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| VICR > SEC Filings for VICR > Form 10-Q on 4-Nov-2009 | All Recent SEC Filings |
4-Nov-2009
Quarterly Report
Three Months Ended
September 30, Increase (decrease)
2009 2008 $ %
BBU $ 44,347 $ 46,673 $ (2,326 ) (5.0 )%
V*I Chip 2,919 4,315 (1,396 ) (32.4 )%
Picor 480 290 190 65.5 %
Total $ 47,746 $ 51,278 $ (3,532 ) (6.9 )%
Book-to-Bill Ratio 1.19:1 1.20:1
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Orders during the quarter increased by 41.6% compared with the second quarter
of 2009. This increase was caused by an increase in BBU orders of 43.4% and an
increase in V*I Chip orders during the period of 37.8%. The quarterly
book-to-bill ratio has been volatile and management believes that the ratio is
not always an accurate indicator of the amount or timing of future revenue.
Gross margin for the third quarter of 2009 decreased $1,235,000, or 5.6%, to
$20,668,000 from $21,903,000 in the third quarter of 2008. Gross margin, as a
percentage of net revenues, increased to 43.3% from 42.7% as a percentage of net
revenues. The primary component of the decrease in gross margin dollars was the
decrease in net revenues. The primary component of the increase in gross margin
percentage was a more favorable product mix, principally due to increased
shipments of higher gross margin Vicor Custom Power products and a decrease in
shipments of lower gross margin V*I Chip products, along with lower brick
production costs.
Selling, general and administrative expenses were $11,625,000 for the period,
a decrease of $2,078,000, or 15.2%, as compared to $13,703,000 for the same
period in 2008. Selling, general and administrative expenses as a percentage of
net revenues, decreased to 24.3% from 26.7% for the same period in 2008.
VICOR CORPORATION
Management's Discussion and Analysis of
Financial Condition and Results of Operation
September 30, 2009
The components of the $2,078,000 decrease were as follows (in thousands):
Increase (decrease)
Compensation $ (799 ) (13.5) % (1)
Advertising expenses (285 ) (36.1) % (2)
Legal fees (185 ) (38.0) % (3)
Travel expenses (152 ) (29.1) % (4)
Commissions expense (132 ) (11.1) % (5)
Stockholder reporting (75 ) (69.2 )%
Audit and tax fees (63 ) (14.5 )%
Depreciation and amortization (58 ) (6.9 )%
Project materials (53 ) (84.3 )%
Training expenses (47 ) (13.4 )%
Facilities expenses (43 ) (14.7 )%
Other, net (186 ) (6.8 )%
$ (2,078 ) (15.2 )%
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(1) Decrease primarily attributable to the workforce reductions completed in the first, second and third quarters of 2009.
(2) Decrease is primarily attributed to decreased advertising in trade publications.
(3) Decrease primarily attributed to a decrease in activity associated with the Company's lawsuit brought against certain of its insurance carriers with respect to the Ericsson, Inc. settlement of product liability litigation in the third quarter of 2009 compared to 2008.
(4) Represents an overall reduction in travel across all business units and functional groups.
(5) Decrease primarily attributed to the decrease in net revenues and changes in the mix of revenues subject to commissions.
Research and development expenses were $7,831,000 for the period, an increase of $30,000, or 0.4%, as compared to $7,801,000 for the same period in 2008. As a percentage of net revenues, research and development increased to 16.4% from 15.2%.
VICOR CORPORATION
Management's Discussion and Analysis of
Financial Condition and Results of Operation
September 30, 2009
The components of the $30,000 increase were as follows (in thousands):
Increase (decrease)
Project materials $ 323 51.4 % (1)
Vicor Custom Power related expenses 233 40.2 % (2)
Facility expenses (49 ) (11.9 )%
Compensation (273 ) (5.1) % (3)
Deferred costs (130 ) 100.0 % (4)
Other, net (74 ) (8.7 )%
$ 30 (0.4 )%
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(1) Increase primarily attributed to a increase in project materials associated with V*I Chip and Picor products.
(2) Increase primarily attributed to increased outside services of $148,000 and an increase in compensation expense of $79,000.
(3) Decrease primarily attributed to the workforce reduction that was completed in the first quarter of 2009.
(4) Decrease primarily attributed to an increase in deferred costs capitalized for certain non-recurring engineering projects for which the related revenues have been deferred.
During the third quarter of 2009, senior management authorized additional
reductions in its workforce. The Company completed the workforce reduction in
the third quarter of 2009 and recorded a pre-tax charge for severance and other
employee-related costs of $126,000 in the third quarter of 2009.
During the third quarter of 2009, the Company entered into a release and
settlement agreement with a vendor over alleged product performance issues with
certain of the vendor's products. The Company received a payment of $750,000 in
consideration for the settlement, which is recorded in "Gain from
litigation-related and other settlements, net" in the accompanying consolidated
statement of operations. In addition, the Company completed discussions with
Exar and Rohm, resulting in separate settlement agreements calling for a final
payment to Exar of $70,000 and no additional payment due Rohm. As a result of
the settlements, the Company reversed a remaining excess accrual of
approximately $96,000 in the third quarter of 2009, which is recorded in "Gain
from litigation-related and other settlements, net" in the accompanying
Condensed Consolidated Statement of Operations.
The major changes in the components of the other income (expense), net were
as follows (in thousands):
Increase
2009 2008 (decrease)
Interest income $ 132 $ 356 $ (224 )
Foreign currency gains (losses) 89 (124 ) 213
Unrealized loss on auction rate securities rights (257 ) - (257 )
Unrealized gain on trading securities 271 - 271
Credit gain on available for sale securities 6 - 6
Other 10 39 (29 )
$ 251 $ 271 $ (20 )
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The decrease in interest income is due to lower average balances on the Company's short and long-term investments as well as a decrease in interest rates. The increase in foreign currency gains is due to favorable exchange rates in the third quarter of 2009 as
Three Months Ended
September 30,
2009 2008
Provision (benefit) for income taxes $ 193 $ (527 )
Effective income tax rate 8.8 % (78.7 %)
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The lower effective income tax rate for the three months ended September 30,
2009 compared to the same period in 2008 is principally due to the higher income
(loss) before income taxes than in 2008, and a prior year tax benefit of
$1,123,000 recorded in the third quarter of 2008 related to a reduction in tax
reserves due to the closing tax periods in certain jurisdictions.
Loss from equity method investment (net of tax) decreased from $87,000 in the
third quarter of 2008 to $0 in 2009. This was due to the allocation of equity
method losses in the third quarter of 2008 and bringing the investment balance
in GWS to zero as of December 31, 2008.
Net income of noncontrolling interest decreased $202,000 to $299,000 in third
quarter of 2009 from $501,000 for the same period in 2008. This was due to lower
net income at certain entities in which the Company holds a noncontrolling
interest.
Basic and diluted income (loss) per share attributable to Vicor Corporation
was $0.04 for the third quarter of 2009 compared to $0.01 for the third quarter
of 2008.
Nine months ended September 30, 2009 compared to nine months ended September 30,
2008
Net revenues for the nine months of 2009 were $148,821,000, a decrease of
$5,223,000 or 3.4%, as compared to $154,044,000 for the same period a year ago.
VICOR CORPORATION
Management's Discussion and Analysis of
Financial Condition and Results of Operation
September 30, 2009
The components of revenue were as follows (dollars in thousands):
Nine Months Ended
September 30, Increase (decrease)
2009 2008 $ %
BBU $ 140,729 $ 141,646 $ (917 ) (0.6 )%
V*I Chip 6,626 11,722 (5,096 ) (43.5 )%
Picor 1,466 676 790 116.9 %
Total $ 148,821 $ 154,044 $ (5,223 ) (3.4 )%
Book-to-Bill Ratio 0.99:1 1.06:1
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Orders during the period decreased by 7.4% compared with the last nine months
of 2008. This decrease was caused by a decrease in BBU orders during the period
of 8.5%, and a decrease in V*I Chip orders of 1.9%. The book-to-bill ratio for
the first nine months of 2009 was 0.99:1 as compared to 1.06:1 for the same
period a year ago, and 1.04:1 for the last nine months of 2008.
Gross margin for the first nine months of 2009 decreased $379,000, or 0.6%,
from $65,476,000 to $65,097,000. Gross margin as a percentage of net revenues
increased to 43.7% from 42.5% compared to the same period a year ago. The
primary component of the decrease in gross margin dollars was the decrease in
net revenues. The primary component of the increase in gross margin percentage
was due to a more favorable product mix, principally due to increased shipments
of higher gross margin products from the Vicor Custom Power subsidiaries and a
decrease in shipments of lower gross margin V*I Chip products along with lower
brick production costs.
Selling, general and administrative expenses were $36,467,000 for the period,
a decrease of $5,263,000, or 12.6%, as compared to $41,730,000 for the same
period in 2008. As a percentage of net revenues, selling, general and
administrative expenses decreased to 24.5% from 27.1%.
VICOR CORPORATION
Management's Discussion and Analysis of
Financial Condition and Results of Operation
September 30, 2009
The components of the $5,263,000 decrease were as follows (in thousands):
Increase (decrease)
Compensation $ (1,853 ) (10.3 )% (1 )
Legal fees (1,038 ) (53.4 )% (2 )
Audit and tax fees (673 ) (37.7 )% (3 )
Advertising expenses (575 ) (26.6 )% (4 )
Travel expenses (528 ) (31.8 )% (5 )
Commissions expense (377 ) (10.8 )% (6 )
Training expenses (239 ) (21.1 )%
Depreciation and amortization (127 ) (5.0 )%
International office expenses (105 ) (37.2 )%
Employment advertising and recruiting (92 ) (89.0 )%
Facilities Expense (54 ) (6.2 )%
Vicor Custom Power related expenses 640 19.7 % (7 )
Other, net (242 ) (5.5 )%
$ (5,263 ) (12.6 )%
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(1) Decrease primarily attributable . . .
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