Good afternoon, everyone, and thank you for participating in today’s conference call to discuss Iteris financial results for the fiscal third quarter ended December 31, 2012. Joining us today are Iteris’ President and CEO, Mr. Abbas Mohaddes, and the company’s CFO, Mr. Jim Miele. Following the remarks, we will open up the call for your questions. Before we continue, we would like to remind all participants that during the course of this call we may make forward-looking statements regarding future events or the future performance of the company, which are based on current information, are subject to change and are not guarantees of future performance. Iteris does not undertake any obligation to provide updates to these forward-looking statements in the future. Actual results may differ substantially from what is discussed today and no one should assume that at a later date the company’s comments from today will still be valid. Iteris refers you to the documents that the company files from time to time with the SEC, specifically the company’s most recent Forms 10-K, 10-Q, and 8-K which contain and identify important risk factors that could cause actual results to differ materially from those that are contained in any of the forward-looking statements. I’d like to remind everyone that a webcast replay of today’s call will be available via the Investors section of the company’s website at www.iteris.com. Now, I’d like to turn the call over to Iteris’ President and CEO, Mr. Abbas Mohaddes. Please proceed.

Thank you, Michaela, and good afternoon everyone. As you saw at the close of the market today, we issued a press release announcing financial results of our fiscal third quarter ended December 31, 2012. In our third quarter, we experienced a decline in Roadway Sensors revenues primarily due to the delay of certain orders and East Coast shipping disturbances resulting from Superstorm Sandy. While I am disappointed with the financial results of this segment, we remain encouraged by our $3.2 million Roadway Sensors backlog and we received strong bookings in the early part of our fourth quarter. We continue to believe there is a strong demand for our core Roadway Sensors products as well as our innovative solutions like Vantage Vector and the recently announced SmartCycle and SmartSpan. Transportation Systems contract revenues were flat year-over-year primarily due to the timing of a key contract in the prior year period. However, this segment is well-positioned to capitalize on the recently passed Federal Highway Bill, as demonstrated by our selection by the Federal Highway Administration. As we have discussed previously, the government and commercial markets for real-time, actionable traffic and weather information analytics are expanding rapidly. We are participating in this emerging market by investing in the people, products, and services within our iPerform segment, and are encouraged by the $3.3 million of backlog. And in spite of the challenging third quarter, our overall business outlook remains strong as we continue to strengthen our foundation with software-based traffic management solutions. We are committed to further expanding our sales, marketing, and research and development teams, particularly within iPerform, and anticipate announcing further developments in the coming quarters. But before going into further details about the quarter as well as our outlook, I would like to turn the call over to our CFO, Jim Miele, who will take us though details of our financial results for the quarter. Afterwards I will return to discuss some more of the highlights for the quarter and how we plan to build shareholder value as we continue to move through fiscal 2013 and beyond. Finally we will open the call for your questions. Jim?

Thanks, Abbas, and good afternoon again, everyone, and thank you for joining us today. For the fiscal third quarter ended December 31, 2012 total revenues decreased 6% to $14 million compared to $14.9 million in the year ago quarter. Please note that our prior year results have been restated to reflect the divestiture of our Vehicle Sensors segment in July 2011. The decrease in revenues was primarily due to a 23% year-over-year decrease in Roadway Sensors net sales for the reasons Abbas noted. As there are different characteristics affecting each of our revenue streams and various attributes affecting our financial results, Abbas will provide more detail regarding our net sales and contract revenues later in his comments. Gross margin in the third quarter was 36.8% compared to 36.7% in the year-ago quarter. Gross margin was impacted in both the third quarter and year-ago quarter by a shift in mix toward Transportation Systems and iPerform contract revenues, which typically provide a lower margin than the company's product revenues and to a lesser extent a slight decline in Roadway Sensors gross margins as a result of lower sale volumes. Even with the lower sale volume, our Roadway Sensors segment still provided a gross margin of 50%. Operating expenses increased 9% to $5.6 million compared to $5.1 million in the year-ago quarter. The increase was primarily due to a $133,000 charge associated with the change in fair value of contingent acquisition consideration, whereas in the year-ago quarter, we reported a $281,000 benefit. SG&A expenses as well as R&D investments in the third quarter were flat when compared to the prior year period. Our net loss from continuing operations was $294,000 or $0.01 per share in the third quarter compared to operating income from continuing ops of $618,000 or $0.02 per share in the year ago quarter. Net income was $1.1 million or $0.03 per diluted share in the third quarter compared to $747,000 or $0.02 per diluted share in the year-ago quarter. Net income in our third quarter of 2013 included an after-tax gain of $1.4 million related to deferred payments and earn-outs earned from the sale of our Vehicle Sensors segment in July 2011. This equated to gross proceeds of $1.8 million in cash. Earn-out payments in the Vehicle Sensors sale are meeting our expectations thus far. Cash at December 31, 2012 was $19.7 million compared to $18.7 million at March 2012 and we continue to carry no debt. We repurchased approximately 388,000 shares for our common stock in the third fiscal quarter of 2013, bringing the total to approximately 1.4 million shares since our repurchase program was initiated in August 2012. That program has since expired and a new $3 million share repurchase program was initiated in August 2012. As of December 31, 2012, we spent approximately $2.1 million through these stock buyback programs. Finally, total backlog at the end of the third quarter was $38 million, which included Transportation Systems backlog of $31.5 million, iPerform backlog of $3.3 million, and Roadway Sensors backlog of $3.2 million. This compares to total backlog of $32.9 million in the year-ago quarter and $41.2 million in the previous quarter. This concludes my prepared remarks on the financials. And now I would like to turn the call back over to Abbas who will further discuss the quarter as well as our strategy as we wrap up our fiscal 2013. Abbas?

Thanks, Jim. As I indicated in my opening remarks, softness in the Roadway Sensors business was the primary reason for our decline in total revenues during the quarter. We experienced a delay of certain orders especially on the East Coast due to Superstorm Sandy. A few orders were also delayed in California due to construction interruptions and certain agency funding issues. However, our outlook for this segment remains strong as our products continue to be in high demand. For example, we are experiencing traction with our Vantage Vector product, and we are receiving favorable feedback from our early adaptor customers. We believe the introduction of new products should help sustain our market leadership. An example of such leadership is the 2 new products I mentioned in my opening remarks, SmartCycle and SmartSpan. Both bolstered our Vantage product suite, address unmet needs in the marketplace and further support our market leading position with more than 100,000 video deduction sensors in operation worldwide. So far in January, Roadway Sensors bookings are up 41% year-over-year. We expect the Roadway Sensors business to resume growth as they continue channel billing and product development and launch efforts. Our transportation system sales were flat during the quarter primarily due to a key project experiencing high-tech contract work in the prior year. We signed $4.9 million in new contracts during the quarter bringing our contract backlog to $31.5 million compared to $29.7 million in the year ago quarter. We continue to believe this business is well positioned to capitalize on the recently passed Federal Highway Bill. For example, during the quarter, the Federal Highway Administration selected Iteris to provide on-call task-order based services for 2 5-year contracts valued at up to $80 million. We will be computing with a small group of other selected providers and expect several task-orders to be awarded over the next few quarters. This selection is a testament to our strong relationship with Federal Highway Administration, the expertise of our team, and the impact the intelligent traffic technologies can have on improving congestion. We are beginning to see more requests for proposal from various agencies due to the Highway Bill. As they have indicated before, we believe to be a direct beneficiary of the bill and it should impact our revenues in the upcoming quarters. We continue to make substantial progress in traveler information 511 which provides real time traffic information systems that help commuters take optimal routes. Subsequent to the quarter’s end, we were selected by South Carolina to develop, implement, and operate its 511 Traveler Information System. The 3-year contract valued at approximately $2.5 million includes 2 1-year options for ongoing operation and maintenance. We believe Iteris remains the market leader in 511 as we now operate 12 state agencies and 5 metro areas. We are pursuing several other similar programs in various states and remain optimistic about the prospect of expanding our presence. Our performance management segment or iPerform continue to make significant progress during the quarter. As you may recall, the iPerform group is focused on performance management solutions that provide customers with world class traffic information services that include our data service products, analytics and visualization application as well as our predictive service offerings. Our market leading product Iteris PeMS or iPeMS offers analytic applications that provide real-time actionable traffic information that allow traffic analysts, engineers, and media producers to manage the traffic information demands. During the third quarter, we experienced significant customer interest and explored various commercial opportunities in the media, automotive and mobile application markets. We're in early discussions with several companies that are particularly interested in our software predictive within traffic data functionality and plan to announce further details in the upcoming months. Also during the quarter, we continued our investment in iPerform research, development and sales capabilities for new market expansion. We also hired key data scientists and software engineers to augment our existing developing capabilities. We made and will continue to make these investments as we anticipate significant growth from this business, as the market for data services and analytic applications continues to increase at a rapid pace. We believe both public and commercial opportunities will expand significantly over the next 5 years. We also believe we can capitalize on our technological investments, experience and market leaderships to leverage Iteris into the unique leadership position. Our bullish view stems from a) the government’s increased emphasis on accountability in transportation infrastructure expenditures as substantiated by the new highway bill. And b) increasing commercial market demand for real-time predictive traffic and weather information services. While our near-term focus remains on delivering our software to public agencies, we plan to capitalize on our existing intellectual property and application infrastructure to provide new data and application services for traffic information services in the media, automotive and consumer application markets. We plan to provide iPeMS as both licensed and software-as-a-service offering and expect software revenues from this initiative to maintain the higher margin of structure as compared to our base business. Now, before I provide my closing remarks, we will be delighted to respond to your questions and comments. Operator?

[Operator Instructions] And our first question comes from the line of Jeff Van Sinderen from B. Riley.

Abbas, maybe you can talk a little bit more about Roadway Sensors in terms of whether the Sandy related business was simply pushed out in terms of timing. Do you see that starting to come back now? I mean, eventually that business should come back, right? And then also may be you can talk about the funding issues in California and when you see those starting to free up.

Yes. Thanks, Mr. Van Sinderen. As far as the orders related to Sandy, yes, we do believe that those would come back; it is a matter of time. Our sales force believes that some of those may come back in fact in this quarter fairly quickly. So I don’t believe that the business overall is lost or rather moved to the right. Regarding California funding issues, you may recall that not too long ago the state of California relinquished the existence of the redevelopment agencies whom used to provide a significant funding for capital improvement projects for local agencies. Now many of the agencies are identifying new funds. We now know that the state funding overall is improving so we envision that, that business to be recaptured. In fact we had 1 large order that has been lingering for a few quarters. We just recently learn that that for a magnitude of $0.5 million or so is lined up to be shipped this quarter. So although we remain cautious about the financial health of the state of California, our outlook is such that it should be stable in the upcoming quarters.

Okay, that's good to hear. And then maybe you can update us on the latest you’re seeing in iPerform and what the outlook is for that segment. I guess one of the things I'm wondering is how fast you expect that to grow. And then you mentioned some new developments I think related to iPerform and some of your software. Maybe you can elaborate on that a little bit too?

Sure. So we have been spending a tremendous amount of time and energy investing, exploring the markets particularly the commercial market as of late. While we believe there is a significant demand in the public agency customers that we have and expanding those, we also feel that the IP and the services that we provide are also in very much high demand in the commercial market, in particular media, automotive, and we have been testing, having discussions with many of the agencies and organizations in those markets and believe that that market is expanding tremendously. So that would come in a way of the data services and a way of the analytic applications that we would be providing. And we are presenting as a matter of fact in couple of weeks to our Board of Directors our next fiscal year plan. And I would envision that there are some significant activities and growth that we envision going through that also requires investments going forward that we more likely would have a special session and special announcement on that in the upcoming weeks or next few months to really share that with the investor community. Overall, we feel quite excited about it for several reasons, not just that we see a growth in our core public agency business that we already have, and as I indicated have over $300 million worth of backlog expanding on that, but also pursuing and entering the commercial market would be -- we truly believe that it's a significant growth for us going forward. We envision offering various futures as specific products and services along those lines, but permit me to expand on it on separate announcements. I’d be delighted to discuss it more at that time.

Okay, great. And then also I'm just looking at your backlog and it's fairly sizable. When do you think that we’ll start to really see a ramp in the systems revenue from the new Federal Highway Bill? I know there’s somewhat of a lag there and sometimes contracts are subject to pushouts and so forth. But any sense you can give us on what you think the timing is in terms of when we will see that in revenues?

I would be disappointed if we didn’t begin seeing a ramp up on that let's say starting next quarter and the quarter after, more likely during the summer quarter we should really see those as material impact on our revenue. It has been a bit slower than expected, but that is not a total surprise to us in a way that that particular funding has been working over the years.

Okay. And then you also mentioned I think $280 million total of I guess $80 million contract when I think you said 5-year contracts, just wondering if you can talk more about that, and I'm wondering how much of that $80 million would it be feasible or do you think is feasible for you to have a shot at winning?

Sure. We have a shot of winning to hopefully all of it. Although we have to compete with the handful of others, we are already seeing task-orders coming in. And so I would envision that again in the upcoming quarters we see the impact of that revenue. We put together a very strong team and competed for that work with many other entities and we feel very good about our chances of getting a significant amount of that work.

Okay, good. So overall let me ask you, so when you think about your business on sort of a consolidated basis over the next 12 months to 18 months, what do you think is a reasonable revenue growth rate to contemplate at this point? And then also maybe you can just touch on how you would see gross margins as the next few quarters progress and then expense levels as well?

Sure. So we typically don't provide guidance, but I could share this with you that with everything that is going on and things ramping up with the influence of iPerform, I would envision that as we move forward our annual growth should certainly be in the double-digit and even get healthier as we go forward. In the way of margins, as we kick in more of a software-based activities the margins should improve. As far as the cost basis, one of the good things that is happening this program that we have had operational excellence of Iteris is that we are able to leverage quite a bit of infrastructure. So I don’t see at all for example the G&A as a percentage of sales ramping up to the extent that the sales growth we would be experiencing year-over-year, if you know what I mean.

Sure.

So you could leverage that quite a bit, which means that we would be expecting expanded operating income as a percentage of sales. Of course we will be discussing our expanded investment in iPerform but I would envision that much of this expansion would not have a significant adverse impact on our overall operating income and that I would expect our overall operating income certainly not going into negative in foreseeable future but rather as we go forward in the let’s say year 2 and beyond they’re significantly expanding.

And our next question comes from the line of William Myers [ph] from Miller Asset Management [ph].

Do you believe that there was any impact from the fiscal cliff fiasco over the last quarter or did you not see anything from that?

Mr. Myers, I have a tough time really speculating and quantifying the kind of impact. It is conceivable that some of the orders, contractors or perhaps agencies are wondering about their budgetary issues. Whenever we have those financial crises, if you will, I personally got a belief that there is some impacts although like I said would be very hard to quantify. The good news is that we are seeing a significant ramp up, I've mentioned 41% in January year-over-year bookings, I mean that’s quite encouraging, which tells me that, that more likely was an anomaly and we ought to be able to resume our shipments the way we expected.

Okay, good. And the only other question I had was on labor cost, did you see any increase in your labor cost in 2012 and would you anticipate any increases in 2013?

Nominal increase, the cost of living raises that we get plus some hirings that we have done. So going forward, I would envision that by and large the majority of the labor additional cost would be attributed to the software engineers, scientists and alike that we would be hiring. I would envision minimal in the G&A, but perhaps also some in sales and marketing so that would be the extra cost, and we haven't really finalized our annual plan, it will be done in couple of weeks, and I'll be happy to share some more on that at the next call as we go forward. But I don't see that as a significant increase though.

[Operator Instructions] And our next question comes from the line of Chris Biles from CJB Capital Management.

I have a couple of questions, the first of which on the $20 million in cash, can you talk about potential acquisition targets or investments or sort of use of that current balance as it relates to growth or opportunities you might be seeing?

Yes, Mr. Biles. Of course as far as the acquisition and we have been mentioning this in the previous call as well, we are in the acquisition mode identifying targets, looking at companies and firms that specifically could enhance our technologies. We are looking at the firms that have an IP that could be very helpful for us particularly in the software based activities that we are doing. So absolutely that's one of our key strategic opportunities that we are pursuing.

Okay. Speaking of opportunities or acquisitions, I noticed that on December 28, FLIR Systems acquired Traficon out of Belgium for what appears to be $46 million, do you have any idea of what revenue or multiple to revenue they paid, and do you consider or did you consider Traficon a direct competitor or were you seeing them in markets in Europe or anywhere else?

Yes, so I response to the latter part. Yes, we see Traficon as a competitor and they not only have been strong in Europe, but also here in U.S. they have been selling quite a bit of their products, and we certainly took a note of that acquisition. I would just speculate that it was probably in round numbers 2x sales although we don't have any direct access to the revenues. This is just our pure speculation if you will. And we see that as a positive thing in our industry, I think it stems from FLIR’s commitment to the traffic management market and they have been and will be a strong player in this market and we of course compete with them.

Okay. Another date from the past that I would like a sort of checkup on, on May 22 you announced collaboration with INRIX, and INRIX seems to be in the news quite a bit of late. Can you elaborate on the nature of that collaboration or how things are going?

Sure. We worked together on certain agencies that require data from INRIX. We worked with them to make sure that their data and analytics that applications that we provide could be well integrated and watch. Example of that collaboration is to the Virginia where we are providing traveler information and they have purchased data from INRIX. We also not only collaborate with INRIX, but we envision also to compete with them as INRIX has been very strong in data, in make the data, providing data. We see them now some of their announcements that they have had is that we're moving into analytics and applications and we are conversely order strength has always been in analytics and its application the data price is coming down, and so we are planning to penetrate into that market. So I would envision that at times we would be competing; at times we would be collaborating. And again this all stems from the health and anticipated significant growth in this particular market.

Okay. You also announced earlier on the call or in the press release a buyback of approximately 390,000 shares. Can you give me a number on what might be remaining dollar wise on the $3 million buyback you announced back in the fall?

Yes, I let Jim to expand upon that.

Yes, so the number in the release and the number that I call it almost $2.1 million that was a cumulative number on both plans. So without having the number in front of me for the second plan there's probably roughly in the neighborhood of $2 million remaining.

$2 million remaining?

In the neighborhood. Subsequent to the December quarter, we have continued to repurchase through a 10b5-1 plan as well.

Okay. My last question and I’ll hop out of the way. I'm just curious how the Board and how management is discussing valuation of the company when you've got a company like Traficon being acquired for what appears to be in your words approximately 2x revenues and you traded 65% on an EB to sales basis. There seems to be some sort of disconnect in the marketplace. Can you comment on that?

Sure. We are all very much concur with you with that observation and it's quite obvious that if you're doing everything you can in various fronts to really accelerate our growth and doing all the right things, so that the market would notice to be able to give us the proper valuation. I know it is easier said than done, but that is an area that we focus and discuss of course quite a bit.

And at this time, I'm showing no further questions in my queue. I would like to turn the conference back over to Mr. Mohaddes for closing comments.

In closing, we continue to believe Iteris is solidly positioned to go after the intelligent traffic management market due to our focus on its specific segments within this market we believe are growing much faster than the traffic industry as a whole. These include Traveler Information 511 and iPerform, both of which involved application of technology to deliver intelligent actionable traffic information to traffic management operators and the traveling public. As we continue to deliver technology-based products and software solutions to the marketplace like Abacus and iPeMS we would expect our overall growth margins to gradually improve. We will also remain optimistic in our acquisition of a strategy and plan to continue to look to acquire companies that either enhance our IP or position us in the new geographic location. We appreciate everyone's support and thoughtful questions. And we look forward to updating you again on our continued progress. Thank you, and Michaela.

Thank you. This concludes today's call. Thank you, ladies and gentlemen for joining us for our presentation. You may now disconnect.