Welcome to the Vicor Corporation Earnings Results for the Second Quarter ended June 30, 2016 conference call. My name is Tijuana and I will be your operator for today. [Operator Instructions]. I will now like to turn the conference over to your host for today Mr. Jamie Simms, CFO. Please proceed.

Thank you. Good afternoon everyone and welcome to Vicor's Conference Call for the second quarter ended June 30, 2016. I'm Jamie Simms, CFO and with me here in Andover are Patrizio Vinciarelli, CEO, and Dick Nagel, Chief Accounting Officer. Today we issued a press release summarizing our financial results for the quarter ended June 30, this press release is available on the Investor Relations page of our website vicorpower.com. We also have filed a Form 8-K with the Securities and Exchange Commission 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 the Form 10-K we filed with the SEC on March 8, 2016. Please note the information provided during this conference call is accurate only as of today, Tuesday, April 26. Vicor undertakes no obligation to update any statements made during this call and you should not rely upon such statements after the conclusion of the call. A replay of today’s call will be available beginning at midnight tonight through August 10, 2016. The replay dial-in number is 888-286-8010 followed by the passcode 36834933. In addition, a webcast replay of today’s call will be available shortly on the Investor Relations page of our website. I’ll start this afternoon’s conversation with a review of our financial performance for the second quarter and the first half of the year. And Patrizio will follow…

Thank you, Jamie. As Jamie noted the second quarter results reflected the rebound from the weak first quarter which we believe the percent is a turning point in our long term performance strength. He also spoke to the expanding level of market -- associated with a differentiated [indiscernible] direct to point of those solution. Coming off a high profile event earlier this year notably the open compute project submitted in March of which Google affirmed it's commitment to 48V [indiscernible] for datacenters. Momentum in other markets continues to build with expanding offering of a high performance bar system building blocks specifically chip modules and chips within VIA platforms for using applications for which match our density, make them compelling, cost effective alternatives to competing solutions in larger traditional form factors. As mentioned last quarter we’re actively engaged with our new products with customers in a range of promising markets including electric vehicles and within the field autonomous vehicles in particular. LED lighting and wider telecommunications infrastructure. We are also seeking a selection in interest in our new products from customers in markets served by BBU as these customers undertake new designs of products in which our legacy business have been defacto standards. Our global teams are busy responding to interest ranging from an issue engineered enquiries to an extensive design engagement. Our introduction new products continues, contributing to the diversification of our customer base. Notably just last month we expanded our family of VIA package DCMs, DCMs are isolated, regulator, DC-DC converters offering a mass power density. When deployed in our VIA package for either board or chassis mounting this convert us offer best in class performance and high level of design flexibility. With [indiscernible] transactions we now offer DCM solutions for challenging the [indiscernible] applications complementing commercial offerings for communications, industrial, instrumentation, robotics and test professional applications. The broaden DCM family is fully integrated into Vicor's power component design methodology. The basis of our strategy for the Broad markets we serve. Our focus on an end to end modular power system design methodology is unique in the industry as it provides system designers with presentable components and system functionality, reliability, [indiscernible], ECC configurability and scalability. Recognition of these unique process and capabilities is catching on across a broadening base of customers. I will conclude my remarks despite a probably a caution and conservatism regarding near term financial results by once a again affirming my belief that Vicor is close to fulfilling it's long term vision of transforming our competitive landscape. Yes, microeconomic uncertainty remains a challenge for our legacy products and this rather innovations, avenue for uncertain sales cycles. However with customers recognizing we have the right products, our momentum is finally building. I'm sure listeners have many questions so I will open the call. Operator? Question-and-Answer Session

[Operator Instructions]. Your first question comes from the line of Jim Bartley. Please proceed.

Patrizio, last quarter you said you expected to see bookings take positive steps this quarter, the next quarter and the quarter after that as far as I can speak, feasibility is the same progression of increasing bookings and shipment. I would take it from your more cautionary note this time that perhaps some of these just aren't projects aren't developing quite as rapidly and/or more macro uncertainty. Could you help me understand a little more about what's happening here?

Yes. So by the way we continue to expect increasing level of bookings and shipments quarter by quarter as far as the eye can see. One thing though that has changed since last quarter is that we've been informed of further delays with the actual start date of the next generation VR-13 which as many of us are paying for has kept pushing to the right with the high degree of unpredictability. How this is the lining is that delays in the ramp of the VR-13 are giving rise to new orders for VR-12.5. However, the offsetting element is that I think as we have discussed in the past, with VR-13 we have a considerable broader customer base so the make-up of VR-12.5 sockets doesn’t fully compensate for the delays with new projects which are only going to be with us as of the time when VR-13 finally takes off. So to recap we still believe that we saw a turning point in the revenue performance and bottom-line performance by far of the company last quarter. We’re still looking forward to increased bookings this quarter, quarter after that and as far as the eye can see but the delay with the further delay with VR-13 has mitigated the stiffness of the ramp that is associated with those particular programs which as of last quarter were anticipated to ramp at the end of the year beginning of 2017 and they now appear to have been set back by another 1 or 2 quarters.

So now it's second quarter '17?

Well as far as we can tell and obviously we were and we’re not alone in this, it is not as unique to us but industrial at large. We have been surprised before, so I cannot rule out the possibility that we can be surprised again. Now again to look at this in the grander compass while VR-13 has been delayed again it is being made up at least in part by continuing shipments of VR-12.5 products and we are making progress and getting productions without programs at a different space or spaces and are related to vagaries of subsequent generations of processors, needless to say our strategy of diversification both within the datacenter space in terms of the types of processors we power and outside of the datacenter space in terms of the types of solutions that we offer in other markets is aimed at limiting dependency or significant dependency on anyone single product generation, introduction schedule which unfortunately has been very unpredictable.

So that would mean that if potential new data center customers that were waiting -- they were in-line for VR-13 so getting some of those new customers would have to wait for VR-13.

Yes we have a broader spectrum applications at the point of load [ph] associated with VR-13 sockets which unfortunately awaits the actual availability of this new processes.

Your next question comes from the line of John Dillon. Please proceed.

I would just want to go back to Jim's question a little bit more. So in your prepared remarks you were talking about the unpredictable delays and the ramp is certain -- major new programs, so is that the VR-13 customers, is that really what the delays are?

That’s been the major factor.

And I appreciate your answer to Jim and makes a lot of sense, it's very hard to follow into because there are so many different iterations of the Skylake process and Skylake really what's got the VR-13 but you’re really looking for the server version of the Skylake and there is all kinds of different version of the server. So I mean is it really the early -- is that really what you’re looking for your platform, because I think that’s scheduled to come out second quarter of 2017.

I'm not going why the reasons to comment on this specific type of process or any question. It may not be one only play given the diversity of applications that we have been pursuing. I think the general knowledge of delays that have occurred with respect to list some, you can infer that we have been dependent and continue to depend on when this process will actually become available in volume.

Okay, what about memory sockets or other sockets? Are you getting any new memory or other sockets before the release of the VR-13?

So generally speaking when it comes to other sockets that are related to the deployment of the new process so you can imagine they are affiliated to the deployment of the new processor and they are subject to corresponding functional delays.

Okay, that’s sense because they are all in the same design. So in light of that when we’re talking about design wins have you lost any design wins if you’ve previously had because some of the new competitors are coming out with new 48V or do you still have all the design wins that you’ve had?

We have not lost any design wins, it is uncertain whether there is any VR competitive product that is truly available and with respect to that which has been projected is becoming available, the performance attributes of this projected products is well-below the performance attributes of our existing products never mind new products that we will be introducing relative soon. So to be clear our disability is limited to what has been advertised is becoming available, we are seeing no evidence of real development and even if that were to become real that which has been projected in terms of density is far below the density of products and in other performance attributes is also considered to be lesser performer. So we don’t feel any way present by the competition. We believe that competition is good particularly competition of this kind where we have very significant performance advantage and we have very good cost card. So we believe that the offset of a broader participation in the 48V two point of load applications and broadening requirements by multiple customers for this kinds of solutions is development that will accelerate a revenue growth and profitability as we’re positioned to catch a very good share of that market.

But what I'm thinking I'm hearing is that because of these delays you’ve got number of customers who are just lining up waiting for the VR-13 to hit and then they are going to be putting in their orders and you’re going to be start shipping product, but like right now you’ve got one basically data center that’s taken the 12.5, you’ve got a multiple number who are going to be taking the 13. You’ve got additional slots that you’re going to be taking over when the new 13 comes out and you’ve got other customers that are coming on. I almost feel like there is a dam here and all your customers are backing up and then all of a sudden the VR-13 is going to be here and you can see a very, very significant increase in your bookings and revenue. Am I on track with that or can you elaborate on that a little bit?

Well I think the comment I would make is that VR-13 and the VR [ph] evolution powers 48V based solutions is without question a great development for us. It's a perfect match for the sensor technology. Again we have particularly in terms of density, efficiency, low noise performance which is more and more mission critical and in other respects I will not be specific about because of this variety of performance advantages and a very cost effective card this development very much favors our opportunity but I think it would be a mistake to put so much emphasis on just that end market. We made tremendous progress toward the last couple of years which expansion in our portfolio in a number of different directions with other complimentary products that make it more real for customers at large and not just in their center space to architect their -- our system based on a combination of modular building blocks that Vicor uniquely makes and this are front-end blocks, these are different kinds of point of load devices including in particular whole family, expanding family of VVS [ph] regulators, development with Vicor and other kinds of products again in the front end space, DCMs, PFMs, these are building blocks which we have developed. The families that is expanding with again very differentiated performance attributes which meet the demands of our customers in a variety of end markets. So we’re finding ourselves in the captain's seat in a multiplicity of end markets and we’re applying all our resources in the front end of the business and back end of the business to pursue in a balanced way this multiplicity opportunities and we can do it without spreading ourselves thin because of the unique methodology that we have developed in terms of being able to reuse the same power conversion engines, being able to use the same packaging technologies, the same manufacturing infrastructure, so we have it all to pursue a large multiplicity of opportunities with common denominator capabilities and for that reason it would be mistake to in effect but all the factors in the datacenter space in server power. There is a lot more to the opportunity than just that.

And again that kind of goes to my question, the heart of my question is, it sounds like you’ve increasing bookings and revenues for the next couple of quarters but then it sounds like it's a backlog of customers just waiting to get these new products and you can see a significant step up in revenue, bookings in revenue, six months -- assuming there is no additional delays, am I right in assuming that that you will see a very significant step up in bookings in revenue in six months if you don’t see any additional delays?

As I said earlier last quarter and we read at the beginning of this call we see increasing bookings and increasing revenues as far as the eye can see. It's not been the case as far as I can remember that we would as we have recently are meant to do in a fact turn away opportunities because we have more customers and more requirements coming to us that is sizeable deficiencies that is brought about by a unique methodology that we can address. So we become more and more selective with respect to the [indiscernible] of business opportunity and commitment to pursue new kinds of customers and applications.

Your next question comes from the line of Don McKenna.

I don’t want to beat the horse again, and I do appreciate the fact that your broadening the base of your customers but can you explain to me why there is that delay that is now 15 if not 18 months? Is it because they are not able to produce a reliable functional product or if they have lost market share to other competing products from other chip design people?

So it's really not upto me to comment on what stands behind this device. I think that the question should be posed elsewhere. We are -- as our customers are dependent on the availability of natural [ph] solutions and I think to your point as time goes on more and more solutions are becoming available and this pressure building for alternatives.

Because they did not indicated why it is they have the continued delay?

Again it's really not upto to me comment, they could be perfectly I'm sure they are perfectly legitimate and valid reasons for this delays. I think I'm fond the impression that people in glass houses should never throw stones, right? So every company that makes disruptive technology, a core element of the strategy will from time to time suffer delays. You can't server -- you are needed to -- I mean if you want the high degree of flexibility by definition you’re taking baby steps that are highly predictable but they [indiscernible] of not enough innovation which optimally is key to lock down success. So Vicor has in the past as you know as we all fairly remember as it's device -- we have added new numerous device certainly when it comes to VR chip products as I go back a few years because of the challenges evidently in the technology we saw developments slip by the year two in some cases. The good news is that we got past their phase and I think as we have all seen over the last year and half we have been able to introduce products at an accelerating rate and that’s a trend that’s continuing because we transition from a certain phase in development of brand new technology to a different phase in which we can apply with higher degree of predictability, what's deleveraging the unique attributes of very disruptive technology, it's a different phase. It's clearly not within my confidence [ph] to be able to applying on what may stand behind the VR-13 device. I'm sure you can find explanations from other sources.

Your next question comes from the line of Alan Hicks. Please proceed.

I had a couple of questions some of your other markets specifically, supercomputing, automotive and wireless telecom. What are your opportunities there?

So supercomputing we’re getting more and more involved, by the way unfortunately one of the supercomputing applications is VR-13 based so it's suffering from the same delays. So that’s an example of a point of load supercomputing application. We’re also evolved in supercomputing applications from a front end perspective, there are two major initiatives on that front that can come to mind to answer your question with some our front end products. So on the supercomputing front we’re making in-roads both at the point of road and in terms of front end solutions. Was there any other market?

Automotive and wireless telecom?

Okay, automotive. So in the automotive space we are selling DCMs and this program is ramping in China with our 4623 DCM chip mostly DCM chips per system. We’re also involved in other programs and in some cases I can't comment about the specifics because of confidentiality constraints but I can tell you that there are exciting programs and they have great potential in years to come particularly when it comes to autonomous driving systems.

And wireless telecom?

So in wireless telecom we have some important, one particularly important design win with our TFM in Asia. So let's get an example of a different kind of product, with different end market, different type of opportunity but still leveraging those common measures or capabilities in terms of engines and packaging technology that I was reference earlier.

Okay and finally your BBU business, do you think that’s back on the growth path or is that still going to be kind of flat?

The BBU business should be viewed in terms of legacy products which as Jamie pointed out in his remarks, do tend to be particularly dependent on the macroeconomic cycles and they are also very much dependent on defense cycles. But the new breed of opportunities that enabled by DCMs and other chip VR products that we will be introducing within the last year, year and half. Registrations of new applications with respect to this products are growing, they rapidly and they clearly point to a time frame in the next few years where the mix of business in terms of the center of gravity was historically BBU business will have shifted progressively towards the new products which needs to say offer much greater density, much greater efficiency, better cost effectiveness and in combination with a number of other improved performance attributes. So we’re continuing to enjoy the steady, the revenue and profitability of the legacy business. Don’t get me wrong, those are not going anywhere but the good news is that we’re also building on top of that a new set of applications with existing traditional BBU customer base and with some new customers that are unable to buy the new products.

Your next question comes from the line of John Dillon. Please proceed.

Patrizio, I just wanted to a little bit more about some markets also, in particular the communications market. I think what I saw is the OCP actually supported the 48V or brought it in to the OCP for communications and as you know I'm not sure if anyone else does but communication has always been 48V, so how is that market embracing you? How are you doing in that market?

While it is true that communication is starting live on a 48V bus, communications for the last 15, 20 years has used their bus through a so called intermediary bus of 12V and while 48V has been the backbone of communication, power distribution and power infrastructure, eventually all of the sockets in recent times have not been provided by way of 48V two point of load converts. Eventually all the sockets have been supported by 12V to point of load converters and that is changing. Remarkably companies that historically have been very entrenched, very comfortable in their paradigm of 48V, 12V to the point of load by way of fast converter followed by an isolated [ph] point of load regulator have recently made recognizing [indiscernible] of what it takes for them to be able to compete and be able to make systems that are the requisite density and efficiency. From a mentally need is the cavalries for innovation and I think a combination of desperate need for greater density and efficiency coupled with some of the public pronouncements that took place earlier this year have caused mountains to move that I would have never thought would be moving as fast as they are away from the 12V intermediate bus and the intermediate bus architecture. Now I'm not suggesting that this is going to be a change that will take place overnight, but it is indicative of a broad change that is taking place now across different end markets and will change the world -- cause greater opportunity for 48V solutions, they act to the point of load with greater economies of scale and greater performance. It is self-enforcing and it is indicative of a trend that should bring about very significant changes in the power system architecture across this different markets.

So it sounds like this is a situation where successful will get more success because you’re saying your success in other markets with 48V and they are starting to adopt it, is that what I'm hearing?

I think that’s an element these also another categories which has to do with just need. You can keep solving communications, power system challenges by bus converter bricks and point of load. So if we look at what has happened over the last 10 years it used to be a typical motherboard was powered by bus converter bricks with the capability of 100s of volts and this evolves [ph] over the years they have gone from consuming 100s of volts to consuming 500Vs to consuming 700Vs to consuming over 1000Vs and that trend keeps ongoing and the requirements in terms of bus converter building blocks and point of load regulators keeps getting more and more challenging to the point that system designers can no longer solve their requirements with the same all solutions even accounting for the evolution of those solutions meaning the bus converter technology has gotten better overtime but it's the point where it no longer works and part of the reasons is to do the inefficiency of the intermediary bus architecture in terms of it's power distribution losses and other factors. So the reason why this changes are taking place more and more and across different end markets has to do impart with emulation, and impart would need and this is a combination of the two that provides a powerful catalyst.

Are you saying design wins? Are you saying many design wins in the communications market?

We’re seeing design activity that I think will take some time to turn into design wins but I think it's fair to say that’s a land of opportunity for our solutions because once again we’re very uniquely equipped in terms of both our conversion engines, our building blocks and our chief capabilities in particular to address these needs with the highest performance with at least the factor to greater density than anything else that’s competitive and with better seasonality in terms of key parameters such as low noise and other attributes and other development of this that we’re referencing here because it bears on all of this is that we’re seeing more and more requirements for solutions in terms of point of load devices, processors other kinds of A6 that demand 0.7V, 0.8V rails, 200 amperes, 300 amperes. That kind of a requirement cannot be effectively addressed in a rational way with the same kinds of solutions that are being deployed in the past. It calls for both the more advance architecture and better engines. So two things have to change to address these kinds of requirements, the architecture and the engine in terms of the capability to deliver in particular a comultiplication function at the point of load which is what in one way of looking at it sets us uniquely apart from everybody else.

Just one last question and that’s how about the graphics market, how are you doing in that?

Very well there too. Designing activity is going on that front as well.

Your next question comes from the line of Dick Feldman.

Patrizio, you mentioned that you’ve gotten orders and are addressing markets that are not tied to the 13 server. I wonder when those markets can start to be significant enough to start and move the needle if there would be further delays within new server chip.

Well these are opportunities and again there are many of them and there are different stages are the basis for our confidence in the growth opportunity irrespective of the ultimate timing of VR-13, not suggesting anyway that VR-13 isn't going to come around, it will. It is just a matter of exactly when and obviously our fastest decisions were based on the information, the best information that was available to us and that information I certain doubt not to be accurate, there have been numerous research but I don’t expect this is going to go on forever. I think at this point in time whether it's the first or second quarter or worse case the third quarter next year, VR-13 as far as we’re concerned with the [indiscernible] that we need to address and the power system requirements that we will provide -- they are coming out and when that happens we expect to see reflect on the growth that should otherwise should be more and more based on a broader set of opportunities that are providing along in complimentary end markets with complementary products.

So what you are saying some of the new markets you want to enter are tied to the introduction of the new chip or are there things that are independent of all of this to provide some growth?

Sorry for interrupting but there are many things that are probably dependent of VR-13 that are progressing along. So VR-13 will be a significant boast as it ramps but if let's say practically for whatever reason I'm not suggesting that will be the case. If you would never to happen which again I would expect to be the case. I think it's only a matter of when not the matter of this, but even if it didn’t come back about we still be looking at the growth story with respect to the complimentary products that would have been developing and getting design into a variety of end markets and applications.

The design win is that you’ve gotten, when do you anticipate that they would start to go into production in the meaningful way?

Well so as an example in answer to the earlier question regarding supercomputing applications, familiar with a design win for front end components that will amount to millions of dollars' worth or is projected to be millions of dollars' worth of business next year and ramping further into 2018. So, it's a long list of different products, different customers, different applications, different end markets and they are all of different phases of gestation [ph].

One last question, you made some comments on your call, earlier in the call that there -- you were deluged with customers making enquiries about using these products that you feel you had to be perhaps more selective in who you can address. I'm wondering if you could give us further insight into that comment?

Yes, so it is apparent to us, that it has become apparent to many OEMs that they are challenging our system requirements carrying some cases only be addressed by Vicor Power components. Even companies that is historically we have found difficult to penetrate for a variety of reasons and recently come to us looking to engage us towards products designed to meet their needs. So I will give you without mentioning a name, an example in the communications space, very substantial Asian company has come to us with a very unique requirement and they believe we’re capable with our technology to address it in a way that cannot be address otherwise. So we have engaged with them to address this requirement. We have been approached by other companies and what I'm referencing here is all things that have happened within the last six months. A number of different engagements that we have taken on and other opportunities that we have selectively chosen not to pursue because they were need to be even though interesting in many respects given other opportunities that we can pursue are not worthwhile. So what I see into this is a growing realization by OEMs in a variety of end markets and in some cases some of the competitors who also come to us for help that our technology because of this very high density, high efficiency, flexibility and our capability can address needs of higher levels in their own specific ways and in fact they want us to be part of the solution and I think this is systematic of again a growing realization of our capabilities which bodes well for our opportunities going forward. It gives us the privilege of being able to select and choose what we have interest in going after and that’s a good place to be.

There are no further questions in the queue.

Very well. Thank you very much.