ANDOVER, MA -- (Marketwire) -- 03/10/09 -- Vicor Corporation (NASDAQ: VICR) today reported its financial results for the fourth quarter and year ended December 31, 2008.

Revenues for the fourth quarter decreased to $51,324,000, compared to $53,947,000 for the corresponding period a year ago and $51,278,000 for the third quarter of 2008. Gross margin decreased to $20,809,000 for the fourth quarter of 2008, compared to $21,279,000 for the corresponding period a year ago and $21,903,000 for the third quarter of 2008. Gross margin, as a percentage of revenue, increased to 40.5% for the fourth quarter of 2008 compared to 39.4% for the fourth quarter of 2007, and decreased on a sequential basis from 42.7% for the third quarter of 2008. Net loss for the fourth quarter was $(3,501,000), or $(0.08) per diluted share, compared to net income of $1,497,000, or $0.04 per diluted share, for the corresponding period a year ago and net income of $609,000, or $0.01 per diluted share, for the third quarter of 2008.

For the twelve months ended December 31, 2008, revenues increased by 4.9% to $205,368,000 from $195,827,000 for the corresponding period a year ago. Net loss for the twelve month period was $(3,595,000), or $(0.09) per diluted share, compared to net income of $5,335,000 or $0.13 per diluted share, for the corresponding period a year ago.

The book-to-bill ratio for the fourth quarter of 2008 was 0.93:1, as compared to 1.20:1 for the third quarter of 2008. Backlog at the end of 2008 was $52,700,000, as compared to $46,500,000 at the end of 2007.

Commenting on the fourth quarter, Patrizio Vinciarelli, Chief Executive Officer, noted, "Vicor's fourth quarter bookings reflected slowing demand within a deteriorating global economy. Our consolidated gross margin in the fourth quarter vs. the third quarter was substantially lower due to product mix and inventory reserves. Furthermore, operating expenses, particularly marketing and legal expenses, increased significantly in the fourth quarter vs. the third quarter. In addition, in the fourth quarter, we incurred higher tax expense relating to an unconsolidated subsidiary and wrote off the balance of an investment in a related entity. In summary, we incurred a significant loss for the quarter and the year."

Dr. Vinciarelli concluded, "Our high expense levels have reflected major investments in the development of our products and markets. We are taking additional steps to make these investments more productive and our operations more efficient in an effort to return to robust profitability as quickly as possible in the face of softened demand in many of our markets. We believe that we are well-capitalized and that V-I Chip and Picor are well-positioned to emerge from the global downturn as strong competitors."

Depreciation and amortization for the fourth quarter of 2008 was approximately $2,700,000, and capital additions totaled $1,700,000. In 2008 depreciation and amortization was $10,500,000 and capital additions were $8,300,000. This compares to $11,600,000 and $9,900,000, respectively, for 2007. Cash, restricted cash and cash equivalents and short-term investments decreased by $52,900,000 to approximately $24,600,000 at the end of 2008 from $77,500,000 at the end of 2007. The decrease in cash, restricted cash and cash equivalents and short-term investments was attributable to the reclassification of $38,500,000 of auction rate securities from short-term to long-term investments and the payment of dividends of approximately $13,700,000 during the year. There were no share repurchases during 2008, and approximately $8,500,000 remains authorized for additional purchases under the Company's stock repurchase plan.

As of December 31, 2008, the Company held approximately $38,325,000, at par value, of auction rate securities ("Failed Auction Securities"), down from $55,200,000, at par value, of such holdings as of December 31, 2007. As previously disclosed, conditions in the market for auction rate securities and the repeated failure of auctions by which such securities are priced led the Company to reclassify its holdings as long-term investments as of March 31, 2008. During the fourth quarter of 2008, we entered into a settlement agreement with UBS giving us the contractual right to sell $18,300,000 par value of Failed Auction Securities to UBS at par during a period of time beginning June 30, 2010, through July 2, 2012. Because we intend to exercise this right and no longer intend to hold these securities to maturity, we reclassified these securities as "trading" from "available-for-sale." In order to record the fair value of these securities appropriately, we reversed the accumulated temporary impairment recorded as a reduction of Stockholders' Equity and recorded a charge to our Consolidated Statements of Operations of $2,238,000, reflecting our estimate at year-end of the "other-than-temporary" decrease in their carrying value from par value. However, we also recorded the receipt of the contractual right as a gain on our Consolidated Statements of Operations, thereby largely offsetting the other than temporary impairment charge. The balance of our holdings of Failed Auction Securities is made up of securities (with a par value of $20,025,000 at year-end, including a partial redemption of $25,000 at par in January 2009) held through Banc of America Securities LLC.