premium, and the recovery rate in default. Significant increases (decreases) in any of those inputs in isolation would result in changes in fair value measurement. Significant increases (decreases) in the cumulative probability of earning the maximum rate until maturity, the cumulative probability of principal return prior to maturity, and the recovery rate in default would result in a higher (lower) fair value measurement, while increases (decreases) in the cumulative probability of default and the liquidity risk premium would result in a lower (higher) fair value measurement.

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VICOR CORPORATION

Notes to Condensed Consolidated Financial Statements

March 31, 2018

(unaudited)

Generally, the interrelationships are such that a change in the assumption used for the cumulative probability of principal return prior to maturity is accompanied by a directionally similar change in the assumption used for the cumulative probability of earning the maximum rate until maturity and a directionally opposite change in the assumptions used for the cumulative probability of default and the liquidity risk premium. The recovery rate in default is somewhat independent and based upon the security’s specific underlying assets and published recovery rate indices.

Quantitative information about Level 3 fair value measurements as of March 31, 2018 is as follows (dollars in thousands):

	Fair Value		Valuation Technique	Unobservable Input	Weighted Average
Failed Auction Security	$	2,548	Discounted cash flow	Cumulative probability of earning the maximum rate until maturity		0.06	%
				Cumulative probability of principal return prior to maturity		94.03	%
				Cumulative probability of default		5.91	%
				Liquidity risk premium		5.00	%
				Recovery rate in default		40.00	%

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, 2018 was as follows (in thousands):

Balance at the beginning of the period	$	2,525
Credit gain on available-for-sale securities included in Other income (expense), net		2
Gain included in Other comprehensive income		21
Balance at the end of the period	$	2,548

The Company has classified its contingent consideration obligations as Level 3 because the fair value for these liabilities was determined using unobservable inputs. The liabilities were based on estimated sales of legacy products over the period of royalty payments at the royalty rate, discounted using the Company’s estimated cost of capital.

The change in the estimated fair value calculated for the liabilities valued on a recurring basis utilizing Level 3 inputs

(i.e., the Contingent consideration obligations) for the three months ended March 31, 2018 was as follows (in thousands):

Balance at the beginning of the period	$	678
Payments		(94	)
Balance at the end of the period	$	584

There were no transfers between Level 1 and Level 2 of the fair value hierarchy during the three months ended March 31, 2018.

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VICOR CORPORATION

Notes to Condensed Consolidated Financial Statements

March 31, 2018

(unaudited)

6. Stock-Based Compensation

The Company uses the Black-Scholes option pricing model to calculate the fair value of stock option awards and options granted under the Vicor Corporation 2017 Employee Stock Purchase Plan (“ESPP”) as of their grant date. Stock-based compensation expense, net for the three months ended March 31 was as follows (in thousands):

	2018		2017
Cost of revenues	$	56	$	34
Selling, general and administrative		542		180
Research and development		138		40
Total stock-based compensation	$	736	$	254

Compensation expense by type of award for the three months ended March 31 was as follows (in thousands):

	2018		2017
Stock options	$	593	$	254
ESPP		143		—
Total stock-based compensation	$	736	$	254

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VICOR CORPORATION

Notes to Condensed Consolidated Financial Statements

March 31, 2018

(unaudited)

7. Net Income (Loss) per Share

The following table sets forth the computation of basic and diluted net income (loss) per share for the three months ended March 31 (in thousands, except per share amounts):

	2018		2017
Numerator:
Net income (loss) attributable to Vicor Corporation	$	3,943	$	(974	)
Denominator:
Denominator for basic net income (loss) per share-weighted average shares (1)		39,479		39,070
Effect of dilutive securities:
Employee stock options (2)		688		—
Denominator for diluted net income (loss) per share – adjusted weighted-average shares and assumed conversions		40,167		39,070
Basic net income (loss) per share	$	0.10	$	(0.02	)
Diluted net income (loss) per share	$	0.10	$	(0.02	)

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

(2) Options to purchase 82,241 and 1,621,001 shares of Common Stock for the three months ended March 31, 2018 and 2017, respectively, were not included in the calculation of net income (loss) per share as the effect would have been antidilutive.

8. Inventories

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

The Company provides reserves for inventories estimated to be excess, obsolete or unmarketable. The Company’s estimation process for assessing net realizable value is based upon its known backlog, projected future demand, historical consumption and expected market conditions. If the Company’s estimated demand and/or market expectation were to change or if product sales were to decline, the Company’s estimation process may cause larger inventory reserves to be recorded, resulting in larger charges to cost of revenues.

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VICOR CORPORATION

Notes to Condensed Consolidated Financial Statements

March 31, 2018

(unaudited)

Inventories were as follows (in thousands):

	March 31, 2018		December 31, 2017
Raw materials	$	30,489	$	27,400
Work-in-process		3,266		3,596
Finished goods		5,204		5,503
Net balance	$	38,959	$	36,499

9. Product Warranties

The Company generally offers a two-year warranty for all of its products, though it has extended the warranty period to three years for certain military grade products sold after January 1, 2017. The Company is party to a limited number of supply agreements with certain customers contractually committing the Company to warranty and indemnification requirements exceeding those to which the Company has been exposed in the past. The Company provides for the estimated cost of product warranties at the time product revenue is recognized. Factors influencing the Company’s warranty reserves include the number of units sold, historical and anticipated rates of warranty returns, and the cost per return. The Company periodically assesses the adequacy of warranty reserves and adjusts the amounts as necessary. Warranty obligations are included in “Accrued expenses” in the accompanying Condensed Consolidated Balance Sheets.

Product warranty activity for the three months ended March 31 was as follows (in thousands):

	2018			2017
Balance at the beginning of the period	$	290		$	214
Accruals for warranties for products sold in the period		123			104
Fulfillment of warranty obligations		(57	)		(73	)
Revisions of estimated obligations		(10	)		(60	)
Balance at the end of the period	$	346		$	185

10. Income Taxes

The tax provision (benefit) 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).

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

	2018			2017
Provision (benefit) for income taxes	$	134		$	(99	)
Effective income tax rate		3.3	%		(9.4	)%

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VICOR CORPORATION

Notes to Condensed Consolidated Financial Statements

March 31, 2018

(unaudited)

The effective tax rate was lower than the statutory tax rate in 2018 due to the utilization of net operating carryforwards and tax credits. It was lower in 2017 due to a full valuation allowance against all net domestic deferred tax assets.

On December 22, 2017, the U.S. government enacted comprehensive tax legislation, referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code, including, but not limited to: (1) reducing the U.S. federal corporate tax rate from 35% to 21%; (2) elimination of the corporate alternative minimum tax (“AMT”) and changing how existing AMT credits can be realized; (3) changing rules related to the usage and limitation of net operating loss carryforwards created in tax years beginning after December 31, 2017; and (4) implementing a territorial tax system, which generally eliminates the U.S. federal income tax on dividends from foreign subsidiaries, and imposes a one-time transition tax on certain earnings of foreign subsidiaries previously untaxed in the United States.

Certain impacts of the Tax Act would generally require accounting to be completed in the period of enactment. However, in response to the complexities of the Tax Act, the Securities and Exchange Commission (“SEC”) issued guidance through Staff Accounting Bulletin No. 118 to provide companies with relief. Specifically, when the initial accounting for items under the Tax Act is incomplete, the guidance allows companies to include provisional amounts when reasonable estimates can be made. The SEC has provided up to a one-year measurement period for companies to finalize the accounting for the impact of the new legislation and the Company expects to finalize the accounting over the coming quarters. The Company has recognized the provisional tax impacts related to the re-measurement of its deferred tax assets and liabilities, and one-time transition tax, for the year ended December 31, 2017. The ultimate impact may differ from these provisional amounts due to, among other things, additional analysis, changes in interpretations and assumptions the Company has made, additional regulatory guidance that may be issued, and actions the Company may take as a result of the Tax Act. There were no changes to the provisional tax impacts referred to above in the first quarter of 2018.

As of March 31, 2018, the Company continues to maintain a valuation allowance of approximately $33,024,000 against all domestic net deferred tax assets, for which realization cannot be considered more likely than not at this time.

In May 2017, the Company received notice from the Internal Revenue Service that its federal corporate tax return for tax year 2015 had been selected for examination. The examination is ongoing. In January 2018, the Company received notice from the New York State Department of Taxation that its New York State tax returns for tax years 2014 through 2016 were selected for audit. On site fieldwork for this audit will take place in May 2018.

11. Commitments and Contingencies

At March 31, 2018, the Company had approximately $1,649,000 of capital expenditure commitments.

On January 28, 2011, SynQor, Inc. (“SynQor”) filed a complaint for patent infringement against Ericsson, Inc. (“Ericsson”), Cisco Systems, Inc. (“Cisco”) and the Company in the U.S. District Court for the Eastern District of Texas (the “Texas Action”). Ericsson and Cisco subsequently settled with SynQor and are no longer parties to the Texas Action. With respect to the Company, SynQor’s complaint in the Texas Action alleged that the Company’s products, including but not limited to unregulated bus converters used in intermediate bus architecture power supply systems, infringe SynQor’s U.S. patent numbers 7,072,190, 7,272,021, and 7,564,702 (“the ‘190 patent”, “the ‘021 patent” and “the ‘702 patent”, respectively). SynQor’s complaint sought an injunction against further infringement and an award of unspecified compensatory and enhanced damages, interest, costs and attorney fees. On September 20, 2011, SynQor filed an amended complaint in the Texas Action that further alleged that the Company’s products, including, but not limited to, unregulated bus converters used in intermediate bus architecture power supply systems, infringe SynQor’s U.S. patent number 8,023,290 (“the ‘290 patent”). The Company responded to SynQor’s amended complaint in the Texas Action by denying its products infringe any of the SynQor patents, and asserting that the SynQor patents are invalid. The Company further alleged that the SynQor ‘290 patent is unenforceable due to inequitable conduct by SynQor or its agents during the examination of the ‘290 patent at the United States Patent and Trademark Office (“USPTO”). The Company also asserted counterclaims seeking damages against SynQor for deceptive trade practices and tortious interference with prospective economic advantage arising from SynQor’s attempted enforcement of its patents against the Company.

The Company initiated administrative review proceedings at the USPTO challenging the validity of certain claims of the SynQor patents asserted in the Texas Action, including all claims that were asserted against the Company by SynQor. Regarding the ‘190 patent, the Patent Trial and Appeal Board (“PTAB”) of the USPTO issued a decision upholding the validity of the ‘190 patent claims. That decision was appealed by the Company to the United States Court of Appeals for the Federal Circuit (“the Federal Circuit”), which issued a decision on March 13, 2015 reversing the PTAB, determining that certain claims were invalid, and remanding the matter to the PTAB for further proceedings. On May 2, 2016, the PTAB issued a decision determining that all but one of the remaining claims of the ‘190 patent were invalid and remanding the remaining claim to a patent examiner for further examination. On June 22, 2017, the examiner issued a determination under 37 C.F.R. § 41.77(d), finding that the remaining claim of the ‘190 patent was unpatentable. That decision is expected to be further reviewed by the PTAB pursuant to 37 C.F.R. § 41.77(f).

On May 2, 2016, the PTAB also issued decisions finding all challenged claims of SynQor’s ‘021 patent invalid and upholding the validity of all challenged claims of SynQor’s ‘702 and ‘290 patents. On May 23, 2016, the Texas Court issued an order staying the Texas Action until the completion of all of the administrative review proceedings concerning the asserted SynQor patents, including any appeals from such proceedings to the Federal Circuit.

On August 30, 2017, the Federal Circuit issued rulings with regard to PTAB’s reexamination decisions for the ‘021, ‘702 and ‘290 patents. With respect to the ‘021 patent, the Federal Circuit affirmed the PTAB’s determination that all of the challenged claims of the ‘021 patent were invalid. The Federal Circuit remanded the case to the PTAB for further consideration of the patentability of certain claims that had been added by amendment during the reexamination. With respect to the ‘702 patent, the Federal Circuit affirmed the PTAB’s determination that all of the challenged claims of the ‘702 patent were patentable. With respect to the ‘290

patent, the Federal Circuit vacated the PTAB’s decision upholding the patentability of the ‘290 patent claims, and remanded the case to the PTAB for further consideration.

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VICOR CORPORATION

Notes to Condensed Consolidated Financial Statements

March 31, 2018

(unaudited)

On October 31, 2017, the Company filed a request with the USPTO for ex parte reexamination of the ‘702 patent, based on different prior art references than had been at issue in the previous inter parte reexamination of the ‘702 patent. On December 6, 2017, the USPTO issued a decision granting the Company’s request for ex parte reexamination of the ‘702 patent, finding that the Company’s request was warranted because it raised substantial new questions of patentability of the ‘702 patent. On March 21, 2018, the USPTO issued a non-final office action finding all of the challenged claims of the ‘702 patent to be unpatentable. The Company continues to monitor the progress of this proceeding.

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

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

12. Segment Information

The Company has organized its business segments according to its key product lines. The Brick Business Unit (“BBU”) segment designs, develops, manufactures, and markets the Company’s legacy lines of DC-DC converters and configurable products, and also includes the entities comprising Vicor Custom Power and the BBU operations of Vicor Japan Company, Ltd. (“VJCL”). The VI Chip segment includes VI Chip Corporation, which designs, develops, manufactures, and markets many of the Company’s advanced power component products. The VI Chip segment also includes the VI Chip business conducted in Japan through VJCL. The Picor segment consists of Picor Corporation, which designs, develops, manufactures, and markets integrated circuits for use in a variety of power management and power system applications. The Picor segment develops integrated circuits for use in the Company’s BBU and VI Chip modules, to be sold as complements to the Company’s BBU and VI Chip products, or for sale to third parties for separate (i.e., stand-alone) applications.

The Company’s Chief Executive Officer (i.e., the chief operating decision maker) evaluates performance and allocates resources based on segment revenues and segment operating income (loss). The operating income (loss) for each segment includes selling, general, and administrative and research and development expenses directly attributable to the segment. Certain of the Company’s indirect overhead costs, which include corporate selling, general, and administrative expenses, are allocated among the segments based upon an estimate of costs associated with each segment. Assets allocated to each segment are based upon specific identification of such assets, which include accounts receivable, inventories, fixed assets and certain other assets. The Corporate segment consists of those operations and assets shared by all segments. The costs of certain centralized executive and administrative functions are recorded in this segment, as are certain shared assets, most notably cash and cash equivalents, deferred tax assets, long-term investments, the Company’s facilities in Massachusetts, real estate, and other assets. The Company’s accounting policies and method of presentation for segments are consistent with that used throughout the Condensed Consolidated Financial Statements.

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VICOR CORPORATION

Notes to Condensed Consolidated Financial Statements

March 31, 2018

(unaudited)

The following table provides segment financial data as of and for the three months ended March 31 (in thousands):

	BBU		VI Chip			Picor		Corporate			Eliminations (1)			Total
2018:
Net revenues	$	40,637	$	20,881		$	8,221	$	—		$	(4,470	)	$	65,269
Income (loss) from operations		1,039		1,081			2,022		(456	)		—			3,686
Total assets		239,619		40,206			12,662		58,095			(176,952	)		173,630
Depreciation and amortization		912		811			191		355			—			2,269
2017:
Net revenues	$	37,535	$	12,922		$	6,858	$	—		$	(2,853	)	$	54,462
Income (loss) from operations		1,420		(3,920	)		1,368		(246	)		—			(1,378	)
Total assets		206,812		22,736			10,268		69,507			(152,752	)		156,571
Depreciation and amortization		973		629			180		375			—			2,157

(1) The elimination for net revenues is principally related to inter-segment sales by Picor to BBU and VI Chip and for inter-segment sales by VI Chip to BBU. The elimination for total assets is principally related to inter-segment accounts receivable due to BBU for the funding of VI Chip and Picor operations.

13. Impact of Recently Issued Accounting Standards

In May 2017, the FASB issued guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718, Compensation – Stock Compensation. The new guidance is effective for annual and interim periods beginning after December 15, 2017, with early adoption permitted. The Company adopted the new standard on January 1, 2018. The adoption of this new guidance did not have a material impact on its consolidated financial statements and related disclosures.

In August 2016, the FASB issued guidance to clarify how certain cash receipts and cash payments should be presented in the statement of cash flows. These include debt prepayment, settlement of zero-coupon debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, distributions received from equity method investees and beneficial interests in securitization transactions. The new guidance is effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted. The Company adopted the new standard on January 1, 2018. The adoption of this new guidance did not have a material impact on its consolidated financial statements and related disclosures.

In June 2016, the FASB issued new guidance which will require measurement and recognition of expected credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. The new guidance is effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted. It is required to be applied on a modified-retrospective approach with certain elements being adopted prospectively. The Company does not expect the adoption of the new guidance will have a material impact on its consolidated financial statements and related disclosures.

In February 2016, the FASB issued new guidance for lease accounting, which will require lessees to recognize leases on the balance sheet and disclose key information about leasing arrangements. The new guidance establishes a right-of-use model

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VICOR CORPORATION

Notes to Condensed Consolidated Financial Statements

March 31, 2018

(unaudited)

(“ROU”) that will require a lessee to recognize a ROU asset and a lease liability on the balance sheet for all leases with a term longer than twelve months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. For lessors, the guidance modifies the classification criteria and accounting for sales-type and direct financing leases. The majority of the Company’s leases are for certain of its office and manufacturing space. The Company is currently developing an implementation plan and gathering information, including compiling an inventory of all leasing arrangements, to assess the impact of the new standard on its financial statements. The new standard is effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted. The Company plans to adopt the new guidance effective January 1, 2019. The new standard must be adopted using a modified retrospective transition which includes certain practical expedients. The Company has not yet determined the impact this new guidance will have on its consolidated financial statements and related disclosures.

Other new pronouncements issued but not effective until after March 31, 2018 are not expected to have a material impact on the Company’s consolidated financial statements.

-20-

VICOR CORPORATION

Management’s Discussion and Analysis of

Financial Condition and Results of Operation

March 31, 2018

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

Except for statements of historical fact contained herein, statements in this report constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words “believes,” “expects,” “anticipates,” “intends,” “estimates,” “plans,” “assumes,” “may,” “will,” “would,” “should,” “continue,” “prospective,” “project,” and other similar words or expressions identify forward-looking statements. Forward-looking statements include, without limitation, statements regarding the transition of the Company’s business strategically and organizationally 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, typically concentrated in computing and communications; the level of customer orders overall and, in particular, from large customers and the delivery lead times associated therewith; the financial and operational impact of customer changes to shipping schedules; the derivation of a portion of the Company’s sales in each quarter from orders booked in the same quarter; the Company’s ongoing development of power conversion architectures, switching topologies, packaging technologies, and products; the Company’s plans to invest in expanded manufacturing capacity and the timing and location thereof; the Company’s continued success depending in part on its ability to attract and retain qualified personnel; the Company’s belief that cash generated from operations and the total of its cash and cash equivalents will be sufficient to fund operations for the foreseeable future; the Company’s belief that it has limited exposure to currency risks; the Company’s intentions regarding the declaration and payment of cash dividends; the Company’s intentions regarding protecting its rights under its patents; and the Company’s expectation that no current litigation or claims will have a material adverse impact on its financial position or results of operations. These statements are based upon the Company’s current expectations and estimates as to the prospective events and circumstances which may or may not be within the Company’s control and as to which there can be no assurance. Actual results could differ materially from those expressed or implied by forward-looking statements as a result of various factors, including the Company’s ability to: grow its revenues, establish and maintain profitability, develop and market new products and technologies cost effectively, and on a timely basis leverage the Company’s new technologies in standard products to promote market acceptance of the Company’s new approach to power system architecture; leverage design wins into increased product sales; continue to meet requirements of key customers and prospects; enter into licensing agreements increasing the Company’s market opportunity and accelerating market penetration; realize significant royalties under such licensing agreements; achieve sustainable bookings rates for the Company’s products across served markets and geographies; improve manufacturing and operating efficiencies; successfully enforce the Company’s intellectual property rights; successfully defend outstanding litigation; hire and retain key personnel; and maintain an effective system of internal controls over financial reporting. These and other factors that may influence actual results are described in the risk factors set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, 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.” The risk factors contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 may not be exhaustive. Therefore, the information contained therein should be read together with other reports and documents that the Company files with the Securities and Exchange Commission from time to time, including Forms 10-Q, 8-K and 10-K, which may supplement, modify, supersede or update those risk factors. Except as required by law, the Company does not undertake any obligation to update any forward-looking statements as a result of future events or developments.

Overview

We design, develop, manufacture, and market modular power components and power systems for converting, regulating, and controlling electric current. We also license certain rights to our technology in return for recurring royalties. The principal customers for our power converters and systems are large original equipment manufacturers (“OEMs”) and the Original Design Manufacturers (“ODMs”) and contract manufacturers serving them, and smaller, lower volume users. We serve a broad range of market segments and geographies worldwide.

We have organized our business segments according to our key product lines. Reflecting our history and direction, we broadly categorize our products as either “legacy” or “advanced,” generally based on design, performance, and form factor considerations, as well as the range of applications for which the products are appropriate.

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VICOR CORPORATION

Management’s Discussion and Analysis of

Financial Condition and Results of Operation

March 31, 2018

The Brick Business Unit (“BBU”) segment designs, develops, manufactures and markets our legacy lines of DC-DC converters and configurable products, as well as complementary components providing AC line rectification, input filtering, power factor correction, and transient protection. The BBU segment also includes the BBU business conducted through Vicor Japan Company, Ltd. (“VJCL”) and our Vicor Custom Power subsidiaries. The BBU has customers concentrated in aerospace and aviation, defense electronics, industrial automation, industrial equipment, medical diagnostics, rail transportation, and test and measurement instrumentation.

The VI Chip segment consists of our subsidiary, VI Chip Corporation, which designs, develops, manufactures, and markets many of our advanced power component products. The VI Chip segment also includes the VI Chip business conducted in Japan through VJCL. VI Chip generally targets large, high volume customers concentrated in the datacenter and supercomputer segments of the computing market, although we also target applications in aerospace and aviation, autonomous driving, defense electronics, electric and hybrid vehicles, instrumentation and test equipment, and networking equipment.

The Picor segment consists of our subsidiary, Picor Corporation, which designs, develops, and markets integrated circuits for use in a variety of power management and power system applications. Picor discontinued the production and sale of solid-state power management devices during 2017. Picor is a “fabless manufacturer,” as its products are manufactured, assembled, packaged, and tested by third parties in Asia and the United States. Picor develops integrated circuits for use in our BBU and VI Chip modules, to be sold as complements to our BBU and VI Chip products, or for sale to third parties for separate (i.e., stand-alone) applications, and are often integrated with VI Chip products to represent a customer solution, particularly in the datacenter and supercomputer segments of the computing market.

Our improved operating results for the first quarter of 2018 were driven by an increase in net revenues, a consequence of sequential quarterly increases in bookings and order backlog, as well as improved gross margins resulting from higher production volumes, favorable product mix, and improved pricing. Customer interest in our expanding portfolio of recently-introduced advanced products continues to increase, reflecting market uptake of our new products, notably our 48 volt to point-of-load solutions for datacenters and supercomputers. New orders for our “Power-on-Package^TM” solution, consisting of a Modular Current Multiplier^TM unit (“MCD”) and two Modular Current Multiplier^TM units (“MCM”), both based on the SM-Chip platform, were robust during the first quarter of 2018.

While improved bookings reflected increasing demand for our advanced products, with shipments scheduled well into 2018, global demand for our legacy brick converters, configurable products, and associated components remains at volumes lower than historical trend, which we attribute primarily to increased customer price sensitivity in certain industries and geographies in which commoditized products have established a strong competitive position. Our legacy products commonly are used in defense electronics, high-value capital goods, and sizeable infrastructure projects, the end demand for which has been unpredictable, reflecting budgetary uncertainty and low-growth economies.

During the first quarter of 2018, we expanded the functionality of our web ordering interface and implemented a new approach to pricing, notably for our legacy products, which are generally not purchased in large quantities. Initial customer response has been positive, and we believe these changes should contribute to a continued shift in orders toward higher volumes.

We believe the following considerations may influence our performance over the remainder of 2018:

Operational Considerations

• We operate a highly automated electronics manufacturing facility in Andover, Massachusetts, and our profitability is closely aligned with production unit volumes. We have invested significantly in state-of-the-art systems, equipment, and robotics, which allow us to generate relatively higher profitability when operating at or near factory capacity, even with a high mix of products produced. However, periods of low volume production and/or brief, low volume production runs contribute to lower profitability, largely due to lower absorption of relatively high manufacturing overhead costs associated with our manufacturing model. While direct labor and associated variable costs correlate with volume, manufacturing overhead costs are inflexible and, therefore, problematic during periods of low volume or brief production runs. We have invested in the

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VICOR CORPORATION

Management’s Discussion and Analysis of

Financial Condition and Results of Operation

March 31, 2018

production capacity to meet our internal volume projections, and believe these projections are reasonable. However, if sustained, uniform, high volume production levels are not achieved, our product-level profitability likely will not reach the levels necessary to cover our fixed spending, consisting of manufacturing overhead costs and operating costs.

• Our ability to achieve sustained, high volume production levels is tied to our ability to forecast manufacturing requirements of a range of inputs, notably raw material inventories. Because we utilize a number of components and other materials of proprietary design, our ability to sustain targeted production schedules and meet customer delivery requirements has been vulnerable to delays or shortages of such inventories. To mitigate supply chain risks, we focus on identifying and reducing potential vulnerabilities to stock-outs, vendor shortages, and similar disruptions. We maintain safety-stock programs for certain critical components and materials, and these programs recently have contributed to increased levels of raw material inventory. We also have established second-source supply relationships, in order to reduce exposure to material shortages. However, the global electronics supply chain continues to experience lengthened lead times, and our product-level profitability and overall performance could be negatively influenced by an unplanned shortage of a particular component or material.

• We expect our operating expenses, notably in engineering and sales, to remain relatively high, as percentages of revenue, for the foreseeable future. If revenue reaches our forecasted levels, these percentages are expected to decline, although we do not expect such expenses to decline on an absolute basis from current levels. We have expanded and focused our engineering and sales organizations to pursue the promising opportunities afforded by our innovative, advanced products, and we believe our current level of spending is necessary to achieve our strategic goals. However, many of these opportunities are in early phases of development, and near-term revenue growth may not be sufficient to reduce the percentages of revenue represented by our operating expenses to forecast levels or levels comparable to our high volume competitors.

Market and Macroeconomic Considerations

• Based on current customer activity, an expanding customer list, and an expanding backlog, we believe the 48 volt to point-of-load opportunity has entered an accelerated, second phase of development, with a broadening of interest, notably associated with our Power-on- Package solution, as well as the entry of new vendors. As such, we face a more complex competitive landscape, with additional challenges. We continue to believe our new products will be adopted in volume by multiple, leading customers. However, we cannot control the actions by, or the timing of, our customers, their contract manufacturers, or the significant vendors also participating in the market. Many of these vendors possess resources far greater than Vicor and have operational and financial flexibility we do not.

• We anticipate aggregate demand for the mature markets we serve with our legacy products will grow, at most, only at the rate of the overall economy (i.e., in the United States, for example, at the rate of growth of gross domestic product) for the foreseeable future. Given our long-standing customer relationships and the status of our legacy products in long-lived customer applications, we anticipate maintaining our share in many of these mature markets. While we are pursuing opportunities to replace our legacy products used in existing customers’ applications with advanced products and, similarly, to replace competitors’ products in existing applications, we believe such opportunities may not cumulatively contribute to expanding, in 2018, our share of the mature markets we serve with our legacy products.

Financial Highlights:

• Net revenues increased 19.8% to $65,269,000 for the first quarter of 2018, from $54,462,000 for the first quarter of 2017, primarily due to an overall 41.5% increase in bookings in the first quarter of 2018, compared to the first quarter of 2017, with significant increases in BBU and Picor. We have recorded sequential increases in total bookings over the past nine quarters.

• Export sales, as a percentage of total revenues, represented approximately 60.7% in the first quarter of 2018 and 63.2% in the first quarter of 2017.

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VICOR CORPORATION

Management’s Discussion and Analysis of

Financial Condition and Results of Operation

March 31, 2018

• Gross margin increased to $30,211,000 for the first quarter of 2018 from $23,652,000 for the first quarter of 2017, and gross margin, as a percentage of net revenues, increased to 46.3% for the first quarter of 2018 from 43.4% for the first quarter of 2017, both due to the increase in net revenues.

• Backlog, representing the total of orders for products received for which shipment is scheduled within the next 12 months, was approximately $89,975,000 at the end of the first quarter of 2018, as compared to $73,054,000 at the end of the fourth quarter of 2017. The increase in backlog has been due to the sequential increases in bookings, across all business units, noted above.

• Operating expenses for the first quarter of 2018 increased $1,495,000, or 6.0%, to $26,525,000 from $25,030,000 for the first quarter of 2017, due to an increase in selling, general, and administrative expenses of $1,376,000 and an increase in research and development expense of $119,000.

• We reported net income for the first quarter of 2018 of $3,943,000, or $0.10 per diluted share, compared to a net loss of $(974,000), or $(0.02) per share, for the first quarter of 2017.

• For the three months ended March 31, 2018, depreciation and amortization totaled $2,269,000, and capital additions totaled $1,858,000, compared to $2,157,000 and $2,648,000, respectively, for the three months ended March 31, 2017.

• Inventories increased by approximately $2,460,000, or 6.7%, to $38,959,000 at March 31, 2018, compared to $36,499,000 at December 31, 2017. This increase was primarily associated with increases in VI Chip and BBU inventories of $1,807,000 and $1,217,000, respectively, to meet increased bookings for the two segments, partially offset by a decrease in Picor inventories of $564,000.

Critical Accounting Policies and Estimates

Please refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 for a summary of the Company’s critical accounting policies and estimates.

See Note 2 to the Condensed Consolidated Financial Statements pertaining to the adoption of the new accounting standard for revenue recognition.

Three months ended March 31, 2018, compared to three months ended March 31, 2017

Consolidated net revenues for the first quarter of 2018 were $65,269,000, an increase of $10,807,000, or 19.8%, as compared to $54,462,000 for the first quarter of 2017, and an increase of $6,498,000, or 11.1%, on a sequential basis from $58,771,000 for the fourth quarter of 2017.

Net revenues, by segment, for the first quarter of 2018 and the first quarter of 2017 were as follows (dollars in thousands):

					Increase (decrease)
	2018		2017		$			%
BBU	$	40,637	$	37,535	$	3,102			8.3	%
VI Chip		20,139		12,425		7,714			62.1	%
Picor		4,493		4,502		(9	)		(0.2	)%
Total	$	65,269	$	54,462	$	10,807			19.8	%

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VICOR CORPORATION

Management’s Discussion and Analysis of

Financial Condition and Results of Operation

March 31, 2018

The increase in consolidated net revenues for the first quarter of 2018 from the first quarter of 2017 was primarily due to an overall 41.5% increase in bookings in the first quarter of 2018, compared to the first quarter of 2017. BBU and Picor bookings increased by 61.1%, and 65.4%, respectively. The increase in BBU revenues was primarily attributable to an increase in BBU module and configurable product revenues of approximately $2,024,000 and Vicor Custom Power revenues of $644,000. Increases in revenues recorded by VI Chip for the first quarter of 2018 were associated largely with fulfillment of increased orders for our 48 volt to point-of-load solutions.

Gross margin for the first quarter of 2018 increased $6,559,000, or 27.7%, to $30,211,000, from $23,652,000 for the first quarter of 2017. Gross margin as a percentage of net revenue increased to 46.3% for the first quarter of 2018 compared to 43.4% for the first quarter of 2017. Both increases were primarily due to the increase in net revenues.

Selling, general, and administrative expenses were $15,399,000 for the first quarter of 2018, an increase of $1,376,000, or 9.8%, from $14,023,000 for the first quarter of 2017. Selling, general, and administrative expenses as a percentage of net revenues decreased to 23.6% for the first quarter of 2018 from 25.7% for the first quarter of 2017, primarily due to the increase in net revenues.

The components of the $1,376,000 increase in selling, general and administrative expenses for the first quarter of 2018 from the first quarter of 2017 were as follows (dollars in thousands):

	Increase (decrease)
Compensation	$	820		9.3	% (1)
Audit, tax, and accounting fees		342		71.4	% (2)
Stockholder reporting		74		137.4	%
Computer expenses		50		20.8	%
Legal fees		44		13.0	%
Commissions expense		(139	)	(16.5	)% (3)
Other, net		185		5.8	%
	$	1,376		9.8	%

(1) Increase primarily attributable to annual compensation adjustments in May 2017, increased stock-based compensation expense and increases in headcount.

(2) Increase primarily attributable to the timing of the 2017 audit process and higher total audit fees for the 2017 audit compared to 2016.

(3) Decrease primarily attributable to the decrease in net revenues subject to commissions.

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VICOR CORPORATION

Management’s Discussion and Analysis of

Financial Condition and Results of Operation

March 31, 2018

Research and development expenses were $11,126,000 for the first quarter of 2018, an increase of $119,000, or 1.1%, compared to $11,007,000 for the first quarter of 2017. As a percentage of net revenues, research and development expenses decreased to 17.0% for the first quarter of 2018 from 20.2% for the first quarter of 2017, primarily due to the increase in net revenues.

The components of the $119,000 increase in research and development expenses were as follows (dollars in thousands):

	Increase (decrease)
Compensation	$	111		1.4	% (1)
Outside services		81		74.3	% (2)
Other, net		(73	)	(2.3	)%
	$	119		1.1	%

(1) Increase primarily attributable to annual compensation adjustments in May 2017 and increases in headcount.

(2) Increase primarily attributable to increased use of outside contractors associated with the pre-production development of certain VI Chip products.

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

	2018		2017		Increase (decrease)
Rental income	$	198	$	198	$	—
Foreign currency gains, net		161		95		66
Interest income		55		24		31
Gain on disposals of equipment		14		2		12
Credit gains on available-for-sale securities		2		3		(1	)
Other, net		—		3		(3	)
	$	430	$	325	$	105

Our exposure to market risk fluctuations in foreign currency exchange rates relate primarily to the operations of VJCL, for which the functional currency is the Japanese Yen. The functional currency of all other subsidiaries in Europe and Asia is the U.S. Dollar.

Income (loss) before income taxes was $4,116,000 for the first quarter of 2018, as compared to $(1,053,000) for the first quarter of 2017.

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VICOR CORPORATION

Management’s Discussion and Analysis of

Financial Condition and Results of Operation

March 31, 2018

The provision (benefit) for income taxes and the effective income tax rates for the first quarter of 2018 and the first quarter of 2017 were as follows (dollars in thousands):

	2018			2017
Provision (benefit) for income taxes	$	134		$	(99	)
Effective income tax rate		3.3	%		(9.4	)%

The effective tax rate was lower than the statutory tax rate in 2018 due to the utilization of net operating carryforwards and tax credits. It was lower in 2017 due to a full valuation allowance against all net domestic deferred tax assets.

Net income per diluted share attributable to Vicor Corporation was $0.10 for the first quarter of 2018 as compared to net loss per share of $(0.02) for the first quarter of 2017.

Liquidity and Capital Resources

As of March 31, 2018, we had $42,678,000 in cash and cash equivalents. The ratio of total current assets to total current liabilities was 4.9:1 as of March 31, 2018 and 4.2:1 as of December 31, 2017. Working capital, defined as total current assets less total current liabilities, increased $10,097,000 to $100,893,000 as of March 31, 2018 from $90,796,000 as of December 31, 2017.

The changes in working capital from December 31, 2017 to March 31, 2018 were as follows (in thousands):

	Increase (decrease)
Cash and cash equivalents	$	(1,552	)
Accounts receivable		7,147
Inventories, net		2,460
Other current assets		117
Accounts payable		(2,331	)
Accrued compensation and benefits		889
Accrued expenses		727
Income taxes payable		2
Deferred revenue		2,638
	$	10,097

The primary uses of cash for the three months ended March 31, 2018 was for operating activities of $812,000 and the purchase of equipment of $1,858,000. The primary sources of cash for the three months ended March 31, 2018 were proceeds from the issuance of Common Stock associated with the exercise of options under our stock option plans and the sale of shares of our Common Stock under our ESPP, of $1,285,000.

In November 2000, our Board of Directors authorized the repurchase of up to $30,000,000 of our Common Stock (the “November 2000 Plan”). The November 2000 Plan authorizes us to make such repurchases from time to time in the open market or through privately negotiated transactions. The timing and amounts of Common Stock repurchases are at the discretion of management based on its view of economic and financial market conditions. We did not repurchase shares of Common Stock under the November 2000 Plan during the three months ended March 31, 2018. As of March 31, 2018, we had approximately $8,541,000 remaining under the November 2000 Plan.

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VICOR CORPORATION

Management’s Discussion and Analysis of

Financial Condition and Results of Operation

March 31, 2018

Our primary liquidity needs are for making continuing investments in manufacturing equipment. We believe cash generated from operations and the total of our cash and cash equivalents will be sufficient to fund planned operations and capital equipment purchases for the foreseeable future. We had approximately $1,649,000 of capital expenditure commitments, principally for manufacturing equipment, as of March 31, 2018.

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Vicor Corporation

March 31, 2018

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 and fluctuations in foreign currency exchange rates. As our cash and cash equivalents consist principally of cash accounts and money market 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, 2018, our long-term investment portfolio, recorded on our Condensed Consolidated Balance Sheet as “Long-term investments, net”, consisted of a single auction rate security with a par value of $3,000,000, purchased through and held in custody by a broker-dealer affiliate of Bank of America, N.A., that has experienced failed auctions (the “Failed Auction Security”) since February 2008. While the Failed Auction Security is Aaa/AA+ rated by major credit rating agencies, collateralized by student loans and guaranteed by the U.S. Department of Education under the Federal Family Education Loan Program, continued failure to sell at its periodic auction dates (i.e., reset dates) could negatively impact the carrying value of the investment, in turn leading to impairment charges in future periods. Periodic changes in the fair value of the Failed Auction Security attributable to credit loss (i.e., risk of the issuer’s default) are recorded through earnings as a component of “Other income (expense), net”, with the remainder of any periodic change in fair value not related to credit loss (i.e., temporary “mark-to-market” carrying value adjustments) recorded in “Accumulated other comprehensive (loss) income”, 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, 2018.

Our exposure to market risk for fluctuations in foreign currency exchange rates relates primarily to the operations of VJCL, for which the functional currency is the Japanese Yen, and changes in the relative value of the Yen to the U.S. Dollar. As the functional currency of all other subsidiaries in Europe and other subsidiaries in Asia is the U.S. Dollar, we believe risk to fluctuations in foreign currency exchange rates is not significant, as these operations do not incur material foreign exchange exposures.

Item 4 — 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, 2018). The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure information required to be disclosed by a company in the reports it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of March 31, 2018, 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 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.

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Vicor Corporation

March 31, 2018

(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, 2018, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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Vicor Corporation

Part II—Other Information

March 31, 2018

Item 1—Legal Proceedings

See Note 11. Commitments and Contingencies in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 – “Financial Statements.”

Item 1A—Risk Factors

There have been no material changes in the risk factors described in Part I, Item 1A – “Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

Item 6—Exhibits

Exhibit Number	Description
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	The following material from the Company’s Quarterly Report on Form 10-Q, for the quarter ended March 31, 2018, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Operations; (iii) the Condensed Consolidated Statements of Comprehensive Income (Loss); (iv) the Condensed Consolidated Statements of Cash Flows; and (v) the Notes to Condensed Consolidated Financial Statements.

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SIGNATURES

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

	VICOR CORPORATION
Date: May 1, 2018	By:	/s/ Patrizio Vinciarelli
		Patrizio Vinciarelli
		Chairman of the Board, President and Chief Executive Officer (Principal Executive Officer)
Date: May 1, 2018	By:	/s/ James A. Simms
		James A. Simms
		Vice President, Chief Financial Officer (Principal Financial Officer)

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