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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
-------------------------------------------------
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________________________________________________
Commission File Number 0-18277
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VICOR CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 04-2742817
(State of Incorporation) (IRS Employer Identification Number)
25 Frontage Road, Andover, Massachusetts 01810
(Address of registrant's principal executive office)
(978) 470-2900
(Registrant's telephone number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No |_|
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of March 31, 2000.
Common Stock, $.01 par value ............ 30,407,093
Class B Common Stock, $.01 par value .... 12,011,348
<PAGE>
VICOR CORPORATION
INDEX TO FORM 10-Q
Page
----
Part I - Financial Information:
Item 1 - Financial Statements (Unaudited)
Condensed Consolidated Balance Sheet at 1
March 31, 2000 and December 31, 1999
Condensed Consolidated Statement of Income 2
for the three months ended March 31, 2000 and 1999
Condensed Consolidated Statement of Cash Flows 3
for the three months ended March 31, 2000 and 1999
Notes to Condensed Consolidated Financial 4-5
Statements
Item 2 - Management's Discussion and Analysis of 6-7
Financial Condition and Results of Operations
Item 3 - Quantitative and Qualitative Disclosures About Market Risk 8
Part II - Other Information:
Item 1 - Legal Proceedings 9
Item 2 - Changes in Securities 9
Item 3 - Defaults Upon Senior Securities 9
Item 4 - Submission of Matters to a Vote of 9
Security Holders
Item 5 - Other Information 9
Item 6 - Exhibits and Reports on Form 8-K 9
Signature(s) 10
<PAGE>
FORM 10-Q
PART I
ITEM 1
PAGE 1
VICOR CORPORATION
Condensed Consolidated Balance Sheet
(In thousands)
(Unaudited)
Assets March 31, 2000 December 31, 1999
- ------------------------------------------ -------------- -----------------
Current assets:
Cash and cash equivalents $ 76,859 $ 69,109
Accounts receivable, net 37,936 32,465
Inventories, net 35,315 33,360
Other current assets 6,461 6,940
--------- ---------
Total current assets 156,571 141,874
Property, plant and equipment, net 109,413 109,079
Notes receivable 8,694 8,698
Other assets 8,491 9,254
--------- ---------
$ 283,169 $ 268,905
========= =========
Liabilities and Stockholders' Equity
- ------------------------------------------
Current liabilities:
Accounts payable $ 9,767 $ 10,317
Accrued liabilities 16,684 8,540
--------- ---------
Total current liabilities 26,451 18,857
Deferred income taxes 5,515 5,515
Stockholders' equity:
Preferred Stock -- --
Class B Common Stock 120 121
Common Stock 359 356
Additional paid-in capital 128,539 124,451
Retained earnings 193,095 185,979
Accumulated other comprehensive income 862 889
Treasury stock, at cost (71,772) (67,263)
--------- ---------
Total stockholders' equity 251,203 244,533
--------- ---------
$ 283,169 $ 268,905
========= =========
Note: The balance sheet at December 31, 1999 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
See accompanying notes.
<PAGE>
FORM 10-Q
PART I
ITEM 1
PAGE 2
VICOR CORPORATION
Condensed Consolidated Statement of Income
(In thousands except per share data)
(Unaudited)
Three Months Ended
---------------------------------
March 31, 2000 March 31, 1999
-------------- --------------
Net revenues:
Product $55,186 $34,396
License 2,600 7,568
------- -------
57,786 41,964
Costs and expenses:
Cost of revenue 33,019 23,276
Selling, general and administrative 10,273 8,889
Research and development 5,271 5,151
------- -------
48,563 37,316
------- -------
Income from operations 9,223 4,648
Other income 1,164 742
------- -------
Income before income taxes 10,387 5,390
Provision for income taxes 3,271 1,725
------- -------
Net income $ 7,116 $ 3,665
======= =======
Net income per common share:
Basic $ 0.17 $ 0.09
Diluted $ 0.16 $ 0.09
Shares used to compute
net income per share:
Basic 42,483 41,530
Diluted 43,341 41,925
See accompanying notes.
<PAGE>
FORM 10-Q
PART I
ITEM 1
PAGE 3
VICOR CORPORATION
Condensed Consolidated Statement of Cash Flows
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
---------------------------------
March 31, 2000 March 31, 1999
-------------- --------------
<S> <C> <C>
Operating activities:
Net income $ 7,116 $ 3,665
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 4,533 3,710
Loss on disposal of equipment 6 78
Change in current assets and
liabilities, net 639 (1,824)
-------- --------
Net cash provided by operating activities 12,294 5,629
Investing activities:
Additions to property, plant and equipment (4,549) (4,333)
Proceeds from sale of equipment 0 10
Decrease in notes receivable 4 9
Decrease (increase) in other assets 436 (547)
-------- --------
Net cash used in investing activities (4,109) (4,861)
Financing activities:
Tax benefit relating to stock option plans 1,211 24
Proceeds from issuance of Common Stock 2,879 237
Acquisitions of treasury stock (4,509) (4,974)
-------- --------
Net cash used in financing activities (419) (4,713)
Effect of foreign exchange rates on cash (16) (234)
-------- ---------
Net increase (decrease) in cash and cash equivalents 7,750 (4,179)
Cash and cash equivalents at beginning of period 69,109 58,897
-------- --------
Cash and cash equivalents at end of period $ 76,859 $ 54,718
======== ========
</TABLE>
See accompanying notes.
<PAGE>
FORM 10-Q
PART I
ITEM 1
PAGE 4
VICOR CORPORATION
Notes to Condensed Consolidated Financial Statements
March 31, 2000
(Unaudited)
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and pursuant to the rules and
regulations of the Securities and Exchange Commission. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of only normal
recurring adjustments) considered necessary for a fair presentation have
been included. Operating results for the three months ended March 31, 2000
are not necessarily indicative of the results that may be expected for the
year ended December 31, 2000. For further information, refer to the
consolidated financial statements and notes thereto included in the
Company's audited financial statements for the year ended December 31,
1999, contained in the Company's annual report filed on Form 10-K (File
No. 0-18277) with the Securities and Exchange Commission.
2. Net Income per Share
The following table sets forth the computation of basic and diluted income
per share for the three months ended March 31 (in thousands, except per
share amounts):
Three Months Ended
------------------
March 31,
2000 1999
---- ----
Numerator:
Net income $ 7,116 $ 3,665
======= =======
Denominator:
Denominator for basic income
per share-weighted average shares 42,483 41,530
Effect of dilutive securities:
Employee stock options 858 395
------- -------
Denominator for diluted income per share-
adjusted weighted-average shares and
assumed conversions 43,341 41,925
======= =======
Basic income per share $ 0.17 $ 0.09
======= =======
Diluted income per share $ 0.16 $ 0.09
======= =======
<PAGE>
FORM 10-Q
PART I
ITEM 1
PAGE 5
VICOR CORPORATION
Notes to Condensed Consolidated Financial Statements
March 31, 2000
(Continued)
3. Inventories
Inventories are valued at the lower of cost (determined using the
first-in, first-out method) or market. Inventories were as follows as of
March 31, 2000 and December 31, 1999 (in thousands):
March 31, 2000 December 31, 1999
-------------- -----------------
Raw materials .............. $23,159 $22,924
Work-in-process ............ 6,621 4,957
Finished goods ............. 5,535 5,479
------ -------
$35,315 $33,360
======= =======
4. Comprehensive Income
Total comprehensive income was $7,089,000 and $3,431,000 for the three
months ended March 31, 2000 and 1999, respectively. Other comprehensive
income consisted of adjustments for foreign currency translation losses in
the amounts of $27,000 and $234,000 for the three months ended March 31,
2000 and 1999, respectively.
<PAGE>
FORM 10-Q
PART I
ITEM 2
PAGE 6
VICOR CORPORATION
Management's Discussion and Analysis of
Financial Condition and Results of Operations
March 31, 2000
Except for historical information contained herein, some matters discussed in
this report constitute forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. The words "believes," "expects,"
"anticipates," "intend," "estimate," "plan," "assumes," and other similar
expressions identify forward-looking statements. Actual results could differ
materially from those projected in the forward-looking statements as a result of
the risk factors set forth in this report and in the Company's Annual Report on
Form 10-K for the year ended December 31, 1999. Reference is made in particular
to the discussions set forth below in this Report under "Management's Discussion
and Analysis of Financial Condition and Results of Operations," and set forth in
the Annual Report on Form 10-K under Item 1 -- "Business -- Second-Generation
Automated Manufacturing Line," "--Competition," "--Patents," "--Licensing," and
"--Risk Factors," and under Item 7 -- "Management's Discussion and Analysis of
Financial Condition and Results of Operations." The risk factors contained in
the Annual Report on Form 10-K may not be exhaustive. Therefore, the information
contained in that Form 10-K should be read together with other reports and
documents that the Company files with the Securities and Exchange Commission
from time to time, including Forms 10-Q, 8-K and 10-K which may supplement,
modify, supersede or update those risk factors.
Results of Operations
Three months ended March 31, 2000 compared to three months ended March 31, 1999
Net revenues for the first quarter of 2000 were $57,786,000, an increase of
$15,822,000 (37.7%) as compared to $41,964,000 for the same period a year ago.
The increase in net revenues resulted primarily from an increase in unit
shipments of standard products of $20,790,000 offset by a decrease in license
revenues of $4,968,000. The decrease in license revenue was primarily due to a
non-recurring payment from a licensee for past use of Vicor's intellectual
property in the first quarter of 1999.
Gross margin increased $6,079,000 (32.5%) from $18,688,000 to $24,767,000, and
decreased as a percentage of net revenues from 44.5% to 42.9%. The primary
component of the increase in gross margin dollars was the increase in net
revenues. The primary component of the decrease in gross margin percentage was
due to changes in the revenue mix, partially offset by the increase in net
revenues.
Selling, general and administrative expenses were $10,273,000 for the period, an
increase of $1,384,000 (15.6%) over the same period in 1999. As a percentage of
net revenues, selling, general and administrative expenses decreased from 21.2%
to 17.8%. The principal components of the $1,384,000 increase were $587,000
(62.7%) of increased sales commission expense, $315,000 (10.2%) of increased
compensation expense, $256,000 (60.4%) of increased advertising costs and
$228,000 of payroll tax expense associated with the exercise of stock options.
Research and development expenses were $5,271,000 for the period, an increase of
$120,000 (2.3%) over the same period in 1999. As a percentage of net revenues,
research and development expenses decreased from 12.3% to 9.1%. The principal
components of the $120,000 increase were $663,000 (29.6%) of increased
compensation expense and $100,000 (57.1%) of increased research and development
expenses associated with the operations of the Vicor Integrated Architects
("VIAs"). The principal component offsetting the above increase was $672,000
(48.7%) of decreased project material costs.
<PAGE>
FORM 10-Q
PART I
ITEM 2
PAGE 7
VICOR CORPORATION
Management's Discussion and Analysis of
Financial Condition and Results of Operations
March 31, 2000
(continued)
Other income increased $422,000 (56.9%) from the same period a year ago to
$1,164,000. Other income is primarily comprised of interest income derived from
invested cash and cash equivalents, as well as notes receivable associated with
the Company's real estate transaction. Interest income increased primarily due
to an increase in cash and cash equivalent balances and an increase in the
average interest rates.
Income before income taxes was $10,387,000, an increase of $4,997,000 (92.7%)
compared to the same period in 1999. As a percentage of net revenues, income
before income taxes increased from 12.8% to 18.0% primarily due to the gross
margin increase generated by the increased net revenues.
The effective tax rate for the first quarter of 2000 was 31.5%, compared to
32.0% for the same period in 1999.
Net income per share (diluted) was $.16 for the first quarter of 2000, compared
to $.09 for the first quarter of 1999, an increase of $.07 (77.8%).
Liquidity and Capital Resources
At March 31, 2000 the Company had $76,859,000 in cash and cash equivalents. The
ratio of current assets to current liabilities was 5.9:1 compared to 7.5:1 at
December 31, 1999. Working capital increased $7,103,000, from $123,017,000 at
December 31, 1999 to $130,120,000 at March 31, 2000. The primary factors
affecting the working capital increase were an increase in cash of $7,750,000
and accounts receivable of $5,471,000, offset by an increase in current
liabilities of $7,594,000. The primary uses of cash for the first three months
of 2000 were for additions to property and equipment of $4,549,000 and for the
acquisition of treasury stock of $4,509,000.
The Company plans to make continuing investments in manufacturing equipment,
much of which is built internally. The internal construction of manufacturing
machinery, in order to provide for additional manufacturing capacity, is a
practice which the Company expects to continue over the next several years.
In February 2000, the Board of Directors of the Company authorized the
repurchase of the Company's Common Stock up to an aggregate amount of
approximately $30,000,000. 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 stock that may be
repurchased is at the discretion of management based on its view of economic and
financial market conditions. During the three months ended March 31, 2000, the
Company spent $4,509,000 for the repurchase of its Common Stock.
The Company believes that cash generated from operations and the total of its
cash and cash equivalents, together with other sources of liquidity, will be
sufficient to fund planned operations and capital equipment purchases for the
foreseeable future. At March 31, 2000, the Company had approximately $870,000 of
capital expenditure commitments.
The Company does not consider the impact of inflation and changing prices on its
business activities or fluctuations in the exchange rates for foreign currency
transactions to have been material during the last three fiscal years.
<PAGE>
FORM 10-Q
PART I
ITEM 3
PAGE 8
ITEM 3 - Quantitative and Qualitative Disclosures About Market Risk
The Company is exposed to a variety of market risks, including changes in
interest rates affecting the return on its cash and cash equivalents and
fluctuations in foreign currency exchange rates. The Company's exposure to
market risk for a change in interest rates relates primarily to the Company's
cash and cash equivalents.
As the Company's cash and cash equivalents consist principally of money market
securities, which are short-term in nature, the Company's exposure to market
risk on interest rate fluctuations is not significant. The Company's exposure to
market risk for fluctuations in foreign currency exchange rates relates
primarily to the operations of Vicor Japan Company, Ltd. ("VJCL"). The Company
believes that this market risk is currently not material due to the relative
size of VJCL's operations.
<PAGE>
FORM 10-Q
PART II
ITEM 1-6
PAGE 9
VICOR CORPORATION
Part II - Other Information
March 31, 2000
Item 1 - Legal Proceedings
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.
Item 2 - Changes in Securities
Not applicable.
Item 3 - Defaults Upon Senior Securities
Not applicable.
Item 4 - Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5 - Other Information
Not applicable.
Item 6 - Exhibits and Reports on Form 8-K
a. Exhibits - 27.1 Financial Data Schedule
b. Reports on Form 8-K - none.
<PAGE>
FORM 10-Q
PART II
PAGE 10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VICOR CORPORATION
Date: May 10, 2000 By: /s/ Patrizio Vinciarelli
----------------------------------
Patrizio Vinciarelli
President and Chairman
of the Board
Date: May 10, 2000 By: /s/ Mark A. Glazer
----------------------------------
Mark A. Glazer
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 76,859
<SECURITIES> 0
<RECEIVABLES> 37,936
<ALLOWANCES> 0
<INVENTORY> 35,315
<CURRENT-ASSETS> 156,571
<PP&E> 180,414
<DEPRECIATION> 71,001
<TOTAL-ASSETS> 283,169
<CURRENT-LIABILITIES> 26,451
<BONDS> 0
0
0
<COMMON> 479
<OTHER-SE> 250,724
<TOTAL-LIABILITY-AND-EQUITY> 283,169
<SALES> 57,786
<TOTAL-REVENUES> 57,786
<CGS> 33,019
<TOTAL-COSTS> 33,019
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 10,387
<INCOME-TAX> 3,271
<INCOME-CONTINUING> 7,116
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,116
<EPS-BASIC> 0.17
<EPS-DILUTED> 0.16
</TABLE>
