Good day, ladies and gentlemen. And welcome to the Vicor Earnings Results for the Fourth Quarter and Year Ended December 31, 2013 Conference Call. My name is Esteban, and I’ll be your operator for today. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions). I would now like to introduce your hosts for today James Simms, CFO of Vicor Corporation and Dr. Patrizio Vinciarelli, CEO of Vicor Corporation. Please proceed.

Thank you, Esteban. Good afternoon and welcome to Vicor’s conference call for the fourth quarter and full year ended December 31, 2013. I am Jamie Simms, CFO and with me here in Andover is Patrizio Vinciarelli, CEO and Dick Nagel, Chief Accounting Officer or CAO. Today, we issued a press release summarizing our financial results for the fourth quarter and full year. This press release is available on the Investor page of our website, www.vicorpower.com. We have also filed a Form 8-K with the Securities and Exchange Commission in association with issuing this press release. I remind listeners this conference call is being recorded and is the copyrighted property of Vicor Corporation. I also remind you various remarks we may make during this call may constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Our forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those explicitly set forth or implied in our statements. Such risks and uncertainties are discussed in our most recent Forms 10-K and 10-Q filed with the SEC. Please note the information provided during this conference call is accurate only as of the date of the call. Vicor undertakes no obligation to update any of the statements made during this call and you should not rely upon them after the conclusion of the call. A replay of the call will be available beginning at midnight tonight through March 28, 2014. The replay dial-in number is 888-286-8010 and the listener pass code is 88759524. In addition, a webcast replay of the conference call will be available on the Investor Relations page of our website, beginning shortly upon its conclusion. I’ll start this evening’s call with a review of our financial…

Thank you, Jamie. As Jamie has described, the fourth quarter was characterized by steady shipments but lower bookings. Volumes fell short of the level we need to leverage our operating model, and putting aside the tax charge, we recorded to a loss due to substantial legal fees that we expect to continue until the trials continue to take place for months. As I said in today’s press release, fourth quarter results and the non-operational measure of significant differences on these results [masked] some important progress we made during the quarter with the new product initiatives, notably our ChiP platform. As I have discussed, Vicor introduced its converter housed in package or ChiP technology in March of 2013 to get a claim. Design concept which integrates advanced magnetic, control ASICs and power semiconductors, within high density interconnected substrates enables unprecedented power density, conversion efficiency and thermal performance. With our ChiP platform, we are announcing a V*I Chip value preposition, because the manufacturing chips is expected to be far less than what it costs to make earlier generation V*I Chips and the performance of ChiP modules is far superior. In addition, our ChiP platform provides us greater flexibility and scalability in manufacturing at wide range of package sizes, much wider than with earlier V*I Chips thereby allowing for a broader range of products offered in application served. In short, ChiP technology is a game changer for Vicor. In December, we released the production of our first ChiP based product, a 1.2 kilowatt bus converter and in January we formally introduced to the public. We are sampling the device across a range of markets. Called the 6123 BCM, reflecting its dimension of 61 millimeter in length and 23 millimeter in width and its bus converter function. The module is a DC input range…

(Operator Instructions). Our first question comes from John Dillon with D&B Capital. John Dillon - D&B Capital: Hey Patrizio and Jamie. I'm wondering if you can comment a little bit more, give us like a little bit more color about bookings. It sounds like they are slightly ahead, running slightly ahead of last quarter and when might you see those start tuning up?

So as I mentioned and Jamie mentioned earlier, the temporary pressure in bookings has a lot to do with transitional issues in terms of our mother power solution for Intel processor applications in data centers. We’re going to see a ramp with next generation products starting in the middle of the year. I think we’re going to see bookings growth in the second half of the year arising from a variety of VR Chip and the Vicor SiP opportunities. In the case of VR Chip it is going to be both from new chip products based on the new packaging platform as well as from older we may call classic VR Chips that have been in the design phase with certain customers over past years with programs in the defense area and other end markets that are finally coming to fruition later this year into and year. So we expect broadening of the customer base for VR Chip. We expect the broadening of the customer base for Vicor which should begin to see substantial revenues as the first major program goes into production in the second half of the year. And last but not least we have our eyes very much focused on the fortune of our brick business unit where historically we’ve had products that relied on early generation technology which had been in need of refreshing for quite sometime with the availability of a range of chip products including DCM, AC DC converters, PFM AC DC converters, BCMs of various kinds; there is going to be in the near future an opportunity to within bricks and power systems implement what you might call a chip inside strategy that will bring that part of our business to new levels of performance and cost effectiveness. John Dillon - D&B Capital: When do you think that will start when the BBU will start coming out with new products with the chip inside technology?

They are currently scheduled to start coming out in the June-July timeframe. John Dillon - D&B Capital: Okay. Sounds like a lot is coming together in the June-July timeframe then.

Well in various ways on various fronts, I mean we have ramps of new products, new products being introduced, there is going to be a lot of activity in terms of new product introduction taking place literally over next several weeks and months with scalable capabilities of PFMs, bus converters, DCMs. So there is a lot of action that’s going on. John Dillon - D&B Capital: In regard to the contract manufacturers I understand that completely, but I am wondering don’t they want to put their orders in a little bit early for the new chips so that they can make sure that they get their deliveries on time or are you promising of a good turn, is the weather holding back on getting the new orders for that?

Well, so essentially what has happened on the trial front is that, last year as we ramped with our older V*I Chip-based solution, there was concern with respect to capacity and our ability to step-up to [worse] demand. We demonstrated that those capacity concerns are misplaced and we performed [precipitations] with respect to the ability to address growing needs on the V*I Chip front. And recently the minds have shifted from if a concern with respect to availability of your product to concern about inventory as a result of transitioning requirements. So, I think that’s the phase we’re in that accounted for softness in booking with V*I Chip in recent months. I think we are getting to that phase and with discounts from our customers and other V*I Chip customers suggested earlier we are going to see [redemption] of significant demand as the year progresses. We’re already forecasting V*I Chip bookings level to set new records in the next 12 months. John Dillon - D&B Capital: Okay. So that’s good. So the V*I Chip should have revenue booking, revenue shipments within the next 12 months?

We are expecting the V*I Chip bookings to achieve new records in the last 12 months and that’s accounting for the fact that some of the V*I Chip business in the central applications is going to be converted to Picor business for Picor SiPs, which are the facts from historical base on which we're building. John Dillon - D&B Capital: Okay. That sounds great. And one last question and I’ll be back in the queue. Will we see a spike in bookings when the contract manufacturers initially place orders with you then?

That has happened before and it could happen again, let’s wait and see what happens. John Dillon - D&B Capital: Okay. I’ll get back in the queue. Thank you.

Thank you.

Our next question comes from Don McKenna with D.B. McKenna. Please proceed.

Patrizio or Jamie, whoever wants to answer it, on the recent announcements of a new distributor relationship, is that just a change in the way you are trying to get the product down out there or is it a -- or you’re getting rid of your internal sales people and giving it over to the distributors or is it new territories that you are addressing?

We have been expanding a self capability in a variety of ways and variety of avenues, I think as I’m truly aware, we’ve elevated our performance in terms of the sales and marketing infrastructure in recent years. We’ve also realigned our strategy in terms of how to address markets in New York, in Asia, globally and in the U.S. And that's evolved new distribution relationships and other ways of expanding our market opportunity. So, that's very much keeping with a strategy that we have been focused on to bring about a very substantial growth in years to come.

Does that also accounts for that change, does that address to the reserve for severance that I saw on the financials?

That was associated with something very early in 2013.

Yes. That is three old...

That was a different.

Okay. Second question I had probably on the designing tools that you have on the web-based designing tools. Is that unique to the industry and do you measure the usage of it and can you give us an idea of what kinds of usage you are seeing?

Yes. So we see growing usage and it is rather unique, because Vicor has a unique vision of how the power system marketplace is going to evolve based on the power [component] methodology. So these capabilities are not ones that you can readily buy, because they haven’t been a development that can affect the other assets, the unique tools and capabilities that we need in order to advance our unique power [component] methodology. So it is something that we’ve invested in considerably for quite some time. We have a large internal group that has been focused on this development and have been able to make great progress in terms of variety of tools that are highly dependent that are architected from the perspective of a customer having a power system need and that customer being able to in time address it with a complement of building blocks of the world, uniquely equipped to make.

Don, I would add that everybody has selection tools, sophisticated online catalogs that allow you to screen for products based on their capabilities. Many companies from particularly in semiconductor area have very sophisticated online tools. What we’re trying to do is for the power business, as Patrizio described it, offer the customer something that really enhances and highlights the advantages of our products and our recommended architectures.

So, from the perspective of the cash being able to find the (inaudible) solution to their power system needs. So it’s the benefits from a vision of how to best address power system requirements that is really customer centric, but leveraging the breadth or capabilities that Vicor uniquely has in terms of our ability to support any power distribution architecture and doing it with engines and the modular power components that has highly differentiated advance density and efficiency that in many instances is multi-fold level of the competition particularly when it comes to density.

Okay. And one last question for you too is the R&D right now is running about 20% of revenues and if I remember right you have said most of that is in-house. Do you expect to maintain that kind of a ratio going forward or do you see now that you have finally got some of these coming on stream that that expense will decrease?

So the way I like to look at it is both in terms of percentage and absolute dollars and what I would expect to -- that the absolute dollars are going to stay relatively constant, overtime they will grow somewhat, but at rate far lower than the revenue growth. And as that happens, the percentage that you are referencing will come down to a level in the mid-teens, which I think historically would be adequate for us to continue to be the kind of company we are highly innovative, very focused on advancing to sell DR. So temporarily these are the level that is higher than we like, it obviously hurts us in terms of short-term financial performance, but we view it as an important investment in the future.

Thanks.

Our next question comes from Jim Bartlett with Bartlett Investors. Please proceed.

Yes. The 48 volt seem to be using a hub and data centers and the large public cloud vendors seem to be going that way. Could you talk about your advantage in 48 volt what you offer them and when you expect to get traction with more than one datacenter customer?

So to your point there was an early adopter company with a good deal of vision that saw the benefits of factorized power system solution for Intel processors, from early Intel processors. As you can imagine everybody in the industry looks over the shoulders of the respective competitors and they’ve all taken now this of the advances that this pioneer has been able to make in terms of efficiency, operating efficiency which ultimately results in lowering the cost of running a datacenter which is obviously (inaudible) for the industry as a whole. So, you should expect to your point that others are following, there is going to be traction with respect to a 48 volt distribution bus, so which is a factorized bus driving point of load current multipliers for several volts. What that will entail is a broader penetration by building blocks. Up to this point it has been limited to powering the processor, but over time it is going to power processor memory and ancillary loads because as suggested earlier, we are being into market more granular solutions, both in terms of point of load current multipliers that can cost effectively address, power requirements and current requirements as a fraction of that of main processor. So well suited to memory rails and also with the Vicor SiP products lower power requirements. So we are going to have this as year progresses the complement of building blocks to enable a complete solution for whole power system for a server board, based on a unique capability, (inaudible) from 48 volt. And the benefits of that are whether density considerably [gather] efficiency several points of efficiency gains that are very meaningful to somebody who runs a datacenter.

And you expect a traction in terms of getting new datacenter customers to be seen this year?

The activity is gaining momentum. I think if we look at how long it is taken for us to go from [constant to fruition] with our first key cast in that pace that took a little over year. It’s a fraction of what it took us with high end servers, which took longer than that reflecting the reality that in this pace things move faster, because systems are relatively simple, lower power levels and with a faster turnaround in terms of design activity. But when it comes to the [processor] change in terms of going to 48 volt, this is more than the motherboard design, there is in fact a mindset change that has to take place over some period of time. But we’re seeing it happening and we expect that we’re going to start benefiting from it as 2015 comes along.

Thank you.

Our next question comes from John Dillon with D&B Capital. John Dillon - D&B Capital: Hey Patrizio. How many shifts are you running now?

Well, it depends on which particular version it is, but in some 3 shifts, in others less than that. Just to give a little bit more sense with respect to capacity utilization, at this time, we’re not [stretched] far from it, with respect to V*I Chip capacity but we are leveraging that the lolling activity relating to the transition that I was outlining earlier to expedite completion of variety of different products which have been in the pipeline. So, to some extent the stars are aligning from that perspective, because if you were more challenged from a capacity perspective in terms of must production of particular products with that less flexibility with respect to doing as much as we’ve been able to do of late, with respect to completing development of products that have been in the pipeline. So that’s been the focus. And because of that we’ve worked the fact very hard even though production, mass production requirements have temporarily subsided. John Dillon - D&B Capital: Okay. So, anyway you’ve got the production to go forward and you’re running 3 SiP on certain segments but not all of them.

That’s correct. John Dillon - D&B Capital: Okay. And what I think I heard you say just a couple of minutes ago was not only will you be powering a processor but in future servers powering the memory and also other parts of it. And so that would indicate to me you’ll get higher revenue per server, Vicor will achieve higher revenue per server, is that correct?

Yes, that’s the goal. And we think that just the memory rails would bring about essentially a factor to increase in the value proposition per server board so that’s going to be an important step. John Dillon - D&B Capital: And do you have design wins already in for this?

Let me just say that the products that are needed in order to support that capability if be working on the bench, these are smaller chips just to give you a little flavor. You’ve heard earlier reference to 6123 chip which is a pretty big chip of (inaudible) introduced at 1200 watts and our product about to be introduced as 1750 watts. This is a representative of a relatively large chip, not the largest but the relatively big one. For the several peak actions we have been referencing with sample customers with a 1523 chip so you can refer from 1523, 15 is lot smaller than 61. So, it’s much smaller chip. We have chips that are a fraction of the 1523 in the world. So, the 1523 is well suited for the processor applications, its capability, DC capability up to about 90 amps, the capability up to 180 amps, we have smaller chips that are well suited for memory applications that are in early demonstration capability and we have even smaller chips in the world. So and all this is enabled to buy our new generation of controllers the progress developed in the last several years which was being our capability for this type of products in terms of density, granularity or lower power levels and cost effectiveness to presented levels. John Dillon - D&B Capital: And with this new chip technology and products that you have got, your design wins, are they going up, they are going down and your design activity, how is that going?

So as I mentioned earlier, we see the customer make up and the customer differentiation that should land a combination of business goals which are diversification in the customer base and significant revenue growth happening in the next 12 months. As mentioned earlier, as we look at the [multimedia] customers that have embraced or are embracing ChiP-based solutions and SiP solutions, we see just for V*I Chip record bookings and record revenues in the next 12 months. John Dillon - D&B Capital: So your design activity must be way up?

Our design activity is up. John Dillon - D&B Capital: Yes great. And one last question on the new [PSE] module and you’re talking about a shorter time to market. When do you expect to see revenue and what kind of -- I mean are you talking about like on a yearly basis, do you expect that to be significant part of your revenue, $10 million line or $5 million line more or less?

We expect it to be very significant. In other way, without even waiting for the new ChiP-based, the 6120 ChiP-based PFM with our older PFM, which was a double chip V*I Chip in the old packaging technology. We have been getting all traction with that despite the fact that in terms of its cost effectiveness and performance it is far inferior to the new V*I Chip-based product. But with the older V*I Chip, we’ve gotten significant design wins which should result in major contribution to bookings not just in terms of the PFM building block, but also suggested earlier in terms of cross selling opportunities, because we view the PFM as if you will a conversion stage that looked customers from AC power sources, which are obviously everywhere to what we referred to in an earlier question, the 48 volt hub, which is really our hub. I guess if I were to use airline analogy depleting of a hub that serves a particular purpose of a major airline in terms of taking the traffic from a power source such as the AC volt plug 248 volt, so that we can then take it from 48 volt to the point-of-load through direct conversion by way of height, K factor kind of multiplier [BCMs]. That 48 volt hub is also useful in high voltage AC distribution because with recently introduced BCMs taking 400 volts down to 48 volt, again we can support any power source into the 48 volt hub and from there to the point-of-load. So, the difference going back to the part of your question, play an important role in terms of the revenue contribution, as well as supporting a comprehensive vision of taking customers from any place, meaning any power source to any other place meaning any point-of-load requirement by way of the 48 volt hub, which is gaining traction more and more in all major electronic markets as the most efficient way of doing business. John Dillon - D&B Capital: It sounds great. Thank you, Patrizio. I appreciate it.

Thank you.

We do have more questions if you would like to take them? Our next question comes from Don McKenna with D.B. McKenna.

Guys, you didn't address the litigation at all and if you could from two standpoints; one is my memory serves me right that if you were successful that it would open the door to market potential that might be as large as something like a $100 million a year. Could you confirm that? And secondly, can you give us an update on the timeline; has the court date been set so on and so forth?

So, we expect to be successful because our products do not infringe any of the [asserted] claims. The case is going to trial in July, so stay tuned. We expect to at a finding on non-infringement. And on best ramp reopen a market, there has been far close that buy a good deal of the interference from a competitor that just getting a chance that goes beyond, the legitimate rise of intellectual property. So, that's just matches the -- at this point in time.

Are the products affected with remembering that the market for those kinds of products was somewhere in the $100 million in annual revenue?

Well, so I think that the competitor that we are referencing is to some extents, managed to, if not heal impact of the golden goose as it were. In that the market opportunity for IBA has significantly shrunk as they felt of the trust that we made to customers that intended to use that our system solution and but that were then in many senses compelled to find alternatives because of the traps and the lack of viable competition. So we are -- the situation has changed, we have suffered from what has happened unjustly and we can’t recover in that regard and then obviously while the opportunity is going to be upon our win to access a significant share of that market as it reopens for us.

Thank you.

Our next question comes from Jim Bartlett with Bartlett Investors.

I guess you’ve mentioned in earlier question the chip inside strategy rolling out for the BBU unit this summer. Given that roll out, when would you expect to start seeing traction in terms of bookings and then revenue from BBU?

So I guess the bad news in that regard is that in our business given that our products are used within OEM products, there is a design cycle that sense in between the availability of an exciting new product and significant revenues. The good news is that when it comes to this class of products, they fall in terms of gestation period into different category relative to let’s say the point of load solutions with [PRMs and VTMs] that we were discussing early in the contest of the center applications or other such applications. The BBU type of product opportunities, the chip inside are primarily in the category of front end systems that bolt-on to a chassis or provide functionality within a customer power system typically of size of the motherboard and because of that the time to market tends to be relatively shorter. And so because of that we anticipate the cycle time from product introduction to revenue to be shorter but again to keep our feet on the ground, it is still going to be a significant gestation period. So with products introduced middle of this year, we should expect to see revenues next year at the growing rate and part of that opportunity is going to be to take certain customers that have designed in relatively costly solutions using earlier VR chip product or the early VR chip PFM taking them to a chip based solution that will offer them significant cost benefits with performance improvements.

Thank you. Could you also address the traction you are getting with other potential higher end server companies?

Yes. And what is the question in that regard?

What you had mentioned I believe in the last conference call that you are working with some of these higher end server companies and just wondering where you are in that process?

Well, there has been progress and we expect to see revenues starting in the fall with chip based solution, that has been sampled to customer and the customer is very, very happy with its performance. So, we are -- as I mentioned earlier, working hard to diversify the customer base because we’re all cognizant and mindful of peoples of being dependent on a small customer base. Fortunately, with VI Chip yearly growing, we are an early adopter that dominated our demand and obviously that was welcomed in many respects, but not desirable from others and we are very much focused on having a significant mix of customers and applications and we’ve been able to make a good year of progress with respect to that, suggested earlier it is going to come out of other high end servers, it’s going to out of and so these are companies that make OEM products that get sold to third parties, in the central space, other big users that in fact design and build their own data centers. So that’s a different kind of market opportunity, again for Chips and then defense applications for VI Chips and ChiPs. So all of these are complementary initiatives that to a large degree we use the same technological foundation of our engines, our control systems, our packaging technology.

Yes, you mentioned since -- if I remember correctly, there was a potential for a large radar based order at some point coming out of…?

Yes, that’s due to grow into very significant volume in 2015, I think over $10 million per year.

Starting in ‘15?

Yes.

Okay, right. And one final question.

(Inaudible) with budget.

Could you give some…

This one application that as far as I understand has not suffered from those constraints.

The future DigiKey distribution numbers, were they this quarter? And that’s progressed, I think more slowly than originally planned, what is the outlook there?

I think from my visibility, DigiKey has got a magic formula for connecting the supply such as Vicor with the world at large. It is the go-to place for designers to, one, avail themselves of what is possible. And when it comes to our building blocks, it’s a very good fit. I expect we are going to see DigiKey contributing directly to our ability to penetrate applications and markets worldwide.

And we’re working hard to load it with content to make sure that they…

Yes. And how much, was it a couple of million dollars this quarter, you usually give out that number?

Yes, a couple of million dollars.

Yes. It was flat, we talked about that in the remarks that was just quarterly flat.

Flat, okay. Thank you.

If there is one more question, we can take it.

There are no further questions.

Thanks a lot then. Talk to you soon. Bye, bye.