Good day, ladies and gentlemen, and welcome to the Vicor Earnings Results for the Third Quarter Ended September 30th, 2015 Conference Call. My name is Teshina [ph] and I will be your operator for today. [Operator Instructions] I would now like to turn the conference over to Jamie Simms, CFO. Please proceed.

Thank you. Good afternoon and welcome to Vicor Corporation's conference call for the third quarter ended September 30th, 2015. I'm Jamie Simms, Chief Financial Officer. And with me here in Andover are Patrizio Vinciarelli, Chief Executive Officer, and Dick Nagel, Chief Accounting Officer. Today we issued a press release summarizing our financial results for the third quarter and nine months ended September 30th. This press release is available on the Investor Relations page of our website www.vicorpower.com. We 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 a 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 Form 10-K filed with the SEC on March 6, 2015. Please note this information provided during the conference call is accurate only as of today, Tuesday, October 27th, 2015. 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 November 11th, 2015. The replay number is 888-286-8010 and the passcode is 11574949. In addition, a webcast replay of today's call will be available shortly on the Investor Relations page of our website. Unfortunately, we have been unable to recover an audio recording of the Annual Shareholders Meeting which took…

As Jamie has addressed, Q3 results largely reflect the expectations we communicated to you during our last earnings call, with the exception of the impact of the redemption of our investment in GWS. My remarks today will be brief, as you've heard before, the circumstances of the impending transition to Intel's VR13 processors, and the gestation period of new products, designing activities, remain focused on the expected 2016 volume ramp, and remain focused on serving a broader range of customers with state-of-the-art, cost-effective motherboard and frontend power systems solutions. I believe the recent decline in bookings and revenues is behind us and that an expanding array of high-performance, low-cost solutions, spanning [ph] applications from virtually any power source to the point of load will fuel significant revenue growth. We're well-positioned to meet this demand, with sales and applications resources and scalable manufacturing capacity. We're experiencing an unprecedented level of interest by existing and new customers in the many products we've introduced within the last year, as well as products in our near-term product roadmap. We're seeing major design wins and are anticipating more. In my recent visits to customers in the U.S. and Europe, I confirmed spreading a rising level of interest in our factorized power 48-volt architecture and are now frontend solutions for automotive, datacenters, high-performance computing, and defense [ph] electronics applications among others. Again, despite my confidence and enthusiasm, I must caution listeners regarding the gestation period of new design wins and applications. Given the reality of these sales cycles, contributions to revenue from products introduced in 2015 likely will not occur until the second half of 2016. I'm sure we'll have quite a few questions, so I will start taking them now. Operator?

Operator?

Yes, I'm here. [Operator Instructions]

Do we have any questions?

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

Yes, Patrizio. You mentioned the expected ramp-up and the Intel VR13 chip in the third quarter of 2016. Specifically, what is that processor that you're referring to? And two, if that's their ramp-up, how does that affect the ramp-up in your orders and then revenues with products related to that?

So there are various skews [ph] of these processors that play a role in different applications. And regarding the second part of your question, as you might expect, the bookings lead shipments by about a quarter. So we expect to see significant step-up in bookings in Q2, in anticipation of a significant step-up in shipments in Q3.

You also mentioned that, in this hiatus, that you would -- you'd made progress to handing your VR13 customer base and datacenter's networking high-end computer applications. Does that mean -- do you have new datacenter customers ready to place or in line to place orders?

It means that we've seen a broadening of the customer base and the applications. VR13 is expected to significant longevity. Some of these applications will turn on with some delay relative to the earliest to ramp, so some of these broadening of the customer's applications will have an impact in follow-on quarters past the start of the ramp, which will be more concentrated. But broader than what we had with the prior VR12.5 and the prior VR12.

Right. Thank you.

Your next question comes from the line of John Dillon. Please proceed. John Dillon - D&B Capital: Hi, Patrizio. You announced some bidirectional converters about a week ago. Just wondering, is this a brand-new area for you? I don't remember ever seeing any bidirectional converters on your webpage or anything.

Yeah, it's a brand-new capability. It's a new application of an engine that we have used for point-of-load applications, it's got [ph] multipliers in factorized [ph] power systems, as well as Bus converters, both high-voltage and lower-voltage Bus converters. It is a novel application. This engine, not just in terms of its bidirectionality, which is becoming more and more a requirement in certain applications, but also because by virtue of its non-isolated structure, it affords a greater level of efficiency and power density and cost effectiveness measured in terms of sales [ph] per watt. So, bidirectionality is an attribute that is important in some applications, not all. The cost effectiveness is obviously important in many applications. And that's a distinguishing attribute of these Bus converters, as well as their power density and efficiency. So these devices are well above by a large multiple. The closest competitive units, both in terms of density, efficiency, as well as being by far the most cost-effective solutions of their kind. John Dillon - D&B Capital: So they're also the most cost-effective solution?

Absolutely, yeah. So, relative to, to quantify the statement, relative to in isolated alternative, these solutions are typically 25%, 30% more dense and more cost effective. John Dillon - D&B Capital: And it seems like that would be ideal for the electric car or hybrid car, because you've got to both recharge a battery and also you have to have electricity coming out of the battery to propel the card. Is that correct? Is that really your target market vehicles or is this --

There's a variety of applications so that leverage bidirectionality. You mentioned some others having to do with the whole winning infrastructure, as well as other kinds of applications that leverage bidirectionality. So we have a unique position with this class of converters, with not just, by far, best-in-class products but also novelty and intellectual property. John Dillon - D&B Capital: When do you expect to start seeing some production revenue out of these products?

Well, so these are [inaudible] with respect to these. Given their nature, from the date of introduction, and we've been sampling some of these devices now for a while, until the cash position [ph] in terms of significant revenues, we're dealing with the sales cycle that was referenced in the earlier remarks. So, 12, 18 months, kind of basic [ph] sales cycle. John Dillon - D&B Capital: Right. And will that all be incremental revenue, since you've never had a product like this? Anything -- I mean this is a --

Sorry. It's another dimension to our multi-dimensional power component methodology. And I think the value proposition here is more than merely incrementing individual opportunities, individual applications. I think there is different perspective on it which has to do with complementing the array of modular functionalities that in the aggregate enable a comprehensive power system methodology. So in the analogy, an analogy we used in the past of making things little Lego blocks, you can imagine that it takes a few different shapes and types of Lego blocks to enable to erect a particular structure or architecture. And this, making the [ph] analogy to what goes on in the power system industry with respect to architecting power systems, this novel, non-isolated, bidirectional Bus converters can generate their own individual opportunities, but they can also play in combination with other building blocks that we have or about to introduce that synergistically enable more advanced power system solutions. John Dillon - D&B Capital: So, not only will it be bringing new revenue but it'll also be complementing the existing customer base you have and allow that to be stronger and grow also?

It's more than issue of the customer base, it's an issue of overall system functionality. So in addition to generating their own revenues for the sales of those specific products within this new class, they will also be generating companion sales of -- or companion modules that, in combination with NBMs [ph], can perform the balance of the power system requirement in specific customer applications. John Dillon - D&B Capital: And you referenced that VIA capital build-out last conference call and you mentioned it again today in this call. And I'm just wondering, when will we see an impact from that? When do you expect to see more significant impact from the VIA products? Are we going to see that this quarter or next quarter?

So we have significant design wins. We have been working furiously to establish automated manufacturing capacity. There's been good progress to that end. You know, there's equipment coming in, factory flaws, have been prepped for it, and we're going to have a turn now in the very near future in anticipation of volume ramp in Q1 of next year. This will start with modest volumes, but we're already seeing volume applications for this new class of products. As discussed in the past, that provide typically frontend power systems solutions that once again complement the motherboard point of load factorized power solutions that we've seen getting more and more traction in particular in the datacenter space. So, part of the strategy with these kinds of products is to enable end-to-end solutions where customers can come to Vicor as a single-stop shop for the complete power system, from the world plug or the power source, whatever it may be, to the point of load. And we're making great advances in having this vision [ph], not just by having complementary products that can play in the frontend as well at the point of load, but also by scaling these capabilities up and down in terms of raw power. So you'll be seeing next year new products that enable very cost-effective [inaudible] efficiency and high-performance solutions at power levels where Vicor historically has not played. And those products again play a role in a comprehensive capability that enables customers to meet the power system requirements end to end. John Dillon - D&B Capital: So, can we count on the revenues getting bumped up the first quarter of 2016 as a result of shipments of these and other new products, but with the real ramp coming Q3 for shipments? Is that a reasonable assumption or?

Well, as suggested in the opening remarks, from my perspective, given the visibility we have, I think we've seen the bottom of bookings and shipments, I think the trend that we suffered from over the last year is reversing. I think having touched the bottom, the near-term outlook is now for a dramatic step-back. Obviously that's reflecting in the book-to-bill ratio of the last quarter being just modestly above 1. I think we'll be building on that and I expect to build up -- the forecast is for the buildup that should be steady in the next couple of quarters and taking up a faster pace as we get -- suggested earlier into Q2 and Q3 of next year. John Dillon - D&B Capital: Thank you.

From a bookings perspective. Yeah. With revenues lagging above 1. John Dillon - D&B Capital: Right. Great. Thank you. I'm going to get back in the queue.

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

Yeah, good afternoon. I'm not an engineer, so I'm just trying to get clear on the VR13. It works with the new Skylake Intel processors, is that correct?

So, VR13 is a class one processor, it's a class of processors, and it's processors that in many respects represent the significance that [inaudible] performance relative to the earlier class, which is VR12.5. Now this can be potentially look confusing because, as you follow Intel's introductions with respect to the many different flavors of these devices, some of them play in a space where now we do not play, and other ones are targeted in particular to higher-end datacenter, more intensive -- computing intensive applications. And those are the ones that are relevant to our revenue opportunity.

So you need to wait for Skylake to come out for server versions and higher-end computing applications?

Generally speaking, we are coupled into those flavors that again go into either super-computing or datacenter type applications. And those are based on the visibility we have, going to -- to be going into production in Q3 of 2016. This is a scheduled that over the last several quarters has been changing. The latest change, as far as we know, has been actually going in the right direction, being -- meaning moving a little bit. But it's still far enough away that I imagine there could still be potential for some minor change. But obviously we're getting closer. And the latest change we're aware of has actually been coming in as opposed to going up.

So this new class of processors will dramatically reduce power. Is that the main advantage?

Well, the processors actually consume more power, which is good for us, since we are the provider of the power in the right form to enable the processor to function. The benefit of these processors is that we're all [ph] consuming more power, that deliver a lot more computing capacity and capability. So they are very leveraged for customers in that they provide more computing capacity. The trend that we generally see in the industry, except for certain class applications, very mobile applications, particularly dependent on the low power consumption, in other realms, the trend that we see is for more power-hungry processors, more power-hungry ASICs. You know, we see more and more applications that are extending their requirements up to several [ph] hundred amperes. And that's good news for our products because our products are the point of load, excel in being able to provide very efficiently and very densely a very [inaudible] and very dynamic loads, the current requirements can rapidly change and achieve very high peaks of, as I mentioned earlier, it's a lot of that [ph]. So the main flavors of these kinds of processors don't get past, I think, for this generation, a couple of hundred amps, but there are again other kinds of loads that we're beginning to power that extend beyond that.

Okay. What I'm kind of trying to get at is your -- this new version will dramatically lower power, so, datacenters and the obvious application. Could there be a cycle where the advantages are so big that they'll replace a lot of the servers that are out there, be a big upgrade cycle, in addition to new products being sold?

Again the power is not going down. The nature of -- the nature of the industry and the nature of our collective dependency on more and more computing power in every facet of our life, from home, from datacenters, in [inaudible] in the office, you know, power consumption in terms of reliance on computing capacity is not going down, it's going up. And the car is a prime example, that electric power in cars keeps going up at a very fast pace. So I wouldn't worry about power going down. The need for cycles is obviously brought about by the ongoing increasing dependency on computing capacity for a variety of purposes. And obviously the industry is geared to support these kinds of needs with generations of chips, processors, ASICs, that they continue to expand their capabilities right at the expense of, in most instances, greater power consumption, and more challenging power system needs.

Without your products to your customers, they couldn't take advantage of the new processors from Intel, is that correct?

No, I think that would be too radical statement. I think the balance statement would be that [inaudible] a way to get power to processors, ASICs. Some approaches may have handicaps that -- most approaches have handicaps that our solution does not have. So, fundamentally what sets us apart is that we have the highest density, meaning we take up the least bar space, we can get the closest to the processor, we can reduce the distribution of losses in delivering power to the processor. We can fuel the processor with the power needs while generating far less noise, which enables greater signal, noise immunity. So we have a number of distinguishing attributes that make our products very appealing, particularly in demanding applications. But there are other ways to power these processors, but we're seeing more and more, and this is a grassroots development that is spanning more and more of the industry, is an interest and requirement for our products, because of these distinguishing attributes. It's not that you cannot do it any other way, it's just that our way of doing it is a lot better than the alternatives.

Yeah. So you do have a competitive advantage over anyone else?

We have a competitive advantage in density, efficiency, overall cost effectiveness, lower noise, which means create a [ph] signal integrity. Those are some of the key advantages we have that set us apart, in some instances, by a large advantage, relative to any competitive alternative, in point-of-load applications, which are the type of datacenter applications we've been referencing in this discussion.

Okay. So, datacenters are your first target market, is that correct?

This one, it's one we've been talking quite a bit about, but I wouldn't say that in the long term it represents our largest market. We have some great opportunities and we're gaining traction in other pass-through [ph] applications that I think will represent a very significant revenue contributor in years to come. So, as mentioned earlier, a variety of frontend power systems are in that category. And these are from power systems that play -- can play a role in datacenters but also play a role in [inaudible] applications and other types of applications.

So, how are you -- what kind of progress are you making in telecom --

Should we let somebody else maybe ask --

Okay. Yeah, okay.

Thank you.

Your next question comes from the line of Don McKenna. Please proceed. Don McKenna - D.B. McKenna & Company: Hi Patrizio. I -- you've already answered some of my questions where you distinctly said you thought the bottom had already been in from a revenue standpoint. Could you take the last three announcements on products? And I know you talked about the gestation period. But what kind of revenue would you see those collectively generating, let's say, three or five years down the road? I don't know if these are $10 million deals or if they're $50 million deals.

Well, it depends on which particular one we're talking about. And -- Don McKenna - D.B. McKenna & Company: Why don't you take them as a group?

As I noted, I want to [ph] make a one-for-one association with specific revenue contributions, but I think it's fair to say that the array of products that have been introduced and the products which are about to be introduced, for which the development cycle has ended and we're very close to new product introductions, that in the aggregate these products are more than capable of supporting the 3-by-5 revenue growth goal that we had set for ourselves, and with respect to which we suffered delays. But in answer to your question, I can say that the complement of products that had been in development and had been introduced or about to be introduced support significant multiple of our current revenue level, 3x, possible more than that. Don McKenna - D.B. McKenna & Company: Okay. Thank you. And Jamie, if I'm reading this right or getting this right, the cash per share is about a buck-and-a-half now, then the deferred tax credit is about 2-1/2 for four [ph]? I assume that your --

If you're just dividing the cash balance as reported and deferred tax asset as reported by the share count, I can't do that in my head, but that seems reasonable. Don McKenna - D.B. McKenna & Company: Okay. And plant and equipment net-net, is that -- where would you see that in relation to market value?

Boy, that really is a hypothetical. I don't think anyone's planning on liquidating any assets here, so I don't --

Yeah, we're planning to use them to generate the revenues that [inaudible] so.

Yeah. It's a more complex nuanced answer than is appropriate for this conversation. I mean we own all of our real estate, we have no debt, we have very strong balance sheet. We just happened to have written most of our assets over time through depreciation down to modest levels.

And we're very focused on operational performance, as the revenue levels get beyond historical peaks. That's really been the logic behind various initiatives that we've taken over the last year and a half in terms of consolidating manufacturing activities. Also to give you a flavor with respect to this, it's more than an issue of focus in cost effectiveness, it's also motivated by visibility with respect to how we see power system methodology evolving and what we see customers being interested in years to come in terms of addressing the power system needs. So the focus we've had with respect to VIA products and other kinds of frontend products, coupled with the motherboard, the point of load, the solutions, have led us to realign some more capabilities to best support these kinds of needs, as distinct from the components and type of solutions that were the focus of our activities 10 or 20 years ago.

The next question comes from the line of Dick Feldman. Please proceed.

Thanks for taking my question. Would it be fair to say that the outlook for the fourth quarter and the early part of 2016 would be one of moderate progress based upon some of the frontend and VI Chip application that's not associated with the datacenter and that later in 2016 you should see a broader-based acceleration?

I'll translate in my own words, but I think it generally aligns [ph] with the picture you're painting. Again, as implied by book-to-bill, which was very close to 1 in the past quarter, we're not about to see this quarter, next quarter, from what visibility we have at this point, any large revenue growth. I think it's going to improve, but initially improve at relatively slow pace, and it will take and gain momentum as we progress through the middle of next year, starting with bookings leading revenues in the second quarter of 2016. I think as we get beyond that, the mix of products, the mix of applications, the mix of customers will extend and -- but it's far enough away that I think it would be premature to set any concrete expectations, beyond the general statement that, from my visibility, I'm very bullish with respect to the medium to long term. Near term, there's still going to be I think a little bit of a cycle [ph], as suggested by Jamie, this quarter is likely to be -- is more net loss. So we're not about to get too excited about near-term performance, but I'm quite excited with respect to performance a couple of quarters out.

And as the VI Chip and Picor [ph] recover from their depressed levels, I would assume that should have a very beneficial impact on your gross margins?

Yes. I think generally speaking, it's true of all of our products where, as you probably know, very much dependent on [inaudible] levels in terms of absorbing largely fixed costs, and our margins in all of these products, we achieved Picor [ph] products as well as the BU [ph] products, benefit greatly from increased volumes and better capacity utilization. But specifically with respect to both VI Chip products and Picor [ph] products, we see great margin opportunities as we leverage the capacity that we have in place for these products with new customers and a broader range of applications.

With the new capacity that you're bringing on, has that materially raised the breakeven point?

No. I think if anything, the initiatives we've taken over the last year, year and a half, in terms of consolidating some of the manufacturing operations and refurbishing some of our satellite entities in terms of aligning our capabilities with a more comprehensive product vision going forward, all these initiatives have gone in the right direction, in terms of reducing fixed costs. But again our prime motivation in taking these steps was not as much a reduction of the fixed costs, which is always a good thing, but more significantly, having greater control and greater focus [ph] with respect to those products that are really going to contribute in a major way to the Company's future growth. It makes no sense for us to be involved in products or custom [ph] capabilities that are not scalable as other capabilities that we've now put in place. And so being focused on those represents greater opportunity in terms of top line growth, while at the same time reducing of these costs, actually improving our margin levels going forward.

One last question if I may, and that is could you give us an update on the legal proceedings with SynQor?

Well, so we're waiting for further developments in the Patent Office. I think you might know that thus far we'd gotten [ph] internal terms to other four patents [inaudible] largely invalidated [ph]. We're waiting for the other two to follow suit. In the interim, not much has happened in terms of the case in Texas. Summary judgment motions are still pending. And not much likelihood of a case going to trial in the very near term. So we will expect to see decisions coming down from a particular patent [ph] trial and appeal board that we expect to be favorable to us. DR: Okay. That's all I've got. Thank you.

Thank you.

Your next question comes from the line of John Dillon. Please proceed. John Dillon - D&B Capital: Patrizio, with the push-out of the VR13 processors for servers, is there any indication of a VR12.5 bump from your current datacenter customer?

Possibly. So, obviously there's a need for capacity in general that, if not satisfied, I'm talking about computing capacity, if not satisfied by the next generation of processors, needs to be satisfied by the existing one. We'll have to wait and see with respect to that. I think the point here [ph] is that any fine-tuning of the schedule with respect to VR13 will have ramifications with respect to the level of business on VR12.5, and needless to say, that cuts both ways, right? If you are to think [inaudible] would be selling fewer of the VR12.5, and conversely, if it were to be further delayed, we sell more of the older one, but we really like to see the new ones come about sooner rather than later. John Dillon - D&B Capital: Right. Because you have more customers for the newer ones, it sounds?

Because we have more opportunity for the new ones, yeah. John Dillon - D&B Capital: Yeah. And you talked about that in your statements here. Can you give us a little bit more color on the design wins that you have and different VR13 applications, the new design wins that you won this quarter?

I'm not going to pinpoint applications and customers beyond saying that we are spreading our coverage, suggested in the past [ph], to applications other than processors. We're spreading our coverage to applications of VR13 other than datacenters. And the level of interest in our solution across different players in the industry is rising considerably, because it's not a mystery that the early adopters have done well with our solution and they've achieved good success in terms of improved performance and capability. John Dillon - D&B Capital: And you talked about this before but I haven't heard it for a while, as with all this big ramp that you're expecting in the second quarter of next year, how are you going to meet the demand? Are you ramping your capital now for this or are you going to outsource some or are you going to be building --

So, to be clear, not to potentially create confusion, the ramp that we're talking about in the second quarter is a bookings ramp, as distinct from a shipment -- John Dillon - D&B Capital: I'm sorry. I meant second half. Yes, you're right, exactly. I meant second half.

So, as suggested earlier, we're looking at the actual ramp in shipments to -- for VR13 to start in Q3. We have a good level of capacity in place and we expect to be able to reach production rates well above past peaks with capacity that we already have in place. For that reason, as suggested in earlier parts of the discussion, our focus over the last six months has been to actually expand capacity. In the VIA space we're starting from [inaudible] and we need to bring about significant capacity, before we take the next step with respect to, in particular, chip manufacturing capacity, which is at the core of point of load, the processor type applications, as do these with respect to other kinds of applications, in frontends and other areas. We think we got still a little bit of time to take the next step with respect to Picor [ph] products [inaudible] small that has got a good deal scalability built in. So we think we're well-covered over the next few quarters with respect to, in particular, datacenter type of applications. John Dillon - D&B Capital: And any super-computer bumps that you may see in the next quarter or two on the horizon?

I think that would be VR13, so I think the time is unfortunately the same. John Dillon - D&B Capital: Okay. Thank you. And just to be clear, the VR13, if there's no slippage from Vicor, it's strictly the slippage at the Intel processor, correct?

That's correct. We've had -- John Dillon - D&B Capital: You're ready.

-- solutions for quite some time now, so, in fact, we've been advancing the capabilities beyond that, which was already capable [ph] enough literally six months ago. John Dillon - D&B Capital: Thank you very much, I appreciate it.

I think if there's one more question, we'll take it, and --

All right. Your last question comes from the line of Don McKenna. Please proceed. Don McKenna - D.B. McKenna & Company: Guys, I got cut off before I really made my point. And what I was trying to do was to say that, with the $1-1/2 in cash, 2.50 [ph] is what I think is about right in the tax benefit going forward, that only left about $5 and change from the current market price as the value of your technology and future earnings power, which I thought was significantly undervaluing what you see is the future, and that was the point I was trying to make. Thanks.

I think you got a believer in me. We've invested nearly $300 million in bringing about this capability and I do expect to see a very large return on that investment, so. Don McKenna - D.B. McKenna & Company: Terrific.

I'm a passionate [inaudible] so. Don McKenna - D.B. McKenna & Company: Me too.

Okay. Don McKenna - D.B. McKenna & Company: Thanks guys.

Thanks a lot.

Thank you, Don.

So with that, we'll conclude.

Talk to you next year.

Yeah. Talk to you early next year. Take care.

Ladies and gentlemen, that concludes today's conference. You may now disconnect. Thank you for your participation. Have a great day.