<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
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(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended DECEMBER 31, 1996
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______to
Commission file number 0-18277
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VICOR CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 04-2742817
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(State or other jurisdiction of (IRS employer
incorporation or organization) identification no.)
23 FRONTAGE ROAD, ANDOVER, MASSACHUSETTS 01810
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (508) 470-2900
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Securities registered pursuant to Section 12(b) of the Act: None
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Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value
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(Title of Class)
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 [X] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates of the
registrant was approximately $324,793,189 as of February 28, 1997.
On February 28, 1997, there were 30,050,515 shares of Common Stock outstanding
and 12,247,309 shares of Class B Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Company's definitive proxy statement (the "Definitive Proxy
Statement") to be filed with the Securities and Exchange Commission pursuant to
Regulation 14A and relating to the Company's 1997 annual meeting of stockholders
are incorporated by reference into Part III.
<PAGE> 2
PART I
This Annual Report on Form 10-K contains 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. Actual results
could differ materially from those projected in the forward-looking statements
as a result, among other factors, of the risk factors set forth in this report.
Reference is made in particular to the discussions set forth under Item 1 -
"Business - Next-Generation Automated Manufacturing Line," "- Competition," "-
Patents," and "- Licensing," and under Item 7 - "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
ITEM 1 - BUSINESS
THE COMPANY
Vicor Corporation (the "Company") designs, develops, manufactures and
markets modular power components and complete power systems using an innovative,
patented, high frequency electronic power conversion technology called "zero
current switching." Power systems, a central element in any electronic system,
convert power from a primary power source (e.g. a wall outlet) into the stable
DC voltages that are required by most contemporary electronic circuits.
The Company was incorporated in Delaware in 1981. In 1987, the Company
formed VLT Corporation as its licensing subsidiary. In 1990, the Company
established a Technical Support Center in Germany and a foreign sales
corporation. In 1994, the Company established a Technical Support Center in
Taiwan. In 1995, the Company established Technical Support Centers in France,
Italy, Hong Kong, and England. Also in 1995, the Company established Vicor
Integration Architects (VIAs), which are majority owned. VIAs provide customers
with local design and manufacturing services for turnkey custom power solutions.
In 1996, the Company established Vicor B.V., a Netherlands company, which will
serve as a European Distribution Center. The Company became publicly traded on
the NASDAQ National Market System in April, 1990.
PRODUCTS
Power systems are incorporated into virtually all electronic products, such
as computers and telecommunication equipment, to convert electric power from a
primary source, for example a wall outlet, into the stable DC voltages required
by electronic circuits. Since power systems are configured in a myriad of
application-specific configurations, the Company's basic strategy is to exploit
the density and performance advantages of its technology by offering
comprehensive families of economical, component-level building blocks which can
be applied by users to easily configure a power system specific to their needs.
In addition to component-level power converters, which serve as modular power
system building blocks, the Company also manufactures and sells complete
configurable power systems, accessory products, and custom power solutions. The
Company's principal product lines include:
Modular Power Converters
The Company currently offers five first generation families of
component-level DC-DC power converters: the VI-100, VI-200, VI-J00, MI-200, and
MI-J00 families. Designed to be mounted directly on a printed circuit board
assembly and soldered in place using contemporary manufacturing processes, each
family comprises a comprehensive set of products which are offered in a wide
range of input voltage, output voltage and power ratings. This allows end users
to select products appropriate to their individual applications.
The product families differ in maximum power ratings, performance
characteristics, package size and, in the case of the "MI" families, in target
market (the MI families are designed specifically to meet many of the
performance requirements of the military markets).
In September of 1996, the Company introduced two models of its next
generation of high power density, component-level DC-DC converters. The first
model delivers 600 watts and is designed for telecommunications and distributed
power systems. The second model delivers 5 volts at 80 amps and is designed for
the industrial, automatic test equipment and computer markets. Both models are
packaged in Vicor's "full size" format. In
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November of 1996 the Company introduced a third model in a new package, the
"Micro", one-third the size of VI-200 converters. This model delivers 150 watts
and is designed for telecommunications and distributed power systems.
Configurable Products
Utilizing its standard converters as core elements, the Company has
developed several product families which provide complete power solutions
configured to a customer's specific needs. These products exploit the benefits
of the component-level approach to offer higher performance, higher power
densities, lower costs, greater flexibility and faster delivery than traditional
competitive offerings.
Most EDP and industrial electronic products operate directly off of AC
lines. "Off-line" power systems require "front end" circuitry to convert AC line
voltage into DC voltage for the core converters. The Company's off-line AC-DC
products incorporate a set of modular front end subassemblies to offer a
complete power solution from AC line input to highly regulated DC output. The
product selection includes a low-profile modular design in various sizes and
power levels, and a choice of alternatives to conventional "box switchers"--high
power, off-line bulk supplies in industry-standard packages. Voltage and power
levels are either factory or field configurable.
Many telecommunications, military and industrial electronic products are
powered off of central DC sources (battery plants or generators). The Company's
DC-DC power system choices include a low-profile modular design similar to the
corresponding AC-DC system, and a rugged, compact assembly for chassis-mounted,
bulk power applications.
Accessory Power System Components
Accessory power system components, used with the Company's component-level
power converters, integrate other important functions of the power system,
facilitating the design of complete power systems by interconnecting several
modules. In general, accessory products are used to condition the inputs and
outputs of the Company's modular power components.
VI-HAMs (Harmonic Attenuator Modules) are universal-AC-input,
power-factor-correcting front ends for use with compatible power converters.
VI-AIMs (AC Input Modules) provide input filtering, transient protection and
rectification of the AC line. VI-IAMs (Input Attenuator Modules) provide the DC
input filtering and transient protection required in industrial and
telecommunications markets. VI-RAMs (Ripple Attenuator Modules) condition
converter module outputs for extremely low noise systems. In 1996 the Company
introduced a new component-level AC front end, the VI-ARM (AC Rectifier Module).
This front end product is packaged in the Company's new "Micro" package and
includes a controller that tracks the AC line to ensure correct operation for
domestic or international line voltages.
Customer Specific Products
Since its inception, the Company has accepted a certain amount of "custom"
power supply business. In most cases, the customer was unable to obtain a
conventional solution which could achieve the desired level of performance in
the available space. By utilizing its component-level power products as core
elements in developing most of these products, the Company was able to meet the
customer's needs with a reliable, high power density, total solution. However,
in keeping with the Company's strategy of focusing on sales of standard families
of component-level power building blocks, custom product sales have not been
directly pursued. The Company has traditionally pursued these custom
opportunities through Value-Added-Resalers ("VARs"). The Company has also put in
place a network of Vicor Integration Architects ("VIAs") (see "The Company,"
above in Item 1 - "Business"). VIAs are majority owned by the Company, while
VARs are independent businesses. Both VIAs and VARs are distributed
geographically and are in close proximity to customers.
Automated Manufacturing Line
The Company entered into an agreement to fabricate and install automated
manufacturing line equipment for use by a licensee of the Company (see
"Next-Generation Automated Manufacturing Line" and "Licensing," below).
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SALES AND MARKETING
The Company sells its products through a network of 25 independent sales
representative organizations in North America; internationally, 38 independent
distributors are utilized. Sales activities are managed by a staff of Regional
and Industry Sales Managers and sales personnel based at the Company's world
headquarters in Andover, Massachusetts, its Westcor division in Sunnyvale,
California, a sales office in Lombard, Illinois, and in its Technical Support
Center subsidiaries in Taipei, Taiwan; Munich, Germany; Camberley Surrey,
England; Milano, Italy; Paris, France; and Hong Kong.
Export sales, as a percentage of total net revenues, were approximately
29%, 32%, and 31%, in 1996, 1995, and 1994, respectively. The decrease in export
sales during 1996 is due to a decrease in revenue earned from the sale of
automated manufacturing line equipment.
Because of the technical nature of the Company's product lines, the Company
relies on its staff of Customer Applications Engineers to support the Company's
sales activities. Customer Applications Engineers provide direct technical sales
support worldwide to review new applications and technical matters with existing
and potential customers. In 1995 the Company significantly expanded its staff of
Customer Applications Engineers by opening new Technical Support Centers in
Italy, France, United Kingdom and Hong Kong, complementing existing Technical
Support Centers in Germany and Taiwan. The Company generally warrants its
standard products for a period of two years.
The Company also sells directly to customers through Vicor Express, an
in-house distribution group. Through space advertising and periodic mailing of
its catalogs, Vicor Express generally offers customers rapid delivery on small
quantities of many standard products. In 1996, the Company, through Vicor B.V.,
expanded its Vicor Express operation to include locations in Germany and France.
CUSTOMERS AND APPLICATIONS
The Company's customer base is comprised of large Original Equipment
Manufacturers (OEMs) and smaller, lower volume users which are broadly
distributed across several major market areas. Some examples of the diverse
applications of the Company's products are:
Telecommunications: EDP:
Central Office Systems Workstations
Fiber Optic Systems Supercomputers
Cellular Telecommunications Fault Tolerant Computers
Microwave Communications Data Storage Systems
Voice Processing Multiplexers ATM Switches
Paging Equipment Networking Equipment
Broadcast Equipment LAN/WAN Systems
File Servers
RAID Systems
Measurement and Control: Military:
Process Control Equipment Communications
Medical Equipment Airborne Radar and Displays
Seismic Equipment Aircraft/Weapons Test Equipment
Test Equipment Ruggedized Computers
Transportation Systems Electro-Optical Systems
Agricultural Equipment IR Reconnaissance/Targeting Systems
Marine Products
For the years ended December 31, 1996, 1995 and 1994, no single customer
accounted for more than 10% of net revenues.
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BACKLOG
As of December 31, 1996, the Company had a backlog of approximately $44
million. Backlog is comprised of orders for products which have a scheduled
shipment date within the next twelve months. The Company maintains most standard
converter products in inventory and manufactures other standard, modified
standard and custom products pursuant to firm orders from customers. The Company
believes that due to its increased production capacity and its ability to
respond quickly to customers' requirements, a substantial portion of sales in
each quarter is, and will continue to be, derived from orders booked in the same
quarter.
RESEARCH AND DEVELOPMENT
As a basic element of its long term strategy, the Company is committed to
the continued advancement of power conversion technology and power component
product development. The Company's research and development efforts are focused
in three areas: continued enhancement of the Company's patented technology;
expansion of the Company's families of component level DC-DC converter products;
and continued development of configurable products based upon market
opportunity. The Company invested approximately $14.3 million, $11.6 million,
and $7.6 million, in research and development in 1996, 1995 and 1994,
respectively. Investment in research and development represented 9.9%, 8.0%, and
6.6%, of net revenues in 1996, 1995 and 1994. The Company plans to continue to
invest a significant percentage of revenues into research and development.
MANUFACTURING
The Company's principal manufacturing processes are assembly of electronic
components onto printed circuit boards, automatic testing of components, wave,
reflow and infrared soldering of assembled components, encapsulation of
converter subassemblies, final "burn-in" of certain products and product test
using automatic test equipment.
The Company continues to execute on its strategy to minimize manual
assembly processes, reduce manufacturing costs, increase product quality and
reliability and ensure its ability to rapidly and effectively expand capacity.
The strategy is based upon the phased acquisition and/or fabrication,
qualification and integration of automated manufacturing equipment. In
accordance with this strategy, the Company purchased a building in December
1994, with approximately 136,000 square feet which was previously leased since
1992 (see Item 2 - Properties). The Company continues the process of installing
its automated manufacturing lines in these premises (see "Next-Generation
Automated Manufacturing Line," below).
Components used in the Company's products are purchased from a variety of
vendors. Most of the components are available from multiple sources. In
instances in which single source items do exist, the Company maintains what it
considers to be appropriate levels of inventories. Incoming components,
assemblies and other parts are subjected to several levels of inspection
procedures.
Compliance by the Company with applicable environmental laws has not had
any material effect on the financial condition or operations of the Company.
NEXT-GENERATION AUTOMATED MANUFACTURING LINE
In 1995, the Company announced that it had started prototype production on
a new automated manufacturing line specifically designed to manufacture
next-generation products. In the fourth quarter of 1996, the Company began
introducing selected models of its next-generation product families. While
management believes that the initiation of limited production on the new
manufacturing line and the introduction of selected models of its
next-generation product families are important milestones, there can be no
assurance that problems will not substantially delay the ultimate general
introduction of the complete product line, require modification of product
specifications, or prevent attainment of the anticipated capacity of the new
manufacturing line. Significant revenues from the sale of any products in the
Company's next-generation product line are not expected to occur for several
quarters.
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See also the discussion regarding the Company's arrangements with Japan
Tobacco Inc. under the heading "Licensing," below.
COMPETITION
Many power supply manufacturers target market segments similar to those of
the Company. Representative examples are: Lambda Electronics, a subsidiary of
Siebe, plc; Computer Products, Inc.; ASTEC America; Zytec Corporation; RO
Associates; and Lucent Technologies. Although certain of the Company's
competitors have significantly greater financial and marketing resources and
longer operating histories than the Company, the Company believes that it has a
strong competitive position, particularly with customers who need small, high
density power system solutions requiring a variety of input-output
configurations.
PATENTS
The Company believes that its patents afford significant advantages by
erecting fundamental and multilayered barriers to competitive encroachment upon
key features and performance benefits of its principal product families. The
Company's patents cover the fundamental conversion topologies used to achieve
the performance attributes of its converter product lines; converter array
architectures which are the basis of the products' "parallelability"; product
packaging design; product construction; high frequency magnetic structures; and
automated equipment and methods for circuit and product assembly. The Company
believes in vigorously protecting its rights under its patents (see "Item 3
Legal Proceedings," below).
The Company has been issued twenty-seven patents in the United States
(which expire between 2001 and 2015), seven in Europe (which expire between 2002
and 2012), and eight in Japan (which expire between 2002 and 2013). The Company
also has a number of patent applications pending in the United States, Europe
and the Far East. Although the Company believes that patents are an effective
way of protecting its technology, there can be no assurances that the Company's
patents will prove to be enforceable. While some of the Company's patents are
deemed materially important to the Company's operations, the Company believes
that no one patent is essential to the success of the Company.
LICENSING
Licensing is one element of the Company's strategy of building market share
and acceptance in worldwide markets. In addition to generating revenue for the
Company, licensing affords a mechanism for development of markets which have
significant barriers of entry. In granting licenses, the Company retains the
right to manufacture and sell its products in all licensed geographic areas and
fields of use. All licensing arrangements provide for a bi-lateral flow of
certain technology improvements between the Company and its licensees. The term
of each of these licenses expires upon the expiration of the last underlying
patent (including patents that may be issued in the future). Licenses are
granted and administered through the Company's wholly owned subsidiary, VLT
Corporation, which owns the Company's patents.
Revenues from licensing arrangements have not exceeded 10% of the Company's
consolidated revenues in any of the last three fiscal years. One licensee has
recently emerged from bankruptcy proceedings under Chapter 11 of the United
States Bankruptcy Code. In connection with this licensee's plan of
reorganization, the Company accepted an unsecured note for $2.2 million,
payments on which are to begin in 1999. For the past two fiscal years, the
Company derived no significant licensing revenues from this licensee. There can
be no assurance that this licensee's obligations to the Company will be paid or
whether the licensee will produce any significant royalty revenues for the
Company. In addition, the Company is involved in litigation with another
licensee relating to the Company's termination of the license arrangement for
the licensee's failure to accurately report revenues and make royalty payments
and certain other related matters. The licensee has contested the Company's
termination of the license. Management does not believe that the ultimate
outcome of this litigation will be materially adverse to the Company's financial
condition or results of operations.
On October 2, 1995 the Company announced that Japan Tobacco Inc. ("JT") had
become a Vicor licensee in the Far East. As part of this transaction, JT
established a new company called JT Electronics Corporation, which markets and
sells standard and custom power conversion products incorporating the Company's
proprietary technologies. JT also acquired essentially all of the power systems
business of Integran Inc., which
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previously had been the Company's licensee in the region. Integran holds a
minority interest in the new company. JT first entered the power electronics
business in 1993 with the founding of JT Integran Inc., a joint venture
chartered to manufacture the Company's licensed products in Japan. At that time,
the Company sold an automated manufacturing line to JT Integran for production
of the Company's current generation families of modular power conversion
products. With the establishment of JT Electronics, JT has expanded its role
from that of being a manufacturer of licensed products to that of being the
principal seller, marketer and manufacturer of the Company's licensed products
in Japan. JT Integran, which has been renamed JT PowerCraft Inc., is the
manufacturing affiliate of JT Electronics and is wholly owned by JT. In a
related transaction, the Company agreed to sell additional automation equipment
and associated computer-integrated manufacturing systems and software to JT
PowerCraft to enable it to manufacture the Company's next generation families of
modular DC-DC converters. The Company does not anticipate that revenues which
will be earned from the sale to exceed 10% of its total revenues in any given
quarter or fiscal year. In 1996, 1995 and 1994, revenues earned from the sale of
automated manufacturing line equipment did not exceed 10% of total revenues.
EMPLOYEES
As of December 31, 1996, the Company employed 933 people. The Company
believes that its continued success depends, in part, on its ability to attract
and retain qualified personnel.
None of the Company's employees is subject to a collective bargaining
agreement. The Company has not experienced any work stoppages and believes that
its employee relations are good.
ITEM 2 - PROPERTIES
The Company currently leases approximately 64,000 square feet of office and
manufacturing space for its corporate headquarters and manufacturing operations
at 23 Frontage Road, Andover, Massachusetts pursuant to a lease which expires in
1999.
In 1994, the Company purchased a building of approximately 136,000 square
feet, situated on approximately 16 acres of land, in an office/industrial park
in Andover, Massachusetts.
In 1994, the Company purchased a building of approximately 31,000 square
feet, in Sunnyvale, California, which is occupied by its Westcor division.
ITEM 3 - LEGAL PROCEEDINGS
On October 17, 1996, the Company filed a complaint in Munich District
Court, Federal Republic of Germany, citing Nemic-Lambda of Japan and Lambda
Electronics GmbH for infringement of Vicor's German "reset" patent. Vicor seeks
injunctive relief and damages.
The Company is involved in certain litigation incidental to the conduct of
its business. While the outcome of lawsuits against the Company cannot be
predicted with certainty, management does not expect any current litigation to
have a material adverse impact on the Company (see "Licensing," above).
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
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PART II
ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
<TABLE>
The Common Stock of the Company is listed on the National Market System of
the National Association of Securities Dealers Automated Quotation ("NASDAQ")
System and is traded in the over-the-counter market under the NASDAQ symbol
"VICR". The Class B Common Stock of the Company is not traded on any market and
transfer is restricted by the Company's Restated Certificate of Incorporation.
The following table sets forth the quarterly high and low bid prices for the
Common Stock as reported by NASDAQ for the periods indicated:
<CAPTION>
1995 High Low
- ---- ------ ------
<S> <C> <C>
First Quarter 18 1/8 12 1/4
Second Quarter 22 1/2 16 7/8
Third Quarter 25 1/2 20 7/8
Fourth Quarter 24 17
1996
- ----
First Quarter 20 1/2 12 1/2
Second Quarter 23 1/4 14 1/2
Third Quarter 25 1/2 18
Fourth Quarter 24 3/4 16 1/2
</TABLE>
The bid quotations set forth above represent prices between dealers and do
not include retail mark-ups, mark-downs or commissions and may not represent
actual transactions. As of February 28, 1997, there were approximately 647
holders of record of the Company's Common Stock and approximately 39 holders of
record of the Company's Class B Common Stock. These numbers do not reflect
persons or entities who hold their stock in nominee or "street name" through
various brokerage firms.
DIVIDEND POLICY
The Company has not paid cash dividends on its common equity and it is the
Company's present intention to retain earnings to finance the expansion of the
Company's business.
ITEM 6 - SELECTED FINANCIAL DATA
The following selected consolidated financial data with respect to the
Company's statements of income for the years ended December 31, 1996, 1995 and
1994 and with respect to the Company's balance sheets as of December 31, 1996
and 1995 are derived from the Company's consolidated financial statements, which
appear elsewhere in this report and which have been audited by Ernst & Young
LLP, independent auditors. The following selected consolidated financial data
with respect to the Company's statements of income for the years ended December
31, 1993 and 1992 and with respect to the Company's balance sheets as of
December 31, 1994, 1993 and 1992 are derived from the Company's consolidated
financial statements, which have been audited by Ernst & Young LLP, independent
auditors, and which are not included herein. The data should be read in
conjunction with the consolidated financial statements, related notes and other
financial information included herein.
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ITEM 6 - SELECTED FINANCIAL DATA (continued)
<TABLE>
<CAPTION>
Year Ended December 31
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(in thousands except per share data)
Income Statement Data
- ---------------------
1996 1995 1994 1993 1992
-------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
Net revenues $144,983 $144,022 $115,444 $84,034 $63,824
Income from operations 36,532 42,632 33,340 21,674 16,851
Net income 25,639 29,498 22,135 15,131 11,970
Net income per common share .60 .68 .52 .35 .27
Weighted average shares 42,743 43,211 42,890 43,096 43,676
<CAPTION>
At December 31
---------------------------------------------------------------------
(in thousands)
Balance Sheet Data 1996 1995 1994 1993 1992
- ------------------ -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Working capital $108,551 $ 95,900 $ 65,015 $ 62,850 $58,734
Total assets 186,443 166,997 126,492 114,813 97,033
Total liabilities 15,699 16,941 13,014 12,416 8,573
Long-term debt - - - 104 544
Stockholders' equity 170,744 150,056 113,478 102,397 88,460
</TABLE>
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following table sets forth certain items of selected consolidated
financial information as a percentage of net revenues for the periods indicated.
This table and the subsequent discussion should be read in conjunction with the
selected financial data and the Consolidated Financial Statements of the Company
contained elsewhere in this report.
<TABLE>
<CAPTION>
Year ended December 31
-------------------------------------
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Net revenues 100.0% 100.0% 100.0%
Gross margin 53.9% 52.7% 50.3%
Selling, general and administrative expenses 18.8% 15.0% 14.8%
Research and development expenses 9.9% 8.0% 6.6%
Income before income taxes 27.9% 32.5% 30.9%
</TABLE>
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YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995:
Net revenues for fiscal 1996 were $144,983,000, an increase of $961,000
(.7%) as compared to $144,022,000 for fiscal 1995. The growth in revenues
resulted primarily from an increase in unit shipments of standard and custom
products of $5,468,000, offset by a decrease in revenue recognized under the
Company's long-term contract for the sale of automated manufacturing line
equipment of $5,128,000.
Gross margin increased $2,253,000 (3.0%) from $75,852,000 to $78,105,000,
and increased as a percentage of net revenues to 53.9% from 52.7%. The primary
components of the increase in gross margin were changes in the revenue mix.
Selling, general, and administrative expenses were $27,232,000 for the
year, an increase of $5,564,000 (25.7%) over fiscal 1995. As a percentage of net
revenues, selling, general and administrative expenses increased to 18.8% as
compared to 15.0% in 1995. The principal components of the $5,564,000 increase
were $1,645,000 (19.7%) of compensation expense due to growth in staffing levels
of sales and administrative personnel, international office expenses of $954,000
(239.0%), VIA related expenses of $799,000 (88.1%) (see the discussion under
Item 1 - "Business"), and legal expense of $517,000 (175.3%). The increase in
international office expenses and VIA related expenses reflects a full year of
expenses for the Company's international Technical Support Centers and in the
VIAs that had been established in 1995.
Research and development expenses increased $2,789,000 (24.1%) to
$14,341,000, and increased as a percentage of net revenues to 9.9% from 8.0%.
The principal components of the $2,789,000 increase were $1,560,000 (23.9%) of
compensation expense due to growth in staffing levels of engineering personnel,
an increase in project materials of $497,000 (24.4%) and an increase in VIA
related research and development expenses of $262,000 (142.0%). The Company
continued its development efforts on its next-generation products throughout
1996. See the discussion under "Liquidity and Capital Resources." The Company
does not expect revenues or earnings from this new product family to be material
over the next several quarters.
Other income decreased $331,000 (7.9%) to $3,860,000. Other income was
primarily comprised of interest income which was derived from cash and cash
equivalents, as well as the notes receivable associated with the Company's real
estate transactions in Andover, Massachusetts. This decrease is primarily due to
a reduction in interest income earned on lower average balances from an escrow
account maintained in connection with the Company's long-term contract for the
sale of automated manufacturing line equipment and from an overall decrease in
market interest rates during the twelve months ended December 31, 1996, as
compared with the same period a year ago.
As a result of the foregoing, income before income taxes was $40,392,000, a
decrease of $6,431,000 (13.7%) compared to 1995. As a percentage of net
revenues, income before income taxes decreased from 32.5% in 1995 to 27.9% in
1996.
The provision for income taxes totaled $14,753,000 in 1996 compared to
$17,325,000 in 1995. The Company's overall tax rate was 36.5% and 37% for 1996
and 1995, respectively.
Net income in 1996 decreased by $3,859,000 to $25,639,000. Earnings per
share in 1996 were $.60 compared to $.68 in 1995, a decrease of $.08 (11.8%).
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994:
Net revenues for fiscal 1995 were $144,022,000, an increase of $28,578,000
(24.8%) as compared to $115,444,000 for fiscal 1994. The growth in revenues
resulted primarily from an increase in unit shipments of standard products.
Gross margin increased $17,733,000 (30.5%) to $75,852,000 from $58,119,000,
and as a percentage of net revenues to 52.7% from 50.3%. The primary components
of the increase in gross margin were changes in the revenue mix and efficiencies
derived from higher volume of standard product sales. Gross margin was adversely
affected in the third and fourth quarters as a result of a lower than average
unit sales price for a high
9
<PAGE> 11
volume shipment to a single customer. Shipments to this customer, at this unit
sales price, were completed at the end of 1995.
Selling, general, and administrative expenses were $21,668,000 for the
year, an increase of $4,537,000 (26.5%) over fiscal 1994. As a percentage of net
revenues, selling, general and administrative expenses increased to 15.0% as
compared to 14.8% in 1994. The principal components of the $4,537,000 increase
were $1,989,000 (29.3%) of compensation expense due to growth in sales and
administrative personnel, advertising expense of $966,000 (45.5%), VIA related
expenses of $906,000 (100.0%) (see the discussion under Item 1 - "Business"),
and sales commissions of $517,000 (15.4%). The increase in these categories
reflects the Company's investments in newly established Technical Support
Centers internationally and in the start-up of the VIA program domestically.
Research and development expenses increased $3,904,000 (51.0%) to
$11,552,000 and increased as a percentage of net revenues to 8.0% from 6.6%. The
principal components of the $3,904,000 increase were $1,812,000 (32.4%) of
compensation expense due to growth in staffing levels of engineering personnel,
and an increase in project materials of $1,240,000 (132.4%). The Company
continued its efforts on its next-generation products throughout 1995. See the
discussion under "Liquidity and Capital Resources."
Other income increased $1,829,000 (77.4%) to $4,191,000. Other income was
primarily comprised of interest income which was derived from cash and cash
equivalents, as well as the notes receivable associated with the Company's real
estate transactions in Andover, Massachusetts. Interest income increased
primarily due to an increase in cash balances earning interest and a slight
increase in the yield rates earned on these balances.
As a result of the foregoing, income before income taxes was $46,823,000,
an increase of $11,121,000 (31.1%) compared to 1994. As a percentage of net
revenues, income before income taxes increased to 32.5% in 1995 as compared with
30.9% in 1994.
The provision for income taxes totaled $17,325,000 in 1995 compared to
$13,567,000 in 1994. The Company's overall tax rate was 37% and 38% for 1995 and
1994, respectively.
Net income in 1995 grew by $7,363,000 to $29,498,000. Earnings per share in
1995 were $.68 compared to $.52 in 1994, an increase of $.16 (30.8%). The
increase in earnings per share is primarily due to the increase in net income in
1995. On July 28, 1995, the Board of Directors declared a 2-for-1 stock split
effected in the form of a stock dividend, which was paid on September 18, 1995,
to holders of record as of August 28, 1995. All per share information has been
presented to reflect the stock-split.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1996, the Company had $73,647,000 in cash and cash
equivalents. Working capital increased $12,651,000 during the year ended
December 31, 1996. This increase is due primarily to an increase in cash and
cash equivalents of $8,403,000 and inventories of $4,444,000.
Cash used in investing activities during fiscal 1996 was $16,361,000, an
increase of $1,693,000 (11.5%) over fiscal 1995. This increase was primarily due
to a net change in notes receivable of $2,768,000, offset by a decrease in
capital expenditures for property and equipment of $1,298,000. Cash used in
financing activities was $4,951,000 during the year compared to cash provided by
financing activities of $6,976,000 in 1995, a net change of $11,927,000. This
change is primarily attributed to an increase in the acquisition of treasury
stock of $7,909,000, and a decrease in the net proceeds from issuance of Common
Stock and the related income tax benefit derived from such issuance, of
$4,122,000.
In 1992, the Company entered into a series of transactions with an
unrelated third party concerning an office/industrial park in Andover,
Massachusetts. In these transactions, the Company leased a building of
approximately 136,000 square feet through December 1994, which had been treated
as a capital lease transaction. In December 1994, the Company purchased this
building and 16 acres of land. After offsetting specified loans and other
prepayments, this transaction resulted in a net cash outlay of approximately
$329,000. In 1995, the Company received a payment of $1,473,000 on a mortgage
note. The Company did not
10
<PAGE> 12
purchase certain other properties covered by the agreement, and retains 8%
mortgage notes in the amount of $2,500,000.
The Company plans to continue its investments in manufacturing equipment,
much of which is built internally. The internal construction of manufacturing
machinery is a practice which the Company expects to follow over the next
several years.
In 1995, the Company announced that it had started prototype production on
a new automated manufacturing line specifically designed to manufacture
next-generation products. In the fourth quarter of 1996, the Company began
introducing selected models of its next-generation product families. While
management believes that the initiation of limited production on the new
manufacturing line and the introduction of selected models of its
next-generation product families are important milestones, there can be no
assurance that problems will not substantially delay the ultimate general
introduction of the complete product line, require modification of product
specifications, or prevent attainment of the anticipated capacity of the new
manufacturing line. Significant revenues from the sale of any products in the
Company's next-generation product line are not expected to occur for several
quarters.
In February, 1996, the Board of Directors of the Company authorized the
repurchase of the Company's Common Stock up to an aggregate amount of
approximately $19,500,000, including amounts remaining under a prior
authorization. The plan authorizes the Company to make such repurchases from
time to time in the open market or through privately negotiated transactions.
The timing of this program and the amount of the stock that may be repurchased
is at the discretion of management based on its view of economic and financial
market conditions. In 1996, the Company spent $13,007,000 in the repurchase of
its Common Stock.
The Company has an unused line of credit with a bank under which the
Company may borrow up to $4,000,000 on a revolving credit basis. The Company
believes that cash generated from operations and its cash and cash equivalents
will be sufficient to fund planned operations and capital equipment purchases
for the foreseeable future. At December 31, 1996, the Company had approximately
$1,000,000 of capital expenditure commitments.
The Company does not consider the impact of inflation on its business
activities or fluctuations in the exchange rates for foreign currency
transactions to have been significant to date.
11
<PAGE> 13
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX
FINANCIAL STATEMENTS
Report of Independent Auditors
Consolidated Balance Sheets at December 31, 1996 and 1995
Consolidated Statements of Income For the Years Ended December 31, 1996, 1995
and 1994
Consolidated Statements of Cash Flows For the Years Ended December 31, 1996,
1995 and 1994
Consolidated Statements of Stockholders' Equity For the Years Ended December 31,
1996, 1995 and 1994
Notes to the Consolidated Financial Statements
SCHEDULE (Refer to Item 14)
12
<PAGE> 14
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders
VICOR CORPORATION
We have audited the accompanying consolidated balance sheets of Vicor
Corporation as of December 31, 1996 and 1995, and the related consolidated
statements of income, stockholders' equity, and cash flows for each of the three
years in the period ended December 31, 1996. Our audits also included the
financial statement schedule listed in the Index at Item 14(a). These financial
statements and schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Vicor Corporation at December 31, 1996 and 1995, and the consolidated results of
its operations and cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles.
Also, in our opinion, the related financial statement schedule, when considered
in relation to the basic financial statements taken as a whole, presents fairly
in all material respects the information set forth therein.
Ernst & Young LLP
Boston, Massachusetts
January 31, 1997
13
<PAGE> 15
VICOR CORPORATION
<TABLE>
CONSOLIDATED BALANCE SHEETS
December 31, 1996 and 1995
<CAPTION>
1996 1995
-------- --------
(in thousands, except share data)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 73,647 $ 65,244
Accounts receivable, less allowance of $879 in 1996 and
$786 in 1995 25,001 26,171
Inventories 21,129 16,685
Other current assets 2,765 3,015
-------- --------
Total current assets 122,542 111,115
Property, plant and equipment, net 57,613 51,516
Notes receivable 3,795 2,500
Other assets 2,493 1,866
-------- --------
$186,443 $166,997
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,558 $ 7,647
Accrued compensation and benefits 2,129 1,489
Accrued expenses 2,184 2,113
Income taxes payable 3,594 3,716
Deferred revenue 526 250
-------- --------
Total current liabilities 13,991 15,215
Deferred income taxes 1,708 1,726
Commitments and contingencies - -
Stockholders' equity:
Preferred Stock, $.01 par value, 1,000,000 shares
authorized; 360,001 issued and none outstanding in 1996 and 1995 - -
Class B Common Stock: 10 votes per share, $.01 par value, 14,000,000
shares authorized, 12,264,809 issued and outstanding
(12,319,309 in 1995) 123 123
Common Stock: 1 vote per share, $.01 par value, 62,000,000 shares
authorized, 33,134,135 shares issued and 29,876,741 outstanding
(32,390,859 issued and 30,015,565 outstanding in 1995) 331 324
Additional paid-in capital 85,842 77,793
Retained earnings 124,839 99,200
Treasury stock at cost: 3,257,394 shares (2,375,294 shares in 1995) (40,391) (27,384)
-------- --------
Total stockholders' equity 170,744 150,056
-------- --------
$186,443 $166,997
======== ========
</TABLE>
See accompanying notes
14
<PAGE> 16
VICOR CORPORATION
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
Years ended December 31, 1996, 1995 and 1994
<CAPTION>
1996 1995 1994
-------- -------- --------
(in thousands, except per share amounts)
<S> <C> <C> <C>
Net revenues $144,983 $144,022 $115,444
Costs and expenses:
Cost of revenue 66,878 68,170 57,325
Selling, general and administrative 27,232 21,668 17,131
Research and development 14,341 11,552 7,648
-------- -------- --------
108,451 101,390 82,104
-------- -------- --------
Income from operations 36,532 42,632 33,340
Other income 3,860 4,191 2,362
-------- -------- --------
Income before income taxes 40,392 46,823 35,702
Provision for income taxes 14,753 17,325 13,567
-------- -------- --------
Net income $ 25,639 $ 29,498 $ 22,135
======== ======== ========
Net income per common share $ .60 $ .68 $ .52
======== ======== ========
Weighted average number of common shares and
equivalents 42,743 43,211 42,890
======== ======== ========
</TABLE>
See accompanying notes
15
<PAGE> 17
VICOR CORPORATION
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 1996, 1995 and 1994
<CAPTION>
1996 1995 1994
-------- -------- --------
(in thousands)
<S> <C> <C> <C>
Operating activities:
Net income $ 25,639 $ 29,498 $ 22,135
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 8,338 8,232 7,591
(Gain) loss on disposal of equipment 4 (20) 304
Deferred compensation expense - - 57
Deferred income taxes (28) 1,049 (843)
Change in current assets and liabilities, net (4,238) (9,024) (3,231)
-------- -------- --------
Net cash provided by operating activities 29,715 29,735 26,013
Investing activities:
Additions to property and equipment (14,295) (15,593) (15,457)
Proceeds from sale of equipment 16 33 91
Increase in other assets (787) (581) (555)
Proceeds from maturity of short-term investments - - 8,988
Decrease (increase) in notes receivable (1,295) 1,473 (328)
-------- -------- --------
Net cash used in investing activities (16,361) (14,668) (7,261)
Financing activities:
Tax benefit relating to stock option plans 2,844 3,516 1,515
Proceeds from issuance of Common Stock 5,212 8,662 2,973
Decrease in deferred building acquisition - - (259)
Payments on long-term debt - (104) (440)
Acquisitions of treasury stock (13,007) (5,098) (15,599)
-------- -------- --------
Net cash provided by (used in)
financing activities (4,951) 6,976 (11,810)
-------- -------- --------
Net increase in cash and cash equivalents 8,403 22,043 6,942
Cash and cash equivalents at beginning of year 65,244 43,201 36,259
-------- -------- --------
Cash and cash equivalents at end of year $ 73,647 $ 65,244 $ 43,201
======== ======== ========
</TABLE>
Continued on following page
16
<PAGE> 18
VICOR CORPORATION
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
Years ended December 31, 1996, 1995 and 1994
<CAPTION>
1996 1995 1994
------- ------- -------
(in thousands)
<S> <C> <C> <C>
Change in current assets and liabilities:
Accounts receivable $ 1,170 $(8,877) $(5,912)
Inventories (4,444) (3,007) 771
Other current assets 260 (482) 109
Accounts payable and other accrued items (1,378) 3,805 188
Income taxes payable (122) (463) 1,613
Deferred revenue 276 -- --
------- ------- -------
$(4,238) $(9,024) $(3,231)
======= ======= =======
Supplemental disclosures
Cash paid during the year for income taxes $10,911 $12,794 $11,019
</TABLE>
See accompanying notes
17
<PAGE> 19
VICOR CORPORATION
<TABLE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years ended December 31, 1996, 1995 and 1994
(in thousands, except share amounts)
<CAPTION>
CLASS B
COMMON STOCK COMMON STOCK ADDITIONAL TOTAL
------------ ------------ PAID-IN RETAINED TREASURY STOCKHOLDERS'
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS STOCK EQUITY
---------- ------ ---------- ------ ---------- -------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1993 6,204,285 $ 62 15,321,032 $153 $61,302 $ 47,567 $ (6,687) $102,397
Sales of Common Stock, net of
issuance costs of $4 291,308 3 2,970 2,973
Conversion of Class B Common
Stock to Common Stock (4,574) 4,574 -
Income tax benefit from
transactions involving stock options 1,515 1,515
Amortization of deferred
compensation 57 57
Purchase of treasury stock (15,599) (15,599)
Net income 22,135 22,135
---------- ---- ---------- ---- ------- -------- -------- --------
Balance at December 31, 1994 6,199,711 62 15,616,914 156 65,844 69,702 (22,286) 113,478
Sales of Common Stock 548,770 6 8,656 8,662
Conversion of Class B Common
Stock to Common Stock (77,500) (1) 77,500 1 -
Income tax benefit from
transactions involving stock options 3,516 3,516
Two-for-one stock split, effected in
the form of a dividend, at par value 6,197,098 62 16,147,675 161 (223) -
Purchase of treasury stock (5,098) (5,098)
Net income 29,498 29,498
---------- ---- ---------- ---- ------- -------- -------- --------
Balance at December 31, 1995 12,319,309 123 32,390,859 324 77,793 99,200 (27,384) 150,056
Sales of Common Stock 688,776 7 5,205 5,212
Conversion of Class B Common
Stock to Common Stock (54,500) 54,500 -
Income tax benefit from
transactions involving stock options 2,844 2,844
Purchase of treasury stock (13,007) (13,007)
Net income 25,639 25,639
---------- ---- ---------- ---- ------- -------- -------- --------
Balance at December 31, 1996 12,264,809 $123 33,134,135 $331 $85,842 $124,839 $(40,391) $170,744
========== ==== ========== ==== ======= ======== ======== ========
</TABLE>
See accompanying notes
18
<PAGE> 20
VICOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
Vicor Corporation (the "Company") designs, develops, manufactures and
markets modular power converters, power system components, and power systems
using a patented, high frequency power conversion technology designated "zero
current switching." The Company also licenses certain rights to its technology
in return for ongoing royalties. The principal markets for the power converters
and systems are large Original Equipment Manufacturers and smaller, lower volume
users which are broadly distributed across several major market areas.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its subsidiaries. All intercompany transactions and balances have been
eliminated upon consolidation.
REVENUE RECOGNITION
Revenue is recognized generally when a product is shipped. License fees are
recognized ratably over the period of exclusivity or as additional royalty
payments would have been required, if greater. Revenue from the long-term
contract entered into in 1993 for the sale of automated manufacturing line
equipment is being recognized under the percentage of completion accounting
method until the fabrication, qualification and production support processes are
completed, which will continue over a period of time determined by the amount of
support activity requested. Revenues recognized from this contract were less
than 10% of net revenues in 1996, 1995 and 1994.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents includes funds held in checking and money market
accounts with banks and certificates of deposit with maturities of less than
three months when purchased. Cash and cash equivalents are valued at cost which
approximates market value.
SHORT-TERM INVESTMENTS
The Company's short-term investments consist principally of money market
securities which are purchased and redeemed at par. The estimated fair value is
equal to the cost of the securities and due to the nature of the securities
there are no unrealized gains or losses at the balance sheet dates. As of
December 31, 1996, the Company has approximately $71 million of
available-for-sale securities ($62 million as of December 31, 1995) which are
classified as cash equivalents on the balance sheet. The Company has no trading
securities or held-to-maturity securities.
CONCENTRATIONS OF CREDIT RISK
Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of cash investments and trade
accounts receivable. The Company maintains cash and cash equivalents and certain
other financial instruments with various financial institutions. Concentrations
of credit risk with respect to trade accounts receivable are limited due to the
large number of entities comprising the Company's customer base. Credit losses
have consistently been within management's expectations and have not been
material.
INTANGIBLE ASSETS
Intangible assets consist primarily of values assigned to patents and are
amortized using the straight-line method over a period of five to fifteen
years.
WARRANTY COSTS
Costs related to product warranty are expensed as incurred.
NET INCOME PER COMMON SHARE
Net income per common share is based on the weighted average number of
shares of common shares and common share equivalents.
19
<PAGE> 21
. VICOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
The Company adopted Financial Accounting Standards Board Statement No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of" in the first quarter of 1996. The adoption of this statement did
not have a material effect on the Company's financial statements.
2. INVENTORIES
<TABLE>
Inventories are valued at the lower of cost (determined using the first-in,
first-out method) or market. Costs associated with the long-term contract for
the sale of automated manufacturing line equipment are included in inventories
reduced by amounts identified with revenues recognized under the contract.
Inventories were as follows (in thousands):
<CAPTION>
December 31
1996 1995
------- -------
<S> <C> <C>
Raw materials $12,627 $10,396
Work-in-process 2,290 2,754
Finished goods 6,212 3,421
Unbilled costs - 114
------- -------
$21,129 $16,685
======= =======
</TABLE>
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost and are depreciated and
amortized over a period of 3 to 31.5 years generally under the straight-line
method for financial reporting purposes and accelerated methods for income tax
purposes.
<TABLE>
Property, plant and equipment was as follows (in thousands):
<CAPTION>
December 31
1996 1995
------- -------
<S> <C> <C>
Land $ 2,076 $ 2,002
Buildings and improvements 11,644 11,641
Machinery and equipment 52,625 44,883
Furniture and fixtures 3,505 3,236
Leasehold improvements 2,240 2,032
Construction-in-progress 27,327 21,527
------- -------
99,417 85,321
Less accumulated depreciation and amortization 41,804 33,805
------- -------
$57,613 $51,516
======= =======
</TABLE>
At December 31, 1996, the Company had approximately $1,000,000 of capital
expenditure commitments.
20
<PAGE> 22
VICOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
4. NOTES RECEIVABLE FROM OFFICERS
The Company's President has borrowed a total of $1,178,882 from the Company
pursuant to a series of unsecured term notes. The notes have terms of five years
and are due at various dates through November 2001. The notes bear interest at
the higher of the Company's prime borrowing rate less 1%, or the applicable
federal rate under the Internal Revenue Code of 1986, as amended. As of December
31, 1996, the notes and interest receivable balance was approximately $1,245,000
($100,250 as of December 31, 1995) and the applicable interest rate at December
31, 1996 was 7.25%.
In November 1995, a Vice-President of the Company borrowed $66,000 from the
Company pursuant to an unsecured term note. The note bears interest at the
Company's prime borrowing rate less 1%. As of December 31, 1996, the note and
interest receivable balance was approximately $54,000 ($65,500 as of December
31, 1995). The applicable interest rate at December 31, 1996 was 7.25%.
5. FINANCING ARRANGEMENTS
The Company has an unused line of credit with a bank under which the
Company may borrow up to $4,000,000 on a revolving credit basis. Borrowings
under this line would bear interest at the Company's option of an interest rate
equal to the Lender's base rate, 30 day LIBOR + 1.75% or the 30 day Banker's
Acceptance (BA) rate + 2.25%.
6. STOCKHOLDERS' EQUITY
In February, 1996, the Board of Directors of the Company authorized the
repurchase of the Company's Common Stock up to an aggregate amount of
approximately $19,500,000, including amounts remaining under a prior
authorization. The plan authorizes the Company to make such repurchases from
time to time in the open market or through privately negotiated transactions.
The timing of this program and the amount of the stock that may be repurchased
is at the discretion of management based on its view of economic and financial
market conditions. In 1996, the Company spent $13,007,000 in the repurchase of
its Common Stock.
Common Stock
Each share of Common Stock entitles the holder thereof to one vote on all
matters submitted to the shareholders. Each share of Class B Common Stock
entitles the holder thereof to ten votes on all such matters.
Shares of Class B Common Stock are not transferable by stockholders except
to or among such stockholder's spouse, certain of such stockholder's relatives,
and certain other defined transferees. Class B Common Stock is not listed or
traded on any exchange or in any market. Class B Common Stock is convertible at
all times and without cost to the shareholder into shares of Common Stock on a
share-for-share basis.
7. EMPLOYEE BENEFIT PLANS
Stock Options
The Company has elected to follow Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" (APB 25) and related
Interpretations in accounting for its employee stock options because, as
discussed below, the alternative fair value accounting provided for under FASB
Statement No. 123, "Accounting for Stock-Based Compensation," requires use of
option valuation models that were not developed for use in valuing employee
stock options. Under APB 25, because the exercise price of the Company's
employee stock options equals the market price of the underlying stock on the
date of grant, no compensation expense is recognized.
21
<PAGE> 23
VICOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. EMPLOYEE BENEFIT PLANS (CONTINUED)
In June 1993, the 1993 Stock Option Plan (the "1993 Plan") was approved
by the stockholders. Under the 1993 Plan, the Board of Directors or the
Compensation Committee may grant stock options to employees and non-employee
directors to purchase shares of Common Stock at a price at least equal to the
fair market value per share of the outstanding Common Stock at the time the
option is granted. Both incentive stock options intended to qualify under
Section 422 of the Internal Revenue Code and non-qualified stock options have
been authorized to be granted. Incentive stock options may be granted to
employees, including employees who are directors of the Company, and
non-qualified options may be granted to non-employee directors. Both employee
directors and non-employee directors automatically receive stock options upon
election or re-election as a director. A total of 4,000,000 shares of Common
Stock have been reserved for issuance under the 1993 Plan. Stock options are
typically granted with vesting periods and become exercisable over various
periods of time, ranging from six months to five years from the date of grant,
and expire over various periods of time, ranging from one to ten years from the
date of grant.
Under the Company's 1984 Stock Option Plan, as amended (the "1984 Plan"),
the Board of Directors or the Compensation Committee granted stock options to
employees to purchase shares of Common Stock at a price at least equal to the
fair market value per share of the outstanding Common Stock at the time the
option was granted. Stock options under the 1984 Plan were typically granted
with vesting periods and became exercisable over various periods of time,
ranging from six months to five years from the date of grant, and expire over
various periods of time, ranging from one to thirteen years from the date of
grant. In connection with the adoption of the 1993 Plan, the Board of Directors
terminated the granting of options under the 1984 Plan upon approval of the 1993
Plan, discussed above.
<TABLE>
Activity as to stock options is as follows:
<CAPTION>
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Outstanding at beginning of year 2,354,480 2,949,108 2,851,290
Granted 943,426 709,977 775,380
Cancelled (587,125) (227,688) (94,946)
Exercised (688,776) (1,076,917) (582,616)
------------ ------------ ------------
Outstanding at end of year 2,022,005 2,354,480 2,949,108
============ ============ ============
Exercisable at end of year 1,552,672 1,886,035 2,220,220
============ ============ ============
Weighted - average exercise price:
Outstanding at beginning of year $8.01 $5.87 --
Granted $14.97 $17.41 --
Cancelled $16.73 $9.25 --
Exercised $7.56 $8.04 --
Outstanding at end of year $8.97 $8.01 --
Exercisable at end of year $7.24 $6.78 --
Weighted - average fair value of
options granted during the year $ 4.38 $ 5.21 --
Price range per share of outstanding options $ .84-24.50 $ .15-23.88 $ .15-21.38
============ ============ ============
Price range per share of options granted $14.38-24.50 $12.50-23.75 $10.75-14.44
============ ============ ============
Price range per share of options exercised $ .15-19.56 $ .15-19.19 $ .15-12.75
============ ============ ============
Available for grant at end of year 2,002,247 2,375,510 2,995,782
============ ============ ============
</TABLE>
22
<PAGE> 24
VICOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. EMPLOYEE BENEFIT PLANS (CONTINUED)
Exercise prices for options outstanding as of December 31, 1996 ranged from $.84
to $24.50. The weighted - average contractual life of those options is 4.88
years.
<TABLE>
The following table summarizes information about stock options outstanding as of December 31, 1996:
<CAPTION>
Range of Exercise Prices
--------------------------------------------------------------------------
$.84-$1.83 $2.94-$11.13 $11.25-$14.50 $14.88-$24.50
---------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Options Outstanding:
- --------------------
Number Outstanding 606,182 556,131 570,128 289,564
Weighted-Average Remaining
Contractual Life 4.53 6.40 1.89 8.55
Weighted-Average
Exercise Price $1.41 $6.96 $14.23 $18.27
Options Exercisable:
- --------------------
Number Exercisable 606,182 415,272 489,124 42,174
Weighted-Average
Exercise Price $1.41 $6.19 $14.34 $18.97
</TABLE>
Pro forma information regarding net income and earnings per share is
required by Statement 123, which also requires that the information be
determined as if the Company had accounted for its employee stock options
granted subsequent to December 31, 1994 under the fair value method of that
Statement. The fair value for these options was estimated at the date of grant
using a Black-Scholes option pricing model with the following weighted-average
assumptions for 1996 and 1995, respectively: risk-free interest rates of 5.4%
and 6.3%; dividend yields of zero; volatility factor of the expected market
price of the Company's common stock of .54 in both years; and a weighted-average
expected life of the option of 1.7 years.
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.
23
<PAGE> 25
VICOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. EMPLOYEE BENEFIT PLANS (CONTINUED)
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The Company's
pro forma information follows (in thousands except for earnings per share
information):
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Pro forma net income $23,658 $27,932
Pro forma net income per share $ .55 $ .65
</TABLE>
The effects on 1996 and 1995 pro forma net income and net income per share
of expensing the fair value of stock options issued are not necessarily
representative of the effects on reporting the pro forma results of operations
for future years as the periods presented include only two and one years,
respectively, of option grants under the Company's plans.
401(k) Plan
The Company sponsors a savings plan available to all domestic employees
which qualifies under Section 401(k) of the Internal Revenue Code. Employees may
contribute to the plan from 1% to 20% of their pre-tax salary subject to
statutory limitations. The Company does not make contributions to this plan.
Stock Bonus Plan
Under the Company's 1985 Stock Bonus Plan, as amended, shares of Common
Stock may be awarded to employees from time to time as determined by the Board
of Directors. At December 31, 1996, 109,964 shares were available for further
award. All shares awarded to employees under this plan have vested in full, and
all deferred compensation related to such grants was fully amortized as of
December 31, 1994. No further awards are contemplated under this plan at
present.
8. INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax liabilities and assets are as follows (in thousands):
<TABLE>
<CAPTION>
December 31
1996 1995
------- -------
<S> <C> <C>
Deferred tax assets:
Inventory reserves $ 883 $ 1,036
Vacation 379 295
Bad debt 357 324
Other 375 329
------- -------
Total deferred tax assets (current) 1,994 1,984
Deferred tax liabilities:
Depreciation (804) (1,125)
Patent amortization (904) (601)
------- -------
Total deferred tax liabilities (noncurrent) (1,708) (1,726)
------- -------
Net deferred tax assets $ 286 $ 258
======= =======
</TABLE>
24
<PAGE> 26
VICOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. INCOME TAXES (CONTINUED)
Significant components of the provision for income taxes attributable to
continuing operations are as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Federal:
Current $12,662 $13,463 $11,957
Deferred (prepaid) (28) 1,049 (843)
------- ------- -------
12,634 14,512 11,114
State:
Current 2,119 2,813 2,453
------- ------- -------
$14,753 $17,325 $13,567
======= ======= =======
</TABLE>
The reconciliation of income tax attributable to continuing operations
computed at the federal statutory rate to income tax expense is:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Statutory federal tax rate 35.0% 35.0% 35.0%
State income taxes, net of federal income tax benefit 3.5 4.0 4.9
Foreign Sales Corporation benefit (1.4) (1.5) (1.3)
Tax credits (0.6) (0.5) (0.6)
---- ---- ----
36.5% 37.0% 38.0%
==== ==== ====
</TABLE>
9. COMMITMENTS AND CONTINGENCIES
The Company leases certain of its office, warehousing and manufacturing
space, as well as certain equipment. The future minimum rental commitments under
noncancelable operating leases with remaining terms in excess of one year are as
follows (in thousands):
<TABLE>
<CAPTION>
Year
----
<S> <C>
1997 $1,383
1998 1,280
1999 1,009
2000 306
2001 123
</TABLE>
Rent expense was approximately $1,329,000, $1,016,000, and $1,209,000 in
1996, 1995 and 1994, respectively. The Company also pays executory costs such as
taxes, maintenance and insurance.
In 1992, the Company entered into a series of transactions with an
unrelated third party concerning an office/industrial park in Andover,
Massachusetts. In these transactions, the Company leased a building of
approximately 136,000 square feet through December 1994, which had been treated
as a capital lease transaction. In December 1994, the Company purchased this
building and 16 acres of land. After offsetting specified loans and other
prepayments, this transaction resulted in a net cash outlay of approximately
$329,000. The Company did not purchase certain other properties covered by the
agreement, and retains 8% mortgage notes in the amount of $2,500,000.
The Company is involved in certain litigation incidental to the conduct of
its business. While the outcome of lawsuits against the Company cannot be
predicted with certainty, management does not expect any current litigation to
have a material adverse impact on the Company.
25
<PAGE> 27
VICOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
10. SEGMENT INFORMATION
The Company operates in one industry segment: the development, manufacture
and sale of power conversion components and systems. During 1996, 1995 and 1994,
no customer constituted more than 10% of net revenues. Export sales, as a
percentage of total sales, were approximately 29%, 32%, and 31% in 1996, 1995
and 1994, respectively. Sales and receipts are recorded and received in U.S.
dollars. Foreign exchange variations have little or no effect on the Company at
this time.
11. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following table sets forth certain unaudited quarterly financial data
(in thousands, except per share amounts):
<TABLE>
<CAPTION>
First Second Third Fourth Total
------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
1996: Net revenues $35,806 $36,702 $35,673 $36,802 $144,983
Gross profit 19,259 19,847 19,320 19,679 $78,105
Net income 6,660 6,718 6,235 6,026 25,639
Net income per share .16 .16 .15 .14 .60
1995: Net revenues $33,786 $35,125 $37,307 $37,804 $144,022
Gross profit 17,974 19,022 19,656 19,200 75,852
Net income 7,036 7,383 7,634 7,445 29,498
Net income per share .16 .17 .18 .17 .68
</TABLE>
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
26
<PAGE> 28
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Incorporated by reference from the Company's Definitive Proxy Statement for
its 1997 annual meeting of stockholders.
ITEM 11 - EXECUTIVE COMPENSATION
Incorporated by reference from the Company's Definitive Proxy Statement for
its 1997 annual meeting of stockholders.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated by reference from the Company's Definitive Proxy Statement for
its 1997 annual meeting of stockholders.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated by reference from the Company's Definitive Proxy Statement for
its 1997 annual meeting of stockholders.
ITEM 14 - FINANCIAL STATEMENTS, SCHEDULES, EXHIBITS, AND REPORTS ON FORM 8-K
(a)(1) FINANCIAL STATEMENTS
See index in Item 8
(a)(2) SCHEDULES
Schedule II Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not required
under the related instructions or are inapplicable, and therefore have been
omitted.
27
<PAGE> 29
(a)(3) EXHIBITS
Exhibits Description of Document
3.1 - Restated Certificate of Incorporation*
3.2 - Bylaws, as amended*
4.1 - Specimen Common Stock Certificate*
10.1 - 1984 Stock Option Plan of the Company, as amended*
10.2 - Lease dated December 30, 1989, by and between the Company
and David J. Carlberg and Paul Bruk, Jr., as Trustees of
Frontage Road Realty Trust, relating to the corporate offices
and manufacturing facilities at 23 Frontage Road, as amended*
10.3 - Military/Aerospace License Agreement dated as of March 1,
1985, by and between the Company and Kollmorgen Corporation*
10.4 - Western Europe License Agreement dated as of March 1, 1985,
by and between the Company and Kollmorgen Corporation*
10.5 - Switching Power Supply Patents and Know-How Agreement dated
as of December 2, 1986, by and between the Company and
Reliance Electric Company*
10.6 - Switching Power Supply Patent and Information Agreement dated
as of June 29, 1988, by and between VLT Corporation and
Integran, Inc.*
10.7 - Vicor Corporation Employee Stock Bonus Plan*
10.8 - Vicor Corporation 401(k) Plan*
10.9 - Amendment to Switching Power Supply Patents and Know-How
Agreement dated as of May 17, 1990, by and among the Company,
VLT Corporation and Reliance Comm/Tec Corporation**
10.10 - $1,500,000 Promissory Note (Lot 3) to Vicor Corporation from
Andover Park Realty Trust dated September 14, 1992***
10.11 - $1,500,000 Promissory Note (Lot 2) to Vicor Corporation from
Andover Park Realty Trust dated September 14, 1992***
10.12 - $1,000,000 Promissory Note (Lot 6A) to Vicor Corporation from
Andover Park Realty Trust dated September 14, 1992***
10.13 - Mortgage and Security Agreement (Lot 6A) to Vicor Corporation
from Andover Park Realty Trust dated September 14, 1992***
10.14 - 1993 Stock Option Plan****
21.1 - Subsidiaries of the Company (1)
23.1 - Consent of Independent Auditors (1)
* Filed as an exhibit to the Company's Registration Statement on
Form 10, as amended, under the Securities Exchange Act of 1934
(File No. 0-18277), and incorporated herein by reference.
** Filed as an exhibit to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1990 and
incorporated herein by reference.
*** Filed as an exhibit to the Company's Current Report on Form
8-K dated September 14, 1992 and incorporated herein by
reference.
**** Filed as an exhibit to the Company's Registration Statement on
Form S-8, as amended, under the Securities Act of 1933 (No.
33-65154), and incorporated herein by reference.
(1) Filed herewith
ITEM 14 - FINANCIAL STATEMENTS, SCHEDULES, EXHIBITS, AND REPORTS ON FORM 8-K
(continued)
(b) REPORTS ON FORM 8-K
None.
28
<PAGE> 30
VICOR CORPORATION
<TABLE>
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
Years ended December 31, 1996, 1995 and 1994
<CAPTION>
(Credit)
Balance at Charge to Other Balance at
Beginning Costs and Changes End
Of Period Expenses Deductions (1) Of Period
---------- --------- -------------- -----------
<S> <C> <C> <C> <C>
1996
ALLOWANCE FOR DOUBTFUL
ACCOUNTS $ 786,000 $ 10,000 $ 83,000 $ 879,000
1995
Allowance for doubtful
accounts $1,172,000 $(650,000) $264,000 $ 786,000
1994
Allowance for doubtful
accounts $873,000 $ 100,000 $199,000 $1,172,000
<FN>
(1) Reflects amounts for recoveries of uncollectible accounts receivable.
</TABLE>
29
<PAGE> 31
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: March 24, 1997 Vicor Corporation
By: /s/Mark A. Glazer
---------------------------------------
Mark A. Glazer
Vice President, Finance and
Administration, Treasurer and Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/Patrizio Vinciarelli President and Chairman March 24, 1997
- ---------------------------------- of the Board (Principal
Patrizio Vinciarelli Executive Officer)
/s/Mark A. Glazer Vice President, Finance and March 24, 1997
- ---------------------------------- Administration, Treasurer and
Mark A. Glazer Secretary (Principal Financial
and Accounting Officer)
/s/Estia J. Eichten Director March 24, 1997
- ----------------------------------
Estia J. Eichten
/s/David T. Riddiford Director March 24, 1997
- ----------------------------------
David T. Riddiford
/s/Richard E. Beede Director March 24, 1997
- ----------------------------------
Richard E. Beede
/s/Jay M. Prager Director March 24, 1997
- ----------------------------------
Jay M. Prager
/s/M. Michael Ansour Director March 24, 1997
- ----------------------------------
M. Michael Ansour
</TABLE>
30
<PAGE> 32
<TABLE>
EXHIBIT INDEX
<CAPTION>
Sequentially
Exhibits Description of Document Numbered Page
-------- ----------------------- -------------
<S> <C>
3.1 - Restated Certificate of Incorporation*
3.2 - Bylaws, as amended*
4.1 - Specimen Common Stock Certificate*
10.1 - 1984 Stock Option Plan of the Company, as amended*
10.2 - Lease dated December 30, 1989, by and between the Company
and David J. Carlberg and Paul Bruk, Jr., as Trustees of
Frontage Road Realty Trust, relating to the corporate offices
and manufacturing facilities at 23 Frontage Road, as amended*
10.3 - Military/Aerospace License Agreement dated as of March 1,
1985, by and between the Company and Kollmorgen Corporation*
10.4 - Western Europe License Agreement dated as of March 1, 1985,
by and between the Company and Kollmorgen Corporation*
10.5 - Switching Power Supply Patents and Know-How Agreement dated
as of December 2, 1986, by and between the Company and
Reliance Electric Company*
10.6 - Switching Power Supply Patent and Information Agreement dated
as of June 29, 1988, by and between VLT Corporation and
Integran, Inc.*
10.7 - Vicor Corporation Employee Stock Bonus Plan*
10.8 - Vicor Corporation 401(k) Plan*
10.9 - Amendment to Switching Power Supply Patents and Know-How
Agreement dated as of May 17, 1990, by and among the Company,
VLT Corporation and Reliance Comm/Tec Corporation**
10.10 - $1,500,000 Promissory Note (Lot 3) to Vicor Corporation from
Andover Park Realty Trust dated September 14, 1992***
10.11 - $1,500,000 Promissory Note (Lot 2) to Vicor Corporation from
Andover Park Realty Trust dated September 14, 1992***
10.12 - $1,000,000 Promissory Note (Lot 6A) to Vicor Corporation from
Andover Park Realty Trust dated September 14, 1992***
10.13 - Mortgage and Security Agreement (Lot 6A) to Vicor Corporation
from Andover Park Realty Trust dated September 14, 1992***
10.14 - 1993 Stock Option Plan****
21.1 - Subsidiaries of the Company (1)
23.1 - Consent of Independent Auditors (1)
<FN>
* Filed as an exhibit to the Company's Registration Statement on
Form 10, as amended, under the Securities Exchange Act of 1934
(File No. 0-18277), and incorporated herein by reference.
** Filed as an exhibit to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1990 and
incorporated herein by reference.
*** Filed as an exhibit to the Company's Current Report on Form
8-K dated September 14, 1992 and incorporated herein by
reference.
**** Filed as an exhibit to the Company's Registration Statement on
Form S-8, as amended, under the Securities Act of 1933 (No.
33-65154), and incorporated herein by reference.
(1) Filed herewith
</TABLE>
31
<PAGE> 1
Exhibit 21.1
<TABLE>
SUBSIDIARIES OF THE COMPANY
<CAPTION>
Name State or jurisdiction of incorporation
---- --------------------------------------
<S> <C>
VLT Corporation Texas, USA
Vicor GmbH Germany
Vicor International Inc. U.S. Virgin Islands
VICR Securities Corporation Massachusetts, USA
Vicor Asia Pacific Co., Ltd. Taiwan
Vicor France SARL France
Vicor Italy SRL Italy
Vicor Hong Kong Ltd. Hong Kong
Vicor U.K. Ltd. United Kingdom
Vicor B.V. Netherlands
Vicor Development Corporation Delaware, USA
Aegis Power Systems, Inc. Delaware, USA
Mission Power Solutions, Inc. Delaware, USA
Northwest Power Integrations, Inc. Delaware, USA
Converpower Corporation Delaware, USA
Freedom Power Systems, Inc. Delaware, USA
</TABLE>
32
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8, No. 33-37491) pertaining to the Vicor Corporation 1984 Stock
Option Plan and in the Registration Statement (Form S-8, No. 33-65154)
pertaining to the Vicor Corporation 1993 Stock Option Plan of our report
dated January 31, 1997 with respect to the consolidated financial
statements and schedule of Vicor Corporation included in the Annual Report
(Form 10-K) for the year ended December 31, 1996.
Ernst & Young LLP
Boston, Massachusetts
March 20, 1997
33
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000751978
<NAME> VICOR CORPORATION
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<CASH> 73,647
<SECURITIES> 0
<RECEIVABLES> 25,001
<ALLOWANCES> 0
<INVENTORY> 21,129
<CURRENT-ASSETS> 122,542
<PP&E> 99,417
<DEPRECIATION> 41,804
<TOTAL-ASSETS> 186,443
<CURRENT-LIABILITIES> 13,991
<BONDS> 0
0
0
<COMMON> 454
<OTHER-SE> 170,290
<TOTAL-LIABILITY-AND-EQUITY> 186,443
<SALES> 144,983
<TOTAL-REVENUES> 144,983
<CGS> 66,878
<TOTAL-COSTS> 66,878
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 40,392
<INCOME-TAX> 14,753
<INCOME-CONTINUING> 25,639
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 25,639
<EPS-PRIMARY> .60
<EPS-DILUTED> .60
</TABLE>
