Vicor’s Quarterly Results and Product Preview

April 20, 2003 by Jeff Shepard

Vicor Corp. achieved revenues for the first quarter of $37,740,000 compared with $34,620,000 for the corresponding period a year ago. The company reported a loss before taxes of $6,374,000 compared with a loss before taxes of $7,765,000 in 2002. Vicor reported a net loss for the quarter of $6,629,000 compared with a net loss of $4,931,000 in 2002, and a diluted loss per share of $.16 compared with a diluted loss per share of $.12 in 2002. Net loss for the quarter ended March 31, 2003 was higher than the comparable quarter in 2002 because of a tax rule change limiting the availability of tax loss carry-backs in 2003 as discussed below.

In the first quarter, revenues increased by 9.0% over the first quarter of 2002, but decreased by 9.4% on a sequential basis from the fourth quarter of 2002. The overall book to bill for the first quarter was 1.0:1 compared with 0.9:1 for the fourth quarter of 2002. Orders during the quarter increased by 3.6% compared with the fourth quarter. The order pattern by most customers was focused on filling short-term requirements and, consequently, visibility based on backlog remained limited. The company finished the first quarter with approximately $32.6 million in backlog compared to $31.9 million at the end of 2002.

During the quarter, Vicor successfully demonstrated prototype converters exhibiting "major advances in power density, conversion efficiency and speed" and utilizing proprietary power conversion technologies invented by the company. Vicor is expected to announce first products based on these new technologies in the second quarter.

Also, during the first quarter, the company received 110 new design wins for its second-generation modules via its proprietary VDAC design system and 53 new design wins for its VIPAC customer-configurable power systems.

In the first quarter, gross margin was 23.6%, which was unchanged from the first quarter of 2002, but gross margin decreased by 2.5% sequentially from the fourth quarter of 2002. The company continued to operate on reduced work schedules for hourly factory employees and required mandatory use of accrued personal time by all others.

Depreciation and amortization in the quarter was $5.7 million and capital additions were $1.9 million. The tax provision for the first quarter of 2003 was 4%. During 2002, Vicor recorded a tax benefit of 36.5% reducing after tax losses due to a carry-back provision allowed by a temporary change in the tax laws. Beginning in 2003, with tax rules reverting to a carry-back limited to two years, any losses incurred will only be available to offset future taxable income. A provision in 2003 is required as the company operates in various state and international taxing jurisdictions, subject to a variety of income and related taxes.

Cash and short-term investments were $97.8 million, a decrease of $3.1 million from the end of 2002. This decrease is attributable in part to the repurchase of 453,400 shares of the company's common stock for approximately $2.6 million during the first quarter. Vicor has $26 million remaining on its authorized stock buy-back plan.

Inventories decreased by approximately $4.0 million to $26.3 million as compared with $30.3 million at the end of 2002.