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+related party transactions between the Company and
+Mr. Mehney. Wolverine purchases promotional materials from
+a company which is one-third owned by one of
+Mr. Mehney’s sons, but the total annual purchases fall
+substantially below the annual $1,000,000 threshold.
+Mr. O’Donovan is not independent because he was the
+Company’s CEO within the last three years. Mr. Krueger
+is not independent because he currently is the Company’s
+CEO and President. Mr. Grimoldi is not independent because
+he is the Chairman and 35% owner of a company that made payments
+to Wolverine in excess of $1,000,000 per year in the last three
+years.
+Independent directors continue to represent a substantial
+majority (more than 70%) of the Board. These directors meet by
+themselves periodically each year. All of the Board’s
+committees are comprised entirely of independent directors. The
+Board believes that this structure ensures that independent
+directors provide meaningful and effective oversight of the
+Company’s management.
+13
+Table of Contents 
+Board
+Leadership 
+The Board of Directors has the following leadership structure:
+Position 
+Person 
+Role
+in Board Leadership 
+Independent
+Lead Director 
+David T. Kollat
+Since 1993, the Board has operated with an independent Lead
+Director who is selected by the independent directors. The

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+related person transactions policy, as described below.
+Related Person
+Transactions Policy 
+Wolverine’s Board adopted written policies and procedures
+regarding related person transactions. They require the
+Governance Committee to review and either approve or disapprove
+the Company entering into
+55
+Table of Contents 
+any Interested Transactions (defined below). If advance approval
+is not feasible, then the Governance Committee must review and
+ratify the Interested Transaction at its next meeting.
+Interested 
+Transaction 
+Any transaction, arrangement or relationship or series of
+similar transactions, arrangements or relationships (including
+any indebtedness or guarantee of indebtedness) in which:
+(1)
+the aggregate amount involved is or is expected to exceed
+$100,000 since the beginning of Wolverine’s last completed
+fiscal year;
+(2)
+Wolverine is a participant; and
+(3)
+any Related Person (defined below) has or will have a direct or
+indirect interest (other than solely as a result of being a
+director or less than ten percent beneficial owner of another
+entity). 
+Related Person 
+Any:
+(a)
+person who is or was at any point during the last fiscal year
+for which Wolverine filed a Form 10-K and proxy statement, an
+executive officer, director or nominee for election as a
+director;
+(b)
+greater than five percent beneficial owner of Wolverine’s
+common stock; or
+(c)
+immediate family
+member * 
+of any of the foregoing. 
+*
+Immediate family member includes a
+person’s spouse, parents, stepparents, children,
+stepchildren, siblings, mothers- and
+fathers-in-law, 
+sons- and
+daughters-in-law, 
+and brothers- and
+sisters-in-law 
+and anyone residing in such person’s home (other than a
+tenant or employee).
+The Governance Committee considers whether the Interested
+Transaction is on terms no less favorable than terms generally
+available to an unaffiliated third-party under the same or
+similar circumstances, the extent of the Related Person’s
+interest in the transaction, and other factors that it deems
+relevant. No director participates in any discussion or approval
+of an Interested Transaction for which he or she is a Related
+Person, except to provide all material information to the
+Governance Committee.
+The following Interested Transactions are pre-approved under the
+policies and procedures:
+(a) 
+any transaction with another company where a Related
+Person’s only relationship is as an employee, director or
+beneficial owner of less than ten percent of that company’s
+shares, if the aggregate amount involved does not exceed the
+greater of $1,000,000, or two percent of that company’s
+total revenues.
+(b) 
+any charitable contribution by Wolverine to a charitable
+organization where a Related Person is an employee, if the
+aggregate amount involved does not exceed the lesser of
+$100,000, or two percent of the charitable organization’s
+total annual receipts.
+ADDITIONAL
+INFORMATION 
+Stockholders
+List 
+A list of stockholders entitled to vote at the meeting will be
+available for review by Wolverine stockholders at the office of
+Kenneth A. Grady, Secretary and General Counsel of Wolverine,
+located at 9341 Courtland Drive, N.E., Rockford, Michigan 49351,
+during ordinary business hours for the
+10-day 
+period before the meeting.
+56
+Table of Contents 
+Director and
+Officer Indemnification 
+The Company indemnifies its directors and NEOs to the fullest
+extent permitted by law so that they will be free from undue
+concern about personal liability in connection with their
+service to the Company.

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+Certain Relationships and Related Transactions 
+During 2000, Wolverine engaged J. Walter Thompson, an
+international advertising firm, to perform public relations and
+marketing services. Wolverine paid $200,214 in fees and expenses
+to J. Walter Thompson. Ms. Joan Parker, a director of
+Wolverine, is a Senior Partner with J. Walter Thompson.
+Wolverine anticipates continuing its relationship with
+J. Walter Thompson during the current year.
+Wolverine has entered into agreements with Grimoldi, S.A., an
+Argentinean corporation of which Mr. Alberto Grimoldi, a
+director of Wolverine, is a large shareholder, granting to
+Grimoldi, S.A. the exclusive rights to distribute and sell
+footwear products in Argentina under the Hush Puppies®,
+Wolverine®, Caterpillar®, Harley-Davidson®,
+and Merrell® trademarks. Wolverine and Grimoldi,
+S.A. have executed a similar agreement that grants similar
+rights with respect to Brazil, which was subsequently assigned
+to a wholly-owned subsidiary of Grimoldi, S.A. Under these
+agreements, Grimoldi, S.A., or its subsidiary, pays Wolverine
+royalties and certain sublicense fees based on sales or
+purchases of footwear products in Argentina and Brazil.
+Under the agreements described above, Grimoldi, S.A. was
+obligated to pay to Wolverine royalties, sublicense fees and
+service fees in 2000 totaling $1,144,463. These agreements were
+made under terms and conditions customary for other
+international licensees and distributors, and all payments due
+under these agreements were invoiced or paid in accordance with
+Wolverine’s customary terms and practices.
+In the ordinary course of their business, Wolverine and its
+subsidiaries sell footwear for resale, samples, components of
+footwear products (such as leather and shoe soles), advertising
+materials and miscellaneous items to licensees, distributors and
+customers. In 2000, purchases of such items by Grimoldi, S.A.
+totaled $402,157 (including any applicable sublicense fees for
+products containing licensed proprietary technology). All of
+these purchases were made pursuant to Wolverine’s customary
+trade terms and were invoiced or paid in accordance with
+Wolverine’s customary payment terms and schedules
+applicable to all licensees, distributors and customers.
+All of the transactions described above occurred pursuant to
+continuing contractual arrangements between Wolverine and
+Grimoldi, S.A. Wolverine expects similar transactions to occur
+between Grimoldi, S.A. and Wolverine and its subsidiaries during
+2001.
+Compensation Committee Interlocks and Insider
+Participation 
+Wolverine’s Compensation Committee consists of
+Donald V. Fites, Phillip D. Matthews, David P.
+Mehney, Elizabeth A. Sanders, and Paul D. Schrage.
+While Mr. Matthews was not at any time an employee of
+Wolverine or its subsidiaries, he served as Chairman of the
+Board of Wolverine from 1993 until 1996. Daniel T. Carroll,
+a current director of Wolverine, was Chairman of
+Wolverine’s Compensation Committee until April 13,
+2000. Mr. Carroll no longer serves on Wolverine’s
+Compensation Committee. Mr. Carroll is also Chairman of the
+Board of Comshare, Inc. and receives compensation from Comshare
+in that capacity. Geoffrey B. Bloom, Wolverine’s
+Chairman of the Board and former Chief Executive Officer, is a
+director of Comshare and serves as Chairman of Comshare’s
+Compensation Committee.

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+Certain Relationships and Related
+Transactions 
+During 2001, Wolverine engaged J. Walter
+Thompson, an international advertising firm, to perform public
+relations and marketing services. Wolverine paid $258,543 in
+fees and expenses to J. Walter Thompson. Ms. Joan
+Parker, a director of Wolverine, is a Senior Partner with
+J. Walter Thompson. Wolverine anticipates continuing its
+relationship with J. Walter Thompson during the current
+year.
+Wolverine has entered into agreements with
+Grimoldi, S.A., an Argentinean corporation of which
+Mr. Alberto Grimoldi, a director of Wolverine, is a large
+shareholder, granting to Grimoldi, S.A. the exclusive rights to
+distribute and sell footwear products in Argentina under the
+Hush Puppies® , Caterpillar® and
+Merrell® trademarks. Wolverine and Grimoldi, S.A.
+executed a similar agreement that grants rights with respect to
+Brazil, which was subsequently terminated by mutual agreement in
+fiscal 2001. Under these agreements, Grimoldi, S.A., or its
+subsidiary, pays Wolverine royalties and certain sublicense fees
+based on sales or purchases of footwear products in Argentina
+and Brazil.
+Under the agreements described above, Grimoldi,
+S.A. was obligated to pay to Wolverine royalties, sublicense
+fees and service fees in 2001 totaling $938,500. These
+agreements were made under terms and conditions customary for
+other international licensees and distributors, and all payments
+due under these agreements were invoiced or paid in accordance
+with Wolverine’s customary terms and practices.
+In the ordinary course of their business,
+Wolverine and its subsidiaries sell footwear for resale,
+samples, components of footwear products (such as leather and
+shoe soles), advertising materials and miscellaneous items to
+licensees, distributors and customers. In 2001, purchases of
+such items by Grimoldi, S.A. totaled $443,583 (including any
+applicable sublicense fees for products containing licensed
+proprietary technology). All of these purchases were made
+pursuant to Wolverine’s customary trade terms and were
+invoiced or paid in accordance with Wolverine’s customary
+payment terms and schedules applicable to all licensees,
+distributors and customers.
+All of the transactions described above occurred
+pursuant to continuing contractual arrangements
+38
+Table of Contents 
+between Wolverine and Grimoldi, S.A. Wolverine
+expects similar transactions to occur between Grimoldi, S.A. and
+Wolverine and its subsidiaries during 2002.
+Compensation Committee Interlocks and Insider
+Participation 
+Wolverine’s Compensation Committee consists
+of Donald V. Fites, Phillip D. Matthews, David P.
+Mehney, Elizabeth A. Sanders, and Paul D. Schrage.
+While Mr. Matthews was not at any time an employee of
+Wolverine or its subsidiaries, he served as Chairman of the
+Board of Wolverine from 1993 until 1996.

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+Certain Relationships and Related
+Transactions 
+During 2002, Wolverine engaged J. Walter
+Thompson, an international advertising firm, to perform public
+relations and marketing services. Wolverine paid $154,081 in
+fees and expenses to J. Walter Thompson. Ms. Joan
+Parker, a director of Wolverine, was a Senior Partner with
+J. Walter Thompson until April 2002. Wolverine does not
+anticipate engaging J. Walter Thompson to provide services
+in 2003.
+Wolverine has entered into an agreement with
+Grimoldi, S.A., an Argentinean corporation of which
+Mr. Alberto Grimoldi, a director of Wolverine, is a
+significant shareholder, granting to Grimoldi, S.A. the
+exclusive rights to distribute and sell footwear products in
+Argentina under the Hush Puppies ®,
+Caterpillar ® and Merrell ® brand names.
+Under this agreement, Grimoldi, S.A., or its subsidiary, pays
+Wolverine royalties and certain sublicense fees based on sales
+or purchases of footwear products in Argentina.
+Under the agreement described above, Grimoldi,
+S.A. was obligated to pay to Wolverine royalties, sublicense
+fees and service fees in 2002 totaling $341,494.
+In the ordinary course of business, Wolverine and
+its subsidiaries sell footwear for resale, samples, components
+of footwear products (such as leather and shoe soles),
+advertising materials and miscellaneous items to licensees,
+distributors and customers. In 2002, purchases of such items by
+Grimoldi, S.A. totaled $95,202 (including any applicable
+sublicense fees for products containing licensed proprietary
+technology).
+All of the transactions described above occurred
+pursuant to continuing contractual arrangements between
+Wolverine and Grimoldi, S.A. Wolverine expects similar
+transactions to occur between Grimoldi, S.A. and Wolverine and
+its subsidiaries during 2003.
+During 2002, Wolverine and Grimoldi, S.A. agreed
+to payment terms with respect to certain trade accounts owed by
+Grimoldi, S.A. to Wolverine. Grimoldi, S.A. executed a
+three-year note payable to Wolverine in the face amount of
+$635,761 which bears interest at 10 percent per annum. As
+of March 3, 2003, the aggregate principal balance of the
+note was $605,202.
+Compensation Committee Interlocks and Insider
+Participation 
+For 2002, Wolverine’s Compensation Committee
+consisted of Donald V. Fites, Phillip D. Matthews,
+David P. Mehney and Paul D. Schrage. While
+Mr. Matthews was not at any time an employee of Wolverine
+or its subsidiaries, he served as Chairman of the Board of
+Wolverine from 1993 until 1996. Effective following the
+February 2003 meeting of the Board of Directors,
+Mr. Matthews resigned from the Compensation Committee and
+was appointed to the Audit Committee.

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+Certain Relationships and Related
+Transactions 
+Wolverine has entered into agreements with
+Grimoldi, S.A., an Argentinean corporation of which
+Mr. Alberto Grimoldi, a director of Wolverine, is chairman
+and a significant shareholder, granting to Grimoldi, S.A. the
+exclusive rights to distribute and sell footwear products in
+Argentina under the Hush Puppies® ,
+Caterpillar® and Merrell® brand names.
+Under these agreements, Grimoldi, S.A. or its subsidiary pays
+Wolverine royalties and certain sublicense fees based on sales
+or purchases of footwear products in Argentina.
+Under the agreements described above, Grimoldi,
+S.A. was obligated to pay to Wolverine royalties, sublicense
+fees and service fees in 2003 totaling $650,275.
+In the ordinary course of business, Wolverine and
+its subsidiaries sell footwear for resale, samples, components
+of footwear products (such as leather and shoe soles),
+advertising materials and miscellaneous items to licensees,
+distributors and customers. In 2003, purchases of such items by
+Grimoldi, S.A. totaled $239,750 (including any applicable
+sublicense fees for products containing licensed proprietary
+technology).
+All of the transactions described above occurred
+pursuant to continuing contractual arrangements between
+Wolverine and Grimoldi, S.A. Wolverine expects similar
+transactions to occur between Grimoldi, S.A. and Wolverine and
+its subsidiaries during 2004.
+During 2002, Wolverine and Grimoldi, S.A. agreed
+to payment terms with respect to certain trade accounts owed by
+Grimoldi, S.A. to Wolverine. Grimoldi, S.A. executed a
+three-year note payable to Wolverine in the face amount of
+$635,761 which bears interest at 10 percent per annum. As
+of February 1, 2004, the aggregate principal balance of the
+note was $461,231. The highest principal balance of the note
+between December 29, 2002 and February 1, 2004 was
+$635,761.
+Compensation Committee Interlocks and Insider
+Participation 
+Mr. Matthews was a member of
+Wolverine’s Compensation Committee until February 2003.
+While Mr. Matthews was not at any time an employee of
+Wolverine or its subsidiaries, he served as Chairman of the
+Board of Wolverine from 1993 until 1996.
+27
+Table of Contents

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+Certain Relationships and Related
+Transactions 
+Wolverine has entered into agreements with
+Grimoldi, S.A., an Argentinean corporation of which
+Mr. Alberto Grimoldi, a director of Wolverine, is chairman
+and a significant shareholder, granting to Grimoldi, S.A. the
+exclusive rights to distribute and sell footwear products in
+Argentina under the Hush Puppies® ,
+Caterpillar® and Merrell® brand names.
+Under these agreements, Grimoldi, S.A. or its subsidiary pays
+Wolverine royalties and certain sublicense fees based on sales
+or purchases of footwear products in Argentina.
+43
+Table of Contents 
+Under the agreements described above, Grimoldi,
+S.A. was obligated to pay to Wolverine royalties, sublicense
+fees and service fees relating to 2004 totaling $1,013,368.
+In the ordinary course of business, Wolverine and
+its subsidiaries sell footwear for resale, samples, components
+of footwear products (such as leather and shoe soles),
+advertising materials and miscellaneous items to licensees,
+distributors and customers. In 2004, purchases of such items by
+Grimoldi, S.A. totaled $136,019 (including any applicable
+sublicense fees for products containing licensed proprietary
+technology).
+All of the transactions described above occurred
+pursuant to continuing contractual arrangements between
+Wolverine and Grimoldi, S.A. Wolverine expects similar
+transactions to occur between Grimoldi, S.A. and Wolverine and
+its subsidiaries during 2005.
+During 2002, Wolverine and Grimoldi, S.A. agreed
+to payment terms with respect to certain trade accounts owed by
+Grimoldi, S.A. to Wolverine. Grimoldi, S.A. executed a
+three-year note payable to Wolverine in the face amount of
+$635,761 which bears interest at 10 percent per annum. As
+of January 1, 2005, the aggregate principal balance of the
+note was $233,339. The highest principal balance of the note
+between January 4, 2004 and January 1, 2005 was
+$461,231.
+In the ordinary course of its business, Wolverine
+purchases promotional merchandise for use in connection with the
+sale of its products. In 2004, Wolverine purchased promotional
+merchandise from Bullseye Group, LLC totaling $373,459. One
+third of Bullseye Group, LLC is owned by Daniel Mehney, the son
+of David P. Mehney, a director of Wolverine. Wolverine
+anticipates continuing to purchase promotional materials from
+Bullseye Group, LLC in 2005.

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+Certain Relationships and Related
+Transactions 
+Wolverine has entered into agreements with
+Grimoldi, S.A., an Argentinean corporation of which
+Mr. Alberto Grimoldi, a director of Wolverine, is chairman
+and a significant shareholder, granting to Grimoldi, S.A. the
+exclusive rights to distribute and sell footwear products in
+Argentina under the Hush
+Puppies ® ,
+Caterpillar ® 
+and
+Merrell ® 
+brand names. Under these agreements, Grimoldi, S.A. or its
+subsidiary pays Wolverine royalties and certain sublicense fees
+based on sales or purchases of footwear products in Argentina.
+Under the agreements described above, Grimoldi,
+S.A. was obligated to pay to Wolverine royalties, sublicense
+fees and service fees relating to 2005 totaling $1,439,938.
+In the ordinary course of business, Wolverine and
+its subsidiaries sell footwear for resale, samples, components
+of footwear products (such as leather and shoe soles),
+advertising materials and miscellaneous items to licensees,
+distributors and customers. In 2005, purchases of such items by
+Grimoldi, S.A. totaled $194,367 (including any applicable
+sublicense fees for products containing licensed proprietary
+technology).
+All of the transactions described above occurred
+pursuant to continuing contractual arrangements between
+Wolverine and Grimoldi, S.A. Wolverine expects similar
+transactions to occur between Grimoldi, S.A. and Wolverine and
+its subsidiaries during 2006.
+During 2002, Wolverine and Grimoldi, S.A. agreed
+to payment terms with respect to certain trade accounts owed by
+Grimoldi, S.A. to Wolverine. Grimoldi, S.A. executed a
+three-year note payable to Wolverine in the face amount of
+$635,761 which bears interest at 10 percent per annum. As
+of December 31, 2005, the aggregate principal balance of
+the note was $40,520. The note was paid in full in January 2006.
+The highest principal balance of the note between
+January 1, 2005 and December 31, 2005 was $233,339.
+In the ordinary course of its business, Wolverine
+purchases promotional merchandise for use in connection with the
+sale of its products. In 2005, Wolverine purchased promotional
+merchandise from Bullseye Group, LLC totaling $402,500. One
+third of Bullseye Group, LLC is owned by Daniel Mehney, the son
+of David P. Mehney, a director of Wolverine. Wolverine
+anticipates purchasing promotional materials from Bullseye
+Group, LLC in 2006.

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+related person transactions. Such policies and procedures
+require the Governance Committee to review and either approve or
+disapprove of entry into any Interested Transactions (defined
+below). If advance approval of the Interested Transaction is not
+feasible, then it must be considered and, if the Governance
+Committee determines it to be appropriate, ratified at the
+Governance Committee’s next meeting.
+47
+An Interested Transaction is any transaction, arrangement or
+relationship or series of similar transactions, arrangements or
+relationships (including any indebtedness or guarantee of
+indebtedness) in which (1) the aggregate amount involved
+will or may be expected to exceed $100,000 in any calendar year,
+(2) Wolverine is a participant, and (3) any Related
+Person (defined below) has or will have a direct or indirect
+interest (other than solely as a result of being a director or
+less than ten percent beneficial owner of another entity). A
+Related Person is, any (a) person who is or was at any
+point during the last fiscal year for which Wolverine filed a
+Form 10-K 
+and proxy statement, an executive officer, director or nominee
+for election as a director, (b) greater than five percent
+beneficial owner of Wolverine’s common stock, or
+(c) immediate family member of any of the foregoing.
+Immediate family member includes a person’s spouse,
+parents, stepparents, children, stepchildren, siblings, mothers-
+and
+fathers-in-law, 
+sons- and
+daughters-in-law, 
+and brothers- and
+sisters-in-law 
+and anyone residing in such person’s home (other than a
+tenant or employee).
+In determining whether to approve or ratify an Interested
+Transaction, the Governance Committee will take into account
+whether the Interested Transaction is on terms no less favorable
+than terms generally available to an unaffiliated third-party
+under the same or similar circumstances, the extent of the
+Related Person’s interest in the transaction and other
+factors that it deems relevant. No director shall participate in
+any discussion or approval of an Interested Transaction for
+which he or she is a Related Person, except to provide all
+material information to the Governance Committee. The following
+Interested Transactions are pre-approved under the policies and
+procedures:
+• 
+any transaction with another company at which a Related
+Person’s only relationship is as an employee, director or
+beneficial owner of less than ten percent of that company’s
+shares, if the aggregate amount involved does not exceed the
+greater of $1,000,000, or two percent of that company’s
+total revenues.
+• 
+any charitable contribution by Wolverine to a charitable
+organization where a Related Person is an employee, if the
+aggregate amount involved does not exceed the lesser of
+$100,000, or two percent of the charitable organization’s
+total annual receipts.
+Wolverine’s policies and procedures for related party
+transactions were adopted in December 2006. All of the
+transactions described above were previously considered by the
+Governance Committee under Wolverine’s Director
+Independence Standards.

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+“Certain Relationships and Related Transactions.”
+7
+Table of Contents 
+Stock
+Ownership Requirements for Directors and Executive
+Officers 
+For many years, the Board has believed that directors and
+management should have a significant financial stake in
+Wolverine to align their interests with those of the
+stockholders. For that reason, several years ago the Board
+adopted formal requirements that directors and executive
+management own specified amounts of Wolverine stock (including
+ownership credit for stock units allocated to non-employee
+directors under the Deferred Compensation Plan) within five
+years of their respective election to the Board or appointment
+as a member of executive management. The ownership requirements
+are as follows: (i) for directors, five times the current
+Board retainer, (ii) for the Chief Executive Officer, five
+times base salary, (iii) for other executive officers,
+between two and three times base salaries, and (iv) for
+other executive management, between one and two times base
+salaries.
+Code of
+Conduct & Compliance 
+For years, Wolverine and its employees and directors have
+followed an extensive Code of Conduct & Compliance
+(“Code”). This comprehensive Code establishes basic
+guidelines to help employees and directors comply with
+applicable legal requirements and sets forth Wolverine’s
+expectations regarding business ethics, integrity, honesty,
+fairness and keeping commitments. The Code contains
+Wolverine’s principles and procedures regarding conflicts
+of interest, corporate opportunities, confidentiality, fair
+dealing, protection and proper use of Wolverine’s assets,
+compliance with laws, rules and regulations, engagement criteria
+for Wolverine’s trading partners, “whistle
+blower” protection provisions, expectations regarding the
+integrity of books and records, and guidelines and procedures
+for many other subjects. Employees are surveyed annually to
+identify any areas of noncompliance with the Code, and the
+results of this survey are reported to the Board.
+Accounting
+and Finance Code of Ethics 
+The Board has adopted an Accounting and Finance Code of Ethics
+(“Finance Ethics Code”). This is an ethics code
+focused on the financial reporting process and is intended to
+protect the interests of all of Wolverine’s constituents,
+including stockholders, employees, customers and the communities
+in which Wolverine conducts business. Many of the basic tenets
+of the Finance Ethics Code have been incorporated for many years
+in the Code. The Finance Ethics Code is applicable to
+Wolverine’s Chief Executive Officer, Chief Financial
+Officer and Corporate Controller and sets forth specific rules
+of conduct and expectations regarding the financial reporting
+process, protection of Wolverine’s assets, compliance with
+rules and regulations and honest and ethical conduct in
+connection with the financial reporting process and related
+disclosures. The Finance Ethics Code and the Code are available
+on the Corporate Governance section of the Investors section of
+Wolverine’s website at www.wolverineworldwide.com ,
+where Wolverine will post any waiver of these codes for
+directors or executive officers.
+Board
+Committee Charters 
+The Board has organized and formed three committees, the Audit
+Committee, the Compensation Committee and the Governance
+Committee. The Board has approved a committee charter for each
+committee that contains basic principles regarding the
+committee’s organization, purpose, authority and
+responsibilities. The performance of each committee is reviewed
+annually by committee members and the Board.
+Leadership 
+Since 1993, the Board has operated with an independent Lead
+Director, who is selected by the independent directors. The
+duties of the independent Lead Director include:
+(a) working closely with the Chairman regarding the agenda
+and scheduling for Board and committee meetings;
+(b) overseeing information sent to the Board;
+(c) presiding over executive sessions; (d) serving as
+a liaison between the Chairman and the independent Directors;
+(e) presiding over Board meetings in the absence of the
+Chairman; and (f) being available for consultation and
+communications with stockholders as appropriate.
+Attendance 
+The Board prides itself on its ability to recruit and retain
+directors who have a diversity of experience, who have the
+highest personal and professional integrity, who have
+demonstrated exceptional ability and judgment and who are
+effective (in conjunction with the other members of the Board)
+in collectively serving the long-term interests of the
+stockholders. Board and committee attendance is central to the
+proper functioning of the Board of Directors and is a priority.
+Directors are expected to make every effort to attend every
+Board meeting. Directors are also expected to attend the Annual
+Meeting of Stockholders in person. All 11 then-current directors
+attended the 2007 annual meeting.
+8
+Table of Contents 
+Communication
+with the Board 
+Stockholders and interested parties may communicate with members
+of Wolverine’s Board of Directors through various links
+provided on the Corporate Governance section of the Investors
+section of Wolverine’s website at
+www.wolverineworldwide.com or by sending correspondence
+to the Board, a specific Board committee or a Board member
+c/o General 
+Counsel, Wolverine World Wide, Inc., 9341 Courtland Drive, N.E.,
+Rockford, Michigan 49351. Any communications submitted by any of
+the above means (or the means described below) are received by
+Wolverine’s General Counsel and forwarded to the
+appropriate person or persons. Complaints or concerns regarding
+Wolverine’s financial statements and accounting, auditing,
+internal control and reporting practices can be reported to the
+audit committee (including anonymous and confidential
+submissions) by sending an
+e-mail to
+financialconcerns@wwwinc.com or by writing to the audit
+committee
+c/o the 
+General Counsel at the above address.
+Board and
+Company Culture 
+Wolverine’s comprehensive governance guidelines and
+principles are coupled with a robust, open and effective Board
+environment that promotes respect, trust and candor, fosters a
+culture of open dissent and permits each director to express
+opinions and contribute to the Board process. Directors are
+expected to have unrestricted access to management and any
+company information they desire. The participation of Board
+members and the open exchange of opinions is further encouraged
+at the Board committee level through the periodic rotation of
+Board members among its standing committees. This open and
+candid operating environment is shared by management and the
+Board and is essential to fully realize the benefits of
+Wolverine’s formal governance guidelines, principles,
+charters and policies.
+9
+Table of Contents 
+Ownership
+of Wolverine Stock 
+Five
+Percent Stockholders 
+The following table sets forth information concerning the number
+of shares of Wolverine stock held by each entity known to
+Wolverine to be the beneficial owner of more than five percent
+of Wolverine’s outstanding shares of common stock:
+Five Percent Stockholders 
+Amount and Nature of Beneficial 
+Ownership of Common Stock 
+Shared Voting 
+Total 
+Name and Address 
+Sole Voting 
+Sole Dispositive 
+or Dispositive 
+Beneficial 
+Percent 
+of Beneficial Owner 
+Power 
+Power 
+Power 
+Ownership 
+of Class 
+Barclays Global Investors, NA(1)
+2,326,764
+3,034,322
+0
+3,034,322
+5.8
+45 Fremont Street 
+San Francisco, CA 94105
+Franklin Resources, Inc.(2)
+3,092,239
+3,092,239
+0
+3,092,239
+5.9
+One Franklin Parkway 
+San Mateo, CA 94403
+(1) 
+Based on information set forth in Schedule 13G filed
+February 5, 2008. The Schedule 13G indicates that
+Barclays Global Investors, NA and other related entities (some
+of which are investment advisors or banks) beneficially own, in
+the aggregate, 3,034,322 shares of Wolverine common stock. 
+(2) 
+Based on information set forth in Schedule 13G filed
+February 8, 2008. The Schedule 13G indicates that
+Franklin Resources, Inc. and one or more open- or close-end
+investment companies and other managed accounts that are
+investment management clients of investment managers that are
+direct and indirect subsidiaries of Franklin Resources, Inc.
+beneficially own, in the aggregate, 3,092,239. 
+10
+Table of Contents 
+Stock
+Ownership By Management 
+The following table sets forth the number of shares of common
+stock beneficially owned as of March 3, 2008, by each of
+Wolverine’s directors and nominees for director, each of
+the named executive officers and all of Wolverine’s
+directors, nominees for director and executive officers as a
+group. An asterisk in the column for “Percent of
+Class” means the individual beneficially owns less than one
+percent of the common stock:
+Stock Ownership By Management 
+Amount and Nature of Beneficial 
+Ownership of Common Stock(1) 
+Sole Voting 
+Shared Voting 
+Total 
+Name of 
+and Dispositive 
+or Dispositive 
+Stock 
+Beneficial 
+Percent 
+Beneficial Owner 
+Power 
+Power(2) 
+Options(3) 
+Ownership(3) 
+of Class 
+Jeffrey M. Boromisa
+—
+—
+10,736
+10,736
+*
+Kenneth A. Grady
+6,800
+—
+3,034
+9,834
+*
+William K. Gerber
+500
+—
+6,891
+7,391
+*
+Alberto L. Grimoldi
+10,168
+—
+42,784
+52,952
+*
+Stephen L. Gulis, Jr. 
+158,632
+1,890
+254,529
+415,051
+*
+David T. Kollat
+83,934
+—
+56,665
+140,599
+*
+Blake W. Krueger
+234,899
+—
+283,037
+517,936
+1.01
+Brenda J. Lauderback
+5,100
+—
+11,040
+16,140
+*
+Phillip D. Matthews(4)
+34,238
+—
+56,665
+90,903
+*
+David P. Mehney
+50,520
+49,250
+56,665
+156,435
+*
+Timothy J. O’Donovan
+309,510
+125,821
+502,351
+937,682
+1.83
+Nicholas P. Ottenwess
+33,291
+190
+85,961
+119,442
+*
+Shirley D. Peterson
+3,000
+—
+19,603
+22,603
+*
+Michael A. Volkema
+5,000
+—
+14,903
+19,903
+*
+James D. Zwiers
+37,641
+—
+32,842
+70,483
+*
+All directors and executive officers as a group
+980,233
+177,151
+1,437,706
+2,595,090
+5.07
+(1) 
+The numbers of shares stated are based on information provided
+by each person listed and include shares personally owned of
+record and shares that, under applicable regulations, are
+considered to be otherwise beneficially owned. 
+(2) 
+These numbers include shares over which the listed person is
+legally entitled to share voting or dispositive power by reason
+of joint ownership, trust or other contract or property right,
+and shares held by spouses, children or other relatives over
+whom the listed person may have influence by reason of
+relationship. 
+(3) 
+The numbers in the Stock Options column represent shares that
+may be acquired within 60 days after March 3, 2008, by
+the exercise of stock options granted under Wolverine’s
+various stock option plans. These numbers are also included in
+the Total Beneficial Ownership column. 
+(4) 
+Mr. Matthews pledged 34,238 shares of Wolverine common
+stock in connection with a post-paid variable forward sale
+contact entered into on February 15, 2007 with an
+unaffiliated third party buyer. 
+11
+Table of Contents 
+Executive
+Compensation 
+COMPENSATION

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+“Certain Relationships and Related Transactions.”
+7
+Table of Contents 
+Mr. Phillip D. Matthews served as a director in 2008 until
+his retirement as a director in April 2008, and was determined
+to be independent by the Board of Directors in February 2008.
+Our Board of Directors has adopted categorical Independence
+Standards, which are attached as Appendix A to this Proxy
+Statement and which are also available at our website. These
+Independence Standards comply with and, in some areas, exceed
+the director independence standards required by the NYSE. In
+summary, under these standards a director is considered
+independent only if the director and his or her immediate family
+members do not have, and generally have not had in the most
+recent three years, any material relationships with Wolverine,
+its subsidiaries or affiliates (including certain relationships
+with Wolverine’s independent auditors). The standards
+establish thresholds at which such relationships are deemed to
+be not material. In addition, the Board examines on a
+case-by-case 
+basis transactions and relationships that are not of a nature
+addressed by the categorical standards.
+Corporate
+Governance Guidelines 
+The Board has adopted Corporate Governance Guidelines that set
+forth the primary framework of governance principles applicable
+to Wolverine. The Corporate Governance Guidelines outline the
+general duties and functions of the Board and management, and
+set forth general principles regarding Board composition,
+independence, Board meetings and responsibilities, Board
+committees, expectations of directors, annual performance
+evaluations, management succession and ethical expectations.
+Stock
+Ownership Requirements for Directors and Executive
+Officers 
+For many years, the Board has believed that directors and
+management should have a significant financial stake in
+Wolverine to align their interests with those of the
+stockholders. For that reason, several years ago the Board
+adopted formal requirements that directors and executive
+management own specified amounts of Wolverine stock (including
+ownership credit for stock units allocated to non-employee
+directors under the Deferred Compensation Plan) within five
+years of their respective election to the Board or appointment
+as a member of executive management. The ownership requirements
+necessitate holdings of a number of shares (including ownership
+credit for stock units allocated to non-employee directors under
+the Deferred Compensation Plan) of Wolverine stock with a value
+equal to at least (i) for directors, five times the current
+Board retainer, (ii) for the Chief Executive Officer, five
+times base salary, (iii) for other executive officers,
+between two and three times base salaries, and (iv) for
+other executive management, between one and two times base
+salaries.
+Code of
+Conduct & Compliance 
+For years, Wolverine and its employees and directors have
+followed an extensive Code of Conduct & Compliance
+(“Code”). This comprehensive Code establishes basic
+guidelines to help employees and directors comply with
+applicable legal requirements and sets forth Wolverine’s
+expectations regarding business ethics, integrity, honesty and
+fairness. The Code contains Wolverine’s principles and
+procedures regarding conflicts of interest, corporate
+opportunities, confidentiality, fair dealing, protection and
+proper use of Wolverine’s assets, compliance with laws,
+rules and regulations, engagement criteria for Wolverine’s
+trading partners, “whistle blower” protection
+provisions, expectations regarding the integrity of books and
+records, and guidelines and procedures for many other subjects.
+Employees are surveyed annually to identify any areas of
+noncompliance with the Code, and the results of this survey are
+reported to the Board.
+Accounting
+and Finance Code of Ethics 
+The Board has adopted an Accounting and Finance Code of Ethics
+(“Finance Ethics Code”). This is an ethics code
+focused on the financial reporting process and is intended to
+protect the interests of all of Wolverine’s constituents,
+including stockholders, employees, customers and the communities
+in which Wolverine conducts business. Many of the basic tenets
+of the Finance Ethics Code have been incorporated for many years
+in the Code. The Finance Ethics Code is applicable to
+Wolverine’s Chief Executive Officer, Chief Financial
+Officer and Corporate Controller and sets forth specific rules
+of conduct and expectations regarding the financial reporting
+process, protection of Wolverine’s assets, compliance with
+rules and regulations and honest and ethical conduct in
+connection with the financial reporting process and related
+disclosures. The Finance Ethics Code and the Code are available
+on the Corporate Governance section of the Investors section of
+Wolverine’s website at www.wolverineworldwide.com ,
+where Wolverine will post any waiver of or amendment to these
+codes for directors or executive officers.
+Board
+Committee Charters 
+The Board has organized and formed three committees, the Audit
+Committee, the Compensation Committee and the Governance
+Committee. The Board has approved a committee charter for each
+committee that contains
+8
+Table of Contents 
+basic principles regarding the committee’s organization,
+purpose, authority and responsibilities. The performance of each
+committee is reviewed annually by committee members and the
+Board.
+Leadership 
+Since 1993, the Board has operated with an independent Lead
+Director, who is selected by the independent directors. The
+duties of the independent Lead Director include:
+(a) working closely with the Chairman regarding the agenda
+and scheduling for Board and committee meetings;
+(b) overseeing information sent to the Board;
+(c) presiding over executive sessions; (d) serving as
+a liaison between the Chairman and the independent Directors;
+(e) presiding over Board meetings in the absence of the
+Chairman; and (f) being available for consultation and
+communications with stockholders as appropriate.
+Attendance 
+The Board prides itself on its ability to recruit and retain
+directors who have a diversity of experience, who have the
+highest personal and professional integrity, who have
+demonstrated exceptional ability and judgment and who are
+effective (in conjunction with the other members of the Board)
+in collectively serving the long-term interests of the
+stockholders. Board and committee attendance is central to the
+proper functioning of the Board of Directors and is a priority.
+Directors are expected to make every effort to attend every
+Board meeting. Directors are also expected to attend the Annual
+Meeting of Stockholders in person. All then-current directors
+attended the 2008 annual meeting.
+Communication
+with the Board 
+Stockholders and interested parties may communicate with members
+of Wolverine’s Board of Directors through various links
+provided on the Corporate Governance section of the Investors
+section of Wolverine’s website at
+www.wolverineworldwide.com or by sending correspondence
+to the Board, a specific Board committee or a Board member
+c/o General 
+Counsel, Wolverine World Wide, Inc., 9341 Courtland Drive, N.E.,
+Rockford, Michigan 49351. Any communications submitted by any of
+the above means (or the means described below) are received by
+Wolverine’s General Counsel and forwarded to the
+appropriate person or persons. Any suggestions, concerns or
+reports of misconduct at Wolverine or complaints or concerns
+regarding Wolverine’s financial statements and accounting,
+auditing, internal control and reporting practices can be
+reported (including anonymous and confidential submissions) by
+submitting a report on www.WolverineReportLine.com or by
+writing to the audit committee
+c/o the 
+General Counsel at the above address.
+Board and
+Company Culture 
+Wolverine’s comprehensive governance guidelines and
+principles are coupled with a robust, open and effective Board
+environment that promotes respect, trust and candor, fosters a
+culture of open dissent and permits each director to express
+opinions and contribute to the Board process. Directors are
+expected to have unrestricted access to management and any
+company information they desire. The participation of Board
+members and the open exchange of opinions is further encouraged
+at the Board committee level through the periodic rotation of
+Board members among its standing committees. This open and
+candid operating environment is shared by management and the
+Board and is essential to fully realize the benefits of
+Wolverine’s formal governance guidelines, principles,
+charters and policies.
+9
+Table of Contents 
+Non-Employee

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+CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 
+Wolverine Worldwide has entered into agreements with Grimoldi S.A., an Argentinean corporation of which Mr. Alberto L. Grimoldi, a director of Wolverine Worldwide, is chairman and a 35% shareholder. The agreements grant Grimoldi, S.A. the exclusive rights to distribute and sell footwear products in Argentina under the Hush Puppies®, Caterpillar®, and Patagonia® brand names, and footwear and apparel under the Merrell® brand name. Grimoldi S.A. or its subsidiary purchases products, samples, footwear components, advertising materials and miscellaneous items from Wolverine Worldwide or pays Wolverine Worldwide royalties and certain sublicense fees based on sales or purchases of products in Argentina. Grimoldi S.A. was obligated to pay Wolverine Worldwide purchase prices, royalties, sublicense fees, service fees and interest relating to purchases made or royalties and fees incurred in fiscal year 2013 totaling $5,660,001. All of the transactions described above occurred pursuant to continuing contractual arrangements between Wolverine Worldwide and Grimoldi S.A. Wolverine Worldwide expects similar transactions to occur between Grimoldi S.A. and Wolverine Worldwide and its subsidiaries during fiscal year 2014. The Governance Committee reviewed and approved or ratified each of these transactions in accordance with Wolverine Worldwide’s related person transactions policy, as described below. 
+RELATED PERSON TRANSACTIONS POLICY 
+Wolverine Worldwide’s Board adopted written policies and procedures regarding related person transactions. They require the Governance Committee to review and either approve or disapprove the Company entering into any Interested Transactions (defined below). If advance approval is not feasible, then the Governance Committee must review and ratify the Interested Transaction at its next meeting. 
+Interested Transaction 
+Any transaction, arrangement or relationship or series of similar transactions, arrangements or relationships (including any indebtedness or guarantee of indebtedness) in which: 
+(1) 
+the aggregate amount involved is or is expected to exceed $50,000 since the beginning of Wolverine Worldwide’s last completed fiscal year; 
+(2) 
+Wolverine Worldwide is a participant; and 
+(3) 
+any Related Person (defined below) has or will have a direct or indirect interest (other than solely as a result of being a director or less than ten percent beneficial owner of another entity or a limited partner in a partnership in which a Related Person, together with all other Related Persons, has an interest of less than ten percent). 
+Related Person 
+Any: 
+(a) 
+person who is or was at any point during the last fiscal year for which Wolverine Worldwide filed an Annual Report on Form 10-K and proxy statement, an executive officer, director or nominee for election as a director; 
+(b) 
+greater than five percent beneficial owner of Wolverine Worldwide’s common stock; or 
+(c) 
+immediate family member * of any of the foregoing. 
+* Immediate family member includes a person’s spouse, parents, stepparents, children, stepchildren, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, and brothers- and sisters-in-law and anyone residing in such person’s home (other than a tenant or employee). 
+The Governance Committee considers whether the Interested Transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances, the extent of the Related Person’s interest in the transaction, and other factors that it deems relevant. No director participates in any discussion or approval of an Interested Transaction for which he or she is a Related Person, except to provide all material information to the Governance Committee. 
+Wolverine Worldwide Notice of 2014 Annual Meeting of Stockholders and Proxy Statement 
+| Page 73 
+Table of Contents

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+Certain Relationships and Related Transactions 
+Wolverine Worldwide has entered into agreements with Grimoldi, S.A., an Argentinean corporation of which Mr. Alberto L. Grimoldi, a
+director of Wolverine Worldwide, is chairman and a 35% shareholder. The agreements grant Grimoldi, S.A. the exclusive rights to distribute and sell footwear products in Argentina under the Hush Puppies ® , Caterpillar ® , and Patagonia ® brand names, and footwear and apparel under the Merrell ® brand name. Grimoldi, S.A. or its subsidiary purchases products, samples, footwear components, advertising materials and miscellaneous items from Wolverine Worldwide
+or pays Wolverine Worldwide royalties and certain sublicense fees based on sales or purchases of products in Argentina. Grimoldi, S.A. was obligated to pay Wolverine Worldwide purchase prices, royalties, sublicense fees, service fees and interest
+relating to purchases made or royalties and fees incurred in fiscal year 2011 totaling $5,462,805. All of the transactions described above occurred pursuant to continuing contractual arrangements between Wolverine Worldwide and Grimoldi, S.A.
+Wolverine Worldwide expects similar transactions to occur between Grimoldi, S.A. and Wolverine Worldwide and its subsidiaries during 2012. 
+In the
+ordinary course of its business, Wolverine Worldwide purchases promotional merchandise for use in connection with the sale of its products. In fiscal year 2011, Wolverine Worldwide purchased promotional merchandise from Bullseye Group, LLC totaling
+$217,863. One-third of Bullseye Group, LLC is owned by Daniel Mehney, the son of David P. Mehney, a director of Wolverine Worldwide. Wolverine Worldwide anticipates purchasing promotional materials from Bullseye Group, LLC in 2012. 
+The Governance Committee reviewed and approved or ratified each of these transactions in accordance with Wolverine Worldwide’s related person transactions
+policy, as described below. 
+Related Person Transactions Policy 
+Wolverine Worldwide’s Board adopted written policies and procedures regarding related person transactions. They require the Governance Committee to review and either approve or disapprove the Company entering
+into any Interested Transactions (defined below). If advance approval is not feasible, then the Governance Committee must review and ratify the Interested Transaction at its next meeting. 
+Interested Transaction 
+Any transaction, arrangement or relationship or series of similar
+transactions, arrangements or relationships (including any indebtedness or guarantee of indebtedness) in which: 
+(1) the aggregate amount involved is or is expected
+to exceed $100,000 since the beginning of Wolverine Worldwide’s last completed fiscal year; 
+(2) Wolverine Worldwide is a participant;
+and 
+(3) any Related Person (defined
+below) has or will have a direct or indirect interest (other than solely as a result of being a director or less than ten percent beneficial owner of another entity). 
+Related Person 
+Any: 
+(a) person who is or was at any point during the
+last fiscal year for which Wolverine Worldwide filed a Form 10-K and proxy statement, an executive officer, director or nominee for election as a director; 
+(b) greater than five percent beneficial owner of
+Wolverine Worldwide’s common stock; or 
+(c) immediate family member * of any of the foregoing. 
+* 
+Immediate family member includes a person’s spouse, parents, stepparents, children, stepchildren, siblings, mothers- and fathers-in- law, sons- and daughters-in-law, and
+brothers- and sisters-in-law and anyone residing in such person’s home (other than a tenant or employee). 
+The Governance Committee
+considers whether the Interested Transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances, the extent of the Related Person’s interest in the
+Page 63 
+Table of Contents 
+Wolverine Worldwide Notice of 2012 Annual Meeting of Stockholders and Proxy Statement 
+transaction, and other factors that it deems relevant. No director participates in any discussion or approval of an Interested Transaction for which he or she is a Related Person, except to
+provide all material information to the Governance Committee. 
+The following Interested Transactions are pre-approved under the policies and procedures:
+(a) 
+any transaction with another company where a Related Person’s only relationship is as an employee, director or beneficial owner of less than ten percent of that
+company’s shares, if the aggregate amount involved does not exceed the greater of $1,000,000, or two percent of that company’s total revenues. 
+(b) 
+any charitable contribution by Wolverine Worldwide to a charitable organization where a Related Person is an employee, if the aggregate amount involved does not exceed the lesser
+of $100,000, or two percent of the charitable organization’s total annual receipts. 
+ADDITIONAL
+INFORMATION 
+Stockholders List 
+A list of stockholders entitled to vote at the meeting will be available for review by Wolverine Worldwide stockholders at the office of R. Paul Guerre, Secretary,
+Wolverine World Wide, Inc., 9341 Courtland Drive, N.E., Rockford, Michigan 49351, during ordinary business hours for the 10-day period before the meeting. 
+Director and Officer Indemnification 
+The Company indemnifies its directors and NEOs to the fullest extent
+permitted by law so that they will be free from undue concern about personal liability in connection with their service to the Company.

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+CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 
+Wolverine Worldwide has entered into agreements with Grimoldi S.A., an Argentinean corporation of which Mr. Alberto L. Grimoldi, a director of Wolverine Worldwide, is chairman and a 35% shareholder.
+The agreements grant Grimoldi, S.A. the exclusive rights to distribute and sell footwear products in Argentina under the Hush Puppies ® , Caterpillar ® , and Patagonia ® brand names, and footwear and apparel under the Merrell ® brand name. Grimoldi S.A. or its subsidiary purchases products, samples, footwear components, advertising materials and miscellaneous items from Wolverine Worldwide
+or pays Wolverine Worldwide royalties and certain sublicense fees based on sales or purchases of products in Argentina. Grimoldi S.A. was obligated to pay Wolverine Worldwide purchase prices, royalties, sublicense fees, service fees and interest
+relating to purchases made or royalties and fees incurred in fiscal year 2012 totaling $5,074,150. All of the transactions described above occurred pursuant to continuing contractual arrangements between Wolverine Worldwide and Grimoldi S.A.
+Wolverine Worldwide expects similar transactions to occur between Grimoldi S.A. and Wolverine Worldwide and its subsidiaries during fiscal year 2013. The Governance Committee reviewed and approved or ratified each of these transactions in accordance
+with Wolverine Worldwide’s related person transactions policy, as described below. 
+RELATED PERSON

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+DEF 14A
+1
+a2084968zdef14a.htm
+DEF 14A
+QuickLinks 
+-- Click here to rapidly navigate through this document 
+SCHEDULE 14A INFORMATION 
+Proxy
+Statement Pursuant to Section 14(a) of 
+the Securities Exchange Act of 1934 (Amendment No. ) 
+Filed by the Registrant ý 
+Filed by a Party other than the Registrant o 
+Check the appropriate box: 
+o 
+Preliminary Proxy Statement 
+o 
+Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) 
+ý 
+Definitive Proxy Statement 
+o 
+Definitive Additional Materials 
+o 
+Soliciting Material Pursuant to § 240.14a-11(c) or § 240.14a-12 
+ODETICS, INC. 
+(Name of Registrant as Specified in Its Charter) 
+(Name of Person(s) Filing Proxy Statement, if other than the Registrant) 
+Payment of Filing Fee (Check the appropriate box): 
+ý 
+No fee required. 
+o 
+Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11 
+(1) 
+Title of each class of securities to which transaction applies: 
+(2) 
+Aggregate number of securities to which transaction applies: 
+(3) 
+Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): 
+(4) 
+Proposed maximum aggregate value of transaction: 
+(5) 
+Total fee paid: 
+o 
+Fee paid previously with preliminary materials. 
+o 
+Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement
+number, or the Form or Schedule and the date of its filing. 
+(1) 
+Amount Previously Paid: 
+(2) 
+Form, Schedule or Registration Statement No.: 
+(3) 
+Filing Party: 
+(4) 
+Date Filed: 
+ODETICS, INC. 
+NOTICE OF ANNUAL MEETING OF STOCKHOLDERS 
+To Be Held September 13, 2002 
+To the Stockholders of Odetics, Inc.: 
+NOTICE
+IS HEREBY GIVEN that the Annual Meeting of Stockholders of Odetics, Inc., a Delaware corporation, will be held on Friday, September 13, 2002 at 10:00 a.m.,
+Pacific Time, at the principal executive offices of Odetics located at 1515 South Manchester Avenue, Anaheim, California 92802 for the following purposes, as more fully described in the proxy
+statement accompanying this Notice: 
+1. To
+elect eight directors to serve on the Board of Directors of Odetics—two directors by the holders of the Class A common stock and six directors by the holders of
+the Class A common stock and the holders of the Class B common stock, voting together as a single class.
+2. To
+ratify the appointment of Ernst & Young LLP as the independent auditors of Odetics for the fiscal year ending March 31, 2003.
+3. To
+transact any other business which may properly come before the meeting or any adjournment(s) or postponement(s) thereof. 
+The
+Board of Directors has fixed the close of business on July 26, 2002 as the record date for the determination of stockholders entitled to notice of, and to vote at, the meeting
+and at any continuation or adjournment thereof. A list of stockholders entitled to vote at the meeting will be available for inspection at the principal executive offices of Odetics. 
+You
+are cordially invited to attend the meeting in person. Whether or not you plan to attend the meeting, please mark, sign, date and return the enclosed proxy card as soon as possible
+in the envelope enclosed for your convenience. Should you receive more than one proxy because your shares are registered in different names and addresses, each proxy should be signed and returned to
+assure that all of your shares will be voted. You may revoke your proxy at any time prior to the meeting. If you attend the meeting and vote by ballot, your proxy will be revoked automatically and
+only your ballot vote at the meeting will be counted. 
+Sincerely, 
+/S/ GARY W. SMITH 
+Anaheim, California 
+Gary W. Smith 
+July 26, 2002 
+Secretary 
+YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. PLEASE READ THE ATTACHED PROXY STATEMENT CAREFULLY, COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE AND
+RETURN IT IN THE ENCLOSED ENVELOPE. 
+ODETICS, INC. 
+PROXY STATEMENT 
+ANNUAL MEETING OF STOCKHOLDERS 
+TO BE HELD SEPTEMBER 13, 2002 
+General 
+These proxy materials and the enclosed proxy card are being furnished in connection with the solicitation of proxies by the Board of Directors of
+Odetics, Inc., a Delaware corporation, to be voted at the Annual Meeting of Stockholders to be held on September 13, 2002 (the "Annual Meeting") and any adjournment or postponement of
+the meeting. The Annual Meeting will be held at 10:00 a.m., Pacific Time, at the principal executive offices of Odetics located at 1515 South Manchester Avenue, Anaheim, California 92802. These
+proxy materials and the form of proxy were first mailed to the stockholders of Odetics on or about August 6, 2002. 
+The
+mailing address of the principal executive offices of Odetics is 1515 South Manchester Avenue, Anaheim, California 92802. 
+Purpose of Meeting 
+The specific proposals to be considered and acted upon at the Annual Meeting are summarized in the accompanying Notice of Annual Meeting of Stockholders. Each
+proposal is described in more detail in this proxy statement. 
+Voting Rights 
+The record date for determining those stockholders who are entitled to notice of, and to vote at, the Annual Meeting has been fixed as July 26, 2002. At
+the close of business on the record date, 11,580,914 shares of the Class A common stock of Odetics, par value $0.10 per share, and 1,035,841 shares of the Class B common stock of
+Odetics, par value $0.10 per share, were outstanding. The Class A common stock and Class B common stock of Odetics are collectively referred to as the "common stock." 
+Holders
+of the Class A common stock are entitled to elect 25% of the Board rounded up to the nearest whole number, or two directors. The holders of the Class A common stock
+and the holders of the Class B common stock, voting together as a single class, will be entitled to elect the balance of the Board, or six directors. Directors will be elected by a plurality of
+the voting power of the class or classes, as the case may be, of common stock entitled to vote and present in person or represented by proxy at the Annual Meeting, unless cumulative voting is in
+effect. With respect to the election of directors, when voting together as a single class, the holders of Class A common stock are entitled to one-tenth of one vote per share held
+and the holders of Class B common stock are entitled to one vote per share held. 
+Pursuant
+to the bylaws of Odetics, no stockholder is entitled to cumulate his or her votes (as described above) for candidates other than those whose names have been placed in nomination
+prior to the commencement of voting and unless at least one stockholder has given notice prior to commencement of the voting of his or her intention to cumulate votes. If any stockholder has given
+such notice, then each stockholder may cumulate votes by multiplying the number of votes of each class of common stock the stockholder is entitled to vote by the number of directors to be elected by
+such class. The number of cumulative votes thus determined may be voted all for one candidate or distributed among several candidates, at the discretion of the stockholder. The candidates receiving
+the highest number of votes, up to the number of directors to be elected by each class of common stock, will be elected. If cumulative voting is in effect, the persons named in the accompanying proxy
+will vote 
+the shares of each class of the common stock covered by proxies received by them (unless authority to vote for directors is withheld) among the named candidates as they determine. 
+Except
+as described above for the election of directors, holders of each class of common stock will vote at the Annual Meeting as a single class on all matters, with each holder of
+shares of Class A common stock entitled to one-tenth of one vote per share held and each holder of shares of Class B common stock entitled to one vote per share held.
+Proposal 2 requires the approval of the affirmative vote of a majority of the voting power of the common stock present in person or represented by proxy at the Annual Meeting and entitled to vote on
+the matter. 
+The
+presence in person or by proxy of the holders of a majority of the outstanding shares of the common stock entitled to vote will constitute a quorum for the transaction of business at
+the Annual Meeting. All votes will be tabulated by the inspectors of election appointed for the meeting, who will separately tabulate affirmative and negative votes, abstentions and broker
+non-votes. Broker non-votes occur when brokers who hold stock in "street name" return proxy cards stating that they do not have authority to vote the stock which they hold on
+behalf of beneficial owners. Abstentions and broker non-votes are counted as present for purposes of determining the presence or absence of a quorum for the transaction of business.
+Abstentions will be counted towards the tabulations of votes cast on proposals presented to the stockholders and will have the same effect as negative votes. Broker non-votes will not be
+counted for purposes of determining whether a proposal has been approved. 
+Proxies 
+Properly executed proxies will be voted in the manner directed by the stockholders. If the proxy does not specify how the shares represented thereby are to be
+voted, the proxy will be voted FOR the election of the directors proposed by the Board unless the authority to vote for the election of any director is withheld and, if no contrary instructions are
+given, the proxy will be voted FOR the approval of Proposal 2 as described in this proxy statement and the accompanying notice. 
+You
+may revoke or change your proxy at any time before the Annual Meeting by filing with the Secretary of Odetics, at the principal executive offices of Odetics at 1515 South Manchester
+Avenue, Anaheim, California 92802, a written notice of revocation or a new duly executed proxy bearing a date later than the date indicated on the previous proxy. You may also revoke your proxy by
+attending the Annual Meeting and voting in person. Attendance at the Annual Meeting will not, by itself, revoke a proxy. 
+Solicitation 
+The enclosed proxy is being solicited by the Board of Directors of Odetics. Odetics will bear the entire cost of proxy solicitation, including costs of preparing,
+assembling, printing and mailing this proxy
+statement, the proxy card and any additional material furnished to the stockholders. Copies of the solicitation materials will be furnished to brokerage houses, fiduciaries and custodians holding
+shares in their names that are beneficially owned by others so that they may forward this solicitation material to such beneficial owners. In addition, Odetics may reimburse such persons for their
+costs in forwarding the solicitation materials to the beneficial owners. The original solicitation of proxies by mail may be supplemented by a solicitation by telephone, facsimile or any other means
+by directors, officers or employees of Odetics. No additional compensation will be paid to these individuals for any such services. 
+In
+the discretion of management, Odetics reserves the right to retain a professional firm of proxy solicitors to assist in solicitation of proxies. Although Odetics does not currently
+expect to retain such a firm, it estimates that the fees of such firm would range from $5,000 to $15,000 plus out-of-pocket expenses, all of which would be paid by Odetics. 
+2 
+PROPOSAL NO. 1 
+ELECTION OF DIRECTORS 
+Nominees 
+The Board of Directors of Odetics is currently comprised of eight members. Eight directors are to be elected at the Annual Meeting and hold office until their
+successors are duly elected and qualified at the next annual meeting of stockholders. Holders of Class A common stock are entitled to elect two of the eight directors to be elected at the
+Annual Meeting, and the holders of Class A common stock and the holders of Class B common stock, voting together as a single class, are entitled to elect the other six directors. The two
+candidates receiving the highest number of affirmative votes of shares of Class A common stock, present in person or represented by proxies and entitled to vote at the Annual Meeting, will be
+elected directors of Odetics, and the six candidates receiving the highest number of affirmative votes of shares of Class A common stock and shares of Class B common stock, voting
+together as a single class, present in person or represented by proxies and entitled to vote at the Annual Meeting, will be elected directors of Odetics. When voting together as a single class, the
+holders of Class A common stock are entitled to one-tenth of one vote per share held and the holders of Class B common stock are entitled to one vote per share held. If
+cumulative voting is in effect, however, the proxy holders of each class of common stock will have the right to cumulate and allocate votes among those nominees standing for election with respect to
+such class of common stock as such proxy holders in their discretion elect. 
+Messrs. Gudmundson
+and Muench will stand for election by the holders of Class A common stock, and Messrs. Daly, Miner, Seazholtz, Slutzky, Thomas and Wright will
+stand for election by the holders of Class A common stock and Class B common stock, voting together as a single class. 
+3 
+Information with Respect to Nominees 
+The following table sets forth certain information concerning the nominees for directors of Odetics as of July 26, 2002. 
+Nominees for Election 
+Name 
+Age 
+Position 
+Director 
+Since 
+Joel Slutzky(3) 
+63 
+Chairman of the Board of Odetics and of Broadcast, Inc. 
+Chairman of the Board of MAXxess Systems, Inc. 
+Chairman of the Board of Iteris, Inc. 
+Director of Meyer, Mohaddes Associates, Inc. 
+Director of Zyfer, Inc. 
+1969 
+Kevin C. Daly, Ph.D.(2)(3) 
+58 
+Director of Odetics 
+1993 
+Crandall L. Gudmundson 
+71 
+Director of Odetics 
+1979 
+Gregory A. Miner(3) 
+47 
+Chief Executive Officer, Chief Financial Officer and Director of Odetics 
+Chief Financial Officer and Assistant Secretary of Broadcast 
+Director, Chief Financial Officer and Secretary of MAXxess Systems 
+Director of Iteris 
+Director, Chief Financial Officer and Secretary of Meyer, Mohaddes Associates 
+Chairman of the Board of Zyfer 
+1998 
+Jerry F. Muench 
+67 
+Director and Assistant Secretary of Odetics 
+1969 
+John W. Seazholtz(1)(2) 
+65 
+Director of Odetics 
+1998 
+Thomas L. Thomas(1)(2) 
+53 
+Director of Odetics 
+1999 
+Paul E. Wright(1)(3) 
+71 
+Director of Odetics 
+Director of Iteris 
+1993 
+(1) Member
+of the Audit Committee.
+(2) Member
+of the Compensation and Stock Option Committee.
+(3) Member
+of the Finance Committee. 
+Joel Slutzky has served as the Chairman of the Board of Directors since he co-founded Odetics in 1969.
+Mr. Slutzky served as the Chief Executive Officer of Odetics from 1975 to February 2002. From August 1993 until January 1994, Mr. Slutzky assumed the additional
+responsibilities of Chief Financial Officer on an interim basis following the retirement of Odetics' former Chief Financial Officer. Mr. Slutzky also served as the President of Odetics from
+1969 to 1975 and served as a director of ATL Products, Inc., a former subsidiary of Odetics, from its formation in 1993 until Quantum Corporation purchased ATL in October 1998.
+Mr. Slutzky currently serves in various capacities for the other subsidiaries of Odetics. 
+Kevin C. Daly, Ph.D. has served as a director of Odetics since 1993. Since July 2002, Dr. Daly has
+been the Chief Executive Officer of Avamar Technologies Inc., a provider of high availability storage software solutions. Dr. Daly was previously Chief Technical Officer of Quantum
+Corporation's Storage 
+4 
+Solutions Group from October 2001 to July 2002 and, prior to that, he was Chief Executive Officer of ATL Products, Inc. from its foundation in 1993 until 2001. Dr. Daly
+also served as Chief Technical Officer of Odetics from 1985 until ATL's separation from Odetics in an initial public offering in 1997. Prior to Odetics, Dr. Daly was Director of
+the Control and Dynamics Division of the Charles Stark Draper Laboratory at MIT from 1974 through 1985. Dr. Daly is also a member of the Board of Directors of Danka Business Systems PLC. 
+Crandall L. Gudmundson is a co-founder of Odetics and served as its President from 1975 until his
+retirement in 1998. Mr. Gudmundson has served as a director of Odetics since 1979 and served as a director of ATL Products, Inc. from 1993 to 1998. Prior to co-founding
+Odetics, Mr. Gudmundson was the lead project engineer for Leach Corporation. 
+Gregory A. Miner has served as the Chief Executive Officer of Odetics since February 2002, as a director
+since 1998 and as a Vice President and Chief Financial Officer since January 1994, when he joined Odetics. From 1998 to 2002, Mr. Miner also served as Odetics' Chief Operating Officer.
+Mr. Miner served as the Vice President and Chief Financial Officer of ATL Products, Inc., a former subsidiary of Odetics, from 1994 to 1998 and currently serves in various capacities for
+the other subsidiaries of Odetics. From December 1984 until joining Odetics, Mr. Miner served as the Vice President and Chief Financial Officer and a member of the Board of Directors of
+Laser Precision Corporation, a manufacturer of telecommunications test equipment. From 1979 to 1984, Mr. Miner was employed by Deloitte Haskins and Sells (now known as Deloitte & Touche
+LLP) in various capacities, the most recent of which was Audit Manager. 
+Jerry F. Muench is a co-founder of Odetics and has served as a director since 1969. From 1969 to 2002,
+Mr. Muench was also Odetics' Secretary. Mr. Muench served as the Vice President, Marketing of Odetics from 1975 until his retirement in December 1997. Prior to
+co-founding Odetics, Mr. Muench was the manager of applications engineering at Leach Corporation. 
+John W. Seazholtz has served as a director of Odetics since May 1998. He also served as a director of
+Mariner Networks, Inc., a subsidiary of Odetics that has been discontinued, from March 2000 to September 2001. From May 1998 to April 2000, Mr. Seazholtz
+served as the President and Chief Executive Officer of Telesoft America, Inc. He retired in April 1998 as the Chief Technology Officer of Bell Atlantic after 36 years of service
+with that company and its predecessor. Mr. Seazholtz was a senior officer of Bell Atlantic since 1986, serving in various positions, including the positions of Vice President, Operations and
+Engineering, Vice President, Marketing, Vice President of New Services, and Vice President, Technology and Information Systems. Mr. Seazholtz currently serves as the Chairman of the Board of
+Westell Technologies, Inc. and is a member of the Board of Directors of Advanced Switching Communications, Inc. 
+Thomas L. Thomas has served as a director of Odetics since May 1999. From January 2000 to
+September 2001, he also served as the Chairman of the Board of Mariner Networks, Inc. Mr. Thomas is
+the Chairman of the Board, President and Chief Executive Officer of HAHT Commerce, a provider of software applications that enable companies to use the Internet to conduct business. A veteran Silicon
+Valley executive, Mr. Thomas was previously the President and Chief Executive Officer of Ajuba Solutions, a provider of B2B integration solution software, which was sold to Interwoven in
+October 2000. From April 1999 until January 2000, he served as the President, Chief Executive Officer and Chairman of the Board of Vantive Corporation, a leading customer
+relationship management software vendor which was acquired by Peoplesoft in January 2000. Prior to that, from September 1995 to April 1999, Mr. Thomas served as the Senior
+Vice President of e-Business and Information Services and Chief Information Officer at 3Com Corporation. From 1993 to 1995, Mr. Thomas served as a Vice President and the Chief
+Information Officer of Dell Computer Corporation. From 1987 to 1993, he served as the Vice President of Management Information Systems at Kraft General Foods, and at Sara 
+5 
+Lee Corporation from 1981 to 1987. Mr. Thomas also serves on the Board of Directors of iManage, Inc. 
+Paul E. Wright has served as a director of Odetics since June 1993 and as a director of Iteris since
+January 1999. Mr. Wright is the President of Wright Associates—Engineering and Business Consultants, a company he formed in 1997. From 1988 until his retirement in 1997,
+Mr. Wright served as the Chairman of Chrysler Technologies Corp., the aerospace and defense electronics subsidiary of Chrysler Corporation. From 1986 to 1988, Mr. Wright served as the
+President and Chief Operating Officer of Fairchild Industries, Inc. Prior to joining Fairchild, he was employed for 28 years by RCA Corporation, where he last served as the Senior Vice
+President, responsible for planning RCA's merger into General Electric Corporation. 
+All
+directors are elected annually and hold office until the next annual meeting of stockholders and until their successors are duly elected and qualified. All of the nominees are
+currently directors of Odetics and have indicated that they are willing to continue to serve as directors. In the event any nominee is unable or declines to serve as a director at the time of the
+Annual Meeting, the proxies will be voted for an additional nominee who shall be designated by the current Board of Directors. As of the date of this proxy statement, the Board of Directors is not
+aware of any nominee who is unable or will decline to serve as director. 
+Board Meetings and Committees 
+The Board of Directors held eight meetings during the fiscal year ended March 31, 2002. Mr. Thomas attended five of the meetings of the Board of
+Directors. All of the other directors attended or participated in at least 75% of the aggregate number of meetings of the Board of Directors. Each director (including Mr. Thomas) attended at
+least 75% of the aggregate number of meetings of those committees of the Board of Directors on which such person served, which were held during such period. 
+Odetics
+has three standing committees—the Audit Committee, the Compensation and Stock Option Committee and the Finance Committee. Odetics has no standing nominating
+committee, and the Board as a whole acts upon matters which would otherwise be the responsibility of a nominating committee. 
+Audit Committee. The Audit Committee supervises and reviews the audit and audit review programs and
+procedures of the independent auditors of Odetics, its internal accounting staff and the results of internal auditing procedures. The Audit Committee also reviews the independence, professional
+services, fees, plans and results of the independent auditors' engagement and recommends their retention or discharge to the Board. The members of the Audit Committee of Odetics are
+Messrs. Seazholtz, Thomas and Wright. The Audit Committee held one meeting during the fiscal year ended March 31, 2002. 
+The
+Board of Directors adopted and approved a written charter for the Audit Committee in June 2000. In July 2002, the Board of Directors adopted and approved an amended and
+restated Audit Committee charter, a copy of which is attached hereto as Appendix A. The Board has determined that all members of the Audit Committee are "independent" as that term is defined in
+Rule 4200 of the listing standards of the National Association of Securities Dealers. 
+Compensation and Stock Option Committee. The Compensation and Stock Option Committee makes
+recommendations to the Board concerning the compensation of all officers of Odetics and administers the stock option plans of Odetics. The members of the Compensation and Stock Option Committee of
+Odetics are Messrs. Daly, Seazholtz and Thomas. The Compensation and Stock Option Committee held two meetings during the fiscal year ended March 31, 2002. 
+6 
+Finance Committee. The Finance Committee reviews Odetics' financial planning and strategies and
+provides guidance to the Board and the Audit Committee regarding issues and opportunities related thereto. The Finance Committee also provides interface and advice between the Board, the capital
+markets and other financing sources. The Finance Committee held no meetings during the fiscal year ended March 31, 2002. The members of the Finance Committee are Messrs. Daly, Miner,
+Slutzky and Wright. 
+Compensation of Directors 
+Directors who are not employees of Odetics or one of its subsidiaries receive an annual fee of $12,000 per year, paid quarterly, in addition to $1,500 for each
+Board meeting attended in person and $250 for each telephone conference Board meeting. All directors are reimbursed for their out-of-pocket expenses incurred in attending
+meetings of the Board of Directors and its committees. 
+Non-employee
+directors are also eligible to receive periodic option grants pursuant to the Automatic Option Grant Program under Odetics' 1997 Stock Incentive Plan. Under this plan, each
+non-employee director receives an option to purchase 20,000 shares of Class A common stock upon his initial appointment to the Board of Directors and an additional option to
+purchase 5,000 shares of Class A common stock on the date of each annual meeting after his appointment. Each option granted to non-employee directors under the Automatic Option
+Grant Program will have an exercise price equal to the fair market value of the Class A common stock on the grant date and will have a maximum term of ten years, subject to earlier termination
+following the optionee's cessation of service as a Board member. 
+Recommendation of the Board of Directors 
+THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED ABOVE. PROXIES RETURNED TO ODETICS WILL BE VOTED "FOR" EACH NOMINEE
+UNLESS OTHERWISE INSTRUCTED IN WRITING ON SUCH PROXY. 
+7 
+PROPOSAL NO. 2 
+RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS 
+The accounting firm of Ernst & Young LLP served as the independent auditors of Odetics for the fiscal year ended March 31, 2002. The Board of
+Directors has selected that firm to continue in this capacity for the fiscal year ending March 31, 2003. Odetics is asking the stockholders to ratify the selection by the Board of Directors of
+Ernst & Young LLP as the independent auditors of Odetics to audit the consolidated financial statements of Odetics for the fiscal year ending March 31, 2003 and to perform other
+appropriate services. Stockholder ratification of the selection of Ernst & Young LLP as Odetics' independent auditors is not required by the bylaws of Odetics or otherwise. In the event that
+the stockholders fail to ratify the appointment, the Board of Directors will reconsider its selection. Even if the selection is ratified, the Board of Directors, in its discretion, may direct the
+appointment of a different independent accounting firm at any time during the year if the Board of Directors feels that such a change would be in the best interests of Odetics and its stockholders. 
+A
+representative of Ernst & Young LLP is expected to be present at the Annual Meeting to respond to stockholders' questions, and that representative will be given an opportunity
+to make a brief presentation to the stockholders if he or she so desires. 
+Stockholder Approval 
+The affirmative vote of a majority of the voting power of the Class A common stock and Class B common stock of Odetics, voting together as a single
+class, present or represented and entitled to vote at the Annual Meeting, will be required for ratification of the selection of Ernst & Young LLP as the independent auditors of Odetics for the
+fiscal year ending March 31, 2003. 
+Recommendation of the Board of Directors 
+THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE RATIFICATION AND APPROVAL OF THE SELECTION OF ERNST & YOUNG
+LLP AS THE INDEPENDENT AUDITORS OF ODETICS FOR THE FISCAL YEAR ENDING MARCH 31, 2003. 
+8 
+PRINCIPAL STOCKHOLDERS AND COMMON STOCK OWNERSHIP 
+OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 
+The following table sets forth, as of July 26, 2002, the number and percentage ownership of the Class A common stock and Class B common stock
+of Odetics by (i) all persons known to Odetics to beneficially own more than 5% of either class of outstanding common stock (based upon reports filed by such persons with the SEC),
+(ii) each of the Named Executive Officers in the Summary Compensation Table which appears elsewhere herein, (iii) each director of Odetics and director nominee named under "Election of
+Directors," and (iv) all executive officers and directors of Odetics as a group. To the knowledge of Odetics, except as otherwise indicated, each of the persons named in this table has sole
+voting and investment power with respect to the common stock shown as beneficially owned, subject to community property and similar laws, where applicable. 
+Class A common stock 
+Class B common stock 
+Total Percent of Voting Power 
+Name and Address of Beneficial Owner(1) 
+Amount and Nature of Beneficial Ownership(2)(3) 
+Percent of 
+Class(2) 
+Amount and Nature 
+of Beneficial 
+Ownership(2)(3) 
+Percent of 
+Class(2) 
+Joel Slutzky 
+853,978 
+(4) 
+7.3 
+% 
+261,622 
+(5) 
+25.3 
+% 
+15.8 
+% 
+Gerald A. Weber 
+382,102 
+(6) 
+3.3 
+195,924 
+18.9 
+10.7 
+New York Life Trust Company 
+969,921 
+(7) 
+8.1 
+— 
+— 
+4.4 
+Kevin C. Daly, Ph.D. 
+25,850 
+(8) 
+* 
+— 
+— 
+* 
+Crandall L. Gudmundson 
+120,682 
+(9) 
+1.0 
+69,743 
+6.7 
+3.7 
+Gregory A. Miner 
+147,047 
+(10) 
+1.3 
+— 
+— 
+* 
+Jerry F. Muench 
+116,808 
+(11) 
+1.0 
+61,537 
+(12) 
+5.9 
+3.3 
+John W. Seazholtz 
+59,297 
+(13) 
+* 
+— 
+— 
+* 
+Thomas L. Thomas 
+40,250 
+(14) 
+* 
+— 
+— 
+* 
+Paul E. Wright 
+72,794 
+(15) 
+* 
+— 
+— 
+* 
+Hugo Fruehauf 
+49,405 
+(16) 
+* 
+— 
+— 
+* 
+John E. Johnson 
+63,223 
+(17) 
+* 
+— 
+— 
+* 
+Steven A. L'Heureux 
+10,818 
+(18) 
+* 
+— 
+— 
+* 
+Gary W. Smith 
+85,729 
+(19) 
+* 
+296 
+* 
+* 
+All executive officers and directors as a group (12 persons) 
+1,645,881 
+(20) 
+14.2 
+% 
+393,198 
+38.0 
+% 
+25.4 
+% 
+* Represents
+less than 1%.
+(1) The
+address for Gerald A. Weber is 222 North LaSalle, Suite 899, Chicago, Illinois 60601. The address for New York Life Trust Company is 51 Madison
+Avenue, Room 117A, New York, New York 10010. The address of all other persons named in the table is 1515 South Manchester Avenue, Anaheim, California 92802.
+(2) Based
+on 11,580,914 shares of the Class A common stock and 1,035,841 shares of Class B common stock outstanding as of July 26, 2002.
+Shares of each class of common stock subject to options which are exercisable within 60 days of July 26, 2002 are deemed to be beneficially owned by the person holding such options for
+the purpose of computing the percentage of ownership of such person but are not treated as outstanding for the purpose of computing the percentage of any other person. Other than as described in the
+preceding sentence, shares issuable upon exercise of outstanding options are not deemed to be outstanding for purposes of this calculation.
+(3) In
+addition to the shares held in the individual's name, this column also includes shares held for the benefit of the named person under Odetics' 401(k)
+and Stock Ownership Plan. 
+9 
+(4) Includes
+141,666 shares issuable upon exercise of options that are currently exercisable or will become exercisable within 60 days after
+July 26, 2002. Excludes 346,808 shares held in trust for the benefit of the children and relatives of Mr. Slutzky as to which Mr. Slutzky has no investment or voting power and
+disclaims any beneficial ownership. See note 6.
+(5) Excludes
+141,536 shares held in trust for the benefit of the children and relatives of Mr. Slutzky as to which Mr. Slutzky has no
+investment or voting power and disclaims any beneficial ownership. See note 6.
+(6) All
+of such shares are owned beneficially of record by various trusts with respect to which Mr. Weber serves as trustee or co-trustee.
+Mr. Weber shares investment and voting power as to 29,379 shares of Class A common stock and 56,088 shares of Class B common stock. Mr. Weber exercises sole investment
+and voting power over the remaining 352,808 shares of Class A common stock and 139,836 shares of Class B common stock. The shares shown include an aggregate of 346,808 shares of
+Class A common stock and 141,536 shares of Class B common stock held in trust for the benefit of the children and relatives of Mr. Slutzky, as to which shares Mr. Slutzky
+has no investment or voting power and disclaims any beneficial ownership.
+(7) Pursuant
+to a Schedule 13G filed on February 14, 2002 with the SEC, New York Life Trust Company reported that it had sole voting power and
+sole dispositive power over all 969,921 shares, in its capacity as trustee of the Odetics 401(K) and Stock Ownership Plan on behalf of numerous plan participants.
+(8) Includes
+100 shares held by Dr. Daly's spouse. Also includes 9,750 shares issuable upon exercise of options that are currently exercisable or will
+become exercisable within 60 days after July 26, 2002.
+(9) Includes
+4,500 shares held by Mr. Gudmundson's IRA and 9,750 shares issuable upon exercise of options that are currently exercisable or will
+become exercisable within 60 days after July 26, 2002.
+(10) Includes
+90,000 shares issuable upon exercise of options held by Mr. Miner that are currently exercisable or will become exercisable within
+60 days after July 26, 2002.
+(11) Includes
+31,114 shares held by Mr. Muench's spouse and 9,750 shares issuable upon exercise of options that are currently exercisable or will
+become exercisable within 60 days after July 26, 2002.
+(12) Includes
+23,235 shares held by Mr. Muench's spouse.
+(13) Includes
+25,750 shares issuable upon exercise of options held by Mr. Seazholtz that are currently exercisable or will become exercisable within
+60 days after July 26, 2002.
+(14) Includes
+21,250 shares issuable upon exercise of options held by Mr. Thomas that are currently exercisable or will become exercisable within
+60 days after July 26, 2002.
+(15) Includes
+23,500 shares issuable upon exercise of options held by Mr. Wright that are currently exercisable or will become exercisable within
+60 days after July 26, 2002.
+(16) Includes
+12,000 shares issuable upon exercise of options held by Mr. Fruehauf that are currently exercisable or will become exercisable within
+60 days after July 26, 2002.
+(17) Includes
+12,000 shares issuable upon exercise of options held by Mr. Johnson that are currently exercisable or will become exercisable within
+60 days after July 26, 2002.
+(18) Includes
+6,666 shares issuable upon exercise of options held by Mr. L'Heureux that are currently exercisable or will become
+exercisable within 60 days after July 26, 2002. 
+10 
+(19) Includes
+38,333 shares issuable upon exercise of options that are currently exercisable or will become exercisable within 60 days after
+July 26, 2002.
+(20) Includes
+262,082 shares issuable upon exercise of options that are currently exercisable or will become exercisable within 60 days after
+July 26, 2002. 
+11 
+EQUITY COMPENSATION PLANS 
+The following table summarizes the status of Odetics' equity compensation plans as of the end of fiscal 2002: 
+Plan Category 
+Number of Securities to 
+be Issued upon Exercise 
+of Outstanding Options 
+Weighted Average 
+Exercise Price of 
+Outstanding Options 
+Number of Securities 
+Remaining Available for 
+Future Issuance (excluding 
+securities reflected in 
+column (a) 
+(a) 
+(b) 
+(c) 
+Equity Compensation Plans that have been approved by Odetics' security holders: 
+1997 Stock Incentive Plan(1) 
+328,655 
+$ 
+8.37 
+1,322,195 
+1994 Long-Term Equity Plan 
+— 
+— 
+132,863 
+Equity Compensation Plans that have not been approved by Odetics' security holders 
+— 
+— 
+— 
+Total 
+328,655 
+$ 
+8.37 
+1,455,058 
+(1) In
+November 2001, Odetics implemented an option exchange program pursuant to which options to purchase a total of 349,000 shares of Odetics' Class A common stock were cancelled and
+subsequently re-granted in May 2002. 
+12 
+EXECUTIVE COMPENSATION AND OTHER INFORMATION 
+Executive Officers 
+The following table sets forth certain information regarding all executive officers of Odetics as of July 26, 2002. 
+Name 
+Age 
+Capacities in Which Served 
+Hugo Fruehauf 
+63 
+Vice President of Odetics 
+Director, President and Chief Executive Officer of Zyfer 
+John E. Johnson 
+55 
+Vice President of Odetics 
+Director, President and Chief Executive Officer of Iteris 
+Director of Meyer, Mohaddes Associates 
+Steven A. L'Heureux 
+46 
+Vice President of Odetics 
+Director and President of Broadcast 
+Gregory A. Miner 
+47 
+Chief Executive Officer, Chief Financial Officer and Director of Odetics 
+Chief Financial Officer and Assistant Secretary of Broadcast 
+Director, Chief Financial Officer and Secretary of MAXxess Systems 
+Director of Iteris 
+Director, Chief Financial Officer and Secretary of Meyer, Mohaddes Associates 
+Chairman of the Board of Zyfer 
+Gary W. Smith 
+45 
+Vice President, Controller and Secretary of Odetics 
+Assistant Secretary of Broadcast, Iteris, MAXxess Systems, Meyer, Mohaddes Associates and Zyfer 
+The
+following is a brief description of the capacities in which each of the executive officers has served during the past five years. The biography of Mr. Miner appears earlier in this
+proxy statement. See "Election of Directors." 
+Hugo Fruehauf has served as a Vice President of Odetics since February 1999 and has served as the
+President, Chief Executive Officer and a director of Zyfer, Inc. (formerly known as Odetics' Communications division) since November 1999. Mr. Fruehauf joined Odetics in
+October 1997 as the Chief Technology Officer of the Communications division and became the President of the Communications division in December 1997. Prior to joining Odetics,
+Mr. Fruehauf was the Group Vice President of Defense Systems at Alliant Techsystems, a developer of smart tactical weapons systems. From 1978 to 1995, Mr. Fruehauf served as President of
+Efratom Time and Frequency Products, a company specializing in telecommunications. From 1965 to 1978, Mr. Fruehauf was employed by Rockwell International in various management functions,
+including Chief Engineer. 
+John E. Johnson has served as a Vice President of Odetics since 1986 and has served as the President, Chief
+Executive Officer and a director of Odetics' subsidiary, Iteris, Inc., since December 1999. Prior to that, he served as the General Manager of the Odetics ITS division (now Iteris, Inc.)
+from 1996 to 1998, prior to its incorporation. From 1990 to 1996, Mr. Johnson served as the General Manager of the Gyyr Incorporated (now MAXxess Systems) Customer Service division.
+Mr. Johnson served in various other capacities with Odetics since joining Odetics in 1974, including the Vice President and General Manager of the Omutec division from 1986 to 1990, the
+Director of Contracts for the Space division from 1980 to 1986, the Controller of Infodetics, a former subsidiary of 
+13 
+Odetics, from 1975 to 1980 and the Controller of Odetics from 1974 to 1975. Prior to joining Odetics, Mr. Johnson served as a certified public accountant with Peat Marwick. 
+Steven A. L'Heureux has served as a Vice President of Odetics since June 2000 and as the
+President and a director of Odetics' subsidiary, Broadcast, Inc., since June 2000. From March 1999 to June 2000, he served as the Vice President of Sales and Marketing of
+Broadcast. Prior to joining Odetics, from August 1996 to February 1999, Mr. L'Heureux served as the Vice President of Sales and Marketing at Vibrint
+Technologies, Inc., a developer of digital video server solutions for broadcast, cable and video applications. From October 1994 to August 1996,
+Mr. L'Heureux was the Vice President of Sales and Business Development for Minerva Systems, Inc., a provider of MPEG video compression systems for video and DVD
+applications. He has also held various North American and international sales management positions with the Eastman Kodak Company. 
+Gary W. Smith has served as the Controller of Odetics since 1992, became a Vice President in August 1994
+and the Secretary in 2002. Prior to that, Mr. Smith served as the Assistant Controller of Odetics from 1990 until 1992, Assistant Secretary from 1998 until 2002, and Senior Financial Analyst
+from 1986 until 1990. 
+Officers
+serve at the discretion of the Board of Directors. 
+Summary of Cash and Certain Other Compensation 
+The following table provides certain summary information concerning the compensation earned by the Chief Executive Officer and each of the four other most highly
+compensated executive officers of Odetics whose total cash salary and bonus during the fiscal year ended March 31, 2002 exceeded $100,000 (collectively, the "Named Executive Officers") for each
+of the three fiscal years ended March 31, 2000, 2001 and 2002. No other executive officers who would have otherwise been includable in such table on the basis of salary earned for the fiscal
+year ended March 31, 2002 has been excluded by reason of his or her termination of employment or change in executive status during that year. Other than the bonus paid to Mr. Johnson for
+the fiscal year ended March 31, 2002, no bonuses have 
+14 
+been paid to the Named Executive Officers during the fiscal years ended March 31, 2000, 2001 and 2002. 
+SUMMARY COMPENSATION TABLE 
+Long-Term Compensation 
+Annual Compensation 
+Awards 
+Name and Principal Positions with Odetics 
+Fiscal 
+Year 
+Salary ($)(1) 
+Bonus ($) 
+Restricted 
+Stock ($) 
+Securities 
+Underlying 
+Options (#)(2) 
+All Other 
+Compensation 
+($)(3) 
+Joel Slutzky(4) 
+Chairman of the Board 
+2002 
+2001 
+2000 
+289,522 
+326,890 
+326,910 
+— 
+— 
+— 
+— 
+— 
+— 
+— 
+— 
+55,000 
+5,100 
+3,211 
+4,800 
+Gregory A. Miner 
+Chief Executive Officer, Chief Financial Officer and Director 
+2002 
+2001 
+2000 
+217,200 
+214,662 
+182,066 
+— 
+— 
+— 
+— 
+— 
+— 
+— 
+30,000 
+30,000 
+4,830 
+3,891 
+5,122 
+John E. Johnson(5) 
+Vice President 
+2002 
+2001 
+2000 
+185,958 
+185,958 
+159,034 
+21,000 
+— 
+— 
+— 
+— 
+— 
+— 
+— 
+— 
+4,164 
+2,831 
+3,869 
+Hugo Fruehauf(6) 
+Vice President 
+2002 
+2001 
+2000 
+172,206 
+174,969 
+172,907 
+— 
+— 
+— 
+— 
+— 
+— 
+— 
+— 
+— 
+5,100 
+3,875 
+4,868 
+Steven A. L'Heureux 
+Vice President 
+2002 
+2001 
+2000 
+189,231 
+183,462 
+172,715 
+— 
+— 
+— 
+— 
+— 
+— 
+— 
+— 
+10,000 
+4,950 
+3,975 
+3,701 
+Gary W. Smith 
+Vice President, Controller and 
+Secretary 
+2002 
+2001 
+2000 
+115,235 
+114,821 
+106,159 
+— 
+— 
+— 
+— 
+— 
+— 
+— 
+— 
+20,000 
+2,881 
+2,106 
+2,593 
+(1) Represents
+all amounts earned from Odetics and its subsidiaries during the fiscal years shown, including amounts deferred under the Executive Deferral Plan and the Odetics 401(k) and
+Stock Ownership Plan.
+(2) Consists
+of options granted pursuant to Odetics' 1994 Long-Term Equity Incentive Plan and 1997 Stock Incentive Plan entitling the holder to purchase shares of
+Class A common stock of Odetics.
+(3) Consists
+solely of the matching contribution of Odetics to the respective accounts of the Named Executive Officers under the Odetics 401(k) and Stock Ownership Plan.
+(4) Mr. Slutzky
+resigned as Odetics' Chief Executive Officer in February 2002 and continues to serve as the Chairman of the Board. In fiscal 2002, Mr. Slutzky was
+granted an option to purchase 100,000 shares of common stock of MAXxess Systems.
+(5) In
+fiscal 2002, Mr. Johnson was granted an option to purchase 40,000 shares of common stock of Iteris.
+(6) In
+fiscal 2001, Mr. Fruehauf was granted an option to purchase 250,000 shares of common stock of Zyfer. 
+15 
+Option Grants in Last Fiscal Year 
+No grants of stock options were made to the Named Executive Officers and no stock appreciation rights were granted to any of the Named Executive Officers during
+the fiscal year ended March 31, 2002. 
+Aggregated Option Exercises and Fiscal Year End Values 
+In November 2001, Odetics implemented an option exchange program pursuant to which all of the Named Executive Officers cancelled all Odetics stock options
+then held by them. Subsequently, on May 20, 2002, the Named Executive Officers were granted new options to purchase shares of Class A common stock to replace the options that had been
+tendered and cancelled under the option exchange program. See "2001 Option Exchange Program." Therefore, no unexercised options were held by any of the Named Executive Officers as of the end of the
+fiscal year ended March 31, 2002. In addition, no options were exercised by any of the Named Executive Officers during that fiscal year, and none of the Named Executive Officers held or
+exercised any stock appreciation rights during the fiscal year ended March 31, 2002. 
+2001 Option Exchange Program 
+In November 2001, Odetics implemented an option exchange program to address the substantial loss in value of the outstanding stock options held by Odetics'
+executive officers and the increasing inability of those options to serve as a meaningful incentive for optionees to remain employed with Odetics. Under the program, each executive officer who held
+outstanding stock options with an exercise price of $4.00 or more per share under the 1997 Plan or the 1994 Long-Term Equity Plan (the "1994 Plan"), was given the opportunity to exchange
+that option for a new option under the 1997 Plan for the same number of shares that would be granted at least six months and one day after the completion of the option exchange program. 
+On
+November 16, 2001, Odetics accepted for exchange and cancellation options to purchase an aggregate of 349,000 shares of Odetics' Class A common stock representing 100%
+of the options eligible to be tendered under the option exchange program. On May 20, 2002, Odetics granted new options to purchase an aggregate of 349,000 shares of Class A common stock
+under the 1997 Plan to replace the eligible options that had been tendered and cancelled under the program. 
+In
+general, the exercise price per share for the new options was $1.40, the last reported sales price of the Class A common stock on the grant date. In the case of Joel Slutzky,
+who is a holder of 10% or more of the common stock, the exercise price per share for the new options was $1.54, or 110% of the last reported trading price of the Class A common stock on the
+grant date. 
+Each
+new option issued in exchange for a cancelled option will continue to vest and become exercisable for the option shares in accordance with the same vesting schedule in effect for
+the cancelled option. 
+16 
+The table below provides certain information concerning our executive officers who tendered eligible options in the option exchange program and the options that were cancelled pursuant
+to that program. Except for the November 2001 option exchange program, Odetics has not implemented any other option repricing or option cancellation/regrant programs. 
+10-YEAR OPTION REPRICINGS 
+Name and Principal Position 
+Date of 
+Cancel- 
+lation 
+Number of 
+Securities 
+Underlying 
+Options at 
+time of 
+Cancellation 
+Market 
+Price of 
+Stock at 
+Time of 
+Cancel- 
+lation 
+Exercise 
+Price at 
+Time of 
+Cancel- 
+lation 
+New 
+Exercise 
+Price of 
+Replace- 
+ment 
+Option 
+Length of 
+Original 
+Option Term 
+Remaining at 
+Date of 
+Cancellation 
+Joel Slutzky 
+Chairman of the Board 
+11/16/01 
+11/16/01 
+11/16/01 
+50,000 
+55,000 
+55,000 
+$ 
+1.26 
+1.26 
+1.26 
+$ 
+4.625 
+8.663 
+11.344 
+$ 
+1.54 
+1.54 
+1.54 
+7 years 
+8 years 
+8 years 
+Gregory A. Miner 
+Chief Executive Officer, Chief Financial Officer and Director 
+11/16/01 
+11/16/01 
+11/16/01 
+11/16/01 
+25,000 
+30,000 
+25,000 
+30,000 
+1.26 
+1.26 
+1.26 
+1.26 
+4.625 
+10.313 
+7.875 
+10.000 
+1.40 
+1.40 
+1.40 
+1.40 
+7 years 
+8 years 
+8 years 
+9 years 
+John E. Johnson 
+Vice President 
+11/16/01 
+12,000 
+1.26 
+4.625 
+1.40 
+7 years 
+Hugo Fruehauf 
+Vice President 
+11/16/01 
+12,000 
+1.26 
+4.625 
+1.40 
+7 years 
+Steven A. L'Heureux 
+Vice President 
+11/16/01 
+10,000 
+1.26 
+10.313 
+1.40 
+8 years 
+Gary W. Smith 
+Vice President, Controller and Secretary 
+11/16/01 
+11/16/01 
+11/16/01 
+15,000 
+20,000 
+10,000 
+1.26 
+1.26 
+1.26 
+4.625 
+10.313 
+7.875 
+1.40 
+1.40 
+1.40 
+7 years 
+8 years 
+8 years 
+Benefit Plans 
+Odetics maintains a 401(k) and Stock Ownership Plan (the "Stock Ownership Plan") which qualifies for favorable tax treatment under Section 401(a) of the
+Internal Revenue Code. The Stock Ownership Plan is the result of the merger of the Odetics, Inc. Profit Sharing and 401(k) Plan and the Odetics Associates Stock Ownership Plan. 
+Employees
+become eligible to make pre-tax contributions to the Stock Ownership Plan pursuant to Internal Revenue Code Section 401(k) as of the January 1,
+April 1, July 1 or October 1 coincident with or next following the date on which they are hired. Participants may contribute an amount not in excess of $11,000 for calendar year
+2002. Employees become eligible to receive an allocation of employer contributions to the Stock Ownership Plan as of the January 1, April 1, July 1 or October 1 coincident
+with or next following the date on which they have completed six months of service with Odetics. These contributions may be made in the form of cash or Odetics stock. No contributions were made by
+Odetics to the Stock Ownership Plan for the fiscal years ended March 31, 2000, 2001 and 2002. 
+Contributions
+that are made to the Stock Ownership Plan are allocated to the separate accounts of participants and are held in a trust. Participant accounts are credited with investment
+gains and charged with investment losses. Participant contributions are always fully vested at all times, and the Odetics contributions on behalf of participants vest at the rate of
+33 1 / 3 percent per year of service. Following 
+16 
+termination of employment, the vested portion of the participant's account balance is distributed in a lump sum payment. 
+Odetics
+also maintains an Executive Deferral Plan which allows designated executives to defer the receipt of some of their current compensation until a future year. These executives may
+elect to defer the receipt of up to 75% of their annual compensation, but in no event may they elect to defer less than $5,000. Benefits are generally fully vested at all times, and are payable
+following termination of employment in the manner elected by the executive. The Executive Deferral Plan does not qualify for favorable income tax treatment under Section 401(a) of the Internal Revenue
+Code. 
+Employment Contracts, Termination of Employment Agreements and Change of Control Arrangements 
+Odetics does not currently have any employment contracts in effect with any of its Named Executive Officers. Odetics provides incentives such as salary, benefits
+and option grants to attract and retain executive officers and other key associates. The Compensation and Stock Option Committee, as Plan Administrator of the 1997 Stock Incentive Plan, has the
+authority to provide for the accelerated vesting of outstanding options held by an individual, in connection with the termination of such individual's employment following an acquisition in which
+these options are assumed or the repurchase rights with respect to the unvested shares are assigned or upon certain hostile changes in control of Odetics. Other than such accelerated vesting and the
+agreements described below, there is no agreement or policy which would entitle any executive officer to severance payments or any other compensation as a result of such officer's termination. 
+Indemnification of Directors and Officers 
+Under Section 145 of the Delaware General Corporation Law, Odetics can indemnify its directors and officers against liabilities they may incur in such
+capacities, including liabilities under the Securities Act of 1933, as amended (the "Securities Act"). The certificate of incorporation and the bylaws of Odetics provides that Odetics will indemnify
+its directors and officers to the fullest extent permitted by law, and the bylaws require Odetics to advance litigation expenses upon receipt by Odetics of an undertaking by the director or officer to
+repay such advances if it is ultimately determined that the director or officer is not entitled to indemnification. The bylaws further provide that rights conferred under such bylaws do not exclude
+any other right such persons may have or acquire under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise. 
+Odetics'
+certificate of incorporation provides that, pursuant to Delaware law, its directors shall not be liable for monetary damages for breach of the directors' fiduciary duty of care
+to Odetics and its stockholders. This provision in the certificate of incorporation does not eliminate the duty of care, and in appropriate circumstances equitable remedies such as injunctive or other
+forms of non-monetary relief will remain available under Delaware law. In addition, each director will continue to be subject to liability for breach of the director's duty of loyalty to
+Odetics or its stockholders, for acts or omissions not in good faith or involving intentional misconduct or knowing violations of law, for actions leading to improper personal benefit to the director,
+and for payment of dividends or approval of stock repurchases or redemptions that are unlawful under Delaware law. The provision also does not affect a director's responsibilities under any other law,
+such as the federal securities laws or state or federal environmental laws. 
+Odetics
+has entered into agreements to indemnify its directors and certain of its officers in addition to the indemnification provided for in the certificate of incorporation and bylaws.
+These agreements, among other things, indemnify Odetics' directors and certain of its officers for certain expenses (including attorneys' fees), judgments, fines and settlement amounts incurred by
+such person in any action or proceeding, including any action by or in the right of Odetics, on account of services as 
+17 
+a director or officer of Odetics, or as a director or officer of any other company or enterprise to which the person provides services at the request of Odetics. 
+Compensation Committee Interlocks and Insider Participation 
+The members of the Compensation and Stock Option Committee of Odetics' Board of Directors during the fiscal year ended March 31, 2002 were
+Messrs. Daly, Seazholtz and Thomas. None of the these individuals was an officer or employee of Odetics or its subsidiaries at any time during the fiscal year ended March 31, 2002. 
+No
+executive officer of Odetics has served on the Board of Directors or on the compensation committee of any other entity that has, or has had, one or more executive officers serving as
+a member of the Board of Directors or on the Compensation and Stock Option Committee of Odetics. 
+COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION 
+This report covers Odetics' fiscal year ended March 31, 2002. The Compensation and Stock Option Committee (the "Compensation Committee") for the fiscal
+year ended March 31, 2002 was comprised of three outside directors, Messrs. Daly, Seazholtz and Thomas. The Compensation Committee recommends the general compensation levels for
+executives. The Compensation Committee meets periodically to review and recommend for approval by the Board of Directors, the salaries, bonuses and benefit plans for officers and key associates.
+During the fiscal year ended March 31, 2002, the Compensation Committee held two meetings. 
+General Compensation Policy 
+The guiding principle of the Compensation Committee is to establish a compensation program that aligns executive compensation with Odetics' objectives and
+business strategies as well as with financial and operational performance. In keeping with this principle the Compensation Committee seeks to: 
+(1) Attract
+and retain qualified senior executives who can play a significant role in the achievement of Odetics' goals;
+(2) Reward
+executives for strategic management and the long-term enhancement of stockholder value; and
+(3) Create
+a performance-oriented environment that rewards performance with respect to the financial and operational goals of Odetics. 
+In
+the fiscal year ended March 31, 2002, the annual compensation for the executive officers included base salaries and stock options. 
+Odetics
+establishes salaries for the officers by considering the salaries of officers at comparably sized companies according to data obtained by the Compensation Committee from
+executive compensation consultants and from other independent outside sources, including the American Electronics Association annual survey of executive compensation. 
+A
+substantial portion of the compensation of executive officers is based upon the award of stock options which rely on increases in the value of Odetics' securities. The award of options
+is intended to encourage executives to establish a meaningful, long-term ownership interest in Odetics consistent with the interests of Odetics' stockholders. Under Odetics' stock option
+plans, options are granted from time to time to certain officers and key associates of Odetics and its subsidiaries at the fair market value of the shares of Class A common stock at the time of
+grant. Because the compensation element of options is dependent on increases over time in the market value of such shares, stock options represent compensation that is tied to Odetics'
+long-term performance. The award of stock options to the 
+18 
+executive officers of Odetics is determined based upon individual performance, level of base salary and position with Odetics. 
+The
+Compensation Committee has reviewed the base salaries for the fiscal year ended March 31, 2002 of each of the executive officers and is of the opinion that such salaries are
+not unreasonable in view of those paid by Odetics' competitors and by other companies of similar size. The Compensation Committee also reviewed the stock options awarded to the executive officers for
+their services in the fiscal year ended March 31, 2002 and is of the opinion that the option awards are reasonable in view of the officers' individual performance and positions with Odetics. 
+CEO Compensation 
+In setting the total compensation payable to Joel Slutzky, who resigned as Odetics' Chief Executive Officer in February 2002 but who continues to serve as
+the Chairman of the Board, and Gregory A. Miner, Odetics' Chief Executive Officer and Chief Financial Officer, for the fiscal year ended March 31, 2002, the Compensation Committee sought to
+make such compensation competitive with that provided by other companies with which Odetics competes for executive talent. 
+With
+respect to the base salaries of Messrs. Slutzky and Miner, it was the Compensation Committee's intent to provide each such individual with a level of stability and certainty
+each year. The Compensation Committee believes the base salaries of Messrs. Slutzky and Miner for the fiscal year ended March 31, 2002 is at a competitive level with the base salaries in
+effect for similarly situated chief executive officers. The remaining components of Mr. Slutzky's and Mr. Miner's compensation for the fiscal year ended March 31, 2002, however,
+were primarily dependent upon corporate performance. Based upon such performance, among other factors, no bonus was paid to either Mr. Slutzky or Mr. Miner for the fiscal year ended
+March 31, 2002 and no options were granted to either person for the fiscal year ended March 31, 2002. 
+2001 Option Exchange Program 
+In light of the substantial decline in the market price of the Class A common stock that occurred as a result of the economic downturn in the technology
+sector, which began in the latter part of the 2000 calendar year, many of the outstanding options held by Odetics' executive officers had exercise prices significantly higher than the market price of
+the underlying common stock. The Compensation Committee believed that many of those options had little or no value and were unlikely to be exercised in the foreseeable future. As a result, the
+Compensation Committee decided that those options were no longer effective in achieving the desired objectives of retaining and incentivizing employees important to Odetics' attainment of its business
+and financial objectives and the creation of value for the stockholders. 
+Accordingly,
+in November 2001, the Compensation Committee authorized Odetics to implement an option exchange program which would allow each executive officer the opportunity to
+exchange his outstanding stock options under the 1997 Plan and the 1994 Plan with an exercise price in excess of $4.00 per share. In exchange, the executive officers would receive new options under
+the 1997 Plan for the same number of shares to be granted at least six months and one day after the completion of the option exchange program. 
+Options
+to purchase 349,000 shares were held by executive officers and eligible for exchange. At the conclusion of the program on November 16, 2001, Odetics accepted for exchange
+and cancellation options to purchase an aggregate of 349,000 shares of common stock representing 100% of the options eligible to be tendered under the option exchange program. 
+On
+May 20, 2002, Odetics granted options to purchase an aggregate of 349,000 shares of Class A common stock to executive officers who tendered eligible options in the
+program. In general, the 
+19 
+exercise price per share for those new options is $1.40, the last reported trading price of the Class A common stock on the grant date. In the case of Joel Slutzky, who is a holder of 10% or
+more of the common stock, the exercise price per share for the new options was $1.54, or 110% of the last reported trading price of the Class A common stock on the grant date. Six executive
+officers originally participated in the option exchange program, six executive officers received new options to purchase a total of 349,000 shares in cancellation of their higher-priced options for
+the same number of shares, and no executive officers held no eligible options. 
+Each
+option issued in exchange for a cancelled option will continue to vest and become exercisable for the option shares in accordance with the same vesting schedule in effect for the
+cancelled option. 
+The
+Compensation Committee believed that this program was necessary because equity incentives in the form of stock option grants form a critical component of the compensation
+package provided to
+Odetics' key employees and play a substantial role in Odetics' ability to retain the services of individuals essential to Odetics' long-term financial success. The Compensation Committee
+felt that Odetics' ability to retain key employees would be significantly impaired, unless value were restored to their options in the form of either replacement options or supplemental options to be
+granted with an exercise price equal to the fair market value of the Class A common stock at the time of grant. However, in order to assure that the option exchange program served its primary
+purposes of assuring the continued service of key employees and helping to create stockholder value, the Committee imposed several limitations. First, no participant would be eligible to receive a
+replacement option for his cancelled option unless that individual continued to be employed by Odetics until the grant date of the replacement option. To assure that the replacement option would not
+be treated as a variable award for financial accounting purposes, which would otherwise have a negative impact upon Odetics' earnings, no replacement option was to be granted within six months and one
+day after the cancellation of the option submitted for exchange. As a result, each participant in the program had to remain employed with Odetics until the end of that period in order to receive the
+replacement option. In addition, each replacement option will vest in accordance with the same vesting schedule as was in effect for the cancelled option it replaces. As a result, the optionee will
+only have the opportunity to acquire all the shares subject to the replacement option if he remains employed with Odetics through the end of that vesting period. 
+As
+a result of the deferred grant date for the replacement options and the continuation of the existing vesting schedules for those options, the Compensation Committee believed that the
+program struck an appropriate balance between the interests of Odetics' employees and those of its stockholders. The replacement options provide an opportunity for executive officers, who are
+essential to Odetics' long-term financial success, to restore value to the equity component of their compensation package. However, those individuals will enjoy the benefits of their
+replacement options only if they in fact remain employed with Odetics and contribute to its financial success in a manner that creates stockholder value in the form of increases to the market value of
+its stock. 
+Compliance with Internal Revenue Code Section 162(m) 
+Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to publicly held corporations for compensation exceeding
+$1.0 million paid to certain of the corporation's executive officers. The limitation applies only to compensation which is not considered to be performance-based. The nonperformance based
+compensation to be paid to Odetics' executive officers for the fiscal year ended March 31, 2002 did not exceed the $1.0 million limit per officer, nor is it expected that the
+nonperformance based compensation to be paid to Odetics' executive officers for the next fiscal year will exceed that limit. Odetics' 1997 Stock Incentive Plan is structured so that any compensation
+deemed paid to an executive officer in connection with the exercise of option grants made under that plan will qualify as performance-based compensation which will not be subject to the
+$1.0 million limitation. Because it is very unlikely that the cash compensation payable to any of Odetics' executive 
+20 
+officers in the foreseeable future will approach the $1.0 million limit, the Compensation Committee has decided at this time not to take any other action to limit or restructure the elements
+of cash compensation payable to Odetics' executive officers. The Compensation Committee will reconsider this
+decision should the individual compensation of any executive officer ever approach the $1.0 million level. 
+Submitted
+by the Compensation Committee 
+of the Board of Directors: 
+Kevin
+C. Daly, Ph.D. 
+John W. Seazholtz 
+Thomas L. Thomas 
+21 
+AUDIT COMMITTEE REPORT 
+The following is the report of the audit committee with respect to the audited consolidated financial statements of Odetics for the fiscal year ended
+March 31, 2002 included in Odetics' Annual Report on Form 10-K for that year. 
+Review with Management 
+The audit committee has reviewed and discussed these audited consolidated financial statements with management of Odetics. 
+Review and Discussions with Independent Auditors 
+The audit committee has discussed with Odetics' independent auditors, Ernst & Young LLP, the matters required to be discussed by SAS 61 (Codification of
+Statements on Auditing Standards, AU Section 380), as amended, which includes, among other items, matters related to the conduct of the audit of the consolidated financial statements of
+Odetics. 
+The
+audit committee has received the written disclosures and the letter from Ernst & Young LLP required by Independence Standards Board Standard No. 1 ("Independence
+Discussions with Audit
+Committees"), as amended, and has discussed with Ernst & Young LLP the independence of Ernst & Young LLP from Odetics. 
+Conclusion 
+Based on the review and discussions referred to above in this report, the audit committee recommended to the Board of Directors of Odetics that the audited
+financial statements be included in Odetics' Annual Report on Form 10-K for the year ended March 31, 2002 for filing with the Securities and Exchange Commission. 
+Submitted
+by the Audit Committee 
+of the Board of Directors: 
+John
+W. Seazholtz 
+Thomas L. Thomas 
+Paul E. Wright 
+AUDIT AND OTHER FEES 
+Fees Billed to Odetics by Ernst & Young LLP During the Fiscal Year Ended March 31, 2002 
+Audit Fees. Audit fees billed to Odetics by Ernst & Young LLP during the fiscal year ended
+March 31, 2002 for audit of Odetics' annual consolidated financial statements and review of those consolidated financial statements included in Odetics' quarterly reports on Forms
+10-Q totaled approximately $133,550. 
+Financial Information Systems Design and Implementation Fees. Odetics did not engage Ernst &
+Young LLP to provide advice or services to Odetics regarding financial information systems design and implementation during the fiscal year ended March 31, 2002. 
+All Other Fees. Other audit-related fees for the fiscal year ended March 31, 2002 were an
+additional $155,500 and included, among other things, fees for registration statements, fees related to a private placement, and audits of certain subsidiaries of Odetics. Fees billed to Odetics for
+non-audit-related services rendered by Ernst & Young LLP for the fiscal year ended March 31, 2002, including 
+22 
+fees for tax compliance and tax consulting services, were approximately $76,440. In the aggregate, all such other fees, including audit-related fees, totaled approximately $231,940. 
+Determination of Independence 
+The Audit Committee of the Board of Directors has determined that the provision by Ernst & Young LLP of the services covered under the headings "Financial
+Information Systems Design and Implementation Fees" and "All Other Fees" above are compatible with maintaining Ernst & Young LLP's independence. 
+PERFORMANCE GRAPH FOR ODETICS, INC. 
+INDEXED COMPARISON OF CUMULATIVE TOTAL RETURN 
+The performance graph shows the cumulative total return on investment assuming an investment of $100 on April 1, 1997 in each of the Class A common
+stock and Class B common stock of Odetics, the Nasdaq Market Index and Media General's Industry Group 836 for Diversified Electronics. The total stockholder return assumes reinvestment of
+dividends on a daily basis, although cash dividends have not been declared on either class of Odetics' common stock. The stockholder returns shown in the following graph are not necessarily indicative
+of future performance. 
+Measurement Period 
+1997 
+1998 
+1999 
+2000 
+2001 
+2002 
+Odetics Class A 
+100.00 
+197.83 
+220.43 
+310.87 
+76.30 
+35.04 
+MG Group Index 
+100.00 
+120.97 
+116.54 
+365.37 
+135.01 
+100.43 
+Nasdaq Market Index 
+100.00 
+151.12 
+197.49 
+363.67 
+149.68 
+151.55 
+Odetics Class B 
+100.00 
+140.56 
+203.03 
+286.32 
+62.47 
+41.67 
+Notwithstanding anything to the contrary set forth in any of Odetics' previous or future filings under the Securities Act or the Exchange Act, as amended, that
+might incorporate this Proxy Statement or future filings made by Odetics under those statutes, the Compensation Committee Report, the Audit Committee Report, the Audit Committee Charter, reference to
+the independence of 
+23 
+the Audit Committee members and the Performance Graph are not deemed filed with the Securities and Exchange Commission and shall not be deemed incorporated by reference into any of those prior
+filings or into any future filings made by Odetics under those statutes. 
+Certain Transactions 
+In January 2001, Odetics entered into an Executive Ownership/Severance Plan with Steven A. L'Heureux, Vice President of Odetics and the
+President and a director of Broadcast, Inc., a subsidiary of Odetics. Under the terms of the plan, in the event that Mr. L'Heureux's employment had been terminated without
+cause by Odetics during the term of the plan, Mr. L'Heureux would have been entitled to receive twelve months of salary and benefits, at the same level as those provided to him
+at the time of execution of the plan. In addition, if Broadcast had been sold before December 31, 2001, (i) Mr. L'Heureux would have been entitled to 2.5% of the
+aggregate sale price and (ii) if the buyer had not offered employment to Mr. L'Heureux on terms at least substantially equal to the terms of his employment with Broadcast,
+Mr. L'Heureux would have been entitled to two years of salary and benefits, at the same level as those provided to him at the time of execution of the ownership/severance plan.
+Even if the buyer had offered employment and Mr. L'Heureux accepted such offer, if such employment had terminated without cause or if certain other events had occurred,
+Mr. L'Heureux would have been entitled to salary and benefits for the remainder of the two-year term, measured from the date of his initial employment with the buyer.
+The plan terminated on December 31, 2001. 
+In
+May 2001, Odetics entered into a Severance Benefit Plan and two Phantom Ownership Plans with Peter Strom, who is no longer employed by Odetics. At the time of these
+transactions, Mr. Strom was a Vice President of Odetics and the President, Chief Executive Officer and a director of MAXxess Systems, Inc., a subsidiary of Odetics. Under the Severance
+Benefit Plan, in the event Mr. Strom's employment had been terminated without cause by Odetics during the term of the plan, Mr. Strom would have been entitled to receive twelve months of
+salary and benefits, at the same level as those provided to him at the time of execution of the plan. In addition, if MAXxess Systems had been sold before October 4, 2001 and the buyer had not
+offered employment to Mr. Strom on terms at least substantially equal to the terms of his employment with MAXxess Systems, Mr. Strom would have been entitled to two years of salary and
+benefits, at the same level as those provided to him at the time of execution of the severance plan. Even if the buyer had offered employment and Mr. Strom had accepted such offer, if such
+employment had been terminated without cause or if certain other events had occurred, Mr. Strom would have been entitled to salary and benefits for the remainder of the two-year
+term, measured from the date of his initial employment with the buyer. Under the Phantom Ownership Plans, in the event that MAXxess Systems had sold its CCTV product line or its Access Control product
+line prior to October 4, 2001, Mr. Strom would have been entitled to 1.75% of the aggregate sale price of the CCTV product line and 0.78% of the aggregate sale price of the Access
+Control product line. Odetics sold substantially all of the assets and certain of the liabilities of the CCTV Products line in September 2001. The Severance Benefit Plan and the two Phantom
+Ownership Plans all terminated on October 4, 2001. Mr. Strom received a total of $153,512 (equal to 1.75% of the aggregate sale price of the CCTV product line) under the Phantom
+Ownership Plans. 
+In
+August 2001, Odetics' subsidiary, Iteris, issued 1,781,268 shares of its Series A preferred stock to an institutional investor in exchange for $5.0 million in
+cash. In addition, Iteris issued 1,343,645 shares of its Series A preferred stock and 547,893 shares of its common stock in exchange for $500,000 in cash and the retirement of its
+$3.75 million Subordinated Convertible Promissory Note, plus related accrued interest of $453,333. Concurrently, Odetics sold in a secondary transaction, $1.9 million of its shares of
+Iteris common stock to a group of investors, which included (i) Thomas Bartholet who is no longer employed with Odetics, but at the time of this transaction was Odetics' Vice President,
+Corporate
+Development, and who purchased a total of 228,985 shares of common stock in two separate tranches for total consideration of $610,602.75; (ii) Kevin C. Daly, a director of Odetics, who
+purchased 
+24 
+a total of 164,516 shares of common stock in two separate tranches for total consideration of $399,533.75; (iii) Crandall L. Gudmundson, one of Odetics' directors, who purchased a total of
+66,667 shares of common stock for $150,000.75; (iv) John E. Johnson, Odetics' Vice President and Iteris' President and Chief Executive Officer, who purchased a total of 133,333 shares of common
+stock for $299,999.25; (v) Gregory A. Miner, Odetics' Chief Executive Officer, Chief Financial Officer and a director, who purchased a total of 20,594 shares of common stock for $46,336.50;
+(vi) Jerry F. Muench, one of Odetics' directors, who purchased a total of 44,444 shares of common stock for $99,999; and (vii) Joel Slutzky, the Chairman of the Board of Odetics (at the
+time of this transaction, Mr. Slutzky was also the Chief Executive Officer of Odetics), who purchased a total of 326,178 shares of common stock in two separate tranches for total consideration
+of $741,805.10. 
+In
+February 2002, Odetics entered into a $1.25 million line of credit with Technology Lending Partners, L.L.C., a California limited liability company that is controlled by
+Joel Slutzky, Odetics' Chairman of the Board of Directors. The line of credit bears interest at the prime rate plus 4% (at March 31, 2002, the interest rate was 8.75%) and matures in
+July 2003. At March 31, 2002, $1.25 million was outstanding under this line of credit. 
+Section 16(a) Beneficial Ownership Reporting Compliance 
+Under the federal securities laws, Odetics' directors and officers and any persons holding more than 10% of Odetics' common stock are required to report their
+ownership of Odetics' common stock and any changes in that ownership to the SEC. Specific due dates for these reports have been established, and Odetics is required to report in this proxy statement
+any failure to file by these dates. Based solely on its review of copies of the reports on Forms 3, 4 and 5 received by Odetics with respect to the fiscal year ended March 31, 2002, and the
+written representations received from the reporting persons that no other reports were required, Odetics believes that all directors, executive officers and persons who own more than 10% of Odetics'
+common stock have complied with the reporting requirements of Section 16(a) and have filed all reports required by such section. 
+Annual Report 
+A copy of Odetics' annual report on Form 10-K for the fiscal year ended March 31, 2002 accompanies the proxy materials being mailed to
+all stockholders. The annual report is not incorporated into this proxy statement and is not considered proxy solicitation material. 
+Deadline for Receipt of Stockholder Proposals 
+If Odetics has not received notice on or prior to June 21, 2002 of any matter a stockholder intends to propose for a vote at the 2002 annual meeting of
+stockholders, then a proxy solicited by the Board of Directors may be voted on such matter in the discretion of the proxy holder, without discussion of the matter in the proxy statement soliciting
+such proxy and without such matter as a separate item on the proxy card. 
+The
+deadline for stockholders to submit proposals to be considered for inclusion in Odetics' proxy statement for next year's annual meeting of stockholders is anticipated to be
+April 8, 2003. In addition, the proxy to be solicited by the Board of Directors for next year's annual meeting will confer discretionary authority to vote on any stockholder proposal presented
+at that meeting, unless Odetics receives notice of such proposal no later than June 22, 2003. Stockholder proposals must be mailed to the attention of the Secretary of Odetics at the principal
+executive offices of Odetics located at 1515 South Manchester, Anaheim, California 92802. 
+25 
+Other Business 
+The Board of Directors is not aware of any other matter which will be presented for action at the Annual Meeting other than the matters set forth in this proxy
+statement. If any other matter requiring a vote of the stockholders arise, it is intended that the proxy holders will vote the shares they represent as the Board of Directors may recommend.
+Discretionary authority with respect to such other matters is granted by the execution of the enclosed proxy card. 
+THE BOARD OF DIRECTORS OF 
+ODETICS, INC. 
+Anaheim, California 
+July 26, 2002 
+26 
+Appendix A 
+Amended and Restated Charter of the Audit Committee 
+of the Board of Directors of Odetics, Inc. 
+Purpose. 
+The purpose of the Audit Committee (the "Committee") is to assist the Board of Directors of Odetics, Inc., a Delaware corporation (the "Company") in monitoring
+(1) the selection and independence of the Company's external auditors, (2) the audit, compliance and financial reporting procedures of the Company, (3) the adequacy of the
+Company's internal financial controls, and (4) the overall integrity of the Company's financial statements. 
+The
+Committee's function is one of oversight only and shall not relieve the responsibilities of the Company's management for preparing financial statements which accurately and fairly
+present the Company's financial results and condition, or the responsibilities of the independent auditors relating to the audit or review of financial statements. Nothing in this charter is intended
+to preclude or impair the protection provided in Section 141(e) of the Delaware General Corporation Law for good faith reliance by members of the Committee on reports or other information
+provided by others. 
+Composition of the Committee. 
+There shall be at least three directors serving on the Committee who meet the independence, financial literacy and related audit committee requirements of the
+listing standards of The Nasdaq Stock Market, Inc. At least one member of the Committee shall have accounting or related financial management expertise as described in the listing standards. 
+Selection and Review of Independent Auditors. 
+The Audit Committee shall have the ultimate authority to select, evaluate and, if appropriate, replace or rotate the independent auditors, subject to any action
+that may be taken by the Board and any ratification by the Company's stockholders proposed by the Board at the annual meeting of stockholders. It is the policy of the Board and the Committee that the
+ultimate accountability of the independent auditors shall be owed to the Board and the Committee as representatives of the Company's stockholders. 
+The
+Committee will review at least annually: 
+• the
+qualifications of the responsible partner or manager of the independent auditors who is engaged on the Company's account,
+• the
+amount billed or to be billed for audit services and the portion of this work being performed by persons who are not full-time, permanent
+employees, and
+• whether
+there are any expertise, personnel, reputation, or other matters affecting the independent auditors which are brought to the Committee's attention
+and which may affect the auditing firm's services to the Company. 
+Annual Financial Reporting. 
+In connection with the audit of each fiscal year's financial statements, the Committee will: 
+• review
+and discuss the audited financial statement and related accounting and auditing principles and practices with appropriate members of the Company's
+management;
+• discuss
+with the independent auditors the matters required to be discussed by Statement on Auditing Standards No. 61, including (1) the quality
+as well as acceptability of the accounting 
+A-1 
+principles applied in the financial statements, and (2) new or changed accounting policies; significant estimates, judgments, uncertainties or unusual transactions; and accounting policies
+relating to significant financial statement items; 
+• receive
+from the independent auditors a written disclosure and statement of all relationships between the auditors and the Company consistent with
+Independence Standards Board Standard No. 1;
+• discuss
+with the auditors any disclosed relationships or services that may impact the objectivity or independence of the auditors;
+• obtain
+from the independent auditors a statement of the audit fees and other categories of fees billed for the last fiscal year which are required to be
+disclosed in the Company's proxy statement for its annual meeting under the SEC's proxy rules, and consider whether the provision of any non-audit services is compatible with maintaining
+the auditors' independence;
+• recommend
+whether or not the audited financial statements should be included in the Company's Annual Report on Form 10-K for filing with
+the SEC;
+• recommend
+to the Board the selection of the independent auditors. 
+Quarterly Financial Reporting. 
+At a Committee meeting or through the Chair of the Committee, the Committee will review with the independent auditors and appropriate company officers the
+Company's interim financial results to be included on each Form 10-Q. The Committee's review will normally include: 
+• the
+results of the independent auditors' review of the quarterly financial statements,
+• management's
+analysis of any significant accounting issues, changes, estimates, judgments or extraordinary items relating to the financial statements, and
+• the
+selection, application and effects of critical accounting policies applied by the Company. 
+Internal Controls. 
+The Committee will review annually: 
+• internal
+control systems and procedures of the Company,
+• status
+of management responses to prior period audit recommendations by the independent auditors,
+• succession
+planning and staffing levels for the Company's finance and accounting employees, and
+• the
+status and implementation of conduct codes concerning related party transactions, conflicts of interest, ethical conduct, and compliance with applicable
+laws and regulatory policies. 
+Other Committee Review Functions. 
+The Committee will review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board. 
+A-2 
+The
+Committee may discuss and review with company management, internal or outside legal counsel, or the independent auditors any other topics relating to the purpose of the Committee
+which may come to the Committee's attention, including: 
+• published
+reports, regulatory or accounting initiatives, or communications from employees, government agencies or others, which raise significant issues
+concerning company financial statements or accounting policies;
+• off
+balance sheet, related party, or other transactions which could affect the Company's financial results or condition;
+• any
+issues concerning the Company which the independent auditors have discussed with their national or supervisory office;
+• reports
+concerning significant subsidiary or foreign operations; and
+• pending
+or threatened litigation that has the potential to have a material adverse effect on the Company, regulatory issues, or alleged violations of law or
+corporate conduct codes. 
+Meetings, Reports and Resources of the Committee. 
+The Committee will meet at least quarterly. The Committee may also hold special meetings or act by unanimous written consent as the Committee may decide.
+Committee meetings will be governed by the quorum and other procedures generally applicable to meetings of the Board under the Company's bylaws, unless otherwise stated by resolution of the Board or
+the Committee. 
+The
+Committee, as it may determine to be appropriate, will meet in separate executive sessions with the Chief Financial Officer, controller or principal accounting officer, and
+representatives of the independent auditors, and may meet with other company employees, agents or representatives invited by the Committee. 
+The
+Committee will prepare the audit committee report required to be included in the Company's annual meeting proxy statement, and report to the Board on the other matters relating to
+the Committee or its purposes, as required by the SEC proxy rules. 
+The
+Committee is at all times authorized to have direct, independent access to the independent auditors and to the Company's management and internal audit and finance personnel. The
+Committee is authorized to communicate in confidence with any of these individuals. 
+The
+Committee is authorized to conduct investigations, and to retain, at the expense of the Company, independent legal, accounting, or other professional consultants selected by the
+Committee, for any matters relating to the purpose of the Committee. The Committee is further authorized to retain at the expense of the Company, separate accounting or finance professional advisers
+that the Committee may consider necessary or helpful in reviewing the Company's accounting policies and financial statements. The Committee will advise the Board in advance of engaging outside
+professional services and the expected fees and costs to be incurred. 
+A-3 
+PROXY 
+ODETICS, INC. 
+CLASS A COMMON STOCK 
+THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS 
+The undersigned stockholder of Class A common stock of ODETICS, INC. hereby appoints GREGORY A. MINER and GARY W. SMITH, and each of them, proxies of the
+undersigned, each with full power to act without the other and with power of substitution, to represent the undersigned at the Annual Meeting of Stockholders of Odetics to be held at 1515 South
+Manchester Avenue, Anaheim, California 92802 on September 13, 2002 at 10:00 a.m. (Pacific Time), and at any adjournments thereof, and to vote all shares of Class A common stock of Odetics held of
+record by the undersigned on July 26, 2002, with all the powers the undersigned would possess if personally present, in accordance with the instructions on the reverse hereof. 
+The
+undersigned hereby revokes any other proxy to vote at such Annual Meeting of Stockholders and hereby ratifies and confirms all that said proxies, and each of them, may lawfully do by
+virtue hereof. The undersigned also acknowledges receipt of the Notice of Annual Meeting of Stockholders, the proxy statement and the annual report to stockholders on Form 10-K for the year ended
+March 31, 2002, which were furnished with this proxy. 
+THIS
+PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS BELOW, OR IF NO INSTRUCTIONS ARE INDICATED, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2, AND IN ACCORDANCE WITH
+THE DISCRETION OF THE PROXY HOLDERS WITH REGARD TO ANY OTHER MATTERS PROPERLY BROUGHT TO A VOTE AT THE ANNUAL MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF. 
+CONTINUED AND TO BE SIGNED ON REVERSE SIDE 
+SEE REVERSE SIDE 
+ý Please mark votes as in this example. 
+1. 
+Election of Directors 
+Nominees standing for election by holders of Class A common stock: Crandall L. Gudmundson and Jerry F. Muench. 
+o FOR o WITHHOLD AUTHORITY to vote for all nominees listed
+below 
+(Instruction: To withhold authority to vote for any individual nominee, write that nominee's name in the space provided below.) 
+Nominees standing for election by holders of Class A common stock and Class B common stock voting together as a single class: Kevin C. Daly, Gregory A. Miner, John W. Seazholtz, Joel Slutzky, Thomas L. Thomas and Paul E.
+Wright. 
+o FOR o WITHHOLD AUTHORITY to vote for all nominees listed
+below 
+(Instruction: To withhold authority to vote for any individual nominee, write that nominee's name in the space provided below.) 
+2. 
+Ratification of Ernst & Young LLP as the independent auditors of Odetics for the fiscal year ending March 31, 2003. 
+o FOR o AGAINST o ABSTAIN 
+MARK HERE FOR ADDRESS CHANGE AND INDICATE NEW ADDRESS 
+o 
+MARK HERE IF YOU PLAN TO ATTEND THE MEETING 
+o 
+Signature: 
+Date: 
+Signature: 
+Date: 
+(This
+Proxy must be signed exactly as your name appears hereon. Executors, administrators, trustees, etc., should give full title as such. If the stockholder is a corporation, a duly authorized
+officer should sign on behalf of the corporation and should indicate his or her title.) 
+PLEASE
+MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. 
+PROXY 
+ODETICS, INC. 
+CLASS B COMMON STOCK 
+THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS 
+The undersigned stockholder of Class B common stock of ODETICS, INC. hereby appoints GREGORY A. MINER and GARY W. SMITH, and each of them, proxies of the
+undersigned, each with full power to act without the other and with power of substitution, to represent the undersigned at the Annual Meeting of Stockholders of Odetics to be held at 1515 South
+Manchester Avenue, Anaheim, California 92802 on September 13, 2002 at 10:00 a.m. (Pacific Time), and at any adjournments thereof, and to vote all shares of Class B common stock of Odetics held of
+record by the undersigned on July 26, 2002, with all the powers the undersigned would possess if personally present, in accordance with the instructions on the reverse hereof. 
+The
+undersigned hereby revokes any other proxy to vote at such Annual Meeting of Stockholders and hereby ratifies and confirms all that said proxies, and each of them, may lawfully do by
+virtue hereof. The undersigned also acknowledges receipt of the Notice of Annual Meeting of Stockholders, the proxy statement and the annual report to stockholders on Form 10-K for the year ended
+March 31, 2002, which were furnished with this proxy. 
+THIS
+PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS BELOW, OR IF NO INSTRUCTIONS ARE INDICATED, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2, AND IN ACCORDANCE WITH
+THE DISCRETION OF THE PROXY HOLDER WITH REGARD TO ANY OTHER MATTERS PROPERLY BROUGHT TO A VOTE AT THE ANNUAL MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF. 
+CONTINUED AND TO BE SIGNED ON REVERSE SIDE 
+SEE REVERSE SIDE 
+ý Please mark votes as in this example. 
+1. 
+Election of Directors 
+Nominees standing for election by holders of Class A common stock and Class B common stock voting together as a single class: Kevin C. Daly, Gregory A. Miner, John W. Seazholtz, Joel Slutzky, Thomas L. Thomas and Paul E.
+Wright. 
+o FOR o WITHHOLD AUTHORITY to vote for all nominees listed
+below 
+(Instruction: To withhold authority to vote for any individual nominee, write that nominee's name in the space provided below.) 
+2. 
+Ratification of Ernst & Young LLP as the independent auditors of Odetics for the fiscal year ending March 31, 2003. 
+o FOR o AGAINST o ABSTAIN 
+MARK HERE FOR ADDRESS CHANGE AND INDICATE NEW ADDRESS 
+o 
+MARK HERE IF YOU PLAN TO ATTEND THE MEETING 
+o 
+Signature: 
+Date: 
+Signature: 
+Date: 
+(This
+Proxy must be signed exactly as your name appears hereon. Executors, administrators, trustees, etc., should give full title as such. If the stockholder is a corporation, a duly authorized
+officer should sign on behalf of the corporation and should indicate his or her title.) 
+PLEASE
+MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. 
+QuickLinks 
+PROPOSAL NO. 1 ELECTION OF DIRECTORS 
+Nominees for Election 
+PROPOSAL NO. 2 RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS 
+PRINCIPAL STOCKHOLDERS AND COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 
+EQUITY COMPENSATION PLANS 
+EXECUTIVE COMPENSATION AND OTHER INFORMATION 
+SUMMARY COMPENSATION TABLE 
+10-YEAR OPTION REPRICINGS 
+COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION 
+AUDIT COMMITTEE REPORT 
+AUDIT AND OTHER FEES 
+PERFORMANCE GRAPH FOR ODETICS, INC. INDEXED COMPARISON OF CUMULATIVE TOTAL RETURN 
+Appendix A 
+Amended and Restated Charter of the Audit Committee of the Board of Directors of Odetics, Inc.

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+DEF 14A
+1
+a2116559zdef14a.htm
+DEF 14A
+QuickLinks 
+-- Click here to rapidly navigate through this document 
+SCHEDULE 14A INFORMATION 
+Proxy
+Statement Pursuant to Section 14(a) of 
+the Securities Exchange Act of 1934 (Amendment No. ) 
+Filed by the Registrant ý 
+Filed by a Party other than the Registrant o 
+Check the appropriate box: 
+o 
+Preliminary Proxy Statement 
+o 
+Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) 
+ý 
+Definitive Proxy Statement 
+o 
+Definitive Additional Materials 
+o 
+Soliciting Material Pursuant to §240.14a-12 
+ODETICS, INC. 
+(Name of Registrant as Specified In Its Charter) 
+(Name of Person(s) Filing Proxy Statement, if other than the Registrant) 
+Payment of Filing Fee (Check the appropriate box): 
+ý 
+No fee required 
+o 
+Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11 
+(1) 
+Title of each class of securities to which transaction applies: 
+(2) 
+Aggregate number of securities to which transaction applies: 
+(3) 
+Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): 
+(4) 
+Proposed maximum aggregate value of transaction: 
+(5) 
+Total fee paid: 
+o 
+Fee paid previously with preliminary materials. 
+o 
+Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or
+Schedule and the date of its filing. 
+(1) 
+Amount Previously Paid: 
+(2) 
+Form, Schedule or Registration Statement No.: 
+(3) 
+Filing Party: 
+(4) 
+Date Filed: 
+ODETICS, INC. 
+NOTICE OF ANNUAL MEETING OF STOCKHOLDERS 
+To Be Held September 12, 2003 
+To the Stockholders of Odetics, Inc.: 
+NOTICE
+IS HEREBY GIVEN that the Annual Meeting of Stockholders of Odetics, Inc., a Delaware corporation, will be held on Friday, September 12, 2003 at 10:00 a.m.,
+Pacific Time, at the principal executive offices of Odetics located at 1515 South Manchester Avenue, Anaheim, California 92802 for the following purposes, as more fully described in the proxy
+statement accompanying this Notice: 
+1. To
+elect eight directors to serve on the Board of Directors of Odetics—two directors by the holders of the Class A common stock and six directors by the holders of
+the Class A common stock and the holders of the Class B common stock, voting together as a single class.
+2. To
+approve the amendment of Odetics' certificate of incorporation to change the name of the company to "Iteris Holdings, Inc."
+3. To
+ratify the appointment of Ernst & Young LLP as the independent auditors of Odetics for the fiscal year ending March 31, 2004.
+4. To
+transact any other business which may properly come before the meeting or any adjournment(s) or postponement(s) thereof. 
+The
+Board of Directors has fixed the close of business on July 25, 2003 as the record date for the determination of stockholders entitled to notice of, and to vote at, the meeting
+and at any continuation or adjournment thereof. A list of stockholders entitled to vote at the meeting will be available for inspection at the principal executive offices of Odetics. 
+You
+are cordially invited to attend the meeting in person. Whether or not you plan to attend the meeting, please mark, sign, date and return the enclosed proxy card as soon as possible
+in the envelope enclosed for your convenience. Should you receive more than one proxy because your shares are registered in different names and addresses, each proxy should be signed and returned to
+assure that all of your shares will be voted. You may revoke your proxy at any time prior to the meeting. If you attend the meeting and vote by ballot, your proxy will be revoked automatically and
+only your ballot vote at the meeting will be counted. 
+Sincerely, 
+Anaheim, California 
+Gary W. Smith 
+August 11, 2003 
+Secretary 
+YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. PLEASE READ THE ATTACHED PROXY STATEMENT CAREFULLY, COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE AND
+RETURN IT IN THE ENCLOSED ENVELOPE. 
+ODETICS, INC. 
+PROXY STATEMENT 
+ANNUAL MEETING OF STOCKHOLDERS 
+TO BE HELD SEPTEMBER 12, 2003 
+General 
+These proxy materials and the enclosed proxy card are being furnished in connection with the solicitation of proxies by the Board of Directors of
+Odetics, Inc., a Delaware corporation, to be voted at the Annual Meeting of Stockholders to be held on September 12, 2003 (the "Annual Meeting") and any adjournment or postponement of
+the meeting. The Annual Meeting will be held at 10:00 a.m., Pacific Time, at the principal executive offices of Odetics located at 1515 South Manchester Avenue, Anaheim, California 92802. These
+proxy materials and the form of proxy were first mailed to the stockholders of Odetics on or about August 13, 2003. 
+The
+mailing address of the principal executive offices of Odetics is 1515 South Manchester Avenue, Anaheim, California 92802. 
+Purpose of Meeting 
+The specific proposals to be considered and acted upon at the Annual Meeting are summarized in the accompanying Notice of Annual Meeting of Stockholders. Each
+proposal is described in more detail in this proxy statement. 
+Voting Rights 
+The record date for determining those stockholders who are entitled to notice of, and to vote at, the Annual Meeting has been fixed as July 25, 2003. At
+the close of business on the record date, 14,115,635 shares of the Class A common stock of Odetics, par value $0.10 per share, and 1,001,120 shares of the Class B common stock of
+Odetics, par value $0.10 per share, were outstanding. The Class A common stock and Class B common stock of Odetics are collectively referred to as the "common stock." 
+Holders
+of the Class A common stock are entitled to elect 25% of the Board rounded up to the nearest whole number, or two directors. The holders of the Class A common stock
+and the holders of the Class B common stock, voting together as a single class, will be entitled to elect the balance of the Board, or six directors. Directors will be elected by a plurality of
+the voting power of the class or classes, as the case may be, of common stock entitled to vote and present in person or represented by proxy at the Annual Meeting, unless cumulative voting is in
+effect. With respect to the election of directors, when voting together as a single class, the holders of Class A common stock are entitled to one-tenth of one vote per share held
+and the holders of Class B common stock are entitled to one vote per share held. 
+Pursuant
+to the bylaws of Odetics, no stockholder is entitled to cumulate his or her votes (as described above) for candidates other than those whose names have been placed in nomination
+prior to the commencement of voting and unless at least one stockholder has given notice prior to commencement of the voting of his or her intention to cumulate votes. If any stockholder has given
+such notice, then each stockholder may cumulate votes by multiplying the number of votes of each class of common stock the stockholder is entitled to vote by the number of directors to be elected by
+such class. The number of cumulative votes thus determined may be voted all for one candidate or distributed among several candidates, at the discretion of the stockholder. The candidates receiving
+the highest number of votes, up to the number of directors to be elected by each class of common stock, will be elected. If cumulative voting is in effect, the persons named in the accompanying proxy
+will vote 
+the
+shares of each class of the common stock covered by proxies received by them (unless authority to vote for directors is withheld) among the named candidates as they determine. Except as described
+above for the election of directors, holders of each class of common stock will vote at the Annual Meeting as a single class on all matters, with each holder of shares of Class A common stock
+entitled to one-tenth of one vote per share held and each holder of shares of Class B common stock entitled to one vote per share held. Proposals 2 and 3 require the approval of the
+affirmative vote of a majority of the voting power of the common stock present in person or represented by proxy at the Annual Meeting and entitled to vote on the matter. 
+The
+presence in person or by proxy of the holders of a majority of the outstanding shares of the common stock entitled to vote will constitute a quorum for the transaction of business at
+the Annual Meeting. All votes will be tabulated by the inspectors of election appointed for the meeting, who will separately tabulate affirmative and negative votes, abstentions and broker
+non-votes. Broker non-votes occur when brokers who hold stock in "street name" return proxy cards stating that they do not have authority to vote the stock which they hold on
+behalf of beneficial owners. Abstentions and broker non-votes are counted as present for purposes of determining the presence or absence of a quorum for the transaction of business.
+Abstentions will be counted towards the tabulations of votes cast on proposals presented to the stockholders and will have the same effect as negative votes. Broker non-votes will not be
+counted for purposes of determining whether a proposal has been approved. 
+Proxies 
+Properly executed proxies will be voted in the manner directed by the stockholders. If the proxy does not specify how the shares represented thereby are to be
+voted, the proxy will be voted FOR the election of the directors proposed by the Board unless the authority to vote for the election of any director is withheld and, if no contrary instructions are
+given, the proxy will be voted FOR the approval of Proposals 2 and 3 as described in this proxy statement and the accompanying notice. 
+You
+may revoke or change your proxy at any time before the Annual Meeting by filing with the Secretary of Odetics, at the principal executive offices of Odetics at 1515 South Manchester
+Avenue, Anaheim, California 92802, a written notice of revocation or a new duly executed proxy bearing a date later than the date indicated on the previous proxy. You may also revoke your proxy by
+attending the Annual Meeting and voting in person. Attendance at the Annual Meeting will not, by itself, revoke a proxy. 
+Solicitation 
+The enclosed proxy is being solicited by the Board of Directors of Odetics. Odetics will bear the entire cost of proxy solicitation, including costs of preparing,
+assembling, printing and mailing this proxy
+statement, the proxy card and any additional material furnished to the stockholders. Copies of the solicitation materials will be furnished to brokerage houses, fiduciaries and custodians holding
+shares in their names that are beneficially owned by others so that they may forward this solicitation material to such beneficial owners. In addition, Odetics may reimburse such persons for their
+costs in forwarding the solicitation materials to the beneficial owners. The original solicitation of proxies by mail may be supplemented by a solicitation by telephone, facsimile or any other means
+by directors, officers or employees of Odetics. No additional compensation will be paid to these individuals for any such services. 
+In
+the discretion of management, Odetics reserves the right to retain a professional firm of proxy solicitors to assist in solicitation of proxies. Although Odetics does not currently
+expect to retain such a firm, it estimates that the fees of such firm would range from $5,000 to $20,000 plus out-of-pocket expenses, all of which would be paid by Odetics. 
+2 
+PROPOSAL NO. 1 
+ELECTION OF DIRECTORS 
+Nominees 
+The Board of Directors of Odetics is currently comprised of eight members. Eight directors are to be elected at the Annual Meeting and hold office until their
+successors are duly elected and qualified at the next annual meeting of stockholders. Holders of Class A common stock are entitled to elect two of the eight directors to be elected at the
+Annual Meeting, and the holders of Class A common stock and the holders of Class B common stock, voting together as a single class, are entitled to elect the other six directors. The two
+candidates receiving the highest number of affirmative votes of shares of Class A common stock, present in person or represented by proxies and entitled to vote at the Annual Meeting, will be
+elected directors of Odetics, and the six candidates receiving the highest number of affirmative votes of shares of Class A common stock and shares of Class B common stock, voting
+together as a single class, present in person or represented by proxies and entitled to vote at the Annual Meeting, will be elected directors of Odetics. When voting together as a single class, the
+holders of Class A common stock are entitled to one-tenth of one vote per share held and the holders of Class B common stock are entitled to one vote per share held. If
+cumulative voting is in effect, however, the proxy holders of each class of common stock will have the right to cumulate and allocate votes among those nominees standing for election with respect to
+such class of common stock as such proxy holders in their discretion elect. 
+Messrs. Gudmundson
+and Muench will stand for election by the holders of Class A common stock, and Messrs. Daly, Miner, Seazholtz, Slutzky, Thomas and Wright will
+stand for election by the holders of Class A common stock and Class B common stock, voting together as a single class. 
+3 
+Information with Respect to Nominees 
+The following table sets forth certain information concerning the nominees for directors of Odetics as of July 15, 2003. 
+Nominees for Election 
+Name 
+Age 
+Position 
+Director Since 
+Joel Slutzky (3) 
+64 
+Chairman of the Board of Odetics 
+Chairman of the Board of MAXxess Systems, Inc. 
+Chairman of the Board of Iteris, Inc. 
+Director of Meyer, Mohaddes Associates, Inc. 
+1969 
+Kevin C. Daly, Ph.D.(2)(3) 
+59 
+Director of Odetics 
+1993 
+Crandall L. Gudmundson 
+72 
+Director of Odetics 
+1979 
+Gregory A. Miner (3) 
+48 
+Director, Chief Executive Officer, Chief Financial 
+Officer and Assistant Secretary of Odetics 
+Director, Chief Financial Officer and Secretary 
+of MAXxess 
+Director of Iteris 
+Director, Chief Financial Officer and Secretary 
+of Meyer, Mohaddes Associates 
+1998 
+Jerry F. Muench 
+68 
+Director and Assistant Secretary of Odetics 
+1969 
+John W. Seazholtz (1)(2) 
+66 
+Director of Odetics 
+1998 
+Thomas L. Thomas (1)(2) 
+54 
+Director of Odetics 
+1999 
+Paul E. Wright (1)(3) 
+72 
+Director of Odetics 
+Director of Iteris 
+1993 
+(1) Member
+of the Audit Committee.
+(2) Member
+of the Compensation and Stock Option Committee.
+(3) Member
+of the Finance Committee. 
+Joel Slutzky has served as the Chairman of the Board of Directors since he co-founded Odetics in 1969. Mr. Slutzky
+served as the Chief Executive Officer of Odetics from 1975 to February 2002. Mr. Slutzky is also Chairman of Iteris and MAXxess, subsidiaries of Odetics. Mr. Slutzky also served
+on the Board of ATL Products, Inc. and on the Board of the American Electronics Association. Mr. Slutzky currently serves on the Board of KOCE, Future Scientists and Engineers of
+America, and the Orange County Business Council Workforce Task Group. Mr. Slutzky is also the Chairman of Project Tomorrow, an organization focused on improving Kindergarten through twelfth
+grade science education in Orange County. 
+Kevin C. Daly, Ph.D. has served as a director of Odetics since 1993. Since July 2002, Dr. Daly has been the Chief Executive
+Officer of Avamar Technologies, Inc., a provider of high availability data storage solutions. Dr. Daly was previously Chief Technical Officer of Quantum Corporation's Storage Solutions
+Group from October 2001 to July 2002 and, prior to that, he was Chief Executive Officer of ATL Products, Inc., the former wholly-owned subsidiary of Odetics, from its foundation
+in 1993 until 2001. Dr. Daly also served as Chief Technical Officer of Odetics from 1985 until ATL's separation from Odetics in an initial public offering in March 1997.
+Odetics distributed its remaining 82.9% interest in ATL to the stockholders of Odetics in October 1997. Prior to Odetics, Dr. Daly was Director of the 
+4 
+Control
+and Dynamics Division of the Charles Stark Draper Laboratory at MIT from 1974 through 1985. Dr. Daly is also a member of the Board of Directors of Danka Business Systems PLC. 
+Crandall L. Gudmundson is a co-founder of Odetics and served as its President from 1975 until his retirement in 1998.
+Mr. Gudmundson has served as a director of Odetics since 1979 and served as a director of ATL Products, Inc. from 1993 to 1998. Prior to co-founding Odetics,
+Mr. Gudmundson was the lead project engineer for Leach Corporation. 
+Gregory A. Miner has served as the Chief Executive Officer of Odetics since February 2002, as a director since 1998 and as a Vice
+President and Chief Financial Officer since January 1994 when he joined Odetics. From 1998 to 2002, Mr. Miner also served as Odetics' Chief Operating Officer. Mr. Miner served as
+the Vice President and Chief Financial Officer of ATL Products, Inc., a former subsidiary of Odetics, from 1994 to 1998 and currently serves as the Chief Financial Officer, Secretary and
+Director of MAXxess. Mr. Miner has also served in various capacities for the other subsidiaries of Odetics from time to time. From December 1984 until joining Odetics, Mr. Miner
+served as the Vice President and Chief Financial Officer and a Director of Laser Precision Corporation, a manufacturer of telecommunications test equipment. From 1979 to 1984, Mr. Miner was
+employed by Deloitte Haskins and Sells (now known as Deloitte & Touche LLP) in various capacities, the most recent of which was Audit Manager. 
+Jerry F. Muench is a co-founder of Odetics and has served as a director since 1969. From 1969 to 2002, Mr. Muench was
+also Odetics' Secretary. Mr. Muench served as the Vice President, Marketing of Odetics from 1975 until his retirement in December 1997. Prior to co-founding Odetics,
+Mr. Muench was the manager of applications engineering at Leach Corporation. 
+John W. Seazholtz has served as a director of Odetics since May 1998. He also served as a director of Mariner
+Networks, Inc., a subsidiary of Odetics that has been discontinued, from March 2000 to September 2001. From May 1998 to April 2000, Mr. Seazholtz served as
+the President and Chief Executive Officer of Telesoft America, Inc. He retired in April 1998 as the Chief Technology Officer of Bell Atlantic after 36 years of service with that
+company and its predecessor. Mr. Seazholtz was a senior officer of Bell Atlantic since 1986, serving in various positions, including the positions of Vice President, Operations and Engineering,
+Vice President, Marketing, Vice President of New Services, and Vice President, Technology and Information Systems. Mr. Seazholtz currently serves as the Chairman of the Board of Westell
+Technologies, Inc. and is a member of the Board of Directors of Advanced Switching Communications, Inc. 
+Thomas L. Thomas has served as a director of Odetics since May 1999. From January 2000 to September 2001, he also
+served as the Chairman of the Board of Mariner Networks, Inc. Mr. Thomas is the Chairman of the Board, President and Chief Executive Officer of HAHT Commerce, a provider of software
+applications that enable companies to use the Internet to conduct business. A veteran Silicon Valley executive, Mr. Thomas was previously the President and Chief Executive Officer of Ajuba
+Solutions, a provider of B2B integration solution software, which was sold to Interwoven in October 2000. From April 1999 until January 2000, he served as the President, Chief
+Executive Officer and Chairman of the Board of Vantive Corporation, a leading customer relationship management software vendor which was acquired by Peoplesoft in January 2000. Prior to that,
+from September 1995 to April 1999, Mr. Thomas served as the Senior Vice President of e-Business and Information Services and Chief Information Officer at 3Com
+Corporation. From 1993 to 1995, Mr. Thomas served as a Vice President and the Chief Information Officer of Dell Computer Corporation. From 1987 to 1993, he served as the Vice President of
+Management Information Systems at Kraft General Foods, and at Sara Lee Corporation from 1981 to 1987. Mr. Thomas also serves on the Board of Directors of iManage, Inc. 
+Paul E. Wright has served as a director of Odetics since June 1993 and as a director of Iteris since January 1999.
+Mr. Wright is the President of Wright Associates—Engineering and Business Consultants, 
+5 
+a
+company he formed in 1997. From 1988 until his retirement in 1997, Mr. Wright served as the Chairman of Chrysler Technologies Corp., the aerospace and defense electronics subsidiary of
+Chrysler Corporation. From 1986 to 1988, Mr. Wright served as the President and Chief Operating Officer of Fairchild Industries, Inc. Prior to joining Fairchild, he was employed for
+28 years by RCA Corporation, where he last served as the Senior Vice President, responsible for planning RCA's merger into General Electric Corporation. 
+All
+directors are elected annually and hold office until the next annual meeting of stockholders and until their successors are duly elected and qualified. All of the nominees are
+currently directors of Odetics and have indicated that they are willing to continue to serve as directors. In the event any nominee is unable or declines to serve as a director at the time of the
+Annual Meeting, the proxies will be voted for an additional nominee who shall be designated by the current Board of Directors. As of the date of this proxy statement, the Board of Directors is not
+aware of any nominee who is unable or will decline to serve as director. 
+Board Meetings and Committees 
+The Board of Directors held seven meetings during the fiscal year ended March 31, 2003. Mr. Thomas attended five of the meetings of the Board of
+Directors. All of the other directors attended or participated in at least 75% of the aggregate number of meetings of the Board of Directors. Each director (excluding Mr. Thomas) attended at
+least 75% of the aggregate number of meetings of those committees of the Board of Directors on which such person served, which were held during such period. 
+Odetics
+currently has three standing committees—the Audit Committee, the Compensation and Stock Option Committee and the Finance Committee. Odetics has no standing nominating
+committee, and the Board as a whole acts upon matters which would otherwise be the responsibility of a nominating committee. 
+Audit Committee. The Audit Committee supervises and reviews the audit and audit review programs and
+procedures of the independent auditors of Odetics, its internal accounting staff and the results of internal auditing procedures. The Audit Committee also reviews, acts on and reports to the Board
+with respect to various auditing and accounting matters, including the selection of the independent auditors and the independence, professional services, fees, plans and results of the independent
+auditors. The members of the Audit Committee of Odetics are Messrs. Seazholtz, Thomas and Wright. The Audit Committee held five meetings during the fiscal year ended March 31, 2003. 
+The
+Board of Directors adopted and approved a written charter for the Audit Committee in June 2000. In July 2002, the Board of Directors adopted and approved an amended and
+restated Audit Committee charter, which charter was included as an appendix to Odetics' proxy statement for the annual meeting of the stockholders which was held in September 2002. The Board
+has determined that all members of the Audit Committee are "independent" as that term is defined in Rule 4200 of the listing standards of the National Association of Securities Dealers. 
+Compensation and Stock Option Committee. The Compensation and Stock Option Committee makes
+recommendations to the Board concerning the compensation of all executive officers of Odetics and administers the stock option plans of Odetics. The members of the Compensation and Stock Option
+Committee of Odetics are Messrs. Daly, Seazholtz and Thomas. The Compensation and Stock Option Committee held two meetings during the fiscal year ended March 31, 2003. 
+Finance Committee. The Finance Committee reviews Odetics' financial planning and strategies and
+provides guidance to the Board and the Audit Committee regarding issues and opportunities related thereto. The Finance Committee also provides interface and advice between the Board, the capital
+markets and other financing sources. The Finance Committee held no meetings during the fiscal year 
+6 
+ended
+March 31, 2003. The members of the Finance Committee are Messrs. Daly, Miner, Slutzky and Wright. 
+Compensation of Directors 
+Directors who are not employees of Odetics or one of its subsidiaries receive an annual fee of $12,000 per year, paid quarterly, in addition to $1,500 for each
+Board meeting attended in person and $250 for each telephone conference Board meeting. All directors are reimbursed for their out-of-pocket expenses incurred in attending
+meetings of the Board of Directors and its committees. 
+Non-employee
+directors are also eligible to receive periodic option grants pursuant to the Automatic Option Grant Program under Odetics' 1997 Stock Incentive Plan. Under this
+plan, each non-employee director receives an option to purchase 20,000 shares of Class A common stock upon his initial appointment to the Board of Directors and an additional option
+to purchase 5,000 shares of Class A common stock on the date of each annual meeting after his appointment. Each option granted to non-employee directors under the Automatic Option
+Grant Program will have an exercise price equal to the fair market value of the Class A common stock on the grant date and will have a maximum term of ten years, subject to earlier termination
+following the optionee's cessation of service as a Board member. 
+Recommendation of the Board of Directors 
+THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED ABOVE. PROXIES RETURNED TO ODETICS WILL BE VOTED "FOR" EACH NOMINEE
+UNLESS OTHERWISE INSTRUCTED IN WRITING ON SUCH PROXY. 
+7 
+PROPOSAL NO. 2 
+APPROVAL OF THE AMENDMENT OF THE 
+CERTIFICATE OF INCORPORATION 
+TO EFFECT A CHANGE IN THE CORPORATE NAME 
+The Board of Directors of Odetics has determined that it is advisable and in the best interests of Odetics and its stockholders to change the name of the company
+to "Iteris Holdings, Inc." in order to aid in communicating the new focus of the company's business. Since late 2001, Odetics has divested itself of many of its business units in order to
+reduce operating expenses and to focus the business on what Odetics believes is its core businesses — the business of its Iteris, Inc. subsidiary and, to a lesser extent, the
+emerging homeland security opportunities. Odetics believes that the name change will better communicate to the public the current and future nature of Odetics' business operations and its majority
+ownership interest in Iteris, Inc. The stockholders are being asked to approve an amendment to the certificate of incorporation of Odetics to effect a change in the corporate name from
+"Odetics, Inc." to "Iteris Holdings, Inc." Upon approval of such an amendment by the stockholders, Odetics plans to file a certificate of amendment to its certificate of incorporation to
+effect the name change. 
+Stockholder Approval 
+The affirmative vote of a majority of the voting power of the Class A common stock and Class B common stock of Odetics, voting together as a single
+class, present or represented and entitled to vote at the Annual Meeting, will be required for approval of the amendment of the certificate of incorporation to effect the name change. 
+Recommendation of the Board of Directors 
+THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE AMENDMENT OF THE CERTIFICATE OF INCORPORATION TO EFFECT A CHANGE IN
+THE NAME OF THE COMPANY TO "ITERIS HOLDINGS, INC." 
+8 
+PROPOSAL NO. 3 
+RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS 
+The accounting firm of Ernst & Young LLP served as the independent auditors of Odetics for the fiscal year ended March 31, 2003. The Audit Committee
+of the Board of Directors has selected that firm to continue in this capacity for the fiscal year ending March 31, 2004. Odetics is asking the stockholders to ratify the selection by the Audit
+Committee of Ernst & Young LLP as the independent auditors of Odetics to audit the consolidated financial statements of Odetics for the fiscal year ending March 31, 2004 and to perform
+other appropriate services. Stockholder ratification of the selection of Ernst & Young LLP as Odetics' independent auditors is not required by the bylaws of Odetics or otherwise. In the event
+that the stockholders fail to ratify the appointment, the Audit Committee will reconsider its selection. Even if the selection is ratified, the Audit Committee, in its discretion, may direct the
+appointment of a different independent accounting firm at any time during the year if the committee feels that such a change would be in the best interests of Odetics and its stockholders. 
+A
+representative of Ernst & Young LLP is expected to be present at the Annual Meeting to respond to stockholders' questions, and that representative will be given an opportunity
+to make a brief presentation to the stockholders if he or she so desires. 
+Stockholder Approval 
+The affirmative vote of a majority of the voting power of the Class A common stock and Class B common stock of Odetics, voting together as a single
+class, present or represented and entitled to vote at the Annual Meeting, will be required for ratification of the selection of Ernst & Young LLP as the independent auditors of Odetics for the
+fiscal year ending March 31, 2004. 
+Recommendation of the Board of Directors 
+THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE RATIFICATION AND APPROVAL OF THE SELECTION OF ERNST & YOUNG
+LLP AS THE INDEPENDENT AUDITORS OF ODETICS FOR THE FISCAL YEAR ENDING MARCH 31, 2004. 
+9 
+PRINCIPAL STOCKHOLDERS AND COMMON STOCK OWNERSHIP 
+OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 
+The following table sets forth, as of July 1, 2003, the number and percentage ownership of the Class A common stock and Class B common stock
+of Odetics by (i) all persons known to Odetics to beneficially own more than 5% of either class of outstanding common stock (based upon reports filed by such persons with the SEC),
+(ii) each of the Named Executive Officers in the Summary Compensation Table which appears elsewhere herein, (iii) each director of Odetics and director nominee named under "Election of
+Directors," and (iv) all executive officers and directors of Odetics as a group. To the knowledge of Odetics, except as otherwise indicated, each of the persons named in this table has sole
+voting and investment power with respect to the common stock shown as beneficially owned, subject to community property and similar laws, where applicable. 
+Class A common stock 
+Class B common stock 
+Amount and 
+Nature of 
+Beneficial 
+Ownership(2)(3) 
+Name and Address of Beneficial Owner(1) 
+Percent 
+of 
+Class(2) 
+Amount and Nature 
+of Beneficial 
+Ownership(2)(3) 
+Percent of 
+Class(2) 
+Total Percent of 
+Voting Power 
+Joel Slutzky 
+894,509 
+(4) 
+6.3 
+% 
+261,622 
+(4) 
+26.1 
+% 
+14.4 
+% 
+Gerald A. Weber 
+393,841 
+(5) 
+2.8 
+187,885 
+18.7 
+9.4 
+Austin W. Marxe and 
+David M. Greenhouse 
+5,302,353 
+(6) 
+31.9 
+— 
+— 
+19.9 
+Kevin C. Daly, Ph.D. 
+26,850 
+(7) 
+* 
+— 
+— 
+0.1 
+Crandall L. Gudmundson 
+121,682 
+(8) 
+* 
+69,743 
+6.9 
+3.4 
+Gregory A. Miner 
+245,847 
+(9) 
+1.7 
+— 
+— 
+1.0 
+Jerry F. Muench 
+117,808 
+(10) 
+* 
+61,537 
+(11) 
+6.1 
+3.0 
+John W. Seazholtz 
+60,297 
+(12) 
+* 
+— 
+— 
+* 
+Thomas L. Thomas 
+42,750 
+(13) 
+* 
+— 
+— 
+* 
+Paul E. Wright 
+75,044 
+(14) 
+* 
+— 
+— 
+* 
+Hugo Fruehauf 
+50,435 
+(15) 
+* 
+— 
+— 
+* 
+John E. Johnson 
+68,351 
+(16) 
+* 
+— 
+— 
+* 
+Steven A. L'Heureux(17) 
+— 
+* 
+— 
+— 
+* 
+Gary W. Smith 
+97,030 
+(18) 
+* 
+296 
+* 
+* 
+All executive officers and directors as a group (10 persons) 
+1,750,168 
+(19) 
+12.0 
+% 
+393,198 
+39.2 
+% 
+23.0 
+% 
+* Represents
+less than 1%.
+(1) The
+address for Gerald A. Weber is 222 North LaSalle, Suite 899, Chicago, Illinois 60601. The address for Messrs. Marxe and Greenhouse is 153 E. 53 rd St.,
+51 st Floor, New York, New York 10022. The address of all other persons named in the table is 1515 South Manchester Avenue, Anaheim, California 92802. The address for Mr. Fruehauf
+is 1585 S. Manchester Avenue, Anaheim, California 92802. The address for Mr. L'Heureux is 1999 Broadway, Suite 4000, Denver, Colorado 80202.
+(2) Based
+on 14,112,823 shares of the Class A common stock and 1,003,932 shares of Class B common stock outstanding as of July 1, 2003. Shares of each class of common
+stock subject to options or warrants which are exercisable within 60 days of July 1, 2003 are deemed to be beneficially owned by the person holding such options or warrants for the
+purpose of computing the percentage of ownership of such person but are not treated as outstanding for the purpose of computing the percentage of any other person. Other than as described in the
+preceding sentence, shares issuable 
+10 
+upon
+exercise of outstanding options or warrants are not deemed to be outstanding for purposes of this calculation. 
+(3) In
+addition to the shares held in the individual's name, this column also includes shares held for the benefit of the named person under Odetics' 401(k) and Stock Ownership Plan.
+(4) Includes
+160,000 shares of Class A common stock issuable upon exercise of options that are currently exercisable or will become exercisable within 60 days after July 1,
+2003. Excludes 349,508 shares of Class A common stock and 140,802 shares of Class B common stock held in trust for the benefit of the children and relatives of Mr. Slutzky as to
+which Mr. Slutzky has no investment or voting power and disclaims any beneficial ownership. See note 5.
+(5) All
+of such shares are owned beneficially of record by various trusts with respect to which Mr. Weber serves as trustee or co-trustee. Mr. Weber shares
+investment and voting power as to 35,333 shares of Class A common stock and 48,049 shares of Class B common stock. Mr. Weber exercises sole investment and voting power over the
+remaining 358,808 shares of Class A common stock and 139,836 shares of Class B common stock. The shares shown include an aggregate of 349,508 shares of Class A common stock and
+140,802 shares of Class B common stock held in trust for the benefit of the children and relatives of Mr. Slutzky, as to which shares Mr. Slutzky has no investment or voting power
+and disclaims any beneficial ownership.
+(6) Includes
+2,500,000 shares issuable upon exercise of warrants that were issued to Special Situations Cayman Fund, L.P., Special Situations Fund III, L.P. and
+Special Situations Private Equity Fund, L.P. (collectively, the "Special Situations Funds"). Purusant to a Schedule 13D/A filed on March 4, 2003 with the SEC, Messrs. Marxe
+and Greenhouse reported that they had shared voting power and shared dispositive power over the shares of common stock (including the 2,500,000 shares issuable upon exercise of warrants) held by the
+Special Situations Funds. Messrs. Marxe and Greenhouse are the controlling principals of AWM Investment Company, Inc. ("AWM"), the general partner of Special Situations Cayman
+Fund, L.P. AWM is the general partner of MGP Advisers Limited Partnership, the general partner of Special Situations Fund III, L.P. In addition, Messrs. Marxe and
+Greenhouse are members of MG Advisers L.L.C., the general partner of Special Situations Private Equity Fund, L.P.
+(7) Includes
+100 shares held by Dr. Daly's spouse. Also includes 10,750 shares issuable upon exercise of options that are currently exercisable or will become exercisable within
+60 days after July 1, 2003.
+(8) Includes
+4,500 shares held by Mr. Gudmundson's IRA and 10,750 shares issuable upon exercise of options that are currently exercisable or will become exercisable within
+60 days after July 1, 2003.
+(9) Includes
+187,778 shares issuable upon exercise of options held by Mr. Miner that are currently exercisable or will become exercisable within 60 days after July 1, 2003.
+(10) Includes
+31,114 shares held by Mr. Muench's spouse and 10,750 shares issuable upon exercise of options that are currently exercisable or will become exercisable within
+60 days after July 1, 2003.
+(11) Includes
+23,235 shares held by Mr. Muench's spouse.
+(12) Includes
+26,750 shares issuable upon exercise of options held by Mr. Seazholtz that are currently exercisable or will become exercisable within 60 days after July 1,
+2003.
+(13) Includes
+23,750 shares issuable upon exercise of options held by Mr. Thomas that are currently exercisable or will become exercisable within 60 days after July 1, 2003.
+(14) Includes
+25,750 shares issuable upon exercise of options held by Mr. Wright that are currently exercisable or will become exercisable within 60 days after July 1, 2003. 
+11 
+(15) Includes
+12,000 shares issuable upon exercise of options held by Mr. Fruehauf that are currently exercisable or will become exercisable within 60 days after July 1,
+2003. Mr. Fruehauf resigned from his positions with Odetics effective as of May 9, 2003.
+(16) Includes
+12,000 shares issuable upon exercise of options held by Mr. Johnson that are currently exercisable or will become exercisable within 60 days after July 1,
+2003.
+(17) Mr. L'Heureux
+resigned from his positions with Odetics effective as of February 21, 2003.
+(18) Includes
+45,000 shares issuable upon exercise of options that are currently exercisable or will become exercisable within 60 days after July 1, 2003.
+(19) Includes
+525,278 shares issuable upon exercise of options that are currently exercisable or will become exercisable within 60 days after July 1, 2003. 
+12 
+EQUITY COMPENSATION PLANS 
+The following table summarizes, as of March 31, 2003, the status of Odetics' compensation plans under which equity securities are authorized for issuance: 
+Plan Category 
+Number of Securities 
+to be Issued upon 
+Exercise of 
+Outstanding Options 
+Weighted 
+Average 
+Exercise Price of 
+Outstanding 
+Options 
+Number of Securities 
+Remaining Available 
+for Future Issuance 
+(excluding securities 
+reflected in column (a) 
+(a) 
+(b) 
+(c) 
+Equity Compensation Plans that have been approved by Odetics' security holders: 
+1997 Stock Incentive Plan 
+961,920 
+$ 
+3.73 
+689,000 
+Equity Compensation Plans that have not been approved by Odetics' security holders 
+Total 
+961,920 
+689,000 
+13 
+EXECUTIVE COMPENSATION AND OTHER INFORMATION 
+Executive Officers 
+The following table sets forth certain information regarding all executive officers of Odetics as of July 15, 2003. 
+Name 
+Age 
+Capacities in Which Served 
+John E. Johnson 
+56 
+Vice President of Odetics; Director, President and Chief Executive Officer of Iteris, Director of Meyer, Mohaddes Associates 
+Gregory A. Miner 
+48 
+Chief Executive Officer, Chief Financial Officer, Assistant Secretary and Director of Odetics Director; Chief Financial Officer and Secretary of MAXxess; Director of Iteris; Director, Chief Financial Officer and Secretary of Meyer, Mohaddes
+Associates 
+Gary W. Smith 
+46 
+Vice President, Controller and Secretary of Odetics; Assistant Secretary of Iteris, MAXxess and Meyer, Mohaddes Associates 
+The
+following is a brief description of the capacities in which each of the executive officers has served during the past five years. The biography of Mr. Miner appears earlier in
+this proxy statement. See "Election of Directors." 
+John E. Johnson has served as a Vice President of Odetics since 1986 and has served as the President, Chief Executive Officer and a
+director of Odetics' subsidiary, Iteris, Inc. since December 1999. Prior to that, he served as the General Manager of the Odetics ITS division (now Iteris, Inc.) from 1996 to
+1998, prior to its incorporation. From 1990 to 1996, Mr. Johnson served as the General Manager of the Odetics Customer Service division. Mr. Johnson served in various other capacities
+with Odetics since joining Odetics in 1974, including the Vice President and General Manager of the Omutec division from 1986 to 1990, the Director of Contracts for the Space division from 1980 to
+1986, the Controller of Infodetics, a former subsidiary of Odetics, from 1975 to 1980 and the Controller of Odetics from 1974 to 1975. Prior to joining Odetics, Mr. Johnson served as a
+certified public accountant with Peat Marwick. 
+Gary W. Smith has served as the Controller of Odetics since 1992, became a Vice President in August 1994 and the Secretary in 2002.
+Prior to that, Mr. Smith served as the Assistant Controller of Odetics from 1990 until 1992, Assistant Secretary from 1998 until 2002, and Senior Financial Analyst from 1986 until 1990. 
+Officers
+serve at the discretion of the Board of Directors. 
+14 
+Summary of Cash and Certain Other Compensation 
+The following table provides certain summary information concerning the compensation earned by the Chief Executive Officer and each of the four other most highly
+compensated executive officers of Odetics whose total cash salary and bonus during the fiscal year ended March 31, 2003 exceeded $100,000 (collectively, the "Named Executive Officers") for each
+of the three fiscal years ended March 31, 2001, 2002 and 2003. No other executive officers who would have otherwise been includable in such table on the basis of salary earned for the fiscal
+year ended March 31, 2003 has been excluded by reason of his or her termination of employment or change in executive status during that year. Other than the bonus paid to Mr. Johnson for
+the fiscal year ended March 31, 2002, no bonuses have been paid to the Named Executive Officers during the fiscal years ended March 31, 2001, 2002 and 2003. 
+SUMMARY COMPENSATION TABLE 
+Long-Term Compensation 
+Annual Compensation 
+Awards 
+Name and Principal Positions with Odetics 
+Fiscal 
+Year 
+Salary ($)(1) 
+Bonus ($) 
+Restricted 
+Stock ($) 
+Securities 
+Underlying 
+Options (#)(2) 
+All Other 
+Compensation 
+($)(3) 
+Gregory A. Miner 
+Chief Executive Officer, Chief Financial Officer and Director 
+2003 
+2002 
+2001 
+284,169 
+217,200 
+214,662 
+— 
+— 
+— 
+— 
+— 
+— 
+310,000 
+— 
+30,000 
+(4) 
+5,671 
+4,830 
+3,891 
+John E. Johnson(5) 
+Vice President 
+2003 
+2002 
+2001 
+202,086 
+185,958 
+185,958 
+— 
+21,000 
+— 
+— 
+— 
+— 
+12,000 
+— 
+— 
+(6) 
+4,263 
+4,164 
+2,831 
+Hugo Fruehauf(7) 
+Vice President 
+2003 
+2002 
+2001 
+158,004 
+172,206 
+174,969 
+— 
+— 
+— 
+— 
+— 
+— 
+12,000 
+— 
+— 
+(6) 
+4,741 
+5,100 
+3,875 
+Steven A. L'Heureux(8) 
+Vice President 
+2003 
+2002 
+2001 
+170,682 
+189,231 
+183,462 
+— 
+— 
+— 
+— 
+— 
+— 
+10,000 
+— 
+— 
+(6) 
+5,029 
+4,950 
+3,975 
+Gary W. Smith 
+Vice President, Controller and Secretary 
+2003 
+2002 
+2001 
+108,199 
+115,235 
+114,821 
+— 
+— 
+— 
+— 
+— 
+— 
+45,000 
+— 
+— 
+(6) 
+3,056 
+2,881 
+2,106 
+(1) Represents
+all amounts earned from Odetics and its subsidiaries during the fiscal years shown, including amounts deferred under the Executive Deferral Plan and the Odetics 401(k) and
+Stock Ownership Plan.
+(2) Consists
+of options granted pursuant to Odetics' 1994 Long-Term Equity Incentive Plan and 1997 Stock Incentive Plan entitling the holder to purchase shares of
+Class A common stock of Odetics.
+(3) Consists
+solely of the matching contribution of Odetics to the respective accounts of the Named Executive Officers under the Odetics 401(k) and Stock Ownership Plan.
+(4) Includes
+110,000 shares underlying the regrant option issued in May 2002 to replace options cancelled in November 2001. See "2001 Option Exchange Program."
+(5) In
+the year ended March 31, 2002, Mr. Johnson was granted an option to purchase 40,000 shares of common stock of Iteris.
+(6) Consists
+of shares underlying regrant options issued in May 2002 to replace options cancelled in November 2001. See "2001 Option Exchange Program."
+(7) In
+the year ended March 31, 2001, Mr. Fruehauf was granted an option to purchase 250,000 shares of common stock of Zyfer. Mr. Fruehauf resigned from his positions with
+Odetics effective as of May 9, 2003.
+(8) Mr. L'Heureux
+resigned from his positions with Odetics effective as of February 21, 2003. 
+15 
+Option Grants in Last Fiscal Year 
+The following table provides information regarding option grants made to our Named Executive Officers during the fiscal year ended March 31, 2003. No stock
+appreciation rights were granted to any of the Named Executive Officers during such fiscal year. 
+Individual Grants 
+Potential Realizable 
+Value at Assumed Annual 
+Rates of Stock Price 
+Appreciation for Option Term (3) 
+Percent of 
+Total Options 
+Granted to 
+Employees in 
+Fiscal 2003 
+Number of 
+Securities 
+Underlying Options 
+Granted (1) 
+Name 
+Exercise Price 
+Per Share (2) 
+Expiration 
+Date 
+5% 
+10% 
+Greg Miner 
+310,000 
+56.47 
+% 
+$ 
+1.40 
+05/20/12 
+$ 
+272,940 
+$ 
+691,684 
+John E. Johnson 
+12,000 
+2.19 
+$ 
+1.40 
+05/20/12 
+10,565 
+26,775 
+Hugo Fruehauf(4) 
+12,000 
+2.19 
+$ 
+1.40 
+05/20/12 
+10,565 
+26,775 
+Steven A. L'Heureux(5) 
+10,000 
+1.82 
+$ 
+1.40 
+05/20/12 
+8,805 
+22,312 
+Gary W. Smith 
+45,000 
+8.20 
+$ 
+1.40 
+05/20/12 
+39,620 
+100,406 
+(1) Each
+option was granted pursuant to Odetics' 1997 Stock Incentive Plan (the "1997 Plan") and entitles the holder to purchase shares of Class A common stock of Odetics. Each
+option has a maximum term of ten years, subject to earlier termination in the event of the optionee's termination of employment with Odetics or its subsidiaries. Each option vests in three equal
+annual installment with the first installment vesting on the first year anniversary of the grant date, subject to acceleration of vesting in the event of the merger, consolidation or reorganization of
+Odetics if such option is not assumed or other wise continued in effect in such transaction. In addition, the Compensation and Stock Option Committee has the authority to provide for the accelerated
+vesting of the option whether or not the option is assumed or other wise continued in effect or upon the termination of the optionee's employment following such transaction. 
+Includes
+shares underlying regrant options issued in May 2002 to replace options cancelled in November 2001. See "2001 Option Exchange Program." 
+(2) Odetics
+may also finance the option exercise by loaning the optionee sufficient funds to pay the exercise price for the purchased shares and the applicable federal and state
+withholding taxes to which the optionee becomes subject in connection with such exercise.
+(3) The
+5% and 10% assumed rates of appreciation are prescribed by the rules and regulations of the SEC and do not represent management's estimate or projection of future trading prices
+of the Class A common stock. Unless the market price of the Class A common stock does in fact appreciate over the option term, no value will be realized from the option grants. Actual
+gains, if any, are dependent upon numerous factors, including, without limitation, the future performance of Odetics and its business units, overall business and market conditions, and the option
+holder's continued employment with Odetics throughout the entire vesting period and option term, which factors are not reflected in this table.
+(4) Mr. Fruehauf
+resigned from his positions with Odetics effective as of May 9, 2003.
+(5) Mr. L'Heureux
+resigned from his positions with Odetics effective as of February 21, 2003. 
+Aggregated Option Exercises and Fiscal Year End Values 
+The following table provides information with respect to the Named Executive Officers concerning the unexercised options held by them at of the end of the fiscal
+year ended March 31, 2003. None of the Named Officers exercised any options or stock appreciation rights during the fiscal year ended March 31, 2003 and no stock appreciation rights were
+held by the Named Executive Officers at the end of such fiscal year. 
+16 
+AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR 
+AND FY-END OPTION/SAR VALUES 
+Number of Securities Underlying Unexercised Options at Fiscal Year End (#)(1) 
+Value of Unexercised In-the-Money Options at Fiscal Year End ($) 
+Name 
+Exercisable 
+Unexercisable 
+Exercisable 
+Unexercisable 
+Gregory A. Miner 
+Chief Executive Officer, Chief Financial Officer and Director 
+155,556 
+154,444 
+— 
+— 
+John E. Johnson 
+Vice President 
+12,000 
+— 
+— 
+— 
+Hugo Fruehauf(2) 
+Vice President 
+12,000 
+— 
+— 
+— 
+Steven A. L'Heureux(3) 
+Vice President 
+— 
+— 
+— 
+— 
+Gary W. Smith 
+Vice President, Controller and Secretary 
+45,000 
+— 
+— 
+— 
+(1) Includes
+both in-the-money and out-of-the money options.
+(2) Mr.
+Fruehauf resigned from his positions with Odetics effective as of May 9, 2003.
+(3) Mr.
+L'Heureux resigned from his positions with Odetics effective as of February 21, 2003. 
+2001 Option Exchange Program 
+In November 2001, Odetics implemented an option exchange program to address the substantial loss in value of the outstanding stock options held by Odetics'
+executive officers and the increasing inability of those options to serve as a meaningful incentive for optionees to remain employed with Odetics. Under the program, each executive officer who held
+outstanding stock options with an exercise price of $4.00 or more per share under the 1997 Plan or the 1994 Long-Term Equity Plan (the "1994 Plan"), was given the opportunity to exchange
+that option for a new option under the 1997 Plan for the same number of shares that would be granted at least six months and one day after the completion of the option exchange program. 
+On
+November 16, 2001, Odetics accepted for exchange and cancellation options to purchase an aggregate of 349,000 shares of Odetics' Class A common stock representing 100%
+of the options eligible to be tendered under the option exchange program. On May 20, 2002, Odetics granted new options to purchase an aggregate of 349,000 shares of Class A common stock
+under the 1997 Plan to replace the eligible options that had been tendered and cancelled under the program. 
+In
+general, the exercise price per share for the new options was $1.40, the last reported sales price of the Class A common stock on the grant date. In the case of Joel Slutzky,
+who is a holder of 10% or more of the common stock, the exercise price per share for the new options was $1.54, or 110% of the last reported trading price of the Class A common stock on the
+grant date. 
+Each
+new option issued in exchange for a cancelled option will continue to vest and become exercisable for the option shares in accordance with the same vesting schedule in effect for
+the cancelled option. 
+The
+table below provides certain information concerning our executive officers who tendered eligible options in the option exchange program and the options that were cancelled pursuant
+to that program. Except for the November 2001 option exchange program, Odetics has not implemented any other option repricing or option cancellation/regrant programs. 
+17 
+10-YEAR OPTION REPRICINGS 
+Name and Principal Position 
+Date of 
+Cancel- 
+lation 
+Number of 
+Securities 
+Underlying 
+Options at 
+Time of 
+Cancellation 
+Market 
+Price of 
+Stock at 
+Time of 
+Cancel- 
+lation 
+Exercise 
+Price at 
+Time of 
+Cancel- 
+lation 
+New 
+Exercise 
+Price of 
+Replace- 
+ment 
+Option 
+Length of 
+Original 
+Option Term 
+Remaining at 
+Date of 
+Cancellation 
+Joel Slutzky 
+Chairman of the Board 
+11/16/01 
+11/16/01 
+11/16/01 
+50,000 
+55,000 
+55,000 
+$ 
+1.26 
+1.26 
+1.26 
+$ 
+4.625 
+8.663 
+11.344 
+$ 
+1.54 
+1.54 
+1.54 
+7 years 
+8 years 
+8 years 
+Gregory A. Miner 
+Chief Executive Officer, Chief Financial Officer and Director 
+11/16/01 
+11/16/01 
+11/16/01 
+11/16/01 
+25,000 
+30,000 
+25,000 
+30,000 
+1.26 
+1.26 
+1.26 
+1.26 
+4.625 
+10.313 
+7.875 
+10.000 
+1.40 
+1.40 
+1.40 
+1.40 
+7 years 
+8 years 
+8 years 
+9 years 
+John E. Johnson 
+Vice President 
+11/16/01 
+12,000 
+1.26 
+4.625 
+1.40 
+7 years 
+Hugo Fruehauf (1) 
+Vice President 
+11/16/01 
+12,000 
+1.26 
+4.625 
+1.40 
+7 years 
+Steven A. L'Heureux (2) 
+Vice President 
+11/16/01 
+10,000 
+1.26 
+10.313 
+1.40 
+8 years 
+Gary W. Smith 
+Vice President, Controller and Secretary 
+11/16/01 
+11/16/01 
+11/16/01 
+15,000 
+20,000 
+10,000 
+1.26 
+1.26 
+1.26 
+4.625 
+10.313 
+7.875 
+1.40 
+1.40 
+1.40 
+7 years 
+8 years 
+8 years 
+(1) Mr. Fruehauf
+resigned from his positions with Odetics effective as of May 9, 2003.
+(2) Mr. L'Heureux
+resigned from his positions with Odetics effective as of February 21, 2003. 
+Benefit Plans 
+Odetics maintains a 401(k) and Stock Ownership Plan (the "Stock Ownership Plan") which qualifies for favorable tax treatment under Section 401(a) of the
+Internal Revenue Code. The Stock Ownership Plan is the result of the merger of the Odetics, Inc. Profit Sharing and 401(k) Plan and the Odetics Associates Stock Ownership Plan. 
+Employees
+become eligible to make pre-tax contributions to the Stock Ownership Plan pursuant to Internal Revenue Code Section 401(k) as of the January 1,
+April 1, July 1 or October 1 coincident with or next following the date on which they are hired. Participants may contribute an amount not in excess of $11,000 for calendar year
+2003. Employees become eligible to receive an allocation of employer contributions to the Stock Ownership Plan as of the January 1, April 1, July 1 or October 1 coincident
+with or next following the date on which they have completed six months of service with Odetics. These contributions may be made in the form of cash or Odetics stock. No contributions were made by
+Odetics to the Stock Ownership Plan for the fiscal years ended March 31, 2000, 2001 and 2003. 
+Contributions
+that are made to the Stock Ownership Plan are allocated to the separate accounts of participants and are held in a trust. Participant accounts are credited with investment
+gains and charged with investment losses. Participant contributions are always fully vested at all times, and the Odetics contributions on behalf of participants vest at the rate of
+33 1 / 3 percent per year of service. Following termination of employment, the vested portion of the participant's account balance is distributed in a lump sum payment. 
+Odetics
+also maintains an Executive Deferral Plan which allows designated executives to defer the receipt of some of their current compensation until a future year. These executives may
+elect to defer the receipt of up to 75% of their annual compensation, but in no event may they elect to defer less than $5,000. Benefits are generally fully vested at all times, and are payable
+following termination of 
+18 
+employment
+in the manner elected by the executive. The Executive Deferral Plan does not qualify for favorable income tax treatment under Section 401(a) of the Internal Revenue Code. 
+Employment Contracts, Termination of Employment Agreements and Change of Control Arrangements 
+Odetics does not currently have any employment contracts in effect with any of its Named Executive Officers. Odetics provides incentives such as salary, benefits
+and option grants to attract and retain executive officers and other key associates. The Compensation and Stock Option Committee, as Plan
+Administrator of the 1997 Plan, has the authority to provide for the accelerated vesting of outstanding options held by an individual, in connection with the termination of such individual's
+employment following an acquisition in which these options are assumed or the repurchase rights with respect to the unvested shares are assigned or upon certain hostile changes in control of Odetics.
+Other than such accelerated vesting and the agreements described below in "Certain Transactions", there is no agreement or policy which would entitle any executive officer to severance payments or any
+other compensation as a result of such officer's termination. 
+Indemnification of Directors and Officers 
+Under Section 145 of the Delaware General Corporation Law, Odetics can indemnify its directors and officers against liabilities they may incur in such
+capacities, including liabilities under the Securities Act of 1933, as amended (the "Securities Act"). The certificate of incorporation and the bylaws of Odetics provides that Odetics will indemnify
+its directors and officers to the fullest extent permitted by law, and the bylaws require Odetics to advance litigation expenses upon receipt by Odetics of an undertaking by the director or officer to
+repay such advances if it is ultimately determined that the director or officer is not entitled to indemnification. The bylaws further provide that rights conferred under such bylaws do not exclude
+any other right such persons may have or acquire under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise. 
+Odetics'
+certificate of incorporation provides that, pursuant to Delaware law, its directors shall not be liable for monetary damages for breach of the directors' fiduciary duty of care
+to Odetics and its stockholders. This provision in the certificate of incorporation does not eliminate the duty of care, and in appropriate circumstances equitable remedies such as injunctive or other
+forms of non-monetary relief will remain available under Delaware law. In addition, each director will continue to be subject to liability for breach of the director's duty of loyalty to
+Odetics or its stockholders, for acts or omissions not in good faith or involving intentional misconduct or knowing violations of law, for actions leading to improper personal benefit to the director,
+and for payment of dividends or approval of stock repurchases or redemptions that are unlawful under Delaware law. The provision also does not affect a director's responsibilities under any other law,
+such as the federal securities laws or state or federal environmental laws. 
+Odetics
+has entered into agreements to indemnify its directors and certain of its officers in addition to the indemnification provided for in the certificate of incorporation and bylaws.
+These agreements, among other things, indemnify Odetics' directors and certain of its officers for certain expenses (including attorneys' fees), judgments, fines and settlement amounts incurred by
+such person in any action or proceeding, including any action by or in the right of Odetics, on account of services as a director or officer of Odetics, or as a director or officer of any other
+company or enterprise to which the person provides services at the request of Odetics. 
+Compensation Committee Interlocks and Insider Participation 
+The members of the Compensation and Stock Option Committee of Odetics' Board of Directors during the fiscal year ended March 31, 2003 were
+Messrs. Daly, Seazholtz and Thomas. None of these individuals was an officer or employee of Odetics or its subsidiaries at any time during the fiscal year ended March 31, 2003. 
+No
+executive officer of Odetics has served on the Board of Directors or on the compensation committee of any other entity that has, or has had, one or more executive officers serving as
+a member of the Board of Directors or on the Compensation and Stock Option Committee of Odetics. 
+19 
+COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION 
+This report covers Odetics' fiscal year ended March 31, 2003. The Compensation and Stock Option Committee (the "Compensation Committee") for the fiscal
+year ended March 31, 2003 was comprised of three outside directors, Messrs. Daly, Seazholtz and Thomas. The Compensation Committee recommends the general compensation levels for
+executives. The Compensation Committee meets periodically to review and recommend for approval by the Board of Directors, the salaries, bonuses and benefit plans for officers and key associates.
+During the fiscal year ended March 31, 2003, the Compensation Committee held two meetings. 
+General Compensation Policy 
+The guiding principle of the Compensation Committee is to establish a compensation program that aligns executive compensation with Odetics' objectives and
+business strategies as well as with financial and operational performance. In keeping with this principle the Compensation Committee seeks to: 
+(1) Attract
+and retain qualified senior executives who can play a significant role in the achievement of Odetics' goals;
+(2) Reward
+executives for strategic management and the long-term enhancement of stockholder value; and
+(3) Create
+a performance-oriented environment that rewards performance with respect to the financial and operational goals of Odetics. 
+In
+the fiscal year ended March 31, 2003, the annual compensation for the executive officers included base salaries and stock options. 
+Odetics
+establishes salaries for the officers by considering the salaries of officers at comparably sized companies according to data obtained by the Compensation Committee from
+executive compensation consultants and from other independent outside sources, including the American Electronics Association annual survey of executive compensation. 
+A
+substantial portion of the compensation of executive officers is based upon the award of stock options which rely on increases in the value of Odetics' securities. The award of options
+is intended to encourage executives to establish a meaningful, long-term ownership interest in Odetics consistent with the interests of Odetics' stockholders. Under Odetics' stock option
+plans, options are granted from time to time to certain officers and key associates of Odetics and its subsidiaries at the fair market value of the shares of Class A common stock at the time of
+grant. Because the compensation element of options is dependent on increases over time in the market value of such shares, stock options represent compensation that is tied to Odetics'
+long-term performance. The award of stock options to the executive officers of Odetics is determined based upon individual performance, level of base salary and position with Odetics. 
+The
+Compensation Committee has reviewed the base salaries for the fiscal year ended March 31, 2003 of each of the executive officers and is of the opinion that such salaries are
+not unreasonable in view of those paid by Odetics' competitors and by other companies of similar size. The Compensation Committee also reviewed the stock options awarded to the executive officers for
+their services in the fiscal year ended March 31, 2003 and is of the opinion that the option awards are reasonable in view of the officers' individual performance and positions with Odetics. 
+CEO Compensation 
+In setting the total compensation payable to Gregory A. Miner, Odetics' Chief Executive Officer and Chief Financial Officer, for the fiscal year ended
+March 31, 2003, the Compensation Committee 
+20 
+sought
+to make such compensation competitive with that provided by other companies with which Odetics competes for executive talent. 
+With
+respect to the base salary of Mr. Miner, it was the Compensation Committee's intent to provide him with a level of stability and certainty each year. The Compensation
+Committee believes the base salary of Mr. Miner for the fiscal year ended March 31, 2003 is at a competitive level with the base salaries in effect for similarly situated chief executive
+officers. The remaining components of Mr. Miner's compensation for the fiscal year ended March 31, 2003, however, were primarily dependent upon corporate performance. Based upon such
+performance, among other factors, no bonus was paid
+to Mr. Miner for the fiscal year ended March 31, 2003 and 200,000 options were granted to him for the fiscal year ended March 31, 2003. 
+2001 Option Exchange Program 
+In light of the substantial decline in the market price of the Class A common stock that occurred as a result of the economic downturn in the technology
+sector, which began in the latter part of the 2000 calendar year, many of the outstanding options held by Odetics' executive officers had exercise prices significantly higher than the market price of
+the underlying common stock. The Compensation Committee believed that many of those options had little or no value and were unlikely to be exercised in the foreseeable future. As a result, the
+Compensation Committee decided that those options were no longer effective in achieving the desired objectives of retaining and incentivizing employees important to Odetics' attainment of its business
+and financial objectives and the creation of value for the stockholders. 
+Accordingly,
+in November 2001, the Compensation Committee authorized Odetics to implement an option exchange program which would allow each executive officer the opportunity to
+exchange his outstanding stock options under the 1997 Plan and the 1994 Plan with an exercise price in excess of $4.00 per share. In exchange, the executive officers would receive new options under
+the 1997 Plan for the same number of shares to be granted at least six months and one day after the completion of the option exchange program. 
+Options
+to purchase 349,000 shares were held by executive officers and eligible for exchange. At the conclusion of the program on November 16, 2001, Odetics accepted for exchange
+and cancellation options to purchase an aggregate of 349,000 shares of common stock representing 100% of the options eligible to be tendered under the option exchange program. 
+On
+May 20, 2002, Odetics granted options to purchase an aggregate of 349,000 shares of Class A common stock to executive officers who tendered eligible options in the
+program. In general, the exercise price per share for those new options is $1.40, the last reported trading price of the Class A common stock on the grant date. In the case of Joel Slutzky, who
+is a holder of 10% or more of the common stock, the exercise price per share for the new options was $1.54, or 110% of the last reported trading price of the Class A common stock on the grant
+date. Six executive officers originally participated in the option exchange program, six executive officers received new options to purchase a total of 349,000 shares in cancellation of their
+higher-priced options for the same number of shares, and no executive officers held no eligible options. 
+Each
+option issued in exchange for a cancelled option will continue to vest and become exercisable for the option shares in accordance with the same vesting schedule in effect for the
+cancelled option. 
+The
+Compensation Committee believed that this program was necessary because equity incentives in the form of stock option grants form a critical component of the compensation
+package provided to Odetics' key employees and play a substantial role in Odetics' ability to retain the services of individuals essential to Odetics' long-term financial success. The
+Compensation Committee felt that Odetics' ability to retain key employees would be significantly impaired, unless value were restored to 
+21 
+their
+options in the form of either replacement options or supplemental options to be granted with an exercise price equal to the fair market value of the Class A common stock at the time of
+grant. However, in order to assure that the option exchange program served its primary purposes of assuring the continued service of key employees and helping to create stockholder value, the
+Committee imposed several limitations. First, no participant would be eligible to receive a replacement option for his cancelled option unless that individual continued to be employed by Odetics until
+the grant date of the replacement option. To assure that the replacement option would not be treated as a variable award for financial accounting purposes, which would otherwise have a negative impact
+upon Odetics' earnings, no replacement option was to be granted within six months and one day after the cancellation of the option submitted for exchange. As a result, each participant in the program
+had to remain employed with Odetics until the end of that period in order to receive the replacement option. In addition, each replacement option will vest in accordance with the same vesting schedule
+as was in effect for the cancelled option it replaces. As a result, the optionee will only have the opportunity to acquire all the shares subject to the replacement option if he remains employed with
+Odetics through the end of that vesting period. 
+As
+a result of the deferred grant date for the replacement options and the continuation of the existing vesting schedules for those options, the Compensation Committee believed that the
+program struck an appropriate balance between the interests of Odetics' employees and those of its stockholders. The replacement options provide an opportunity for executive officers, who are
+essential to Odetics' long-term financial success, to restore value to the equity component of their compensation package. However, those individuals will enjoy the benefits of their
+replacement options only if they in fact remain employed with Odetics and contribute to its financial success in a manner that creates stockholder value in the form of increases to the market value of
+its stock. 
+Compliance with Internal Revenue Code Section 162(m) 
+Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to publicly held corporations for compensation exceeding
+$1.0 million paid to certain of the corporation's executive officers. The limitation applies only to compensation which is not considered to be performance-based. The nonperformance based
+compensation to be paid to Odetics' executive officers for the fiscal year ended March 31, 2003 did not exceed the $1.0 million limit per officer, nor is it expected that the
+nonperformance based compensation to be paid to Odetics' executive officers for the next fiscal year will exceed that limit. Odetics' 1997 Stock Incentive Plan is structured so that any compensation
+deemed paid to an executive officer in connection with the exercise of option grants made under that plan will qualify as performance-based compensation which will not be subject to the
+$1.0 million limitation. Because it is very unlikely that the cash compensation payable to any of Odetics' executive
+officers in the foreseeable future will approach the $1.0 million limit, the Compensation Committee has decided at this time not to take any other action to limit or restructure the elements of
+cash compensation payable to Odetics' executive officers. The Compensation Committee will reconsider this decision should the individual compensation of any executive officer ever approach the
+$1.0 million level. 
+Submitted
+by the Compensation Committee 
+of the Board of Directors: 
+Kevin
+C. Daly, Ph.D. 
+John W. Seazholtz 
+Thomas L. Thomas 
+22 
+AUDIT COMMITTEE REPORT 
+The following is the report of the audit committee with respect to the audited consolidated financial statements of Odetics for the fiscal year ended
+March 31, 2003 included in Odetics' Annual Report on Form 10-K for that year. 
+Review with Management 
+The audit committee has reviewed and discussed these audited consolidated financial statements with management of Odetics. 
+Review and Discussions with Independent Auditors 
+The audit committee has discussed with Odetics' independent auditors, Ernst & Young LLP, the matters required to be discussed by SAS 61 (Codification of
+Statements on Auditing Standards, AU Section 380), as amended, which includes, among other items, matters related to the conduct of the audit of the consolidated financial statements of
+Odetics. 
+The
+audit committee has received the written disclosures and the letter from Ernst & Young LLP required by Independence Standards Board Standard No. 1 ("Independence
+Discussions with Audit Committees"), as amended, and has discussed with Ernst & Young LLP the independence of Ernst & Young LLP from Odetics. 
+Conclusion 
+Based on the review and discussions referred to above in this report, the audit committee recommended to the Board of Directors of Odetics that the audited
+financial statements be included in Odetics' Annual Report on Form 10-K for the year ended March 31, 2003 for filing with the Securities and Exchange Commission. 
+Submitted
+by the Audit Committee 
+of the Board of Directors: 
+John
+W. Seazholtz 
+Thomas L. Thomas 
+Paul E. Wright 
+23 
+AUDIT AND OTHER FEES 
+Fees Billed to Odetics by Ernst & Young LLP During the Fiscal Year Ended March 31, 2003 
+Audit Fees. Audit fees billed to Odetics by Ernst & Young LLP during the fiscal year ended
+March 31, 2003 for audit of Odetics' annual consolidated financial statements and review of those consolidated financial statements included in Odetics' quarterly reports on Forms
+10-Q totaled approximately $108,000. 
+Financial Information Systems Design and Implementation Fees. Odetics did not engage Ernst &
+Young LLP to provide advice or services to Odetics regarding financial information systems design and implementation during the fiscal year ended March 31, 2003. 
+All Other Fees. Other audit-related fees for the fiscal year ended March 31, 2003 were an
+additional $90,000 and included, among other things, fees for registration statements, fees related to audits of certain subsidiaries of Odetics. Fees billed to Odetics for
+non-audit-related services rendered by Ernst & Young LLP for the fiscal year ended March 31, 2003, including fees for tax compliance and tax consulting services, were
+approximately $133,000. In the aggregate, all such other fees, including audit-related fees, totaled approximately $223,000. 
+Determination of Independence 
+The Audit Committee of the Board of Directors has determined that the provision by Ernst & Young LLP of the services covered under the headings "Financial
+Information Systems Design and Implementation Fees" and "All Other Fees" above are compatible with maintaining Ernst & Young LLP's independence. 
+24 
+PERFORMANCE GRAPH FOR ODETICS, INC. 
+INDEXED COMPARISON OF CUMULATIVE TOTAL RETURN 
+The performance graph shows the cumulative total return on investment assuming an investment of $100 on March 31, 1998 in each of the Class A common
+stock and Class B common stock of Odetics, the Nasdaq Stock Market Index and Media General's Industry Group 836 for Diversified Electronics. The total stockholder return assumes reinvestment of
+dividends on a daily basis, although cash dividends have not been declared on either class of Odetics' common stock. The stockholder returns shown in the following graph are not necessarily indicative
+of future performance. 
+COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* 
+AMONG ODETICS, INC., THE NASDAQ STOCK MARKET (U.S.) INDEX 
+AND A PEER GROUP 
+Measurement Period 
+1998 
+1999 
+2000 
+2001 
+2002 
+2003 
+Odetics Class A Common Stock 
+100.00 
+111.43 
+157.14 
+38.57 
+17.71 
+7.54 
+Odetics Class B Common Stock 
+100.00 
+98.14 
+136.65 
+29.81 
+19.89 
+5.17 
+Nasdaq Stock Market Index 
+100.00 
+135.08 
+250.99 
+100.60 
+101.32 
+74.37 
+MG Group Index 
+100.00 
+93.60 
+295.09 
+116.44 
+86.07 
+55.30 
+Notwithstanding anything to the contrary set forth in any of Odetics' previous or future filings under the Securities Act or the Exchange Act, as amended, that
+might incorporate this proxy statement or future filings made by Odetics under those statutes, the Compensation Committee Report, the Audit Committee Report, the Audit Committee Charter, reference to
+the independence of the Audit Committee members and the Performance Graph are not deemed filed with the Securities and Exchange Commission and shall not be deemed incorporated by reference into any of
+those prior filings or into any future filings made by Odetics under those statutes. 
+25 
+Certain Transactions 
+In February 2002, Odetics obtained a $1.25 million line of credit from Technology Lending Partners, L.L.C. ("TLP"), a California limited
+liability company that is controlled by Joel Slutzky, Odetics' Chairman of the Board of Directors. Interest is payable on this line of credit monthly and accrues at the prime rate of interest
+designated by Bank of America from time to time plus 4% (8.5% as of March 31, 2003). As of March 31, 2003, $1.25 million was outstanding under this line of credit. In May 2003, in
+connection with Odetics' sale of the assets of its Zyfer, Inc. subsidiary, Odetics entered into a release of lien with TLP, pursuant to which Odetics repaid TLP $850,000 under this line of
+credit to obtain a release of TLP's security interest in the assets relating to the Zyfer business. 
+In
+October 2002, Odetics entered into a Receivables Purchase Agreement with TLP, pursuant to which TLP advanced Odetics an aggregate of $923,672 against certain of Odetics'
+accounts receivable in exchange certain fees. As of March 31, 2003, the total fees earned by TLP in connection with this agreement were $111,248. Of the total amounts advanced, $232,347
+remained outstanding and payable to TLP as of March 31, 2003. In May 2003, in connection with the Zyfer sale, Odetics entered into an agreement with TLP, pursuant to which Odetics
+repurchased the receivables remaining outstanding under this agreement, all of which related to the Zyfer business, for an aggregate repurchase price of $227,689. As of the date of this proxy
+statement, there are no outstanding factored receivables between TLP and Odetics. 
+In
+May 2003, Odetics entered into change in control agreements with each of Greg Miner, the Chief Executive Officer, Chief Financial Officer and a director of Odetics, and John E.
+Johnson, a Vice President of Odetics and the President and Chief Executive Officer and a Director of Iteris. In the event of an involuntary termination of the officer's employment within three months
+prior to or twenty-four months after a change in control, the agreement provides for a severance payment to such officer of 200% of such officer's annual base pay plus target bonus for the
+current fiscal year. In addition, such officer and his dependents are entitled to all insurance benefits for up to twenty-four months or until such officer obtains new employment with comparable
+benefits, whichever is earlier. 
+In
+July 2003, Odetics entered into a Securities Purchase Agreement with certain purchasers, including Greg Miner, the Chief Executive Officer, the Chief Financial Officer and a
+director of Odetics, pursuant to which it sold an aggregate of 3,666,666 shares of its Class A common stock and issued warrants to purchase an aggregate of 366,666 shares of its Class A
+common stock to seven accredited investors, including Mr. Miner, who participated in such private financing on the same terms as the other investors. Mr. Miner purchased an aggregate of
+166,667 shares of the Class A common stock of Odetics at a purchase price of $0.60 per share, the closing sales price of the Class A common stock on the OTC Bulletin Board on the date of
+the agreement. In addition, in accordance with the terms of the agreement, Mr. Miner received a warrant to purchase up to 16,667 shares of the Class A common stock at an exercise price
+of $1.50 per share. 
+Section 16(a) Beneficial Ownership Reporting Compliance 
+Under the federal securities laws, Odetics' directors and officers and any persons holding more than 10% of Odetics' common stock are required to report their
+ownership of Odetics' common stock and any changes in that ownership to the SEC. Specific due dates for these reports have been established, and Odetics is required to report in this proxy statement
+any failure to file by these dates. Based solely on its review of copies of the reports on Forms 3, 4 and 5 received by Odetics with respect to the fiscal year ended March 31, 2003, and the
+written representations received from the reporting persons that no other reports were required, Odetics believes that all directors, executive officers and persons who own more than 10% of Odetics'
+common stock have complied with the reporting requirements of Section 16(a) and have filed all reports required by such section. 
+26 
+Annual Report 
+A copy of Odetics' annual report on Form 10-K for the fiscal year ended March 31, 2003 (including Amendment No. 1 but excluding
+the exhibits thereto) accompanies the proxy materials being mailed to all stockholders. The annual report is not incorporated into this proxy statement and is not considered proxy solicitation
+material. Stockholders may obtain a copy of the exhibits to the annual report on Form 10-K, as amended, without charge, by writing to Investor Relations, Odetics, Inc.,
+1515 S. Manchester Avenue, Anaheim, California 92802. The annual report on Form 10-K, as amended (including the exhibits thereto), is also available on the Securities and Exchange
+Commission's Web site (http://www.sec.gov). 
+Deadline for Receipt of Stockholder Proposals 
+If Odetics has not received notice on or prior to June 22, 2003 of any matter a stockholder intends to propose for a vote at the 2003 annual meeting of
+stockholders, then a proxy solicited by the Board of Directors may be voted on such matter in the discretion of the proxy holder, without discussion of the matter in the proxy statement soliciting
+such proxy and without such matter as a separate item on the proxy card. 
+The
+deadline for stockholders to submit proposals to be considered for inclusion in Odetics' proxy statement for next year's annual meeting of stockholders is anticipated to be
+April 15, 2004. In addition, the proxy to be solicited by the Board of Directors for next year's annual meeting will confer discretionary authority to vote on any stockholder proposal presented
+at that meeting, unless Odetics receives notice of such proposal no later than June 30, 2004. Stockholder proposals must be mailed to
+the attention of the Secretary of Odetics at the principal executive offices of Odetics located at 1515 South Manchester, Anaheim, California 92802. 
+Other Business 
+The Board of Directors is not aware of any other matter which will be presented for action at the Annual Meeting other than the matters set forth in this proxy
+statement. If any other matter requiring a vote of the stockholders arise, it is intended that the proxy holders will vote the shares they represent as the Board of Directors may recommend.
+Discretionary authority with respect to such other matters is granted by the execution of the enclosed proxy card. 
+THE
+BOARD OF DIRECTORS OF 
+ODETICS, INC. 
+Anaheim,
+California 
+August 11, 2003 
+27 
+V DETACH PROXY CARD HERE V 
+PROXY 
+THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS 
+ODETICS, INC. 
+CLASS A COMMON STOCK 
+The undersigned stockholder of Class A common stock of ODETICS, INC. hereby appoints GREGORY A. MINER and GARY W. SMITH, and each of them,
+proxies of the undersigned, each with full power to act without the other and with power of substitution, to represent the undersigned at the Annual Meeting of Stockholders of Odetics to be held at
+1515 South Manchester Avenue, Anaheim, California 92802 on September 12, 2003 at 10:00 a.m. (Pacific Time), and at any adjournments thereof, and to vote all shares of
+Class A common stock of Odetics held of record by the undersigned on July 25, 2003, with all the powers the undersigned would possess if personally present, in accordance with the
+instructions on the reverse hereof. 
+The
+undersigned hereby revokes any other proxy to vote at such Annual Meeting of Stockholders and hereby ratifies and confirms all that said proxies, and each of them, may lawfully do by
+virtue hereof. The undersigned also acknowledges receipt of the Notice of Annual Meeting of Stockholders, the proxy statement and the annual report to stockholders on Form 10-K for the year ended
+March 31, 2003 (including Amendment No. 1 to such annual report), which were furnished with this proxy. 
+THIS
+PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS BELOW, OR IF NO INSTRUCTIONS ARE INDICATED, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 3, AND IN ACCORDANCE
+WITH THE DISCRETION OF THE PROXY HOLDERS WITH REGARD TO ANY OTHER MATTERS PROPERLY BROUGHT TO A VOTE AT THE ANNUAL MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF. 
+(Continued, and to be signed on reverse side) 
+See reverse side 
+ODETICS, INC. 
+V DETACH PROXY CARD HERE V 
+Please Detach Here 
+V You Must Detach This Portion of the Proxy Card V 
+Before Returning it in the Enclosed Envelope 
+ý Please mark votes as in this example. 
+1. 
+ELECTION OF DIRECTORS 
+Nominees standing for election by holders of Class A common stock: Crandall L. Gudmundson and Jerry F. Muench. 
+o FOR o WITHHOLD AUTHORITY to vote for all nominees listed below 
+(Instruction: To withhold authority to vote for any individual nominee, write that nominee's name in the space provided below.) 
+Nominees standing for election by holders of Class A common stock and Class B common stock voting together as a single class: Kevin C. Daly, Gregory A. Miner, John W.
+Seazholtz, Joel Slutzky, Thomas L. Thomas and Paul E. Wright. 
+o FOR o WITHHOLD AUTHORITY
+to vote for all nominees listed below 
+(Instruction: To withhold authority to vote for any individual nominee, write that nominee's name in the space provided below.) 
+2. 
+Approval of the amendment of the certificate of incorporation of Odetics to effect a change in the corporate name to "Iteris Holdings, Inc." 
+o FOR o AGAINST o ABSTAIN 
+3. 
+Ratification of Ernst & Young LLP as the independent auditors of Odetics for the fiscal year ending March 31, 2004. 
+o FOR o AGAINST o ABSTAIN 
+MARK HERE FOR ADDRESS CHANGE AND INDICATE NEW ADDRESS 
+o 
+MARK HERE IF YOU PLAN TO ATTEND THE MEETING 
+o 
+Signature: 
+Date: 
+Signature: 
+Date: 
+(This
+Proxy must be signed exactly as your name appears hereon. Executors, administrators, trustees, etc., should give full title as such. If the stockholder is a corporation, a duly authorized
+officer should sign on behalf of the corporation and should indicate his or her title.) 
+PLEASE
+MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. 
+V DETACH PROXY CARD HERE V 
+PROXY 
+THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS 
+ODETICS, INC. 
+CLASS B COMMON STOCK 
+The undersigned stockholder of Class B common stock of ODETICS, INC. hereby appoints GREGORY A. MINER and GARY W. SMITH, and each of them, proxies of the
+undersigned, each with full power to act without the other and with power of substitution, to represent the undersigned at the Annual Meeting of Stockholders of Odetics to be held at 1515 South
+Manchester Avenue, Anaheim, California 92802 on September 12, 2003 at 10:00 a.m. (Pacific Time), and at any adjournments thereof, and to vote all shares of Class B common stock of Odetics held
+of record by the undersigned on July 25, 2003, with all the powers the undersigned would possess if personally present, in accordance with the instructions on the reverse hereof. 
+The
+undersigned hereby revokes any other proxy to vote at such Annual Meeting of Stockholders and hereby ratifies and confirms all that said proxies, and each of them, may lawfully do by
+virtue hereof. The undersigned also acknowledges receipt of the Notice of Annual Meeting of Stockholders, the proxy statement and the annual report to stockholders on Form 10-K for the year ended
+March 31, 2003 (including Amendment No. 1 to such annual report), which were furnished with this proxy. 
+THIS
+PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS BELOW, OR IF NO INSTRUCTIONS ARE INDICATED, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 3, AND IN ACCORDANCE
+WITH THE DISCRETION OF THE PROXY HOLDER WITH REGARD TO ANY OTHER MATTERS PROPERLY BROUGHT TO A VOTE AT THE ANNUAL MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF. 
+(Continued, and to be signed on reverse side) 
+See reverse side 
+ODETICS, INC. 
+V DETACH PROXY CARD HERE V 
+Please Detach Here 
+V You Must Detach This Portion of the Proxy Card V 
+Before Returning it in the Enclosed Envelope 
+ý Please mark votes as in this example. 
+1. 
+ELECTION OF DIRECTORS 
+Nominees standing for election by holders of Class A common stock and Class B common stock voting together as a single class: Kevin C. Daly, Gregory A. Miner, John W.
+Seazholtz, Joel Slutzky, Thomas L. Thomas and Paul E. Wright. 
+o FOR o WITHHOLD AUTHORITY
+to vote for all nominees listed below 
+(Instruction: To withhold authority to vote for any individual nominee, write that nominee's name in the space provided below.) 
+2. 
+Approval of the amendment of the certificate of incorporation of Odetics to effect a change in the corporate name to "Iteris Holdings, Inc." 
+o FOR o AGAINST o ABSTAIN 
+3. 
+Ratification of Ernst & Young LLP as the independent auditors of Odetics for the fiscal year ending March 31, 2004. 
+o FOR o AGAINST o ABSTAIN 
+MARK HERE FOR ADDRESS CHANGE AND INDICATE NEW ADDRESS 
+o 
+MARK HERE IF YOU PLAN TO ATTEND THE MEETING 
+o 
+Signature: 
+Date: 
+Signature: 
+Date: 
+(This
+Proxy must be signed exactly as your name appears hereon. Executors, administrators, trustees, etc., should give full title as such. If the stockholder is a corporation, a duly authorized
+officer should sign on behalf of the corporation and should indicate his or her title.) 
+PLEASE
+MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. 
+QuickLinks 
+PROPOSAL NO. 1 ELECTION OF DIRECTORS 
+Nominees for Election 
+PROPOSAL NO. 2 APPROVAL OF THE AMENDMENT OF THE CERTIFICATE OF INCORPORATION TO EFFECT A CHANGE IN THE CORPORATE NAME 
+PROPOSAL NO. 3 RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS 
+PRINCIPAL STOCKHOLDERS AND COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 
+EQUITY COMPENSATION PLANS 
+EXECUTIVE COMPENSATION AND OTHER INFORMATION 
+SUMMARY COMPENSATION TABLE 
+AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES 
+10-YEAR OPTION REPRICINGS 
+COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION 
+AUDIT COMMITTEE REPORT 
+AUDIT AND OTHER FEES 
+PERFORMANCE GRAPH FOR ODETICS, INC. INDEXED COMPARISON OF CUMULATIVE TOTAL RETURN 
+COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* AMONG ODETICS, INC., THE NASDAQ STOCK MARKET (U.S.) INDEX AND A PEER GROUP

raw/proxies/0000350868/0001104659-06-049985/proxy.txt

@@ -0,0 +1,1846 @@
+DEF 14A
+1
+a06-17064_1def14a.htm
+DEFINITIVE PROXY STATEMENT
+UNITED STATES 
+SECURITIES
+AND EXCHANGE COMMISSION 
+Washington,
+D.C. 20549 
+SCHEDULE 14A 
+Proxy Statement
+Pursuant to Section 14(a) of 
+the Securities Exchange Act of 1934 (Amendment No. ) 
+Filed by the Registrant x 
+Filed by a Party other than the Registrant o 
+Check the appropriate box: 
+o 
+Preliminary Proxy Statement 
+o 
+Confidential, for Use of the Commission Only (as
+permitted by Rule 14a-6(e)(2)) 
+x 
+Definitive Proxy Statement 
+o 
+Definitive Additional Materials 
+o 
+Soliciting Material Pursuant to §240.14a-12 
+ITERIS, INC. 
+(Name of Registrant
+as Specified In Its Charter) 
+(Name of Person(s)
+Filing Proxy Statement, if other than the Registrant) 
+Payment of Filing Fee (Check the appropriate box): 
+x 
+No fee required. 
+o 
+Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
+and 0-11. 
+(1) 
+Title of each class of securities to which transaction applies: 
+(2) 
+Aggregate number of securities to which transaction applies: 
+(3) 
+Per unit price or other underlying value of transaction computed
+pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing
+fee is calculated and state how it was determined): 
+(4) 
+Proposed maximum aggregate value of transaction: 
+(5) 
+Total fee paid: 
+o 
+Fee paid previously with preliminary materials. 
+o 
+Check box if any part of the fee is offset as provided by
+Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting
+fee was paid previously. Identify the previous filing by registration
+statement number, or the Form or Schedule and the date of its filing. 
+(1) 
+Amount Previously Paid: 
+(2) 
+Form, Schedule or Registration Statement No.: 
+(3) 
+Filing Party: 
+(4) 
+Date Filed: 
+ITERIS,
+INC. 
+NOTICE OF
+THE ANNUAL MEETING OF STOCKHOLDERS 
+TO BE HELD SEPTEMBER 14, 2006 
+To the Stockholders of Iteris, Inc.: 
+NOTICE IS HEREBY GIVEN that the 2006 Annual Meeting of
+Stockholders (the “Annual Meeting”) of Iteris, Inc., a Delaware corporation (“Iteris”
+or the “Company”), will be held on Thursday, September 14, 2006 at 10:00 a.m.
+Pacific Time, at the principal executive offices of Iteris located at 1515
+South Manchester Avenue, Anaheim, California 92802 for the following purposes,
+as more fully described in the proxy statement accompanying this Notice: 
+1. To elect eleven directors to serve on the
+Board of Directors until the next annual meeting of stockholders. The nominees for election are Richard Char,
+Kevin C. Daly, Ph.D., Gary Hernandez, Jack Johnson, Dr. Hartmut Marwitz,
+Gregory A. Miner, Abbas Mohaddes, John W. Seazholtz, Joel Slutzky, Thomas L.
+Thomas and Paul E. Wright. 
+2. To ratify the appointment of McGladrey
+& Pullen, LLP as the independent auditors of Iteris for the fiscal year
+ending March 31, 2007. 
+3. To transact any other business which may
+properly come before the Annual Meeting or any adjournment(s) or
+postponement(s) thereof. 
+All stockholders of record as of the close of business
+on July 25, 2006 are entitled to notice of and to vote at the Annual Meeting
+and at any postponement(s) or adjournment(s) thereof. A list of stockholders entitled to vote at
+the Annual Meeting will be available for inspection at the principal executive
+offices of Iteris. 
+We cordially invite all stockholders to attend the
+Annual Meeting. Whether or not you plan
+to attend, it is important that your shares be represented and voted at the
+Annual Meeting. You can vote your shares
+by completing and returning the enclosed proxy card. If your shares are held in
+“street name,” that is, your shares are held in the name of a brokerage firm,
+bank or other nominee, in lieu of a proxy card you should receive from that
+institution an instruction form for voting by mail and you may also be eligible
+to vote your shares electronically over the Internet or by telephone. Should
+you receive more than one proxy card or voting instruction form because your
+shares are held in multiple accounts or registered in different names or
+addresses, please sign, date and return each proxy card or voting
+instruction form to ensure that all of your shares are voted. You may revoke your proxy at any time prior
+to the Annual Meeting. If you attend the
+Annual Meeting and vote by ballot, any proxy that you previously submitted will
+be revoked automatically and only your vote at the Annual Meeting will be
+counted. For further information, please see the discussion of voting rights
+and proxies beginning on page 1 of the enclosed proxy statement. 
+BY ORDER OF THE BOARD OF DIRECTORS 
+/s/ Jack Johnson 
+Anaheim,
+California 
+Jack Johnson 
+August 9, 2006 
+President and Chief Executive Officer 
+YOUR VOTE IS VERY IMPORTANT REGARDLESS OF THE NUMBER
+OF SHARES YOU OWN. PLEASE READ THE
+ATTACHED PROXY STATEMENT CAREFULLY, COMPLETE, SIGN AND DATE THE ENCLOSED PROXY
+CARD AS PROMPTLY AS POSSIBLE AND RETURN IT IN THE ENCLOSED ENVELOPE. 
+ITERIS,
+INC. 
+1515
+South Manchester Avenue 
+Anaheim, California 92802 
+PROXY
+STATEMENT 
+FOR THE 2006 ANNUAL MEETING OF STOCKHOLDERS 
+TO BE HELD SEPTEMBER 14, 2006 
+General 
+These proxy materials and the enclosed proxy card are
+being furnished in connection with the solicitation of proxies by the Board of
+Directors of Iteris, Inc., a Delaware corporation (“Iteris” or the “Company”),
+to be voted at the 2006 Annual Meeting of Stockholders (the “Annual Meeting”)
+to be held on September 14, 2006 and at any adjournment(s) or postponement(s)
+of the meeting. The Annual Meeting will
+be held at 10:00 a.m. Pacific Time, at the Company’s principal executive
+offices located at 1515 South Manchester Avenue, Anaheim, California
+92802. These proxy materials and the
+form of proxy are expected to be mailed to the Company’s stockholders who are
+entitled to vote at the Annual Meeting on or about August 9, 2006. 
+Purpose
+of Meeting 
+The specific proposals to
+be considered and acted upon at the Annual Meeting are summarized in the
+accompanying Notice of the Annual Meeting of Stockholders and are described in
+more detail in this proxy statement. 
+Voting
+Rights 
+The record date for determining those stockholders who
+are entitled to notice of, and to vote at, the Annual Meeting has been fixed as
+July 25, 2006. At the close of business
+on the record date, 28,825,582 shares of the Company’s common stock, par value
+$0.10 per share, were outstanding and no shares of the Company’s preferred
+stock were outstanding. Each stockholder
+is entitled to one vote for each share of common stock held by such stockholder
+as of the record date. 
+The presence in person or by proxy of the holders of a
+majority of the outstanding shares of the common stock entitled to vote will
+constitute a quorum for the transaction of business at the Annual Meeting. If a quorum is not present, the Annual
+Meeting will be adjourned until a quorum is obtained. 
+In the election of directors under Proposal One,
+directors will be elected by a plurality of the common stock entitled to vote
+and present in person or represented by proxy at the Annual Meeting, unless
+cumulative voting is in effect. Pursuant
+to the bylaws of Iteris, no stockholder is entitled to cumulate his or her
+votes (as described above) for candidates other than those whose names have
+been placed in nomination prior to the commencement of voting and unless at
+least one stockholder has given notice prior to commencement of voting of his
+or her intention to cumulate votes. If
+any stockholder has given such notice, then each stockholder may cumulate votes
+by multiplying the number of shares of common stock the stockholder is entitled
+to vote by the number of directors to be elected. The number of cumulative votes thus
+determined may be voted all for one candidate or distributed among several
+candidates, at the discretion of the stockholder. The candidates receiving the highest number
+of votes, up to the number of directors to be elected, will be elected. If cumulative voting is in effect, the
+persons named in the accompanying proxy will vote the shares of common stock
+covered by proxies received by them (unless authority to vote for directors is
+withheld) among the named candidates as they determine. 
+1 
+Proposal Two requires the approval of the affirmative
+vote of a majority of the common stock present in person or represented by
+proxy at the Annual Meeting and entitled to vote on the matter. 
+All votes will be tabulated by the inspector of
+election appointed for the Annual Meeting, who will separately tabulate
+affirmative and negative votes, abstentions and broker non-votes. Broker non-votes occur when brokers who hold
+stock in “street name” return proxy cards stating that they do not have
+authority to vote the stock which they hold on behalf of beneficial
+owners. Abstentions and broker non-votes
+are counted as present for purposes of determining the presence or absence of a
+quorum for the transaction of business. 
+Abstentions will be counted towards the tabulations of votes cast on
+proposals presented to the stockholders and will have the same effect as
+negative votes. Broker non-votes will
+not be counted for purposes of determining whether a proposal has been approved. The election of directors in Proposal One and
+the ratification of the selection of the independent auditors in Proposal Two
+are matters on which a broker or other nominee is generally empowered to vote. Therefore, no broker non-votes will exist in
+connection with Proposal One or Proposal Two. 
+Voting 
+You may vote by one of three ways: (i) by mail, (ii) electronically
+over the Internet or by telephone, or (iii) by ballot in person at the Annual
+Meeting. If you are a “registered
+holder,” that is your shares are registered in your own name through our
+transfer agent, you may vote by returning a completed proxy card in the
+enclosed postage-paid envelope. If your
+shares are held in “street name,” that is, your shares are held in the name of
+a brokerage firm, bank or other nominee,
+in lieu of a proxy card you should receive a voting instruction form from that
+institution by mail. The voting
+instruction form should indicate whether the institution has a process for
+beneficial holders to vote over the Internet or by telephone. A large number of banks and brokerage firms
+are participating in the ADP Investor Communication Services online
+program. This program provides eligible
+stockholders who receive a paper copy of the proxy statement the opportunity to
+vote over the Internet or by telephone. The Internet and telephone voting facilities will
+close at 11:59 p.m. Eastern Time on Wednesday, September 13, 2006 . Stockholders who vote over the Internet or by
+telephone need not return a proxy card or voting instruction form by mail, but
+may incur costs, such as usage charges, from telephone companies or Internet
+service providers. If your voting
+instruction form does not reference Internet or telephone information, please
+complete and return the paper voting instruction form in the self-addressed,
+postage-paid envelope provided. 
+If you are a registered holder, you may also vote your
+shares in person at the Annual Meeting. 
+If your shares are held in street name and you wish to vote in person at
+the meeting, you must obtain a proxy issued in your name from the record holder
+and bring it with you to the Annual Meeting. 
+The Company recommends that you vote your shares in advance as described
+above so that your vote will be counted if you later decide not to attend the
+Annual Meeting. 
+Proxies 
+Please use the enclosed proxy card to vote by
+mail. If your shares are held in street
+name, then in lieu of a proxy card you should receive from that institution an
+instruction form for voting by mail, the Internet or by telephone. Should you receive more than one proxy card
+or voting instruction form because your shares are held in multiple accounts or
+registered in different names or addresses, please be sure to complete, sign,
+date and return each proxy card or voting instruction form to ensure that all
+of your shares will be voted. Only proxy
+cards and voting instruction forms that have been signed, dated and timely
+returned will be counted in the quorum and voted. Properly executed proxies will be voted in
+the manner directed by the stockholders. 
+If the proxy does not specify how the shares represented thereby are to
+be voted, the proxy will be voted FOR the election of the directors proposed by
+the Board under Proposal One unless the authority to vote for the election of
+any director is withheld and, if no contrary instructions are given, the proxy
+will be voted FOR the approval of Proposal Two as described in this proxy
+statement and the accompanying notice. 
+The enclosed proxy also grants the proxy holders
+discretionary authority to vote on any other business that may properly come
+before the Annual Meeting as well as any procedural matters. The Company has not been notified by any
+stockholder of his or her intent to present a stockholder proposal at the
+Annual Meeting. 
+2 
+If your shares are held in your name, you may revoke
+or change your vote at any time before the Annual Meeting by filing a notice of
+revocation or another signed proxy card with a later date with the Company’s
+Secretary at the Company’s principal executive offices at 1515 South Manchester
+Avenue, Anaheim, California 92802. If
+your shares are held in street name, you should contact the record holder to
+obtain instructions if you wish to revoke or change your vote before the Annual
+Meeting. If you attend the Annual
+Meeting and vote by ballot, any proxy that you submitted previously to vote the
+same shares will be revoked automatically and only your vote at the Annual
+Meeting will be counted. Please note, however, that if your shares are held in street name, your
+vote in person at the Annual Meeting will not be effective unless you have
+obtained and present a proxy issued in your name from the record holder. Attendance at the Annual Meeting
+will not, by itself, revoke a proxy. 
+Solicitation 
+The enclosed proxy is being solicited by the Company’s
+Board of Directors. The Company will
+bear the entire cost of proxy solicitation, including the costs of preparing,
+assembling, printing and mailing this proxy statement, the proxy card and any
+additional material furnished to the stockholders. Copies of the solicitation materials will be
+furnished to brokerage houses, fiduciaries and custodians holding shares in
+their names that are beneficially owned by others so that they may forward this
+solicitation material to such beneficial owners. In addition, the Company may reimburse such
+persons for their reasonable expenses in forwarding the solicitation materials
+to the beneficial owners. The original
+solicitation of proxies by mail may be supplemented by a solicitation by
+personal contact, telephone, facsimile, email or any other means by the Company’s
+directors, officers or employees. No
+additional compensation will be paid to these individuals for any such
+services. 
+In the discretion of management, the Company reserves
+the right to retain a professional firm of proxy solicitors to assist in
+solicitation of proxies. Although the
+Company does not currently expect to retain such a firm, it estimates that the
+fees of such firm would range from $5,000 to $20,000 plus out-of-pocket
+expenses, all of which would be paid by the Company. 
+3 
+MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING 
+PROPOSAL ONE: 
+ELECTION OF DIRECTORS 
+Eleven directors are to be elected at the Annual
+Meeting to hold office until their successors are duly elected and qualified at
+the next annual meeting of stockholders. 
+The eleven candidates receiving the highest number of affirmative votes,
+present in person or represented by proxies and entitled to vote at the Annual
+Meeting, will be elected as directors of Iteris. However, if cumulative voting is in effect,
+the proxy holders will have the right to cumulate and allocate votes among
+those nominees standing for election as such proxy holders in their discretion
+elect. 
+Information with Respect to
+Nominees 
+The following table sets forth certain information, as
+of July 1, 2006, concerning the director nominees. 
+Name 
+Age 
+Current Position(s) with Iteris 
+Director 
+Since 
+Richard Char(1) 
+47 
+Director 
+2005 
+Kevin C. Daly,
+Ph.D.(2)(3) 
+61 
+Director
+and Assistant Secretary 
+1993 
+Gary Hernandez(3) 
+46 
+Director 
+2004 
+Jack Johnson 
+59 
+President,
+Chief Executive Officer and Director 
+2004 
+Dr. Hartmut Marwitz 
+64 
+Director 
+2004 
+Gregory A. Miner 
+51 
+Chairman
+of the Board 
+1998 
+Abbas Mohaddes 
+49 
+Executive
+Vice President, General Manager, Assistant 
+2005 
+Secretary
+and Director 
+John W.
+Seazholtz(1)(2)(3) 
+69 
+Director 
+1998 
+Joel Slutzky 
+67 
+Director
+and Assistant Secretary 
+1969 
+Thomas L.
+Thomas(1)(2)(3) 
+57 
+Director 
+1999 
+Paul E. Wright 
+75 
+Director 
+1993 
+(1) Member of the Audit Committee. 
+(2) Member of the Compensation Committee. 
+(3) Member of the Nominating and
+Corporate Governance Committee. 
+Richard Char has served as a director of Iteris since September 2005. Since June 2006, Mr. Char has served as
+Senior Vice President of Corporate Development and General Counsel at Blackhawk
+Network, Inc., a provider of card-based financial solutions, including
+third-party prepaid cards. From March
+2003 to April 2005, Mr. Char served as the President and Chief Executive
+Officer of IC Media, a developer of CMOS image sensors that was acquired in
+April 2005 by MagnaChip Semiconductors, a developer and manufacturer of
+mixed-signal and digital multimedia semiconductors. Prior to joining IC Media, from March 1999 to
+January 2002, Mr. Char was Managing Director with the Technology Group of
+Credit Suisse First Boston. From 1997 to
+1999, Mr. Char was Co-Head of Technology Investment Banking at Cowen &
+Company and from 1984 to 1997, he was a partner in the law firm of Wilson
+Sonsini Goodrich & Rosati. Mr. Char
+received his A.B. degree from Harvard College and his J.D. degree from Stanford
+Law School. 
+Kevin C. Daly, Ph.D. has served as a director of Iteris since 1993. Since November 2005, Dr. Daly has served as
+the Chief Executive Officer of MAXxess Systems, Inc., a provider of electronic
+security solutions, which he joined in June 2005. From June 2002 to June 2005, Dr. Daly was the
+Chief Executive Officer of Avamar Technologies, Inc., a provider of high
+availability storage software solutions. 
+Dr. Daly was Chief Technical Officer 
+4 
+of
+Quantum Corporation’s Storage Solutions Group from October 2001 to July 2002
+and, prior to that, he was Chief Executive Officer of ATL Products, Inc., a
+former subsidiary of the Company, from ATL’s formation in 1993 until 2001. Dr. Daly also served as Chief Technical
+Officer of Iteris from 1985 until ATL’s separation from Iteris in an initial
+public offering in 1997. Prior to
+joining Iteris, Dr. Daly was Director of the Control and Dynamics Division of
+the Charles Stark Draper Laboratory at MIT from 1974 through 1985. Dr. Daly is also a member of the Board of
+Directors of Danka Business Systems PLC and iStor Networks Inc. 
+Gary Hernandez has served as a director of Iteris since September 2004. He also served as a director of the Company’s
+former Iteris, Inc. subsidiary (the “Iteris Subsidiary”) from January 1999 to
+October 2004. Mr. Hernandez has been a
+partner in the law firm of Sonnenschein, Nath and Rosenthal LLP since December
+1997. From December 1995 to December
+1997, Mr. Hernandez was a partner in the law firm of Long & Levit. Mr. Hernandez served as Deputy Insurance
+Commissioner of California from April 1991 to November 1995. Mr. Hernandez received his B.A. degree from the
+University of California, Berkeley and his J.D. degree from the University of California,
+Davis. 
+Jack Johnson has served as the President and Chief Executive Officer of Iteris
+since October 2004 and as a director since September 2004. Prior to that, Mr. Johnson served as the
+President, Chief Executive Officer and a director of the Iteris Subsidiary from
+December 1999 to October 2004, when the Iteris Subsidiary was merged into the
+Company. Mr. Johnson also served as a
+Vice President of Iteris from 1986 to October 2004, as the General Manager of
+the Company’s ITS division (which became the Iteris Subsidiary), prior to its
+incorporation, from 1996 to 1998 and as the General Manager of the Company’s
+Customer Service division from 1990 to 1996. 
+Mr. Johnson has served in various other capacities with Iteris and its
+subsidiaries since joining the Company in 1974, including the Vice President
+and General Manager of the Company’s Omutec division from 1986 to 1990, the
+Director of Contracts for the Space division of Iteris from 1980 to 1986, the
+Controller of Infodetics, a former subsidiary of Iteris, from 1975 to 1980 and
+the Controller of Iteris from 1974 to 1975. 
+Prior to joining Iteris, Mr. Johnson served as a certified public
+accountant with Peat Marwick. 
+Dr. Hartmut Marwitz has served as a director of Iteris since September 2004. Dr. Marwitz also served as a director of the
+Iteris Subsidiary from 1999 to October 2004 and has served as the
+Vice-President of Engineering Mercedes-Benz Trucks of DaimlerChrysler in
+Germany since 1995. Previously, Dr. Marwitz
+served with Daimler-Benz AG as Director of Truck Powertrain Testing. Furthermore, Dr. Marwitz has broad
+experiences in the field of passenger car development. Before joining Daimler-Benz AG, Dr. Marwitz
+worked as Senior Manager for Rheinmetall in the field of Special Machinery
+Development in Germany and Spain. Dr.
+Marwitz holds an Engineering Degree in Mechanical Engineering and a Doctoral
+Degree in Experimental Mechanics from the Technical University of Munich,
+Germany. Since 2003, Dr. Marwitz has
+held an honorary professorship as the Chair of Machine and Design at the
+Institute of Machine Design and Automotive Engineering at the Technical
+University of Karlsruhe (Germany). 
+Gregory A. Miner has served as a director of Iteris since 1998 and as its Chairman of
+the Board of Directors since October 2004. 
+Mr. Miner is also the Managing Partner of Merchant Capital Source, LLC,
+a company that provides working capital financing solutions to merchants. Prior to that, Mr. Miner served as the
+Company’s Chief Executive Officer from February 2002 to October 2004 and as the
+Company’s Chief Financial Officer from January 1994 to October 2004. He also served as the Company’s Chief
+Operating Officer from 1998 to 2002 and as the Chairman of the Board of the
+Iteris Subsidiary from December 2003 to October 2004. Mr. Miner has served in various capacities
+for the other subsidiaries of Iteris from time to time. From December 1984 until joining Iteris, Mr.
+Miner served as the Vice President, Chief Financial Officer and a director of
+Laser Precision Corporation, a manufacturer of telecommunications test
+equipment. Mr. Miner is a Certified
+Public Accountant and, from 1979 to 1984, was employed by Deloitte Haskins and
+Sells (now known as Deloitte & Touche LLP) in various capacities, the most
+recent of which was Audit Manager. 
+Abbas Mohaddes has served as a director since September 2005, an Executive Vice
+President and General Manager of Iteris since October 2004 and as an Assistant
+Secretary since May 2004. He was the
+Executive Vice President of the Iteris Subsidiary from March 2004 to October
+2004 and its Secretary from September 2001 to October 2004. Prior to that, he served as the Senior Vice
+President and Director of Transportation Systems of the 
+5 
+Iteris
+Subsidiary from May 2000 to March 2004 and as its Vice President and Deputy
+Director of Transportation from October 1998 to May 2000. Mr. Mohaddes also served as President and
+Chief Executive Officer of Meyer, Mohaddes Associates, Inc. (“MMA”), an ITS and
+transportation firm that he co-founded in 1991, which was acquired by the
+Iteris Subsidiary in October 1998 and dissolved in April 2006. Prior to establishing MMA, from 1986 to 1990,
+he was a principal and Southern California Director of Operations for DKS
+Associates, a consulting firm. Mr.
+Mohaddes is a nationally recognized expert in ITS and has published over 20
+articles and made over 50 presentations at ITS Transportation engineering
+professional societies. Mr. Mohaddes is
+a founding member of ITS America and member of several trade organizations including
+Transportation Research Board, Institute of Transportation Engineers, and the
+Design/Build Institute of America. 
+John W. Seazholtz has served as a director of Iteris since May 1998. From May 1998 to April 2000, Mr. Seazholtz
+served as the President and Chief Executive Officer of Telesoft America,
+Inc. He retired in April 1998 as the
+Chief Technology Officer of Bell Atlantic after 36 years of service with that
+company and its predecessor. Mr.
+Seazholtz was a senior officer of Bell Atlantic from 1986, serving in various
+positions, including the positions of Vice President, Operations and
+Engineering, Vice President, Marketing, Vice President of New Services, and
+Vice President, Technology and Information Systems. Mr. Seazholtz currently serves as the
+Chairman of the Board of Westell Technologies, Inc. and is a member of the
+Board of Directors of Advanced Switching Communications, Inc. 
+Joel Slutzky has served as a director of Iteris since he co-founded the Company in
+1969. Mr. Slutzky was the Chairman of
+the Board of Directors from 1969 to October 2004 and the Company’s Chief
+Executive Officer from 1975 to February 2002. 
+Mr. Slutzky also served as the Chairman of the Board of the Iteris
+Subsidiary until December 2003 and served in various capacities for other
+subsidiaries of Iteris from time to time. 
+Mr. Slutzky currently serves on the Board of Directors of the American
+Electronics Association, KOCE, Future Scientists and Engineers of America and
+the Orange County Business Council Workforce Task Group. Mr. Slutzky is also the Chairman of Project
+Tomorrow, an organization focused on improving Kindergarten through 12th grade
+science education in Orange County, California. 
+Thomas L. Thomas has served as a director of Iteris since May 1999. Mr. Thomas served as the Chairman of the
+Board, President and Chief Executive Officer of HAHT Commerce, a provider of
+software applications that enable companies to use the Internet to conduct
+business, from February 2000 until February 2004 when HAHT Commerce was sold to
+Global Exchange Services, or GXS. Mr.
+Thomas currently serves as the President and Chief Operating Officer of GXS, a
+provider of business-to-business EDI and supply chain management solutions. Mr. Thomas was previously the President and
+Chief Executive Officer of Ajuba Solutions, a provider of B2B integration
+solution software, which was sold to Interwoven in October 2000. From April
+1999 until January 2000, he served as the President, Chief Executive Officer
+and Chairman of the Board of Vantive Corporation, a customer relationship
+management software vendor which was acquired by Peoplesoft in January
+2000. Prior to that, from September 1995
+to April 1999, Mr. Thomas served as the Senior Vice President of e-Business and
+Information Services and Chief Information Officer at 3Com Corporation. From 1993 to 1995, Mr. Thomas served as a
+Vice President and the Chief Information Officer of Dell Computer
+Corporation. From 1987 to 1993, he
+served as the Vice President of Management Information Systems at Kraft General
+Foods, and at Sara Lee Corporation from 1981 to 1987. Mr. Thomas also serves on the Board of
+Directors of iManage, Inc. 
+Paul E. Wright has served as a director of Iteris since June 1993. He also served as a director of the Iteris
+Subsidiary from January 1999 to October 2004. 
+Mr. Wright is the President of Wright Associates—Engineering and
+Business Consultants, a company he formed in 1997. From 1988 until his retirement in 1997, Mr.
+Wright served as the Chairman of Chrysler Technologies Corp., the aerospace and
+defense electronics subsidiary of Chrysler Corporation. From 1986 to 1988, Mr. Wright served as the
+President and Chief Operating Officer of Fairchild Industries, Inc. Prior to
+joining Fairchild, he was employed for 28 years by RCA Corporation, where he
+last served as the Senior Vice President, responsible for planning RCA’s merger
+into General Electric Corporation. 
+All directors are elected annually and hold office
+until the next annual meeting of stockholders and until their successors are
+duly elected and qualified. All of the
+nominees have indicated that they are willing to continue to serve as
+directors. In the event any nominee is
+unable or declines to serve as a director at the time of the Annual Meeting,
+the proxies will be voted for an additional nominee who shall be designated by
+the current Board of Directors. As of
+the date of this proxy statement, the Board of Directors is not aware of any
+nominee who is unable or unwilling to serve as director. 
+6 
+Corporate
+Governance 
+The Company’s Board of Directors has adopted a Code of
+Ethics and Business Conduct which applies to all directors, officers (including
+the Company’s principal executive officer, principal financial officer,
+principal accounting officer or controller, or persons performing similar
+functions) and employees. The full text
+of the Company’s Code of Ethics and Business Conduct is available on the
+Investor Relations section of the Company’s website at www.iteris.com. The Company intends to disclose future
+amendments to certain provisions of the Code of Ethics and Business Conduct,
+and any waivers of provisions of the Code of Ethics required to be disclosed
+under the rules of the Securities and Exchange Commission (“SEC”), at the same
+location on the Company’s website. 
+Board
+Meetings and Committees 
+The Board of Directors held four meetings during the
+fiscal year ended March 31, 2006. All of
+the directors attended or participated in at least 75% of the aggregate number
+of meetings of the Board of Directors. 
+Each director attended at least 75% of the aggregate number of meetings
+of those committees of the Board of Directors on which such person served,
+which were held during such period. The
+Board has determined that each of the Company’s directors other than Messrs. Johnson,
+Marwitz, Miner, Mohaddes and Slutzky satisfies the requirements for “independence”
+under the listing standards of the American Stock Exchange. 
+Iteris currently has several standing committees of
+the Board of Directors, including the Audit Committee, the Compensation
+Committee, and the Nominating and Corporate Governance Committee. The Audit Committee, the Compensation
+Committee, and the Nominating and Corporate Governance Committee each has a
+written charter that is reviewed annually and revised as appropriate. A copy of each committee’s charter is
+available on the Investor Relations section of the Company’s website at
+www.iteris.com. 
+Audit Committee. 
+The current members of the Company’s Audit Committee are Messrs. Char,
+Seazholtz and Thomas. Each member of the
+Audit Committee is “independent” under the current listing standards of the
+American Stock Exchange and the SEC rules regarding audit committee
+memberships. The Board has identified
+Mr. Char as the member of the Audit Committee who qualifies as an “audit
+committee financial expert” under applicable SEC rules and regulations
+governing the composition of the Audit Committee. The Audit Committee held eleven meetings
+during the fiscal year ended March 31, 2006. 
+The Audit Committee oversees on behalf of the Board
+(a) the conduct of the accounting and financial reporting processes, the audits
+of the Iteris financial statements and the integrity of its audited financial
+statements and other financial reports; (b) the performance of the internal
+accounting and financial controls function of Iteris; (c) the engagement,
+replacement, compensation, qualifications, independence and performance of the
+independent auditors for Iteris; and (d) the portions of the Code of Ethics and
+Business Conduct and related policies regarding the accounting, internal
+accounting controls or auditing matters of Iteris. 
+The Audit Committee meets privately with the
+independent auditors of Iteris, and the independent auditors have unrestricted
+access to and report directly to the Audit Committee. The Audit Committee has selected McGladrey
+& Pullen, LLP as the Company’s independent auditors for the fiscal year
+ending March 31, 2007 and is recommending that the stockholders of Iteris
+ratify this appointment at the Annual Meeting. 
+The Board of Directors initially adopted the Audit
+Committee Charter in 2000 and approved an amended and restated Audit Committee
+Charter in July 2002. The Board
+subsequently further amended and restated the Audit Committee Charter in March
+2004. A copy of the current charter was
+filed as an appendix to the proxy statement for the annual meeting of
+stockholders held in September 2004. 
+Compensation Committee. 
+The current members of the Company’s Compensation Committee are Messrs.
+Daly, Seazholtz and Thomas. The Board
+has concluded that each member of the Compensation Committee is “independent”
+under the listing standards of the American Stock Exchange. The Compensation Committee held two meetings
+during the fiscal year ended March 31, 2006. 
+7 
+The Compensation Committee (a) evaluates officer and
+director compensation policies, goals, plans and programs; (b) determines the
+cash and non-cash compensation of the “executive officers” of the Company as
+defined in the rules promulgated under Section 16 of the Securities Exchange
+Act of 1934, as amended (the “Exchange Act”); (c) reviews and makes
+recommendations to the Board with respect to the Company’s equity-based and
+other incentive compensation plans for employees; (d) evaluates the performance
+of the Company’s executive officers; (e) assists the Board in evaluating
+potential candidates for executive officer positions with the Company and
+oversee management succession planning; and (f) produces the Committee report
+required by the applicable rules and regulations of the SEC and other
+regulatory bodies for inclusion in the Company’s annual proxy statement. 
+Nominating and Corporate
+Governance Committee. The current members of the
+Nominating and Corporate Governance Committee are Messrs. Daly, Hernandez,
+Seazholtz and Thomas. The Board has
+determined that each of the members of this committee are “independent” under
+the listing standards of the American Stock Exchange. The Nominating and Corporate Governance
+Committee held no meetings during the fiscal year ended March 31, 2006. 
+The primary purposes of the Nominating and Corporate
+Governance Committee are to (a) identify, screen and review individuals
+qualified to serve as directors of the Company; (b) select or recommend to the
+Board of Directors the selection of nominees for election at the next annual
+meeting of stockholders; (c) recommend to the Board of Directors candidates to
+fill any vacancies on the Board; (d) oversee the implementation and monitoring
+the effectiveness of the Company’s corporate governance policies and developing
+and recommending to the Board modifications and or additions to such policies;
+and (e) review on a regular basis the overall corporate governance of the
+Company and recommend improvements when necessary. 
+In connection with their recommendations regarding the
+size and composition of the Board, the Nominating and Corporate Governance
+Committee reviews the appropriate qualities and skills required of directors in
+the context of the then current make-up of the Board. This includes an assessment of each candidate’s
+independence, personal and professional integrity, financial literacy or other
+professional or business experience relevant to an understanding of the Company’s
+business, ability to think and act independently and with sound judgment, and
+ability to serve the Company’s and its stockholders’ long-term interests. These factors, and others as considered
+useful by the Nominating and Corporate Governance Committee, are reviewed in
+the context of an assessment of the perceived needs of the Board at a
+particular point in time. As a result,
+the priorities and emphasis of the Nominating and Corporate Governance
+Committee and of the Board may change from time to time to take into account
+changes in business and other trends, and the portfolio of skills and
+experience of current and prospective directors. The Nomination and Corporate Governance
+Committee leads the search for and selects, or recommends that the Board select,
+candidates for election to the Board. Consideration of new director candidates
+typically involves a series of committee discussions, review of information
+concerning candidates and interviews with selected candidates. Candidates for nomination to the Company’s
+Board typically have been suggested by other members of the Board or by the
+Company’s executive officers. From time
+to time, the Nomination and Corporate Governance Committee may engage the
+services of a third-party search firm to identify director candidates. 
+The Nominating and Corporate Governance Committee will
+consider candidates for directors recommended by stockholders of Iteris who
+meet the eligibility requirements for submitting stockholder proposals for
+inclusion in the Company’s next proxy statement. This committee will evaluate such
+recommendations applying its regular nominee criteria. Eligible stockholders wishing to recommend a
+nominee must submit such recommendation in writing to the Chair, Nomination
+Committee, care of the corporate Secretary of the Company, by the deadline for
+stockholder proposals set forth in the Company’s last proxy statement,
+specifying the following information: (a) the name and address of the nominee,
+(b) the name and address of the stockholder making the nomination, (c) a
+representation that the nominating stockholder is a stockholder of record of
+the Company’s stock entitled to vote at the next annual meeting and intends to
+appear in person or by proxy at such meeting to nominate the person specified
+in the notice, (d) the nominee’s qualifications for membership on the Board,
+(e) a resume of the candidate’s business experience and educational background
+as well as all of the information that would be required in a proxy statement 
+8 
+soliciting proxies for the election of the nominee as
+a director, (f) a description of all direct or indirect arrangements or
+understandings between the nominating stockholder and the nominee and any other
+person or persons (naming such person or persons) pursuant to whose request the
+nomination is being made by the stockholder, (g) all other companies to which
+the nominee is being recommended as a nominee for director, and (h) a signed
+consent of the nominee to cooperate with reasonable background checks and
+personal interviews, and to serve as a director of the Company, if
+elected. In connection with its
+evaluation, the Nominating and Corporate Governance Committee may request
+additional information from the candidate or the recommending stockholder, and
+may request an interview with the candidate. 
+The Nominating and Corporate Governance Committee has the discretion to
+decide which individuals to recommend for nomination as directors. 
+No candidates for director nominations were submitted
+to the Nominating and Corporate Governance Committee by any stockholder in
+connection with the election of directors at the Annual Meeting. Each of the director nominees standing for
+election at this Annual Meeting is a current director of Iteris. 
+Compensation
+of Directors 
+Directors who are not employees of Iteris or any of
+its subsidiaries receive an annual fee of $12,000 per year, paid quarterly, in
+addition to $1,500 for each Board meeting attended in person and $250 for each
+telephone conference Board meeting. All
+directors are reimbursed for their out-of-pocket expenses incurred in attending
+meetings of the Company’s Board of Directors and its committees. 
+Non-employee directors are also eligible to receive
+periodic option grants pursuant to the Automatic Option Grant Program under the
+Company’s 1997 Stock Incentive Plan. 
+Under this plan, each non-employee director receives an option to
+purchase 20,000 shares of common stock upon his initial appointment to the
+Board of Directors and an additional option to purchase 5,000 shares of common
+stock on the date of each annual meeting after his appointment. Each option granted to non-employee directors
+under the Automatic Option Grant Program will have an exercise price equal to
+the fair market value of the common stock on the grant date and will have a
+maximum term of ten years, subject to earlier termination following the
+optionee’s cessation of service as a Board member. 
+Stockholder
+Communications 
+The Board has implemented a process by which
+stockholders may send written communications directly to the attention of the
+Board, any committee of the Board or any individual Board member, care of
+Iteris’ corporate Secretary. The name of
+any specific intended Board recipient should be noted in the
+communication. Iteris’ corporate
+Secretary will be primarily responsible for collecting, organizing and
+monitoring communications from stockholders and, where appropriate depending on
+the facts and circumstances outlined in the communication, providing copies of
+such communications to the intended recipients. 
+Communications will be forwarded to directors if they relate to
+appropriate and important substantive corporate or Board matters. Communications that are of a commercial or
+frivolous nature or otherwise inappropriate for the Board’s consideration will
+not be forwarded to the Board. 
+Stockholders who wish to communicate with the Board can write to the
+corporate Secretary at Iteris, Inc., 1515 South Manchester Avenue, Anaheim,
+California 92802. 
+Annual
+Meeting Attendance 
+Iteris does not have a formal policy regarding
+attendance by members of its Board of Directors at annual meetings of its
+stockholders; however, directors are encouraged to attend all such
+meetings. Four of the Company’s current
+directors attended Iteris’ 2005 annual meeting of stockholders. 
+Recommendation
+of the Board of Directors 
+The Board of Directors recommends
+a vote “FOR” the nominees listed above. 
+Proxies returned to Iteris will be voted “FOR” each nominee unless
+otherwise instructed in writing on such proxy. 
+9 
+PROPOSAL TWO: 
+RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS 
+The accounting firm of McGladrey & Pullen, LLP was
+engaged to serve as the Company’s independent auditors for the fiscal year
+ended March 31, 2006. The Audit
+Committee of the Board of Directors has selected that firm to continue in this
+capacity for the fiscal year ending March 31, 2007. The Company is asking the stockholders to
+ratify the selection by the Audit Committee of McGladrey & Pullen, LLP as
+the independent auditors of Iteris to audit the Company’s consolidated
+financial statements for the fiscal year ending March 31, 2007 and to perform
+other appropriate services. Stockholder
+ratification of the selection of McGladrey & Pullen, LLP as the Company’s
+independent auditors is not required by the Company’s bylaws or otherwise. In the event that the stockholders fail to
+ratify the appointment, the Audit Committee will reconsider its selection. Even if the selection is ratified, the Audit
+Committee, in its sole discretion, may direct the appointment of a different
+independent accounting firm at any time during the year if the committee feels
+that such a change would be in the best interests of the Company and its
+stockholders. 
+A representative of McGladrey & Pullen, LLP is
+expected to be present at the Annual Meeting to respond to stockholders’
+questions, and that representative will have the opportunity to make a brief
+presentation to the stockholders if he or she so desires and will be available
+to respond to appropriate questions from stockholders. 
+Stockholder
+Approval 
+The affirmative vote of a majority of the common stock
+of Iteris, present or represented by proxy and entitled to vote at the Annual
+Meeting will be required for ratification of the selection of McGladrey &
+Pullen, LLP as the Company’s independent auditors for the fiscal year ending
+March 31, 2007. 
+Recommendation
+of the Board of Directors 
+The Board of Directors recommends that the
+stockholders vote “FOR” the ratification and approval of the selection of
+McGladrey & Pullen, LLP as the independent auditors of Iteris for the
+fiscal year ending March 31, 2007. 
+10 
+FEES PAID TO INDEPENDENT REGISTERED PUBLIC
+ACCOUNTING FIRM 
+Principal Accountant Fees 
+The following table presents the aggregate fees billed
+for the indicated services performed by McGladrey & Pullen, LLP for the
+fiscal years ended March 31, 2005 and 2006: 
+Fiscal Year Ended March 31, 
+2005 
+2006 
+Audit Fees 
+$ 
+435,000 
+$ 
+309,000 
+Audit-Related
+Fees 
+14,000 
+38,000 
+Tax Fees 
+7,000 
+37,000 
+All Other Fees 
+¾ 
+¾ 
+Total Fees 
+$ 
+456,000 
+$ 
+384,000 
+Audit Fees. 
+Audit fees consist of fees billed by McGladrey & Pullen, LLP for
+professional services rendered in connection with the audit of Iteris’ annual
+consolidated financial statements and review of those consolidated financial
+statements included in Iteris’ quarterly reports on Forms 10-Q and other
+regulatory filings. 
+Audit-Related Fees. 
+Audit-related fees consist of fees billed for professional services that
+are reasonably related to the performance of the audit or review of the Company’s
+consolidated financial statements but are not reported under “Audit Fees.” Such fees include, among other things, fees
+for registration statements, fees for internal control reviews and assistance
+with meeting the requirements of Section 404 the Sarbanes-Oxley Act, and fees
+for acquisition or asset sale-related work and certain consultations concerning
+financial accounting and reporting standards. 
+Tax Fees. 
+Tax fees consist of fees billed for professional services for tax
+compliance, which include the preparation of federal, state and international
+tax returns, and fees billed for tax consultations, including federal, state
+and international tax advice, tax planning and assistance with tax audits. 
+All Other Fees. 
+There were no other fees billed to the Company by McGladrey &
+Pullen, LLP during the fiscal years ended March 31, 2005 and 2006. 
+Determination of Independence 
+The Audit Committee of the Board of Directors has determined
+that the provision by McGladrey & Pullen, LLP of the non-audit related
+services described above is compatible with maintaining the independence of
+McGladrey & Pullen, LLP. 
+Audit
+Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent
+Auditors 
+All engagements for services by McGladrey &
+Pullen, LLP or other independent registered public accountants are subject to
+prior approval by the Audit Committee; however, de minimis non-audit services
+may instead be approved in accordance with applicable SEC rules. The prior approval of the Audit Committee was
+obtained for all services provided by McGladrey & Pullen, LLP in the fiscal
+year ended March 31, 2006. 
+11 
+PRINCIPAL STOCKHOLDERS AND COMMON STOCK OWNERSHIP 
+OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 
+The following table sets forth, as of July 1, 2006,
+the number and percentage ownership of the common stock of Iteris by (i) all
+persons known to Iteris to beneficially own more than 5% of the outstanding
+common stock, (ii) each of the Named Executive Officers in the Summary
+Compensation Table which appears elsewhere herein, (iii) each director of
+Iteris, and (iv) all executive officers and directors of Iteris as a
+group. To the knowledge of Iteris,
+except as otherwise indicated, each of the persons named in this table has sole
+voting and investment power with respect to the common stock shown as
+beneficially owned, subject to community property and similar laws, where
+applicable. 
+Common Stock 
+Name and Address of Beneficial Owner(1) 
+Amount and Nature of 
+Beneficial 
+Ownership(2)(3) 
+Percent of Class(2) 
+Austin W. Marxe
+and David M. Greenhouse(4) 
+4,303,408 
+14.9 
+% 
+Bryant R.
+Riley(5) 
+2,740,383 
+9.3 
+Clint D.
+Coghill(6) 
+1,477,500 
+5.1 
+John D. Gruber
+and J. Patterson McBaine(7) 
+1,892,597 
+6.6 
+Jack Johnson(8) 
+1,010,408 
+3.4 
+Abbas
+Mohaddes(9) 
+1,127,426 
+3.9 
+Greg McKhann(10) 
+277,650 
+1.0 
+Francis
+Memole(11) 
+271,655 
+* 
+Richard D.
+Crawshaw(12) 
+213,318 
+* 
+Richard Char(13) 
+20,000 
+* 
+Kevin C. Daly,
+Ph.D.(14) 
+383,132 
+1.3 
+Gary
+Hernandez(13) 
+75,000 
+* 
+Dr. Hartmut
+Marwitz(13) 
+45,000 
+* 
+Gregory A.
+Miner(15) 
+966,945 
+3.3 
+John W.
+Seazholtz(16) 
+97,547 
+* 
+Joel Slutzky(17) 
+2,117,113 
+7.3 
+Thomas L.
+Thomas(18) 
+69,000 
+* 
+Paul E.
+Wright(19) 
+172,794 
+* 
+All executive officers
+and directors as a group (15 persons)(20) 
+6,907,015 
+21.9 
+% 
+* Less than 1%. 
+(1) The address for Messrs. Marxe and
+Greenhouse is 527 Madison Avenue, Suite 2600, New York, NY 10022. The address for Bryant R. Riley is 11550
+Santa Monica Blvd., Suite 750, Los Angeles, CA 90025. The address for Clint D. Coghill is One North
+Wacker Drive, Suite 4350, Chicago, IL 60606. 
+The address for Messrs. Gruber and McBaine is 50 Osgood Place, San
+Francisco, CA 94133. The address of all
+other persons named in the table is 1515 South Manchester Avenue, Anaheim, CA
+92802. 
+(2) Based on 28,790,767 shares of common
+stock outstanding as of July 1, 2006. 
+Shares of common stock subject to options or warrants which are
+exercisable within 60 days of July 1, 2006 are deemed to be beneficially owned
+by the person holding such options or warrants for the purpose of computing the
+percentage of ownership of such person but are not treated as outstanding for
+the purpose of computing the percentage of any other person. Other than as described in the preceding
+sentence, shares issuable upon exercise of outstanding options and warrants are
+not deemed to be outstanding for purposes of this calculation. 
+12 
+(3) In addition to the shares held in the
+individual’s name, this column also includes shares held for the benefit of the
+named person under the Company’s 401(k) and Stock Ownership Plan and the
+Deferred Compensation Savings Plan. 
+(4) Includes 1,250,000 shares issuable upon
+exercise of warrants that were issued to Special Situations Cayman Fund, L.P.,
+Special Situations Fund III, L.P., Special Situations Fund III QP, L.P and
+Special Situations Private Equity Fund, L.P. (collectively, the “Special
+Situations Funds”). Pursuant to a
+Schedule 13G/A filed on February 15, 2006 with the SEC, Messrs. Marxe and
+Greenhouse reported that they had shared voting power and shared dispositive
+power over the shares of common stock (including the 1,250,000 shares issuable
+upon exercise of warrants) held by the Special Situations Funds. Messrs. Marxe and Greenhouse are the
+controlling principals of AWM Investment Company, Inc. (“AWM”), the general
+partner of Special Situations Cayman Fund, L.P. 
+AWM is the general partner of MGP Advisers Limited Partnership, the
+general partner of Special Situations Fund III, L.P. and Special Situations
+Fund III QP, L.P. In addition, Messrs.
+Marxe and Greenhouse are members of MG Advisers L.L.C., the general partner of
+Special Situations Private Equity Fund, L.P. 
+(5) Includes (i) 88,640 shares issuable upon
+conversion of convertible debentures held by Mr. Riley’s children and (ii)
+495,570 shares issuable upon exercise of warrants held by Mr. Riley, his
+children, B. Riley & Co., Inc. and SACC Partners L.P. that are currently
+exercisable. Mr. Riley owns all of the
+outstanding shares of B. Riley & Co., Inc., an NASD member broker-dealer. Mr. Riley also manages and owns all of the
+outstanding membership interests of Riley Investment Management LLC (“RIM”), a
+California registered investment adviser. 
+RIM is the investment adviser to and general partner of SACC Partners
+L.P. B. Riley & Co., Inc. has
+provided financial advisory services to us and has received payments (including
+warrants) for such services. Mr. Riley
+disclaims beneficial ownership of the shares held for his children’s accounts. 
+(6) Pursuant to a Schedule 13G filed on
+February 9, 2006 with the SEC, CCM Master Qualified Fund, Ltd., Coghill Capital
+Management, L.L.C. and Clint D. Coghill reported that they had shared voting
+power and shared dispositive power over the shares of common stock held by the
+CCM Master Qualified Fund, Ltd. Mr.
+Coghill and Coghill Capital Management, L.L.C. are the principals of the
+investment manager or investment manager to the investment management entity of
+CCM Master Qualified Fund, Ltd. The
+reporting persons disclaim beneficial ownership of the securities except to the
+extent of their pecuniary interest therein. 
+(7) Pursuant to a Schedule 13G filed on
+February 8, 2006 with the SEC, Gruber & McBaine Capital Management, LLC (“GMCM”),
+Jon D. Gruber, J. Patterson McBaine and Eric Swergold reported that they had
+shared voting power and shared dispositive power over 1,892,597 shares of
+common stock. The table does not include
+362,665 shares, 32,350 shares and 20,600 shares over which Messrs. Gruber,
+McBaine and Swergold, respectively, have sole voting and dispositive power. GMCM is a registered investment advisor whose
+clients have the right to receive or the power to direct the receipt of
+dividends from, or the proceeds from the sale of the shares. Messrs. Gruber and McBaine are the Managers,
+controlling persons and portfolio managers of GMCM. No individual client’s holdings of the shares
+of Iteris common stock is more than five percent of the outstanding shares of
+Iteris. Lagunitas is an investment
+limited partnership of which GMCM is the general partner. GMCM, Gruber, McBaine and Swergold constitute
+a group within the meaning of Rule 13d-5(b). 
+Lagunitas is not a member of any group and disclaims beneficial
+ownership of the securities with respect to its ownership is reposited. 
+(8) Includes (i) 27,700 shares issuable upon
+conversion of convertible debentures held by Mr. Johnson’s IRA, (ii) 6,335
+shares issuable upon exercise of warrants held by Mr. Johnson’s IRA which are
+currently exercisable, and (iii) 597,980 shares issuable upon exercise of
+options held by Mr. Johnson that are currently exercisable or will become exercisable
+within 60 days after July 1, 2006, and (iv) shares held by a family trust. 
+(9) Includes (i) 13,850 shares issuable upon
+conversion of convertible debentures, (ii) 3,167 shares issuable upon exercise
+of warrants that are currently exercisable, (iii) 304,000 shares issuable upon
+exercise of options that are currently exercisable or will become exercisable
+within 60 days after July 1, 2006, and (iv) shares held by a family trust. 
+13 
+(10) Includes 224,081 shares issuable upon
+exercise of options that are currently exercisable or will become exercisable
+within 60 days after July 1, 2006. 
+(11) Includes (i) 13,850 shares issuable upon
+conversion of convertible debentures held by Mr. Memole’s IRA, (ii) 3,167
+shares issuable upon exercise of warrants held by Mr. Memole’s IRA which are
+currently exercisable, and (iii) 202,496 shares issuable upon exercise of
+options that are currently exercisable or will become exercisable within 60
+days after July 1, 2006. 
+(12) Includes 200,163 shares issuable upon
+exercise of options that are currently exercisable or will become exercisable
+within 60 days after July 1, 2006. 
+(13) Consists of shares issuable upon exercise
+of options that are currently exercisable or will become exercisable within 60
+days after July 1, 2006. 
+(14) Includes (i) 100 shares held by Dr. Daly’s
+spouse, (ii) 329,032 shares held by a trust to which Dr. Daly serves as a
+trustee, and (iii) 38,000 shares issuable upon exercise of options that are
+currently exercisable or will become exercisable within 60 days after July 1,
+2006. 
+(15) Includes (i) 13,850 shares issuable upon
+conversion of convertible debentures held by Mr. Miner’s IRA, (ii) 19,834
+shares issuable upon exercise of warrants held by Mr. Miner’s IRA that are
+currently exercisable, (iii) 185,897 shares held by Mr. Miner’s IRA, (iv)
+19,230 shares held by Mr. Miner’s wife’s IRA and (v) 515,000 shares issuable
+upon exercise of options that are currently exercisable or will become
+exercisable within 60 days after July 1, 2006. 
+(16) Includes 54,000 shares issuable upon
+exercise of options that are currently exercisable or will become exercisable
+within 60 days after July 1, 2006. 
+(17) Includes 195,000 shares issuable upon
+exercise of options that are currently exercisable or will become exercisable
+within 60 days after July 1, 2006. 
+Excludes shares of common stock held in trust for the benefit of the
+children and relatives of Mr. Slutzky as well as shares in the Joel Slutzky
+Family Trust; Mr. Slutzky has no investment or voting power with respect to the
+shares in such trusts and disclaims any beneficial ownership. 
+(18) Includes 50,000 shares issuable upon
+exercise of options that are currently exercisable or will become exercisable
+within 60 days after July 1, 2006. 
+(19) Includes 118,000 shares issuable upon
+exercise of options that are currently exercisable or will become exercisable
+within 60 days after July 1, 2006. 
+(20) Includes (i) 69,250 shares issuable upon
+conversion of convertible debentures, (ii) 32,503 shares issuable upon exercise
+of warrants which are currently exercisable, and (iii) 2,690,720 shares
+issuable upon exercise of options that are currently exercisable or will become
+exercisable within 60 days after July 1, 2006. 
+14 
+EQUITY COMPENSATION PLANS 
+The following table provides information as of March
+31, 2006 with respect to shares of the Company’s common stock that may be
+issued under existing equity compensation plans. The table does not include information with
+respect to shares of the Company’s common stock subject to outstanding options
+granted under equity compensation plans or option agreements that were assumed
+in connection with the merger of the Iteris Subsidiary into the Company in
+October 2004. However, Note 1 to the
+table sets forth the total number of shares of common stock issuable upon the
+exercise of those assumed options as of March 31, 2006 and the weighted average
+exercise price of those options. Except
+for the adjustments described in Note 1 with respect to the outstanding assumed
+options, no additional options may be granted under those assumed plans. 
+Plan Category 
+Number of Securities 
+to be Issued Upon 
+Exercise of 
+Outstanding Options, 
+Warrants and Rights 
+Weighted Average 
+Exercise Price of 
+Outstanding 
+Options, Warrants 
+and Rights 
+Number of Securities 
+Remaining Available For 
+Future Issuance under 
+Equity Compensation Plans 
+(excluding some securities 
+reflected in first column) 
+Equity Compensation Plans Approved by Security
+Holders 
+1997 Stock Incentive Plan 
+1,372,991 
+$ 
+2.85 
+256,718 
+Equity Compensation Plans Not Approved by
+Security Holders 
+None 
+Total(1) 
+1,372,991 
+$ 
+2.85 
+256,718 
+(1) The table does not include information
+with respect to the equity compensation plan or option agreements that were
+assumed by the Company in connection with the merger of the Iteris Subsidiary
+into the Company in October 2004. As of
+March 31, 2006, a total of 5,604,428 shares of common stock were issuable upon
+exercise of outstanding options under the assumed plan and agreements. No additional options may be granted under
+the assumed plan. The weighted average exercise
+price of all such assumed options to acquire shares of the Company’s common
+stock was $1.07 per share. 
+15 
+EXECUTIVE COMPENSATION AND OTHER INFORMATION 
+Executive Officers 
+The table below sets
+forth certain information regarding the executive officers of Iteris as of July
+1, 2006. 
+Name 
+Age 
+Capacities in Which Served 
+Jack Johnson 
+59 
+President, Chief
+Executive Officer and Director 
+Abbas Mohaddes 
+49 
+Executive Vice
+President, General Manager, Assistant Secretary and Director 
+Gregory McKhann 
+43 
+Senior Vice President
+and General Manager 
+Francis Memole 
+48 
+Senior Vice President
+and General Manager 
+James S. Miele 
+38 
+Vice President, Chief
+Financial Officer and Secretary 
+Richard D.
+Crawshaw 
+51 
+Vice President 
+The following is a brief description of the capacities
+in which each of the executive officers has served during the past five
+years. The biographies of Messrs.
+Johnson and Mohaddes appear earlier in this proxy statement. See Proposal One: “Election of Directors.” 
+Gregory McKhann has served as a Senior Vice President and General Manager of Iteris
+since October 2004. Mr. McKhann was a
+Senior Vice President of the Iteris Subsidiary from March 2004 to October 2004,
+its Vice President and General Manager of Roadway Sensors from December 1998 to
+March 2004, its Vice President, Strategic Business Development from October
+1999 to May 2000 and the Marketing Director of the Company’s ITS division
+(which became the Iteris Subsidiary) from July 1997 to October 1999. Prior to joining Iteris, Mr. McKhann served
+as a Business Development Manager at Rockwell International from 1990 to
+1997. While at Rockwell, Mr. McKhann
+developed a joint business relationship between Rockwell and Honeywell and was
+a founding member of Rockwell Transportation Systems business. Prior to 1990, Mr. McKhann held a variety of
+Engineering and Project Management positions at Rockwell International. 
+Francis Memole has served as a Senior Vice President and General Manager of Iteris
+since October 2004. Mr. Memole was a
+Senior Vice President of the Iteris Subsidiary from March 2004 to October 2004,
+its Vice President of Vehicle Sensors from December 1998 to March 2004 and the
+Marketing Director of the Company’s ITS division (which became the Iteris
+Subsidiary) from June 1997 to December 1998. 
+Prior to joining Iteris, Mr. Memole was one of the founding members of
+the Rockwell Transportation Systems business at Rockwell International. At Rockwell, Mr. Memole started two new
+business initiatives, which now include key aspects of Iteris, including
+Transportation Systems and In-Vehicle Systems. 
+James S. Miele has served as the Vice President of Finance and Chief Financial Officer
+of Iteris since October 2004 and as the Secretary since March 2004. Mr. Miele was the Controller of Iteris from
+October 2003 to October 2004 and the Controller of the Iteris Subsidiary from
+April 2001 to October 2004. Prior to
+that, from October 1998 to June 2000, Mr. Miele served as an audit manager at
+Ernst & Young LLP, supervising financial statement audits for a variety of
+public and privately held companies. Mr.
+Miele also served in Ernst & Young’s Assurance and Advisory Business
+Services group from 1994 to 1998. Mr.
+Miele is a Certified Public Accountant and holds a B.S. degree in Accounting
+from San Diego State University. 
+Richard D. Crawshaw has served as the Vice President of Engineering of Iteris since October
+2004. Prior to that, from January 1999
+to October 2004, Mr. Crawshaw was the Vice President of Engineering of the
+Iteris Subsidiary. Mr. Crawshaw also
+served as the Director of Engineering of the Iteris Subsidiary from January
+1998 to December 1998 and as a Product Manager of the Company’s ITS division,
+prior to its incorporation as the Iteris Subsidiary, from November 1995 to
+December 1997. Prior to joining Iteris,
+Mr. Crawshaw worked as a Senior Software Engineer at Hewlett Packard. 
+Officers serve at the discretion of the Board of
+Directors. 
+16 
+Summary of Cash and Certain Other
+Compensation 
+The following table provides certain summary
+information concerning the compensation earned by the Company’s Chief Executive
+Officer and each of its four other most highly compensated executive officers
+whose total cash salary and bonus during the fiscal year ended March 31, 2006
+exceeded $100,000 (collectively, the “Named Executive Officers”) for each of
+the three fiscal years ended March 31, 2004, 2005 and 2006. 
+SUMMARY
+COMPENSATION TABLE 
+Annual Compensation 
+Long-Term Compensation 
+Awards 
+Name and Principal Positions with Iteris 
+Fiscal 
+Year 
+Salary ($)(1) 
+Bonus ($) 
+Restricted 
+Stock ($) 
+Securities 
+Underlying 
+Options (#) 
+All Other 
+Compensation 
+($)(2) 
+Jack Johnson 
+2006 
+$ 
+259,615 
+$ 
+40,919 
+— 
+— 
+$ 
+7,077 
+President, Chief Executive 
+2005 
+250,359 
+26,152 
+— 
+— 
+8,295 
+Officer and Director 
+2004 
+225,373 
+— 
+— 
+— 
+6,761 
+Abbas Mohaddes 
+2006 
+228,419 
+72,005 
+— 
+— 
+7,301 
+Executive Vice President, General 
+2005 
+209,951 
+14,941 
+— 
+— 
+8,758 
+Manager and Assistant Secretary 
+2004 
+193,892 
+82,000 
+— 
+— 
+8,097 
+Gregory McKhann 
+2006 
+203,053 
+38,441 
+— 
+— 
+4,753 
+Senior Vice President and 
+2005 
+182,214 
+34,498 
+— 
+— 
+5,466 
+General Manager 
+2004 
+165,447 
+— 
+— 
+— 
+4,963 
+Francis Memole 
+2006 
+193,158 
+10,000 
+— 
+— 
+4,566 
+Senior Vice President and 
+2005 
+169,231 
+42,003 
+— 
+— 
+5,827 
+General Manager 
+2004 
+162,047 
+25,000 
+— 
+— 
+5,431 
+Richard D. Crawshaw 
+2006 
+171,343 
+30,500 
+— 
+— 
+2,994 
+Vice President 
+2005 
+161,784 
+14,855 
+— 
+— 
+1,414 
+2004 
+155,866 
+15,000 
+— 
+— 
+1,237 
+(1) Represents all amounts earned from Iteris
+and its subsidiaries during the fiscal years shown, including amounts deferred
+under the Deferred Compensation Savings Plan and the Company’s 401(k) and Stock
+Ownership Plan. 
+(2) Consists solely of the matching
+contribution of the Company to the respective accounts of the Named Executive
+Officers under the Company’s 401(k) and Stock Ownership Plan. 
+Option/SAR
+Grants in Last Fiscal Year 
+No option grants were
+made to the Company’s Named Executive Officers during the fiscal year ended
+March 31, 2006, and no stock appreciation rights were granted to any of the
+Named Executive Officers during such fiscal year. 
+Aggregated Option Exercises and Fiscal Year End
+Values 
+The following table
+provides information with respect to the Named Executive Officers concerning
+the unexercised options held by them at of the end of the fiscal year ended
+March 31, 2006 None of the Named
+Officers exercised any options or stock appreciation rights during the fiscal
+year ended March 31, 2006 and no stock appreciation rights were held by the
+Named Executive Officers at the end of such fiscal year. 
+17 
+AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR 
+AND FISCAL YEAR END OPTION VALUES 
+Number of Securities Underlying 
+Unexercised Options at Fiscal 
+Year End (#)(1) 
+Value of Unexercised In-the-Money 
+Options at Fiscal Year End ($) 
+Name 
+Exercisable 
+Unexercisable 
+Exercisable 
+Unexercisable 
+Jack Johnson 
+583,980 
+14,000 
+$ 
+1,511,306 
+$ 
+32,900 
+Abbas Mohaddes 
+293,000 
+11,000 
+711,950 
+25,850 
+Gregory McKhann 
+215,581 
+8,500 
+527,909 
+18,800 
+Francis Memole 
+197,496 
+29,000 
+507,604 
+56,870 
+Richard D. Crawshaw 
+193,163 
+7,000 
+496,668 
+16,450 
+(1) Includes both in-the-money and out-of-the
+money options. 
+Employment
+Contracts, Termination of Employment Agreements and Change of Control
+Arrangements 
+In May 2003, the Company entered into change in
+control agreements with each of Gregory Miner and Jack Johnson. In the event of an involuntary termination of
+the officer’s employment within three months prior to or twenty-four months
+after a change in control, the agreements provide for a severance payment to
+such officer of 200% of such officer’s annual base pay plus target bonus for the
+current fiscal year. In addition, such
+officer and his dependents are entitled to all insurance benefits for up to
+twenty-four months or until such officer obtains new employment with comparable
+benefits, whichever is earlier. Upon the
+merger of the Iteris Subsidiary into the Company in October 2004, Mr. Johnson
+assumed the role of President and Chief Executive Officer of the Company,
+replacing Mr. Miner. The merger and
+subsequent change in position triggered the payment of severance to Mr. Miner
+under the terms of his agreement. 
+Iteris does not currently have any employment
+contracts in effect with any of its Named Executive Officers other than the
+change in control agreements with Messrs. Johnson and Miner as described
+above. Iteris provides incentives such
+as salary, benefits and option grants to attract and retain executive officers
+and other key associates. The plan
+administrator of the 1997 Plan has the authority to provide for the accelerated
+vesting of outstanding options held by an individual, in connection with the
+termination of such individual’s employment following an acquisition in which
+these options are assumed or the repurchase rights with respect to the unvested
+shares are assigned or upon certain hostile changes in control of Iteris. Other than such accelerated vesting and the
+agreements described above, there is no agreement or policy which would entitle
+any executive officer to severance payments or any other compensation as a
+result of such officer’s termination. 
+Indemnification
+of Directors and Officers 
+Under Section 145 of the Delaware General Corporation
+Law, Iteris can indemnify its directors and officers against liabilities they
+may incur in such capacities, including liabilities under the Securities Act of
+1933, as amended (the “Securities Act”). 
+The certificate of incorporation and the bylaws of Iteris provides that
+Iteris will indemnify its directors and officers to the fullest extent
+permitted by law, and the bylaws require Iteris to advance litigation expenses
+upon receipt by Iteris of an undertaking by the director or officer to repay
+such advances if it is ultimately determined that the director or officer is
+not entitled to indemnification. The
+bylaws further provide that rights conferred under such bylaws do not exclude
+any other right such persons may have or acquire under any bylaw, agreement,
+vote of stockholders or disinterested directors or otherwise. 
+18 
+Iteris’ certificate of incorporation provides that,
+pursuant to Delaware law, its directors shall not be liable for monetary
+damages for breach of the directors’ fiduciary duty of care to Iteris and its
+stockholders. This provision in the
+certificate of incorporation does not eliminate the duty of care, and in
+appropriate circumstances equitable remedies such as injunctive or other forms
+of non-monetary relief will remain available under Delaware law. In addition, each director will continue to
+be subject to liability for breach of the director’s duty of loyalty to Iteris
+or its stockholders, for acts or omissions not in good faith or involving
+intentional misconduct or knowing violations of law, for actions leading to
+improper personal benefit to the director, and for payment of dividends or
+approval of stock repurchases or redemptions that are unlawful under Delaware
+law. The provision also does not affect
+a director’s responsibilities under any other law, such as the federal
+securities laws or state or federal environmental laws. 
+Iteris has entered into agreements to indemnify its
+directors and certain of its officers in addition to the indemnification
+provided for in the certificate of incorporation and bylaws. These agreements, among other things,
+indemnify Iteris’ directors and certain of its officers for certain expenses
+(including attorneys’ fees), judgments, fines and settlement amounts incurred
+by such person in any action or proceeding, including any action by or in the
+right of Iteris, on account of services as a director or officer of Iteris, or
+as a director or officer of any other company or enterprise to which the person
+provides services at the request of Iteris. 
+Compensation
+Committee Interlocks and Insider Participation 
+The members of the Compensation Committee of Iteris’
+Board of Directors during the fiscal year ended March 31, 2006 were Messrs. Daly,
+Seazholtz and Thomas. None of these
+individuals was an officer or employee of Iteris or its subsidiaries at any
+time during the fiscal year ended March 31, 2006. 
+No executive officer of Iteris has served on the Board
+of Directors or on the compensation committee of any other entity that has, or
+has had, one or more executive officers serving as a member of the Board of
+Directors or on the Compensation Committee of Iteris. 
+19 
+COMPENSATION
+COMMITTEE REPORT ON EXECUTIVE COMPENSATION 
+This report covers the Company’s fiscal year ended
+March 31, 2006. The Compensation
+Committee for the fiscal year ended March 31, 2006 was comprised of three
+outside directors, Messrs. Daly, Seazholtz and Thomas. The Compensation Committee recommends the
+general compensation levels for executives. 
+The Compensation Committee meets periodically to review and recommend
+for approval by the Board of Directors, the salaries, bonuses and benefit plans
+for officers and key associates. During
+the fiscal year ended March 31, 2006, the Compensation Committee held one
+meeting. 
+General
+Compensation Policy 
+The guiding
+principle of the Compensation Committee is to establish a compensation program
+that aligns executive compensation with the Company’s objectives and business
+strategies as well as with financial and operational performance. In keeping with this principle the
+Compensation Committee seeks to: 
+(1) Attract
+and retain qualified senior executives who can play a significant role in the
+achievement of the Company’s goals; 
+(2) Reward
+executives for strategic management and the long-term enhancement of
+stockholder value; and 
+(3) Create
+a performance-oriented environment that rewards performance with respect to the
+financial and operational goals of Iteris. 
+In the fiscal year ended March 31, 2006, the annual
+compensation for the executive officers included base salaries and cash
+bonuses. 
+The Company establishes salaries for the officers by
+considering the salaries of officers at comparably sized companies according to
+data obtained by the Compensation Committee from executive compensation
+consultants and from other independent outside sources, including the American
+Electronics Association annual survey of executive compensation. 
+The Company also has a Deferred Compensation Savings
+Plan pursuant to which executive officers of the Company may defer some or all
+of their salaries. No amounts were
+deferred by any executive officer in the fiscal year ended March 31, 2006. 
+A portion of the compensation of executive officers
+has historically been based upon the award of stock options which rely on
+increases in the value of the Company’s securities. The award of options is intended to encourage
+executives to establish a meaningful, long-term ownership interest in the
+Company consistent with the interests of Iteris’ stockholders. Under Iteris’ stock option plans, options are
+granted from time to time to certain officers and key associates of the Company
+and its subsidiaries at the fair market value of the shares of common stock at
+the time of grant. Because the
+compensation element of options is dependent on increases over time in the
+market value of such shares, stock options represent compensation that is tied
+to the Company’s long-term performance. 
+The award of stock options to the executive officers of the Company is
+determined based upon individual performance, level of base salary and position
+with the Company. 
+The Compensation Committee has reviewed the base salaries
+for the fiscal year ended March 31, 2006 of each of the executive officers and
+is of the opinion that such salaries are not unreasonable in view of those paid
+by the Company’s competitors and by other companies of similar size. 
+20 
+CEO
+Compensation 
+In setting the total compensation payable to Jack
+Johnson, the Company’s President and Chief Executive Officer, for the fiscal
+year ended March 31, 2006, the Compensation Committee sought to make such
+compensation competitive with that provided by other companies with which the
+Company competes for executive talent. 
+With respect to the base salary of Mr. Johnson, it was
+the Compensation Committee’s intent to provide him with a level of stability
+and certainty each year. The
+Compensation Committee believes the base salary of Mr. Johnson for the fiscal
+year ended March 31, 2006 is at a competitive level with the base salaries in
+effect for similarly situated chief executive officers. The remaining components of Mr. Johnson’s
+compensation for the fiscal year ended March 31, 2006, however, were primarily
+dependent upon corporate performance. 
+Based upon such performance, among other factors, a bonus to Mr. Johnson
+of $40,919 was approved for the fiscal year ended March 31, 2006. No options were granted to him for the fiscal
+year ended March 31, 2006. 
+Compliance with
+Internal Revenue Code Section 162(m) 
+Section 162(m) of the Internal Revenue Code generally
+disallows a tax deduction to publicly held corporations for compensation
+exceeding $1.0 million paid to certain of the corporation’s executive
+officers. The limitation applies only to
+compensation which is not considered to be performance-based. The nonperformance based compensation to be
+paid to the Company’s executive officers for the fiscal year ended March 31, 2006
+did not exceed the $1.0 million limit per officer, nor is it expected that the
+nonperformance based compensation to be paid to the Company’s executive
+officers for the next fiscal year will exceed that limit. The Company’s 1997 Stock Incentive Plan is
+structured so that any compensation deemed paid to an executive officer in
+connection with the exercise of option grants made under that plan will qualify
+as performance-based compensation which will not be subject to the $1.0 million
+limitation. Because it is very unlikely
+that the cash compensation payable to any of the Company’s executive officers
+in the foreseeable future will approach the $1.0 million limit, the
+Compensation Committee has decided at this time not to take any other action to
+limit or restructure the elements of cash compensation payable to the executive
+officers. The Compensation Committee
+will reconsider this decision should the individual compensation of any
+executive officer ever approach the $1.0 million level. 
+Submitted by the Compensation
+Committee 
+of the Board of Directors: 
+Kevin C. Daly, Ph.D. 
+John W. Seazholtz 
+Thomas L. Thomas 
+21 
+AUDIT
+COMMITTEE REPORT 
+The following is the report of the Audit Committee
+with respect to the Company’s audited consolidated financial statements for the
+fiscal year ended March 31, 2006 included in the Company’s Annual Report on
+Form 10-K for that year. 
+Review with
+Management 
+The Audit Committee has reviewed and discussed the
+audited consolidated financial statements with the Company’s management. 
+Review and
+Discussions with Independent Auditors 
+The Audit Committee has discussed with the Company’s
+independent auditors, McGladrey & Pullen, LLP, the matters required to be
+discussed by SAS 61 (Codification of Statements on Auditing Standards, AU
+Section 380), as amended, which includes, among other items, matters related to
+the conduct of the audit of the consolidated financial statements of Iteris. 
+The Audit Committee has received the written
+disclosures and the letter from McGladrey & Pullen, LLP required by
+Independence Standards Board Standard No. 1 (“Independence Discussions with
+Audit Committees”), as amended, and has discussed with McGladrey & Pullen,
+LLP the independence of McGladrey & Pullen, LLP from Iteris. 
+Conclusion 
+Based on the review and discussions referred to above
+in this report, the Audit Committee recommended to the Company’s Board of
+Directors that the audited financial statements be included in the Company’s
+Annual Report on Form 10-K for the year ended March 31, 2006 for filing with
+the Securities and Exchange Commission. 
+Submitted by the Audit
+Committee 
+of the Board of Directors: 
+Richard Char 
+John W. Seazholtz 
+Thomas L. Thomas 
+22 
+PERFORMANCE GRAPH
+FOR ITERIS, INC. 
+INDEXED COMPARISON OF CUMULATIVE TOTAL RETURN 
+The performance graph shows the cumulative total
+return on investment assuming an investment of $100 on March 31, 2001 in the
+Company’s common stock, the Nasdaq Stock Market Index and the same peer group used
+by the Company last year, which is made up of the remaining members of the
+index used by the Company in prior years, the Media General Industry Group 836
+for Diversified Electronics, which is no longer a published index. The Company’s common stock is currently
+listed on the American Stock Exchange under the symbol “ITI” and began trading
+on such exchange on December 9, 2004. 
+The Company’s common stock (formerly the Class A common stock) was
+listed on the Nasdaq National Market (now called the Nasdaq Global Market) until
+April 2002 and on the Nasdaq SmallCap Market (now called the Nasdaq Capital
+Market) from April 2002 to August 2003 and quoted on the OTC Bulletin Board
+from August 2003 to December 2004. The
+total stockholder return assumes reinvestment of dividends on a daily basis,
+although cash dividends have not been declared on the Company’s common
+stock. The stockholder returns shown in
+the following graph are not necessarily indicative of future performance. 
+Measurement Period 
+2001 
+2002 
+2003 
+2004 
+2005 
+2006 
+Iteris Common
+Stock 
+100.00 
+45.93 
+19.56 
+118.52 
+72.30 
+78.22 
+Nasdaq Market
+Index 
+100.00 
+103.39 
+77.21 
+113.36 
+113.86 
+135.02 
+Peer Group 
+100.00 
+75.03 
+47.61 
+86.20 
+66.03 
+87.03 
+Notwithstanding
+anything to the contrary set forth in any of the Company’s previous or future
+filings under the Securities Act or the Exchange Act, as amended, that might
+incorporate this proxy statement or future filings made by the Company under
+those statutes, the Compensation Committee Report, the Audit Committee Report,
+the Audit Committee Charter, reference to the independence of the Audit
+Committee members and the Performance Graph are not deemed filed with the
+Securities and Exchange Commission and shall not be deemed incorporated by
+reference into any of those prior filings or into any future filings made by
+the Company under those statutes. 
+23 
+CERTAIN
+TRANSACTIONS 
+Since April 1, 2005, other than the payments to
+Gregory Miner pursuant to the change in control agreement described in
+“Executive Compensation and Other Information–Employment Contracts, Termination
+of Employment Agreements and Change of Control Arrangements,” there have been
+no transaction, or series of similar transactions, to which the Company or any
+of its subsidiaries was or is to be a party, in which the amount involved exceeds
+$60,000 and in which any of the directors or executive officers of the Company,
+any greater than 5% stockholder of the Company or any member of the immediate
+family of any of the foregoing person had a direct or indirect material
+interest. In addition, there are no
+relationships between our directors and entities with which we do business of
+the type required to be disclosed pursuant to Item 404(b) of Regulation S-K. 
+SECTION 16(A)
+BENEFICIAL OWNERSHIP REPORTING COMPLIANCE 
+Under the federal securities laws, Iteris’ directors
+and officers and any persons holding more than 10% of Iteris’ common stock are
+required to report their ownership of Iteris’ common stock and any changes in
+that ownership to the SEC. Specific due
+dates for these reports have been established, and Iteris is required to report
+in this proxy statement any failure to file by these dates. Based solely on its review of copies of the
+reports on Forms 3, 4 and 5 received by Iteris with respect to the fiscal year
+ended March 31, 2006, and the written representations received from the
+reporting persons that no other reports were required, Iteris believes that all
+directors, executive officers and persons who own more than 10% of Iteris’
+common stock have complied with the reporting requirements of Section 16(a) and
+have filed all reports required by such section. 
+ANNUAL REPORT 
+A copy of Iteris’ annual report on Form 10-K for the
+fiscal year ended March 31, 2006 (excluding the exhibits thereto) accompanies
+the proxy materials being mailed to all stockholders. The annual report is not incorporated into
+this proxy statement and is not considered proxy solicitation material. Stockholders may obtain a copy of the annual report
+and any of the Company’s other filings with the SEC, without charge, by writing
+to Investor Relations, Iteris, Inc., 1515 South Manchester Avenue, Anaheim,
+California 92802. The annual report on
+Form 10-K (including the exhibits thereto) is also available on the Securities
+and Exchange Commission’s website at www.sec.gov. 
+DEADLINE FOR
+RECEIPT OF STOCKHOLDER PROPOSALS 
+In the event that a stockholder desires to have a
+proposal considered for presentation at the annual meeting of stockholders to
+be held in 2006, and included in the Company’s proxy statement and form of
+proxy card used in connection with such meeting, the proposal must be forwarded
+in writing to the Company’s Secretary so that it is received no later than
+April 11, 2007. Any such proposal must
+comply with the requirements of Rule 14a-8 promulgated under the Exchange Act. 
+If a stockholder, rather than including a proposal in
+the proxy statement as discussed above, commences his or her own proxy
+solicitation for the 2006 Annual Meeting of Stockholders or seeks to nominate a
+candidate for election as a director or to propose business for consideration
+at such meeting, the Company must receive notice of such proposal on or before
+June 25, 2007. If the notice is not
+received on or before June 25, 2007, it will be considered untimely under Rule
+14a-4(c)(1) promulgated under the Exchange Act, and the Company will have
+discretionary voting authority under proxies solicited for the 2006 Annual
+Meeting of Stockholders with respect to such proposal, if presented at the
+meeting. 
+Please address any stockholder proposals or notices of
+proposals to the corporate Secretary of Iteris at the principal executive
+offices of Iteris located at 1515 South Manchester Avenue, Anaheim, California
+92802. 
+24 
+OTHER
+BUSINESS 
+The Board of Directors is not aware of any other
+matter which will be presented for action at the Annual Meeting other than the
+matters set forth in this proxy statement. 
+If any other matter requiring a vote of the stockholders arise, it is
+intended that the proxy holders will vote the shares they represent as the
+Board of Directors may recommend. 
+Discretionary authority with respect to such other matters is granted by
+the execution of the enclosed proxy card. 
+THE BOARD OF DIRECTORS OF 
+ITERIS, INC. 
+Anaheim, California 
+August 9, 2006 
+25 
+PROXY 
+ITERIS, INC. 
+COMMON STOCK 
+THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS 
+The undersigned stockholder of ITERIS, INC. hereby
+appoints JACK JOHNSON and JAMES S. MIELE, and each of them, proxies of the
+undersigned, each with full power to act without the other and with power of
+substitution, to represent the undersigned at the Annual Meeting of
+Stockholders of Iteris to be held at 1515 South Manchester Avenue, Anaheim,
+California 92802 on September 14, 2006 at 10:00 a.m. Pacific Time, and at any
+adjournments or postponements thereof, and to vote all shares of common stock
+of Iteris held of record by the undersigned on July 25, 2006, with all the
+powers the undersigned would possess if personally present, in accordance with
+the instructions on the reverse hereof. 
+The undersigned hereby revokes any other proxy to vote
+at such Annual Meeting of Stockholders and hereby ratifies and confirms all
+that said proxies, and each of them, may lawfully do by virtue hereof. The undersigned also acknowledges receipt of
+the Notice of the Annual Meeting of Stockholders, the proxy statement and the
+annual report to stockholders on Form 10-K for the year ended March 31, 2006,
+which were furnished with this proxy. 
+CONTINUED AND TO
+BE SIGNED ON REVERSE SIDE 
+SEE REVERSE SIDE 
+THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN
+ACCORDANCE WITH THE INSTRUCTIONS BELOW, OR IF NO INSTRUCTIONS ARE INDICATED,
+THIS PROXY WILL BE VOTED FOR PROPOSALS ONE AND TWO, AND IN ACCORDANCE WITH THE
+DISCRETION OF THE PROXY HOLDERS WITH REGARD TO ANY OTHER MATTERS PROPERLY
+BROUGHT TO A VOTE AT THE ANNUAL MEETING OR ANY ADJOURNMENT OR POSTPONEMENT
+THEREOF. 
+x Please mark votes as in this example. 
+1. Election of
+Directors 
+Nominees standing for
+election by holders of common stock: 
+Richard Char, Kevin C. Daly, Ph.D., Gary Hernandez, Jack Johnson, Dr.
+Hartmut Marwitz, Gregory A. Miner, Abbas Mohaddes, John W. Seazholtz, Joel
+Slutzky, Thomas L. Thomas and Paul E. Wright. 
+o FOR o WITHHOLD AUTHORITY to vote for all nominees
+listed below 
+(Instruction: 
+To withhold authority to vote for any individual nominee, write that
+nominee’s name in the space provided above.) 
+2. Ratification
+of McGladrey & Pullen, LLP as the independent auditors of Iteris for the
+fiscal year ending 
+March 31, 2007. 
+o 
+FOR o AGAINST o ABSTAIN 
+MARK HERE FOR ADDRESS CHANGE AND INDICATE NEW ADDRESS o 
+MARK HERE IF YOU PLAN
+TO ATTEND THE MEETING o 
+Signature: 
+Date: 
+Signature: 
+Date: 
+(This Proxy must be signed exactly as your name
+appears hereon. Executors,
+administrators, trustees, etc., should give full title as such. If the stockholder is a corporation, a duly
+authorized officer should sign on behalf of the corporation and should indicate
+his or her title.) 
+PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD
+PROMPTLY USING THE ENCLOSED ENVELOPE.

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+related party transactions. The Audit Committee monitors and reviews potential
+conflict of interest situations involving a principal stockholder, a member of
+the Board of Directors or senior management.. 
+SECTION

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+related party transactions. The Audit
+Committee monitors and reviews potential conflict of interest situations
+involving a principal stockholder, a member of the Board of Directors or senior
+management.

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+related party transactions. The Audit
+Committee monitors and reviews potential conflict of interest situations
+involving a principal stockholder, a member of the Board of Directors or senior
+management.

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+DEF 14A
+1
+a11-20611_1def14a.htm
+DEF 14A
+UNITED STATES 
+SECURITIES AND EXCHANGE COMMISSION 
+Washington, D.C. 20549 
+SCHEDULE 14A 
+Proxy Statement Pursuant to Section 14(a) of 
+the Securities Exchange Act of 1934 (Amendment No. ) 
+Filed by the Registrant x 
+Filed by a Party other than the Registrant o 
+Check the appropriate box: 
+o 
+Preliminary Proxy Statement 
+o 
+Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) 
+x 
+Definitive Proxy Statement 
+o 
+Definitive Additional Materials 
+o 
+Soliciting Material Pursuant to §240.14a-12 
+ITERIS, INC. 
+(Name of Registrant as Specified In Its Charter) 
+(Name of Person(s) Filing Proxy Statement, if other than the Registrant) 
+Payment of Filing Fee (Check the appropriate box): 
+x 
+No fee required. 
+o 
+Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. 
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+(2) 
+Aggregate number of securities to which transaction applies: 
+(3) 
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+(4) 
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+Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. 
+(1) 
+Amount Previously Paid: 
+(2) 
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+(3) 
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+(4) 
+Date Filed: 
+ITERIS, INC. 
+NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS 
+TO BE HELD SEPTEMBER 16, 2011 
+To the Stockholders of Iteris, Inc.: 
+NOTICE IS HEREBY GIVEN that the 2011 Annual Meeting of Stockholders (the “Annual Meeting”) of Iteris, Inc., a Delaware corporation, will be held on September 16, 2011 at 10:00 a.m. Pacific Time, at our principal executive offices located at 1700 Carnegie Avenue, Suite 100, Santa Ana, CA 92705, for the following purposes, as more fully described in the proxy statement accompanying this Notice: 
+1. To elect Richard Char, Kevin C. Daly, Ph.D., Gregory A. Miner, Abbas Mohaddes, Joel Slutzky, Thomas L. Thomas and Mikel Williams to the Board of Directors, each to hold such office until the next annual meeting of stockholders or until his successor is elected and qualified. 
+2. To ratify the appointment of McGladrey & Pullen, LLP as our independent registered public accounting firm for the fiscal year ending March 31, 2012. 
+3. To transact any other business which may properly come before the Annual Meeting or any adjournment(s) or postponement(s) thereof. 
+All stockholders of record as of the close of business on July 20, 2011 are entitled to notice of and to vote at the Annual Meeting and at any postponement(s) or adjournment(s) thereof. You are cordially invited to be present and to vote at this Annual Meeting. Whether or not you plan to attend, it is important that your shares be represented and voted at the Annual Meeting. You can vote your shares by completing and returning the enclosed proxy card. If your shares are held in “street name” (i.e., your shares are held in the name of a brokerage firm, bank or other nominee), in lieu of a proxy card you should receive from that institution an instruction form for voting by mail and you may also be eligible to vote your shares electronically over the Internet or by telephone. Should you receive more than one proxy card or voting instruction form because your shares are held in multiple accounts or registered in different names or addresses, please sign, date and return each proxy card or voting instruction form to ensure that all of your shares are voted. You may revoke your proxy at any time prior to the Annual Meeting. If you attend the Annual Meeting and vote by ballot, any proxy that you previously submitted will be revoked automatically and only your vote at the Annual Meeting will be counted. For further information, please see the discussion of voting rights and proxies beginning on page 1 of the enclosed proxy statement. 
+BY ORDER OF THE BOARD OF DIRECTORS 
+Abbas Mohaddes 
+Chief Executive Officer and President 
+Santa Ana, California 
+July 29, 2011 
+YOUR VOTE IS VERY IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN. PLEASE READ THE ATTACHED PROXY STATEMENT CAREFULLY, COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE AND RETURN IT IN THE ENCLOSED ENVELOPE. 
+ITERIS, INC. 
+1700 Carnegie Avenue, Suite 100 
+Santa Ana, California 92705 
+PROXY STATEMENT 
+FOR THE 2011 ANNUAL MEETING OF STOCKHOLDERS 
+TO BE HELD SEPTEMBER 16, 2011 
+General 
+These proxy materials and the enclosed proxy card are being furnished in connection with the solicitation of proxies by the Board of Directors of Iteris, Inc., a Delaware corporation (“Iteris” or the “Company”), to be voted at the 2011 Annual Meeting of Stockholders (the “Annual Meeting”) to be held on September 16, 2011 and at any adjournment(s) or postponement(s) of the meeting. The Annual Meeting will be held at 10:00 a.m. Pacific Time, at our principal executive offices located at 1700 Carnegie Avenue, Suite 100, Santa Ana, CA 92705. These proxy materials and the form of proxy are expected to be mailed to our stockholders who are entitled to vote at the Annual Meeting on or about August 4, 2011. 
+Purpose of Meeting 
+The specific proposals to be considered and acted upon at the Annual Meeting are summarized in the accompanying Notice of the Annual Meeting of Stockholders and are described in more detail in this proxy statement. 
+Internet Availability of Materials 
+IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON SEPTEMBER 16, 2011: The proxy statement, proxy card, and Annual Report on Form 10-K for the fiscal year ended March 31, 2011 (the “Annual Report”) are available at www.edocumentview.com/ITI, or at www.envisionreports.com/ITI for registered holders (Internet voting included). 
+Voting Rights 
+The record date for determining those stockholders who are entitled to notice of, and to vote at, the Annual Meeting has been fixed as July 20, 2011. At the close of business on the record date, 34,379,076 shares of our common stock, par value $0.10 per share, were outstanding and no shares of our preferred stock were outstanding. Each stockholder is entitled to one vote for each share of common stock held by such stockholder as of the record date. 
+The presence in person or by proxy of the holders of a majority of the outstanding shares of the common stock entitled to vote will constitute a quorum for the transaction of business at the Annual Meeting. If a quorum is not present, the Annual Meeting will be adjourned until a quorum is obtained. 
+In the election of directors under Proposal One, directors will be elected by a plurality of the common stock entitled to vote and present in person or represented by proxy at the Annual Meeting, unless cumulative voting is in effect. Pursuant to our bylaws, no stockholder is entitled to cumulate his or her votes for candidates other than those whose names have been placed in nomination prior to the commencement of voting and unless at least one stockholder has given notice prior to commencement of voting of his or her intention to cumulate votes. If any stockholder has given such notice, then each stockholder may cumulate votes by multiplying the number of shares of common stock the stockholder is entitled to vote by the number of directors to be elected. The number of cumulative votes thus determined may be voted all for one candidate or distributed among several candidates, at the discretion of the stockholder. The candidates receiving the highest number of votes, up to the number of directors to be elected, will be elected. If cumulative voting is in effect, the persons named in the accompanying proxy will vote the shares of common stock covered by proxies received by them (unless authority to vote for directors is withheld) among the named candidates as they determine. 
+1 
+With regard to Proposal Two, the affirmative vote of the holders of a majority of our common stock present or represented by proxy and entitled to vote at the Annual Meeting is being sought. 
+All votes will be tabulated by the inspector of election appointed for the Annual Meeting, who will separately tabulate affirmative and negative votes, abstentions, and broker non-votes. Broker non-votes occur when brokers who hold stock in “street name” return proxy cards stating that they do not have authority to vote the stock which they hold on behalf of beneficial owners. Abstentions and broker non-votes are counted as present for purposes of determining the presence or absence of a quorum for the transaction of business. Abstentions will be counted towards the tabulations of votes cast on proposals presented to the stockholders and will have the same effect as negative votes. Broker non-votes will not be counted for purposes of determining whether a proposal has been approved. 
+Voting 
+You may vote by one of three ways: (i) by mail, (ii) electronically over the Internet or by telephone, or (iii) by ballot in person at the Annual Meeting. If you are a “registered holder” (i.e., your shares are registered in your own name through our transfer agent), you may vote by returning a completed proxy card in the enclosed postage-paid envelope or through the Internet at www.envisionreports.com/ITI. If your shares are held in “street name” (i.e., your shares are held in the name of a brokerage firm, bank or other nominee), in lieu of a proxy card you should receive a voting instruction form from that institution by mail. The voting instruction form should indicate whether the institution has a process for beneficial holders to vote over the Internet or by telephone. Stockholders who vote over the Internet or by telephone need not return a proxy card or voting instruction form by mail, but may incur costs, such as usage charges, from telephone companies or Internet service providers. If your voting instruction form does not reference Internet or telephone information, please complete and return the paper voting instruction form in the self-addressed, postage-paid envelope provided. 
+If you are a registered holder, you may also vote your shares in person at the Annual Meeting. If your shares are held in street name and you wish to vote in person at the meeting, you must obtain a proxy issued in your name from the record holder and bring it with you to the Annual Meeting. We recommend that you vote your shares in advance as described above so that your vote will be counted if you later decide not to attend the Annual Meeting. 
+Proxies 
+Please use the enclosed proxy card to vote by mail. If your shares are held in street name, then in lieu of a proxy card you should receive from that institution an instruction form for voting by mail, the Internet or by telephone. Should you receive more than one proxy card or voting instruction form because your shares are held in multiple accounts or registered in different names or addresses, please be sure to complete, sign, date, and return each proxy card or voting instruction form to ensure that all of your shares will be voted. Only proxy cards and voting instruction forms that have been signed, dated, and timely returned (or otherwise properly voted by Internet or telephone) will be counted in the quorum and voted. Properly executed proxies will be voted in the manner directed by the stockholders. If the proxy does not specify how the shares represented thereby are to be voted, the proxy will be voted FOR the election of the directors proposed by our Board of Directors (the “Board”) under Proposal One unless the authority to vote for the election of any director is withheld and, if no contrary instructions are given, the proxy will be voted FOR the approval of each of the other proposals as described in this proxy statement and the accompanying notice. 
+The enclosed proxy also grants the proxy holders discretionary authority to vote on any other business that may properly come before the Annual Meeting as well as any procedural matters. We have not been notified by any stockholder of his or her intent to present a stockholder proposal at the Annual Meeting. 
+If your shares are held in your name, you may revoke or change your vote at any time before the Annual Meeting by filing a notice of revocation or another signed proxy card with a later date with our Secretary at our principal executive offices. If your shares are held in street name, you should contact the record holder to obtain instructions if you wish to revoke or change your vote before the Annual Meeting. If you attend the Annual Meeting and vote by ballot, any proxy that you submitted previously to vote the same shares will be revoked automatically and only your vote at the Annual Meeting will be counted. Please note, however, that if your shares are held in street name, your vote in person at the Annual Meeting will not be effective unless you have obtained and present a proxy issued in your name from the record holder. Attendance at the Annual Meeting will not, by itself, revoke a proxy. 
+2 
+Solicitation 
+The enclosed proxy is being solicited by our Board of Directors. We will bear the entire cost of proxy solicitation, including the costs of preparing, assembling, printing, and mailing this proxy statement, the proxy card, and any additional material furnished to the stockholders. Copies of the solicitation materials will be furnished to brokerage houses, fiduciaries, and custodians holding shares in their names that are beneficially owned by others so that they may forward this solicitation material to such beneficial owners. In addition, we may reimburse such persons for their reasonable expenses in forwarding the solicitation materials to the beneficial owners. The original solicitation of proxies by mail may be supplemented by a solicitation by personal contact, telephone, facsimile, e-mail or any other means by our directors, officers, or employees. No additional compensation will be paid to these individuals for any such services. 
+In the discretion of management, we reserve the right to retain a professional firm of proxy solicitors to assist in solicitation of proxies. Although we do not currently expect to retain such a firm, we estimate that the fees of such firm would range from $5,000 to $20,000 plus out-of-pocket expenses, all of which would be paid by us. 
+3 
+PROPOSAL ONE: 
+ELECTION OF DIRECTORS 
+Our bylaws provide for a Board of Directors consisting of not less than seven nor more than eleven members. The exact number may be changed, within such limits, by a resolution duly adopted by the Board or by the stockholders. The number of directors constituting the full Board is currently set at eight. One of the current directors will not be standing for re-election at the Annual Meeting, and the size of the Board will be reduced to seven persons as of the Annual Meeting. All directors are elected annually and hold office until the next annual meeting of stockholders and until their successors are duly elected and qualified. 
+On the recommendation of the Nominating and Corporate Governance Committee, our Board of Directors selected and approved the following persons as nominees for election at the Annual Meeting: Richard Char, Kevin C. Daly, Ph.D., Gregory A. Miner, Abbas Mohaddes, Joel Slutzky, Thomas L. Thomas and Mikel Williams. Each nominee for election is currently a member of our Board of Directors and has agreed to serve if elected. We have no reason to believe that any of the nominees will be unavailable to serve. In the event any of the nominees named herein is unable to serve or declines to serve at the time of the Annual Meeting, the persons named in the enclosed proxy will exercise discretionary authority to vote for substitutes. Unless otherwise instructed, the proxy holders will vote the proxies received by them FOR the nominees named above. 
+Stockholder Approval 
+The seven candidates receiving the highest number of affirmative votes, present in person or represented by proxies and entitled to vote at the Annual Meeting, will be elected as our directors. However, if cumulative voting is in effect, the proxy holders will have the right to cumulate and allocate votes among those nominees standing for election as such proxy holders in their discretion elect. 
+Recommendation of the Board of Directors 
+Our Board of Directors recommends a vote “FOR” the seven director nominees listed above. 
+Directors and Nominees 
+The table and narrative below set forth information as of July 1, 2011 regarding each director and director nominee, including the year they first became directors, business experience during at least the past five years, public company boards they currently serve on or have served on during the past five years, and certain other biographical information and attributes that the Nominating and Corporate Governance Committee determined qualify them to serve as directors. The Nominating and Corporate Governance Committee believes that the directors and director nominees have the following other key attributes that are important to an effective board of directors: integrity and demonstrated high ethical standards; sound judgment; analytical skills; the ability to engage management and each other in a constructive and collaborative fashion; diversity of experience and thought; and the commitment to devote significant time and energy to service on the Board and its committees. 
+Name 
+Age 
+Current Position(s) with Iteris 
+Richard Char(1) 
+52 
+Director 
+Kevin C. Daly, Ph.D.(2)(3) 
+66 
+Director and Assistant Secretary 
+Gregory A. Miner(1) 
+56 
+Chairman of the Board 
+Abbas Mohaddes 
+54 
+Chief Executive Officer, President, Assistant Secretary and Director 
+John W. Seazholtz*(1)(2)(3) 
+74 
+Director 
+Joel Slutzky(3) 
+72 
+Director and Assistant Secretary 
+Thomas L. Thomas(1)(2)(3) 
+62 
+Director 
+Mikel Williams 
+54 
+Director 
+* Not a director nominee for the Annual Meeting 
+(1) Member of the Audit Committee 
+(2) Member of the Compensation Committee 
+(3) Member of the Nominating and Corporate Governance Committee 
+4 
+Richard Char has served as Senior Managing Director at Regent Pacific Management Corporation, a turnaround, restructuring, and performance improvement firm, since September 2010. From October 2008 to March 2010, Mr. Char served as CEO of VIPGift LLC, a provider of corporate and consumer loyalty and incentive programs. From June 2006 to July 2008, Mr. Char was the Senior Vice President of Corporate Development and General Counsel of Blackhawk Networks, Inc., an affiliate of Safeway which markets pre-paid gift cards through leading U.S. retailers. Mr. Char’s prior business experience includes serving as the President and Chief Executive Officer of IC Media, a developer of CMOS digital image sensors, as the Managing Director with the Technology Group of Credit Suisse First Boston, as Co-Head of Technology Investment Banking at Cowen & Company, and as a partner in the law firm of Wilson Sonsini Goodrich & Rosati. Mr. Char currently serves on the board of directors of Netlist, Inc. and serves as the chairman of its audit committee and a member of its compensation committee. He received his A.B. degree from Harvard College and his J.D. degree from Stanford Law School. Mr. Char has served as a director since October 2005, and brings to the Board of Directors executive leadership experience, as well as significant corporate finance, legal and corporate development experience with the financial acumen requisite to serve as a financial expert on our Audit Committee. 
+Kevin C. Daly, Ph.D. has served as the CEO of MAXxess Systems, Inc., a former subsidiary of Iteris and a provider of electronic security systems, since November 2005. Between August 2007 and August 2009, Dr. Daly also served as CEO of iStor Networks, Inc., a manufacturer of IP SAN storage systems. Prior to that, he served as the CEO of several technology companies, including Avamar Technologies, Inc. and ATL Products, Inc. Dr. Daly currently serves on the board of directors of STEC, Inc., a provider of solid state disk systems, and from 2002 to 2008, he served as a director of Danka Business Systems, PLC. Dr. Daly received a B.S. degree in electrical engineering from the University of Notre Dame and M.S., M.A. and Ph.D degrees in engineering from Princeton University. He has served as a director of Iteris since 1993. Having served as the CEO of several technology companies and as a director of both private and public companies, Dr. Daly offers to the Board a wealth of management and leadership experience as well as an understanding of issues faced by such companies. 
+Gregory A. Miner has served as a Managing Partner of Merchant Capital Source, LLC, a company that provides working capital financing solutions to merchants, since 2004. Prior to that, Mr. Miner served in a number of management positions with us and our subsidiaries, most recently as our Chief Executive Officer. Mr. Miner is a Certified Public Accountant and his business experience includes work at Deloitte Haskins and Sells (now known as Deloitte & Touche LLP). Mr. Miner has served as a director since 1998 and as our Chairman of the Board of Directors since 2004. Through his service in a variety of executive positions with us and our subsidiaries, Mr. Miner has a deep and broad understanding of our business as well as the leadership skills and the operational understanding to provide sound guidance in continuing to grow our business. 
+Abbas Mohaddes has served as our Chief Executive Officer and President since March 2007, as an Assistant Secretary since May 2004 and as a director since September 2005. Prior to his promotion in March 2007, Mr. Mohaddes served as our Executive Vice President from October 2004. He also served in a number of executive positions with our Iteris, Inc. subsidiary (“Iteris Subsidiary”), through which the majority of our current operations were conducted until we merged that subsidiary into us in October 2004. Mr. Mohaddes was also the President and Chief Executive Officer of Meyer, Mohaddes Associates, Inc. (“MMA”), an ITS and transportation firm that he co-founded, which was acquired by the Iteris Subsidiary in 1998. Mr. Mohaddes is the current chairman of the board and a founding member of ITS America and a member of several trade organizations, including Transportation Research Board, Institute of Transportation Engineers, and the Design/Build Institute of America. Mr. Mohaddes provides extensive technology, industry, and management experience to the Board, as well as a substantial understanding of the Company and its operations resulting from his service as an officer of our Iteris Subsidiary and as the founder of MMA. 
+John W. Seazholtz currently serves as the Chairman of the Board of Westell Technologies, Inc. He retired in 1998 from Bell Atlantic after serving in a number of executive positions, but served as the President and Chief Executive Officer of Telesoft America, Inc. from 1998 to 2000. Mr. Seazholtz has served as a director of Iteris since 1998, and has provided the Board with executive leadership experience and strong sales and marketing expertise in the technology industry, combined with extensive public company experience. 
+5 
+Joel Slutzky is a co-founder of the Company and has served as a director since its incorporation and as the Chairman of the Board of Directors until October 2004. Prior to 2004, Mr. Slutzky served in various capacities for us and our subsidiaries, most recently as our Chief Executive Officer and as the Chairman of the Board of the Iteris Subsiary. Mr. Slutzky currently serves on the board of directors of Project Tomorrow, an organization focused on improving Kindergarten through 12th grade science education in Orange County, California and the Butterfly Connection, an organization that promotes creativity and critical thinking skills in K-12 education. As the co-founder of the Company with over 40 years of experience with technology companies, Mr. Slutzky is uniquely qualified to provide insights into and guidance on the industry and growth and development of the Company. 
+Thomas L. Thomas has served as the Executive Chairman of International Decision Systems, a provider of software and solutions for the equipment finance market, since September of 2009. He also owns a management consulting business, T2 Partners. From 2004 until his retirement in July 2008, Mr. Thomas was as the President and Chief Operating Officer of Global Exchange Services, a provider of business-to-business EDI and supply chain management solutions. Prior to that, Mr. Thomas served as the President and CEO at several technology companies, including HAHT Commerce, Ajuba Solutions, and Vantive Corporation, and served in various senior and executive positions at 3Com Corporation, Dell Computer Corporation, Kraft General Foods and Sara Lee Corporation. Mr. Thomas currently serves on the board of directors, and as the chairman of the compensation committee, of infoGroup, Inc. He also serves on the board of directors and the compensation committee and the audit committee of Front Range Solutions, a developer of service management and IT asset management software for mid-sized and distributed enterprises. Mr. Thomas has served as a director of Iteris since 1999 and offers to the Board of Directors valuable business, leadership and strategic insights obtained through his service in a variety of industries, including a number of technology companies, and his experience in working with companies through several stages of their development. 
+Mikel Williams has served as the President and Chief Executive Officer of DDi Corporation, a leading provider of time-critical, technologically advanced electronics manufacturing services, since November 2005 and as a Senior Vice President and Chief Financial Officer of DDi prior to the promotion. Prior to that, Mr. Williams served in various management positions with several technology related companies, including as the President and sole member of Constellation Management Group, LLC, where he provided strategic, operational, and financial consulting services to companies in the telecommunications, software, and other technology-related industries., and various executive positions with Global TeleSystems, Inc. and its subsidiaries, a leading telecommunications company providing data and internet services in Europe. Mr. Williams began his career as a certified public accountant in the State of Maryland, working as an auditor for Price Waterhouse. Mr. Williams has served as a director since April 2011 and provides the Board of Directors with operational and public company experience and valuable strategic insights through his many years of leadership positions in technology-related companies with international operations. 
+Family Relationships 
+There are no family relationships among any of our directors, director nominees, or executive officers. 
+6 
+CORPORATE GOVERNANCE 
+Code of Ethics and Business Conduct 
+Our Board of Directors has adopted a Code of Ethics and Business Conduct which applies to all directors, officers (including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions) and employees. The full text of our Code of Ethics and Business Conduct is available on the Investor Relations section of our website at www.iteris.com. We intend to disclose future amendments to certain provisions of the Code of Ethics and Business Conduct, and any waivers of provisions of the Code of Ethics required to be disclosed under the rules of the Securities and Exchange Commission (“SEC”), at the same location on our website. 
+Director Independen c e 
+Our policy is to have at least a majority of the directors qualify as “independent” under the listing standards of NYSE Amex. The Board of Directors has determined that Messrs. Char, Daly, Miner, Seazholtz, Slutzky, Thomas and Williams each satisfy the requirements for “independence” under such listing standards. 
+Board Structure 
+The Board does not have a policy regarding the separation of the roles of the CEO and Chairman of the Board as the Board believes it is in the best interest of the Company to make that determination based on the position and direction of the Company and the membership of the Board from time to time. However, the Board has determined that having an independent director serve as the Chairman is currently in the best interest of our stockholders in recognition of the different demands and responsibilities of the roles and to emphasize the independence of the role of Chairman. The Board also meets regularly in executive sessions. 
+Board Meetings and Committees 
+We currently have several standing committees of the Board of Directors, including the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee. The Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee each has a written charter that is reviewed annually and revised as appropriate. A copy of each committee’s charter is available on the Investor Relations section of our website at www.iteris.com. 
+During the fiscal year ended March 31, 2011 (“Fiscal 2011”), the Board of Directors and the various committees of the Board held the following number of meetings: Board of Directors—five; Audit Committee—five; Compensation Committee—two; and Nominating and Corporate Governance Committee—two. During Fiscal 2011, no director attended fewer than 75% of the aggregate of the total number of meetings of the Board of Directors and the total number of meetings of any committees of the Board held while he was serving on the Board or such committee. 
+Audit Committee. The current members of our Audit Committee are Messrs. Char, Miner, Seazholtz, and Thomas. The Board has determined that each member of the Audit Committee is “independent” under the current listing standards of NYSE Amex and the SEC rules regarding audit committee memberships. The Board has identified Mr. Char as the member of the Audit Committee who qualifies as an “audit committee financial expert” under applicable SEC rules and regulations governing the composition of the Audit Committee. 
+The Audit Committee oversees on behalf of the Board (a) the conduct of the accounting and financial reporting processes, the audits of our financial statements and the integrity of our audited financial statements and other financial reports; (b) the performance of our internal accounting and financial controls function; (c) the engagement, replacement, compensation, qualifications, independence and performance of our independent registered public accounting firm; and (d) the portions of the Code of Ethics and Business Conduct and related policies regarding our accounting, internal accounting controls or auditing matters. 
+The Audit Committee meets privately with our independent registered public accounting firm, and such firm has unrestricted access to and reports directly to the Audit Committee. The Audit Committee has selected McGladrey & Pullen, LLP as our independent registered public accounting firm for the fiscal year ending March 31, 2012 and is recommending that our stockholders ratify this appointment at the Annual Meeting. 
+7 
+Compensation Committee. The current members of our Compensation Committee are Messrs. Daly, Seazholtz, and Thomas. The Board has determined that each member of the Compensation Committee is “independent” under the listing standards of NYSE Amex. 
+The Compensation Committee (a) evaluates officer and director compensation policies, goals, plans and programs; (b) determines the cash and non-cash compensation of our “officers” as defined in the rules promulgated under Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”); (c) reviews and makes recommendations to the Board with respect to our equity-based and other incentive compensation plans for employees; (d) evaluates the performance of our executive officers; and (e) assists the Board in evaluating potential candidates for executive officer positions and oversees management succession planning. 
+The Compensation Committee meets periodically to review and establish the salaries, bonuses and incentive plans for our executive officers. The committee considers a number of factors in determining the compensation plans and elements for, and the amount of each compensation element paid to, our executive officers, including publicly available data from independent outside sources, our general business conditions and objectives, and the committee’s subjective determination with respect to the executive’s individual contributions to such objectives. To assist the committee in its review, our Chief Executive Officer provides to the Compensation Committee his evaluations of the executives, including himself, and recommendations with respect to all executive compensation matters; however, the final decisions regarding the compensation of our executive officers are made by the Compensation Committee. Neither the Compensation Committee nor management engaged a compensation consultant to provide advice or recommendations on the amount or form of executive and director compensation during Fiscal 2011. 
+Nominating and Corporate Governance Committee. The current members of the Nominating and Corporate Governance Committee are Messrs. Daly, Seazholtz, Slutzky, and Thomas. The Board has determined that each member of the Nominating and Corporate Governance Committee is “independent” under the listing standards of NYSE Amex. 
+The primary purposes of the Nominating and Corporate Governance Committee are to (a) identify, screen and review individuals qualified to serve as directors; (b) select or recommend to the Board of Directors the selection of nominees for election at the next annual meeting of stockholders; (c) recommend to the Board of Directors candidates to fill any vacancies on the Board; (d) oversee the implementation and monitoring the effectiveness of our corporate governance policies and developing and recommending to the Board modifications and or additions to such policies; and (e) review on a regular basis our overall corporate governance and recommend improvements when necessary. 
+In connection with their recommendations regarding the size and composition of the Board, the Nominating and Corporate Governance Committee reviews the appropriate qualities and skills required of directors in the context of the then current make-up of the Board and the needs of the Company. This includes an assessment of each candidate’s independence, personal and professional integrity, financial literacy or other professional or business experience relevant to an understanding of our business, ability to think and act independently and with sound judgment, and ability to serve the Company’s and our stockholders’ long-term interests. While we do not have a formal policy with regard to the consideration of diversity in identifying director nominees, the Nominating and Corporate Governance Committee strives to nominate directors with a variety of complementary skills and backgrounds so that, as a group, the Board will possess the appropriate talent, skills, insight and expertise to oversee our business. These factors, and others as considered useful by the Nominating and Corporate Governance Committee, are reviewed in the context of an assessment of the perceived needs of the Board at a particular point in time. As a result, the priorities and emphasis of the Nominating and Corporate Governance Committee and of the Board may change from time to time to take into account changes in business and other trends, and the portfolio of skills and experience of current and prospective directors. The Nominating and Corporate Governance Committee generally leads the search for and selects, or recommends that the Board select, candidates for election to the Board. Consideration of new director candidates typically involves a series of committee discussions, review of information concerning candidates and interviews with selected candidates. Candidates for nomination to our Board typically have been suggested by other members of the Board or by our executive officers. From time to time, the Nominating and Corporate Governance Committee may engage the services of a third-party search firm to identify director candidates. 
+The Nominating and Corporate Governance Committee will consider candidates for directors recommended by our stockholders who meet the eligibility requirements for submitting stockholder proposals for inclusion in our next proxy statement. This committee will evaluate such recommendations applying its regular nominee criteria. Eligible stockholders wishing to recommend a nominee must submit such recommendation in writing to the Chair, Nominating and Corporate Governance Committee, care of our corporate Secretary, by the deadline for stockholder proposals set forth in our last proxy statement, 
+8 
+specifying the following information: (a) the name and address of the nominee, (b) the name and address of the stockholder making the nomination, (c) a representation that the nominating stockholder is a stockholder of record of our stock entitled to vote at the next annual meeting and intends to appear in person or by proxy at such meeting to nominate the person specified in the notice, (d) the nominee’s qualifications for membership on the Board, (e) a resume of the candidate’s business experience and educational background as well as all of the information that would be required in a proxy statement soliciting proxies for the election of the nominee as a director, (f) a description of all direct or indirect arrangements or understandings between the nominating stockholder and the nominee and any other person or persons (naming such person or persons) pursuant to whose request the nomination is being made by the stockholder, (g) all other companies to which the nominee is being recommended as a nominee for director, and (h) a signed consent of the nominee to cooperate with reasonable background checks and personal interviews, and to serve as a director, if elected. In connection with its evaluation, the Nominating and Corporate Governance Committee may request additional information from the candidate or the recommending stockholder, and may request an interview with the candidate. The Nominating and Corporate Governance Committee has the discretion to decide which individuals to recommend for nomination as directors. 
+No candidates for director nominations were submitted to the Nominating and Corporate Governance Committee by any stockholder in connection with the election of directors at the Annual Meeting. Each of the director nominees standing for election at this Annual Meeting is a current director. 
+Risk Oversight Role 
+The Board is responsible for overseeing our risk management, but its duties in this regard are supplemented by committees of the Board. In particular, the Audit Committee focuses on financial risk, including internal controls, and is responsible for discussing with management and our independent auditors policies with respect to risk assessment and risk management, including the process by which we undertake major financial and accounting risk assessment and management. Risks related to our compensation programs are reviewed by the Compensation Committee and legal and regulatory compliance risks are reviewed by the Nominating and Corporate Governance Committee. In connection with its responsibilities relating to risk assessment, our full Board periodically engages in discussions of the most significant risks that the Company is facing and how these risks are being managed. 
+Stockholder Communications 
+The Board has implemented a process by which stockholders may send written communications directly to the attention of the Board, any committee of the Board or any individual Board member, care of our corporate Secretary. The name of any specific intended Board recipient should be noted in the communication. Our corporate Secretary will be primarily responsible for collecting, organizing and monitoring communications from stockholders and, where appropriate depending on the facts and circumstances outlined in the communication, providing copies of such communications to the intended recipients. Communications will be forwarded to directors if they relate to appropriate and important substantive corporate or Board matters. Communications that are of a commercial or frivolous nature or otherwise inappropriate for the Board’s consideration will not be forwarded to the Board. Stockholders who wish to communicate with the Board can write to the corporate Secretary at Iteris, Inc., 1700 Carnegie Avenue, Suite 100, Santa Ana, California 92705. 
+Annual Meeting Attendance 
+We do not have a formal policy regarding attendance by members of our Board of Directors at annual meetings of our stockholders; however, directors are encouraged to attend all such meetings. Four of our current directors attended our 2010 annual meeting of stockholders. 
+9 
+PROPOSAL TWO: 
+RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 
+The accounting firm of McGladrey & Pullen, LLP was engaged to serve as our independent registered public accounting firm for the fiscal year ended March 31, 2011. The Audit Committee of the Board of Directors has selected that firm to continue in this capacity for the fiscal year ending March 31, 2012. We are asking our stockholders to ratify the selection by the Audit Committee of McGladrey & Pullen, LLP as our independent registered public accounting firm to audit our consolidated financial statements for the fiscal year ending March 31, 2012 and to perform other appropriate services. Stockholder ratification of the selection of McGladrey & Pullen, LLP as our independent registered public accounting firm is not required by our bylaws or otherwise. In the event that the stockholders fail to ratify the appointment, the Audit Committee will reconsider its selection. Even if the selection is ratified, the Audit Committee, in its sole discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if the committee feels that such a change would be in the best interests of us and our stockholders. 
+A representative of McGladrey & Pullen, LLP is expected to be present at the Annual Meeting, and that representative will have the opportunity to make a brief presentation to the stockholders if he or she so desires and is expected to be available to respond to appropriate questions from stockholders. 
+Stockholder Approval 
+The affirmative vote of a majority of the common stock, present or represented by proxy and entitled to vote at the Annual Meeting will be required for ratification of the selection of McGladrey & Pullen, LLP as our independent registered public accounting firm for the fiscal year ending March 31, 2012. 
+Recommendation of the Board of Directors 
+The Board of Directors recommends that the stockholders vote “FOR” the ratification and approval of the selection of McGladrey & Pullen, LLP as our independent registered public accounting firm for the fiscal year ending March 31, 2012. 
+10 
+FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 
+Principal Accountant Fees 
+The following table presents the aggregate fees billed by McGladrey & Pullen, LLP for the indicated services for the fiscal years ended March 31, 2010 and 2011: 
+Fiscal Year Ended March 31, 
+2010 
+2011 
+Audit Fees 
+$ 
+320,000 
+$ 
+320,000 
+Audit-Related Fees 
+46,000 
+41,000 
+Tax Fees 
+¾ 
+75,000 
+All Other Fees 
+¾ 
+¾ 
+Total Fees 
+$ 
+366,000 
+$ 
+436,000 
+Audit Fees. Audit fees consist of fees for professional services rendered in connection with the audit of our annual consolidated financial statements and review of the consolidated financial statements included in our quarterly reports on Forms 10-Q and other regulatory filings. 
+Audit-Related Fees. Audit-related fees consist of fees for professional services that are reasonably related to the performance of the audit or review of our consolidated financial statements but are not reported under “Audit Fees.” Such fees include, among other things, fees for registration statements, fees for internal control reviews and assistance with meeting the requirements of Section 404 of the Sarbanes-Oxley Act and certain consultations concerning financial accounting and reporting standards. 
+Tax Fees. Tax fees consist of fees for tax compliance services, which include the preparation of federal, state and international tax returns, and for tax consultations, including tax planning and federal, state and international tax advice. There were no tax fees billed to us by McGladrey & Pullen, LLP during the fiscal year ended March 31, 2010. 
+All Other Fees. There were no other fees billed to us by McGladrey & Pullen, LLP during the fiscal years ended March 31, 2010 and 2011. 
+Audit Committee Pre-Approval Policies and Procedures 
+All engagements for services by McGladrey & Pullen, LLP or other independent registered public accountants are subject to prior approval by the Audit Committee; however, de minimis non-audit services may instead be approved in accordance with applicable SEC rules. The prior approval of the Audit Committee was obtained for all services provided by McGladrey & Pullen, LLP for the fiscal year ended March 31, 2011. 
+11 
+AUDIT COMMITTEE REPORT 
+The following is the report of the Audit Committee with respect to the audited consolidated financial statements for the fiscal year ended March 31, 2011 of Iteris, Inc. included in its Annual Report on Form 10-K for that year. 
+Review with Management 
+The Audit Committee has reviewed and discussed the audited consolidated financial statements with the Company’s management. 
+Review and Discussions with Independent Registered Public Accounting Firm 
+The Audit Committee has discussed with the Company’s independent registered public accounting firm, McGladrey & Pullen, LLP, the matters required to be discussed by auditing standards set forth in AU Section 380 established by the Public Company Accounting Oversight Board, which includes, among other items, matters related to the conduct of the audit of the Company’s consolidated financial statements. 
+The Audit Committee has received the written disclosures and the letter from McGladrey & Pullen, LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence, and has discussed with McGladrey & Pullen, LLP its independence from the Company. 
+Conclusion 
+Based on the review and discussions referred to above in this report, the Audit Committee recommended to the Company’s Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended March 31, 2011 for filing with the SEC. 
+Submitted by the Audit Committee 
+of the Board of Directors: 
+Richard Char 
+Gregory A. Miner 
+John W. Seazholtz 
+Thomas L. Thomas 
+12 
+EXECUTIVE COMPENSATION AND OTHER INFORMATION 
+Executive Officers 
+The table below sets forth certain information, as of July 1, 2011, regarding our executive officers. 
+Name 
+Age 
+Capacities in Which Served 
+Abbas Mohaddes 
+54 
+Chief Executive Officer, President, Assistant Secretary and Director 
+James S. Miele 
+43 
+Chief Financial Officer, Vice President and Secretary 
+Todd Kreter 
+51 
+Senior Vice President, Sensors Development and Operations 
+Gregory McKhann 
+48 
+Senior Vice President, Sensors Sales and Marketing 
+Alan Clelland 
+58 
+Senior Vice President, Transportation Systems 
+The following is a brief description of the capacities in which the above persons have served the Company and their business experience during at least the past five years. The biography of Mr. Mohaddes appears earlier in this proxy statement. See Proposal One: “Election of Directors.” 
+James S. Miele has served as our Chief Financial Officer and Vice President of Finance since October 2004 and as the Secretary since March 2004. Mr. Miele previously served as our Controller and the Controller of our Iteris Subsidiary. Mr. Miele’s business experience includes working as an audit manager at Ernst & Young LLP, supervising financial statement audits for a variety of public and privately held companies. Mr. Miele is a Certified Public Accountant in the State of California (inactive) and holds a B.S. degree in Accounting from San Diego State University. 
+Todd Kreter has served as a Senior Vice President of the Company since May 2009. Mr. Kreter served as our Vice President of Engineering from November 2007 to May 2009. Prior to joining us, Mr. Kreter served in a number of executive positions at Quantum Corporation, most recently as the VP Global Services from 2004 to January 2007, where he managed the company’s worldwide customer service organization. Mr. Kreter holds an executive M.B.A. from Stanford/AEA and a B.S. degree in mechanical engineering from California State University, Fullerton. 
+Gregory McKhann has served as a Senior Vice President of the Company since October 2004. Prior to that, Mr. McKhann served in various executive and management positions at the Iteris Subsidiary and at Rockwell International. Mr. McKhann holds a B.S. degree in computer science from Duke University and an MBA from University of California, Irvine. 
+Alan Clelland has served as a Senior Vice President of the Company since October 2007, focused on various activities in our Transportation Systems segment. Prior to joining us, Mr. Clelland worked in management positions at several ITS consulting and transportation engineering companies, including as the Marketing Director and then as the Director of Consulting at the Siemens ITS business unit of Siemens Energy & Automation, Inc. from 2000 to September 2007. Mr. Clelland holds a B.Sc. degree in Physics and Electronic Engineering from the University of Leeds in the United Kingdom. 
+13 
+Summary Compensation Table 
+The following table shows information regarding the compensation earned during the fiscal years ended March 31, 2010 and 2011 by (i) our Chief Executive Officer, (ii) our Chief Financial Officer, and (iii) our three other executive officers. The officers listed below are collectively referred to as the “named executive officers” or “NEOs” in this proxy statement. 
+Name and Principal Position 
+Fiscal 
+Year 
+Salary 
+Stock 
+Awards(1) 
+Option 
+Awards(2) 
+Non-Equity 
+Incentive Plan 
+Compensation(3) 
+All Other 
+Compensation(4) 
+Total 
+Abbas Mohaddes 
+2011 
+$ 
+350,022 
+$ 
+74,000 
+$ 
+— 
+$ 
+41,995 
+$ 
+15,942 
+$ 
+481,959 
+Chief Executive Officer 
+2010 
+362,120 
+— 
+99,597 
+31,500 
+10,010 
+503,227 
+James S. Miele 
+2011 
+199,434 
+37,000 
+— 
+25,798 
+6,383 
+268,615 
+Chief Financial Officer 
+2010 
+195,000 
+— 
+24,899 
+28,800 
+2,363 
+251,062 
+Todd Kreter 
+2011 
+197,702 
+37,000 
+— 
+43,875 
+6,579 
+285,156 
+Senior Vice President 
+2010 
+182,109 
+— 
+24,899 
+21,600 
+1,413 
+230,021 
+Gregory McKhann 
+2011 
+199,680 
+37,000 
+— 
+53,047 
+6,223 
+295,950 
+Senior Vice President 
+2010 
+221,679 
+— 
+24,899 
+18,400 
+2,903 
+267,881 
+Alan Clelland 
+2011 
+189,987 
+37,000 
+— 
+14,999 
+6,180 
+248,166 
+Senior Vice President 
+2010 
+187,107 
+— 
+24,899 
+16,000 
+1,454 
+229,460 
+(1) The dollar amounts shown represent the grant date fair value of restricted stock units (“RSUs”) granted during the applicable fiscal year calculated in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, based on the closing sales price of the underlying shares of our common stock on the respective grant dates and without any adjustment for estimated forfeitures. Each RSU represents the right to receive one share of our common stock. The RSUs vest in equal annual installments over four years, with the first installment vesting on August 10, 2011. Vested shares are issued as soon as practicable after the applicable vesting date. 
+(2) The dollar amounts shown represent the grant date fair value of stock options granted during the applicable fiscal year determined pursuant to the Black-Scholes-Merton option pricing formula, in accordance with FASB ASC Topic 718. For a discussion of valuation assumptions used in the calculations, see Note 10 to our consolidated financial statements in our Annual Report. See also our discussion of stock-based compensation under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” in the Annual Report. Options to acquire the following number of shares of our common stock were granted to our named executive officers on May 27, 2009: Mr. Mohaddes — 100,000 shares; each of Messrs. Miele, Kreter, McKhann and Clelland — 25,000 shares. The options have an exercise price of $1.41 per share (the closing sales price of our common stock as of the grant date), vest in equal annual installments over four years, and are not exercisable until vested. 
+(3) The amounts shown in this column constitute the cash bonuses paid to each named executive officer based on the attainment of certain criteria pre-established by the Compensation Committee. These awards are discussed in further detail under “Grants of Plan-Based Awards—Incentive Cash Bonuses” below. 
+(4) Represents 401(k) plan employer contributions and automobile allowances paid by us. 
+14 
+Grants of Plan-Based Awards 
+The following table sets forth certain information with respect to (i) bonuses that were potentially payable to our named executive officers under our bonus plan for Fiscal 2011 and (ii) RSUs granted to the NEOs in Fiscal 2011. 
+Estimated Future Payouts Under 
+Non-Equity Incentive Plan Awards(1) 
+Grant 
+All Other Stock 
+Awards: 
+Number of 
+Shares of Stock 
+Grant Date 
+Fair Value of 
+Stock and 
+Option 
+Name 
+Threshold 
+Target 
+Maximum 
+Date 
+or Units (#)(2) 
+Awards (2) 
+Abbas Mohaddes 
+Chief Executive Officer 
+— 
+$ 
+175,000 
+$ 
+245,000 
+08/12/10 
+50,000 
+$ 
+74,000 
+James S. Miele 
+Chief Financial Officer 
+— 
+80,000 
+108,000 
+08/12/10 
+25,000 
+37,000 
+Todd Kreter 
+Senior Vice President 
+— 
+80,000 
+108,000 
+08/12/10 
+25,000 
+37,000 
+Gregory McKhann 
+Senior Vice President 
+— 
+115,000 
+161,000 
+08/12/10 
+25,000 
+37,000 
+Alan Clelland 
+Senior Vice President 
+— 
+100,000 
+140,000 
+08/12/10 
+25,000 
+37,000 
+(1) Consists of amounts that were potentially payable as cash bonuses based on the attainment of certain criteria pre-established by the Compensation Committee. These awards are discussed in further detail below under “Incentive Cash Bonuses.” The “Target” amounts represent the maximum amounts that could have been awarded to the executives if the pre-established criteria had been attained. The “Maximum” amounts consist of the “Target” amounts plus the maximum overachievement bonuses that could have been awarded to the executives. 
+(2) The dollar amounts shown represent the grant date fair value of RSUs granted to the NEOs, calculated in accordance with FASB ASC Topic 718, based on the closing sales price of the underlying shares of our common stock on the respective grant dates and without any adjustment for estimated forfeitures. Each RSU represents the right to receive one share of our common stock. The RSUs vest in equal annual installments over four years, with the first installment vesting on August 10, 2011. Vested shares are issued as soon as practicable after the applicable vesting date. 
+Incentive Cash Bonuses 
+For Fiscal 2011, the potential compensation for named executive officers included an annual cash bonus based upon criteria established by the Compensation Committee at the beginning of the fiscal year. The bonuses were primarily dependent upon corporate and business unit performance. 80% of the potential bonus for the CEO and 70% of the potential bonus for the CFO were based on the total revenue and operating income achieved for the year, and the remaining 20% and 30%, respectively, of the potential bonus were based on the applicable officer’s achievement of individual objectives that were qualitative in nature and were established by the Compensation Committee for our CEO and established by the CEO for our CFO. 70% to 80% of the potential bonus for each of Messrs. Clelland, Kreter and McKhann was based on revenue and operating income achieved by the business unit for which such officer had primary responsibility, as well as the total revenue and operating income achieved by the Company, and the remaining 20% to 30% of the potential bonus was based on the applicable officer’s achievement of individual objectives that were qualitative in nature and were established by the CEO. 
+For the fiscal year ending March 31, 2012 (“Fiscal 2012”), the bonus plan will cover our CEO, CFO, SVP of Sensors Development and Operations, and SVP of Sensors Sales and Marketing, and will be entirely based on our corporate and business unit performance. The potential bonuses for Messrs. Mohaddes and Miele will be based on the total revenue and operating income achieved by the Company for the year, and the potential bonuses for Messrs. Kreter and McKhann will be based on revenue and operating income achieved by the Roadway and Vehicle Sensors segment, as well as the total revenue and operating income achieved by the Company. 
+15 
+Performance Targets 
+The corporate and business unit performance targets for the annual cash bonuses for the named executive officers for Fiscal 2011 were as follows: 
+Performance Component(1) 
+No Bonuses At or Below 
+Target 
+Maximum 
+(in thousands) 
+Corporate Revenue 
+$ 
+56,550 
+$ 
+67,300 
+$ 
+70,650 
+Corporate Operating Income 
+3,300 
+4,700 
+5,150 
+Transportation Systems Revenue 
+25,900 
+28,800 
+30,250 
+Transportation Systems Operating Income 
+1,650 
+2,050 
+2,350 
+Roadway and Vehicle Sensors Revenue 
+34,650 
+38,500 
+40,450 
+Roadway and Vehicle Sensors Operating Income 
+2,500 
+3,150 
+3,600 
+(1) The corporate revenue and operating income goals were applicable to each NEO, the Transportation Systems revenue and operating income goals were applicable to Mr. Clelland, and the Sensors revenue and operating income goals were applicable to Messrs. Kreter and McKhann. 
+If our performance exceeds the revenue and operating income targets set for bonus purposes, the executives can earn an additional bonus of up to 50% of the portion of the target bonus award relating to our operational performance. The full 50% additional bonus would have been earned by the NEOs if the Company had achieved the revenue and operating income goals set forth under the “Maximum” column above. If the Company had achieved revenue and operating income which were less than the goals set forth under the “Maximum” column but more than the amounts set forth under the “Target” column, the additional bonus payable would have been proportional, or based on the level of the Maximum goal achieved when measured from the Target amount. For example, if the performance had exceeded the Target goal by 25% (i.e., by 25% of the difference between the Maximum and Target amounts), then 25% of the additional bonus relating to such performance goal would have been payable. 
+Individual Objectives 
+The individual objectives for Fiscal 2011 for the Chief Executive Officer and the Chief Financial Officer were primarily focused on such officer’s management of his area of responsibility. The objectives for Mr. Mohaddes generally included strategic development of the Company, achievement of the revenue and operating income plan, and enhancing market value, as well as enhancing the relationship of the Company with the financial community. The objectives for Mr. Miele principally included enhancement of our financial position and financial objectives, including accurate and timely reporting of financial results and managing SEC compliance matters. The individual objectives for the other NEOs primarily consisted of broad, general and qualitative operational and strategic objectives for the business unit for which the NEO is responsible. The objectives for Mr. Kreter, the Company’s Senior Vice President of Sensors Development and Operations, generally included providing product on time according to the delivery schedule, improving products, assisting in M&A opportunities, retaining and attracting personnel, improving efficiency and reducing cost, and aligning the Company’s research and development emphasis appropriately. The objectives for Mr. McKhann, the Company’s Senior Vice President of Sensors Sales and Marketing, generally included focusing on sales and marketing activities for the Sensors unit as well as strategies to boost market penetration, organizing and implementing greater outreach, including by visiting a larger number of customers, hiring appropriate personnel for different markets, preparing and executing launch plans for new products, and working with the other business segments in joint marketing, business development and procurement of contracts. The objectives for Mr. Clelland, the Company’s Senior Vice President of Transportation Systems, generally included attracting the necessary staff to implement the Company’s plan for the business segment, focusing on strategic initiatives and M&A opportunities, improving efficiency and reducing costs as well as improving profitability, expanding the existing offices and opening new ones as appropriate, and working with the other business segments in joint marketing, business development and procurement of contracts. 
+Based upon the above described criteria, cash bonuses for the named executive officers in the following amounts were approved for Fiscal 2011: Mr. Mohaddes — $41,995; Mr. Miele — $25,798, Mr. Kreter— $43,875; Mr. McKhann — $53,047; and Mr. Clelland — $14,999. 
+16 
+Outstanding Equity Awards at Fiscal Year-End 
+The following table sets forth the outstanding equity awards held by each of the named executive officers as of March 31, 2011. 
+Option Awards 
+Stock Awards 
+Name 
+Number of 
+Securities 
+Underlying 
+Unexercised 
+Options (#) 
+Exercisable 
+Number of 
+Securities 
+Underlying 
+Unexercised 
+Options (#) 
+Unexercisable 
+Option 
+Exercise 
+Price ($) 
+Option 
+Grant 
+Date(1) 
+Option 
+Expiration 
+Date 
+Number of 
+Shares or 
+Units of 
+Stock That 
+Have Not 
+Vested(2) 
+Market Value 
+of Shares or 
+Units of Stock 
+That Have Not 
+Vested(3) 
+Abbas Mohaddes 
+210,000 
+— 
+1.19 
+09/27/01 
+09/26/11 
+50,000 
+$ 
+72,000 
+Chief Executive 
+44,000 
+— 
+1.40 
+05/01/02 
+04/30/12 
+Officer 
+30,000 
+— 
+2.21 
+06/15/06 
+06/14/16 
+100,000 
+— 
+2.55 
+03/14/07 
+03/13/17 
+150,000 
+50,000 
+2.34 
+10/02/07 
+10/01/17 
+25,000 
+75,000 
+1.41 
+05/27/09 
+05/26/19 
+James S. Miele 
+40,000 
+— 
+1.19 
+09/27/01 
+09/26/11 
+25,000 
+36,000 
+Chief Financial 
+12,000 
+— 
+1.40 
+05/01/02 
+04/30/12 
+Officer 
+20,000 
+— 
+3.26 
+09/02/05 
+09/01/15 
+15,000 
+— 
+2.21 
+06/15/06 
+06/14/16 
+6,250 
+18,750 
+1.41 
+05/27/09 
+05/26/19 
+Todd Kreter 
+18,750 
+6,250 
+2.46 
+02/21/08 
+02/20/18 
+25,000 
+36,000 
+Senior Vice 
+6,250 
+18,750 
+1.41 
+05/27/09 
+05/26/19 
+President 
+Gregory McKhann 
+96,000 
+— 
+1.19 
+09/27/01 
+09/26/11 
+25,000 
+36,000 
+Senior Vice 
+34,000 
+— 
+1.40 
+05/01/02 
+04/30/12 
+President 
+30,000 
+— 
+2.21 
+06/15/06 
+06/14/16 
+6,250 
+18,750 
+1.41 
+05/27/09 
+05/26/19 
+Alan Clelland 
+18,750 
+6,250 
+2.46 
+02/21/08 
+02/20/18 
+25,000 
+36,000 
+Senior Vice 
+6,250 
+18,750 
+1.41 
+05/27/09 
+05/26/19 
+President 
+(1) Each option vests at the rate of 25% on each of the first four anniversaries of the grant date. 
+(2) Indicates the number of shares of common stock subject to RSUs granted in August 2010. Each RSU represents the right to receive one share of our common stock. The RSUs vest in equal annual installments over four years, with the first installment vesting on August 10, 2011. 
+(3) The dollar amounts represent the market value of the shares subject to the RSUs, calculated by multiplying the closing sales price of our common stock at the end of Fiscal 2011 by the applicable number of shares. 
+Option Exercises and Stock Vested 
+No options were exercised by the named executive officers, and no stock awards held by the named executive officers vested, during Fiscal 2011. 
+17 
+Employment Contracts; Termination of Employment and Change of Control Arrangements 
+We do not currently have any employment contracts in effect with any of our named executive officers other than the agreements described below. We provide incentives such as salary, benefits and option grants to attract and retain executive officers and other key associates. The plan administrators of the 1997 Stock Incentive Plan and the 2007 Omnibus Incentive Plan (the “2007 Plan”) have the authority to provide for the accelerated vesting of outstanding options held by an individual in connection with the termination of such individual’s employment following an acquisition in which these options are assumed or the repurchase rights with respect to the unvested shares are assigned or upon certain changes in control of the Company. Other than such accelerated vesting and the agreements described above, there is no agreement or policy which would entitle any executive officer to severance payments or any other compensation as a result of such officer’s termination. 
+Agreements with Abbas Mohaddes 
+On July 27, 2010, we entered into a letter agreement with Abbas Mohaddes (the “Employment Agreement”), our Chief Executive Officer. Under the terms of the Employment Agreement, in the event that he is terminated without cause (as defined in the agreement) within three years after the effective date of the agreement, Mr. Mohaddes is entitled to salary continuation payments for 12 months following termination and payment of 50% of his target bonus for the applicable year, payable at the end of the 12 month salary continuation period. If his employment is terminated as a result of death or disability, then no salary continuation or other severance payments will be made but the vesting of any options, restricted stock or other similar awards then held by him will be accelerated by one year. The Employment Agreement also provided that Mr. Mohaddes will be granted a restricted stock unit award covering 50,000 shares of our common stock, which award will vest over four years. 
+Also on July 27, 2010, we entered into a change in control agreement with Mr. Mohaddes (the “Change in Control Agreement”), which provides for a lump sum payment of one year’s base pay and 50% of his target bonus for the year in the event of an involuntary termination (as defined in the agreement) of Mr. Mohaddes’ employment in connection with or within 12 months after a change in control, except that such payment will be reduced to 50% of the annual base pay and no bonus if the involuntary termination is due to his voluntary resignation which does not occur within the first six months after the change in control. Mr. Mohaddes will also be entitled to receive reimbursement for the cost of COBRA coverage for a period of up to one year following the involuntary termination of his employment. In the event of a termination of Mr. Mohaddes’ employment after a change in control, the Change in Control Agreement, and not the Employment Agreement, will determine whether Mr. Mohaddes will be entitled to any payments or benefits (including the acceleration of the vesting of any equity-based awards) and the amount of such payments or benefits. The Change in Control Agreement terminates on the fifth anniversary of the date of the agreement, unless earlier terminated in accordance therewith. 
+Agreement with James Miele 
+On June 11, 2008, we entered into a change in control agreement with James Miele, our Chief Financial Officer. Pursuant to the terms of the agreement, in the event of an involuntary termination (as defined in the agreement) of Mr. Miele’s employment in connection with or within 12 months after a change in control, Mr. Miele will be entitled to receive a lump sum payment of one year’s base pay and 50% of his target bonus for the year, with such payment to be reduced to 50% of the annual base pay and 25% of the bonus if the involuntary termination is due to his voluntary resignation which does not occur within the first six months after the change in control. In addition, Mr. Miele will be entitled to receive reimbursement for the cost of COBRA coverage for a period of up to one year following the involuntary termination of his employment. The agreement terminates on the fifth anniversary of the date of the agreement, unless earlier terminated in accordance with the agreement. 
+Director Compensation 
+Until January 2011, directors who are not employees of Iteris or any of its subsidiaries received an annual retainer of $12,000 per year, paid quarterly, in addition to $1,500 for each Board meeting attended in person, $250 for each telephone conference Board meeting and $250 for each committee meeting (whether in person or by telephone conference). Beginning January 1, 2011, each non-employee director other than the Chairman of the Board receives an annual retainer of $28,000 per year, paid quarterly, and the Chairman of the Board receives $38,000 per year, paid quarterly; no additional amounts will be paid for attending meetings. In addition, beginning January 1, 2011, each non-employee director who serves on a Board committee receives the following annual amounts, paid quarterly: Audit Committee — $2,500 ($5,000 for the Chair); Compensation Committee - $1,500 ($3,000 for the Chair); Nominating and Governance Committee - $1,000 ($2,000 for the Chair); ad hoc committees - $500 ($1,000 for the Chair). All directors are reimbursed for their out-of-pocket expenses incurred in attending meetings of our Board of Directors and its committees. 
+18 
+Non-employee directors are also eligible to receive periodic option grants pursuant to the Directors’ Automatic Option Grant Program under our 2007 Plan. Under the 2007 Plan, each non-employee director receives an option to purchase 20,000 shares of common stock upon his initial appointment to the Board of Directors, which option vests one year after the grant date, and an additional option to purchase shares of common stock on the date of each annual meeting provided he has served on the Board for at least six months as of such annual meeting. Prior to this Annual Meeting, such additional option grant was for 5,000 shares, vesting in equal annual installments over four years. Beginning with this Annual Meeting, the additional option grant will be for 10,000 shares, vesting one year after the grant date. Each option granted to non-employee directors under the Directors’ Automatic Option Grant Program will have an exercise price equal to the fair market value of the common stock on the grant date and a maximum term of ten years, subject to earlier termination following the optionee’s cessation of service as a Board member. 
+The following table sets forth a summary of the compensation earned in Fiscal 2011 by each person who served as a director during such year, who is not a named executive officer. Mikel Williams became a director in April 2011 and did not receive any compensation for Fiscal 2011. 
+Name 
+Fees Earned or 
+Paid in Cash ($)(1) 
+Option 
+Awards ($)(2) 
+All Other 
+Compensation ($) 
+Total ($) 
+Richard Char 
+$ 
+23,375 
+$ 
+4,275 
+$ 
+— 
+$ 
+27,650 
+Kevin C. Daly, Ph.D. 
+23,375 
+4,275 
+— 
+27,650 
+Gregory A. Miner 
+24,625 
+4,275 
+— 
+28,900 
+John W. Seazholtz 
+23,500 
+4,275 
+— 
+27,775 
+Joel Slutzky 
+21,375 
+4,275 
+— 
+25,650 
+Thomas L. Thomas 
+23,500 
+4,275 
+— 
+27,775 
+(1) 
+Represents amounts earned by the directors based on the compensation arrangement described above. 
+(2) 
+The dollar amounts shown represent the grant date fair value of stock options granted in Fiscal 2011 determined pursuant to the Black-Scholes-Merton option pricing formula, in accordance with FASB ASC Topic 718. For a discussion of valuation assumptions used in the calculations, see Note 10 to our consolidated financial statements in our Annual Report. See also our discussion of stock-based compensation under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” in the Annual Report. At the end of Fiscal 2011, the non-employee directors held options for the following number of shares of common stock: Richard Char — 45,000; Kevin C. Daly, Ph.D. - 50,000; Gregory A. Miner — 540,000; John W. Seazholtz - 50,000; Joel Slutzky - 220,000; and Thomas L. Thomas - 50,000. 
+Indemnification of Directors and Officers 
+Under Section 145 of the Delaware General Corporation Law, we can indemnify our directors and officers against liabilities they may incur in such capacities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Our certificate of incorporation and bylaws provide that we will indemnify our directors and officers to the fullest extent permitted by law, and our bylaws require us to advance litigation expenses upon receipt of an undertaking by the director or officer to repay such advances if it is ultimately determined that the director or officer is not entitled to indemnification. The bylaws further provide that rights conferred under such bylaws do not exclude any other right such persons may have or acquire under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise. 
+Our certificate of incorporation provides that, pursuant to Delaware law, our directors shall not be liable for monetary damages for breach of the directors’ fiduciary duty of care to us and our stockholders. This provision in the certificate of incorporation does not eliminate the duty of care, and in appropriate circumstances equitable remedies such as injunctive or other forms of non-monetary relief will remain available under Delaware law. In addition, each director will continue to be subject to liability for breach of the director’s duty of loyalty to us or our stockholders, for acts or omissions not in good faith or involving intentional misconduct or knowing violations of law, for actions leading to improper personal benefit to the director, and for payment of dividends or approval of stock repurchases or redemptions that are unlawful under Delaware law. The provision also does not affect a director’s responsibilities under any other law, such as the federal securities laws or state or federal environmental laws. 
+We have entered into agreements to indemnify our directors and certain of our officers in addition to the indemnification provided for in the certificate of incorporation and bylaws. These agreements, among other things, indemnify our directors and certain of our officers for certain expenses (including attorneys’ fees), judgments, fines and settlement amounts incurred by such person in any action or proceeding, including any action by or in the right of the Company, on account of services as a director or officer of Iteris, or as a director or officer of any other company or enterprise to which the person provides services at our request. 
+19 
+EQUITY COMPENSATION PLANS 
+The following table provides information as of March 31, 2011 with respect to shares of our common stock that may be issued under existing equity compensation plans. The table does not include information with respect to shares of our common stock subject to outstanding options granted under equity compensation plans or option agreements that were assumed in connection with the merger of the Iteris Subsidiary into us in October 2004. However, Note 1 to the table sets forth the total number of shares of common stock issuable upon the exercise of those assumed options as of March 31, 2011 and the weighted average exercise price of those options. 
+Plan Category 
+Number of Securities to 
+be Issued Upon Exercise 
+of Outstanding Options, 
+Warrants and Rights 
+Weighted Average 
+Exercise Price of 
+Outstanding 
+Options, Warrants 
+and Rights 
+Number of Securities 
+Remaining Available For 
+Future Issuance under 
+Equity Compensation Plans 
+(excluding some securities 
+reflected in first column) 
+Equity Compensation Plans Approved by Security Holders 
+1997 Stock Incentive Plan 
+1,095,750 
+$ 
+1.73 
+— 
+2007 Omnibus Incentive Plan 
+998,500 
+(2) 
+1.87 
+(3) 
+651,500 
+Equity Compensation Plans Not Approved by Security Holders 
+None 
+Total(1) 
+2,094,250 
+$ 
+1.79 
+(3) 
+651,500 
+(1) 
+The table does not include information with respect to the equity compensation plan or option agreements that were assumed by us in connection with the merger of the Iteris Subsidiary into us in October 2004. As of March 31, 2011, a total of 1,231,000 shares of common stock were issuable upon exercise of outstanding options under the assumed plan and agreements. No additional options may be granted under the assumed plan. The weighted average exercise price of all such assumed options to acquire shares of our common stock was $1.28 per share. 
+(2) 
+Includes 214,000 shares of our common stock subject to RSUs that entitle each holder to one share of common stock for each such unit that vests over the holder’s period of continued service. 
+(3) 
+Calculated without taking into account the 214,000 shares of common stock subject to outstanding RSUs that become issuable as those units vest, without the payment of any additional consideration or exercise price. 
+20 
+PRINCIPAL STOCKHOLDERS AND COMMON STOCK OWNERSHIP 
+OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 
+The following table sets forth, as of June 1, 2011, the number and percentage ownership of our common stock by (i) all persons known to us to beneficially own more than 5% of the outstanding common stock, (ii) each of the named executive officers in the Summary Compensation Table which appears elsewhere herein, (iii) each of our directors, and (iv) all of our executive officers and directors as a group. To our knowledge, except as otherwise indicated, each of the persons named in this table has sole voting and investment power with respect to the common stock shown as beneficially owned, subject to community property and similar laws, where applicable. 
+Common Stock 
+Name and Address of Beneficial Owner(1) 
+Amount and Nature of 
+Beneficial 
+Ownership(2) 
+Percent of Class(2) 
+Lloyd I. Miller, III(3) 
+4,591,337 
+13.4 
+% 
+Austin W. Marxe and David M. Greenhouse(4) 
+4,339,707 
+12.5 
+The PNC Financial Services Group, Inc.(5) 
+2,869,196 
+8.3 
+Abbas Mohaddes(6) 
+1,318,358 
+3.8 
+James S. Miele(7) 
+104,295 
+* 
+Greg McKhann(8) 
+202,700 
+* 
+Todd Kreter(9) 
+19,058 
+* 
+Alan Clelland(10) 
+26,300 
+* 
+Richard Char(11) 
+45,000 
+* 
+Kevin C. Daly, Ph.D(12) 
+395,132 
+1.1 
+Gregory A. Miner(13) 
+967,485 
+2.8 
+John W. Seazholtz(14) 
+118,547 
+* 
+Joel Slutzky(15) 
+2,044,259 
+5.9 
+Thomas L. Thomas(16) 
+79,000 
+* 
+Mikel Williams 
+— 
+* 
+All executive officers and directors as a group (12 persons)(17) 
+5,320,134 
+14.7 
+% 
+* 
+Less than 1%. 
+(1) 
+The address of each of the directors and officers is 1700 Carnegie Avenue, Suite 100, Santa Ana, CA 92705. 
+(2) 
+Based on 34,365,743 shares of common stock outstanding as of June 1, 2011. Shares of common stock subject to options or warrants which are exercisable within 60 days of June 1, 2011 are deemed to be beneficially owned by the person holding such options or warrants for the purpose of computing the percentage of ownership of such person but are not treated as outstanding for the purpose of computing the percentage of any other person. Other than as described in the preceding sentence, shares issuable upon exercise of outstanding options and warrants are not deemed to be outstanding for purposes of this calculation. In addition to the shares held in the individual’s name, the number of shares indicated also includes shares held for the benefit of the named person under our 401(k) and Stock Ownership Plan. 
+(3) 
+Pursuant to an amendment to a Schedule 13G filed on February 11, 2011 with the SEC, Mr. Miller reported that, as of December 31, 2010, he had shared dispositive and voting power with respect to 2,932,659 shares as (i) an investment advisor to the trustee of certain family trusts, and (ii) as an authorized person with respect to a custody account. Mr. Miller also had sole dispositive and voting power with respect to 1,658,678 shares as (x) a manager of a limited liability company that is the general partner of a certain limited partnership, (y) the trustee to a certain grantor retained annuity trust, and (z) an individual. The address for Mr. Miller is 4550 Gordon Drive, Naples, FL 34102. 
+(4) 
+Pursuant to an amendment to a Schedule 13G filed on February 12, 2010 with the SEC, Messrs. Marxe and Greenhouse reported that, as of December 31, 2009, they had shared voting power and shared dispositive power over 4,104,703 shares of common stock and 235,004 shares issuable upon exercise of warrants held by Special Situations Cayman Fund, L.P., Special Situations Fund III, L.P., Special Situations Fund III QP, L.P. and Special Situations Private Equity Fund, L.P. (collectively, the “Special Situations Funds”). No subsequent amendment to such filing, indicating any changes to their holdings, was filed by the reporting persons. Messrs. Marxe and Greenhouse are the controlling principals of AWM Investment Company, Inc. (“AWM”), the general partner of and investment adviser to Special Situations Cayman Fund, L.P. AWM is the general partner of MGP Advisers Limited Partnership, the general partner of and investment adviser to Special Situations Fund III, L.P. and the general partner of Special Situations Fund III QP, L.P. In addition, Messrs. Marxe and Greenhouse are members of MG Advisers L.L.C., the general partner of Special Situations Private Equity Fund, L.P. AWM serves as the investment adviser to Special Situations Fund III QP, L.P. and Special Situations Private Equity Fund, L.P. The address for Messrs. Marxe and Greenhouse is 527 Madison Avenue, Suite 2600, New York, NY 10022. 
+(5) 
+Pursuant to a Schedule 13G filed on February 11, 2011 with the SEC, The PNC Financial Services Group, Inc., PNC Bancorp, Inc. and PNC Bank, National Association reported that, as of December 31, 2010, they had shared dispositive and voting power with respect to the shares, which are held in trust accounts created by an Amended and Restated Trust Agreement dated September 20, 1983, in which Lloyd I. Miller, Jr. was Grantor and for which PNC Bank, National Association serves as Trustee. In connection with the trust accounts, Lloyd I. Miller, III and PNC Bank, National Association, in its capacity as Trustee, have entered into an Investment Advisory Agreement dated as of April 1, 2002. Either party may terminate the Investment Advisory Agreement on 30 days prior written notice. PNC Bank, National Association is a wholly-owned subsidiary of PNC Bancorp, Inc., and PNC Bancorp, Inc. is a wholly-owned subsidiary of The PNC Financial Services Group, Inc. The addresses for the PNC entities are as follows: The PNC Financial Services Group, Inc. — One PNC Plaza, 249 Fifth Avenue, Pittsburgh, PA 15222-2707; PNC Bancorp, Inc. — 222 Delaware Avenue, Wilmington, DE 19801; PNC Bank, National Association — One PNC Plaza, 249 Fifth Avenue, Pittsburgh, PA 15222-2707. 
+21 
+(6) 
+Includes (i) 484,000 shares issuable upon exercise of options that are currently exercisable or will become exercisable within 60 days after June 1, 2011 and (iv) 11,540 shares held by Mr. Mohaddes’ IRA. 
+(7) 
+Includes 93,250 shares issuable upon exercise of options that are currently exercisable or will become exercisable within 60 days after June 1, 2011. 
+(8) 
+Includes 166,250 shares issuable upon exercise of options that are currently exercisable or will become exercisable within 60 days after June 1, 2011. 
+(9) 
+Includes 18,750 shares issuable upon exercise of options that are currently exercisable or will become exercisable within 60 days after June 1, 2011. 
+(10) 
+Includes 18,750 shares issuable upon exercise of options that are currently exercisable or will become exercisable within 60 days after June 1, 2011. 
+(11) 
+Consists of shares issuable upon exercise of options that are currently exercisable or will become exercisable within 60 days after June 1, 2011. 
+(12) 
+Includes (i) 100 shares held by Dr. Daly’s spouse, (ii) 329,032 shares held by Dr. Daly’s IRA, and (iii) 50,000 shares issuable upon exercise of options that are currently exercisable or will become exercisable within 60 days after June 1, 2011. 
+(13) 
+Includes (i) 183,334 shares held by Mr. Miner’s IRA, (ii) 19,230 shares held by Mr. Miner’s wife’s IRA and (iii) 540,000 shares issuable upon exercise of options that are currently exercisable or will become exercisable within 60 days after June 1, 2011. 
+(14) 
+Includes 50,000 shares issuable upon exercise of options that are currently exercisable or will become exercisable within 60 days after June 1, 2011. 
+(15) 
+Includes (i) 1,584,922 shares held by The J&J Slutzky Trust, of which Mr. Slutzky is the co-trustee, (ii) 144,616 shares held by Mr. Slutzsky’s IRA and (ii) 220,000 shares issuable upon exercise of options that are currently exercisable or will become exercisable within 60 days after June 1, 2011. Excludes shares of common stock held in the Joel Slutzky Family Trust for the benefit of the children and relatives of Mr. Slutzky; Mr. Slutzky has no investment or voting power with respect to the shares in such trust and disclaims any beneficial ownership. 
+(16) 
+Includes 50,000 shares issuable upon exercise of options that are currently exercisable or will become exercisable within 60 days after June 1, 2011. 
+(17) 
+Includes 1,736,000 shares issuable upon exercise of options that are currently exercisable or will become exercisable within 60 days after June 1, 2011. 
+22 
+CERTAIN TRANSACTIONS 
+Since April 1, 2009, other than the agreements and transactions described in “Executive Compensation and Other Information” and the transactions described below, there has not been, nor is there any proposed transaction, where we (or any of our subsidiaries) were or will be a party in which the amount involved exceeded or will exceed the lesser of $120,000 or the average of the Company’s total assets at year end for the last two fiscal years and in which any director, director nominee, executive officer, holder of more than 5% of any class of our voting securities, or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest. 
+We previously subleased office space to MAXxess Systems, Inc. (“MAXxess”), one of our former subsidiaries that we sold in September 2003 and is currently owned by an investor group that includes two of our directors, one of whom is the Chief Executive Officer of MAXxess. The sublease terminated in September 2007, at which time MAXxess owed us an aggregate of $274,000 related to this sublease and certain related ancillary services that we provided to MAXxess. In August 2009, MAXxess executed a promissory note payable to us for $274,000. The promissory note bears interest at a rate of 6% per annum, compounded annually, with accrued interest to be paid annually on the first business day of each calendar year. Payments under the note may be made in bona fide services rendered by MAXxess to us to the extent such services and amounts are pre-approved in writing by us. All amounts outstanding under the note will become due and payable on the earliest of (i) August 10, 2014, (ii) a change of control in MAXxess, or (iii) a financing by MAXxess resulting in gross proceeds of at least $10 million. As of March 31, 2011, approximately $16,000 of accrued interest along with the entire $274,000 principal balance was outstanding and payable to us. 
+SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE 
+Under the federal securities laws, our directors and officers and any persons holding more than 10% of our common stock are required to report their ownership of our common stock and any changes in that ownership to the SEC. Specific due dates for these reports have been established, and we are required to report any failure to file by such dates. For Fiscal 2011, the Form 4 filing for a sale of shares on August 5, 2010 by Mr. Slutzky, pursuant to his 10b5-1 plan, was not filed within two business days of such sale. Based solely on our review of copies of the reports on Forms 3, 4 and 5 received by us with respect to the fiscal year ended March 31, 2011 and the written representations received from the reporting persons that no other reports were required, except as indicated in the foregoing sentence or as indicated in our prior proxy statements, we believe that all directors, executive officers and persons who own more than 10% of our common stock have complied with the reporting requirements of Section 16(a) and have filed all reports required by such section. 
+ANNUAL REPORT 
+A copy of our Annual Report on Form 10-K for the fiscal year ended March 31, 2011 (excluding the exhibits thereto) accompanies the proxy materials being mailed to all stockholders. The Annual Report is not incorporated into this proxy statement and is not considered proxy solicitation material. Stockholders may obtain a copy of the Annual Report and any of our other filings with the SEC, without charge, by writing to Investor Relations, Iteris, Inc., 1700 Carnegie Avenue, Suite 100, Santa Ana, California 92705. The Annual Report (including the exhibits thereto) is also available on the SEC’s website at www.sec.gov. 
+DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS 
+Stockholders may present proposals for action at a future meeting or nominate persons for the election of directors only if they comply with the requirements of the proxy rules established by the SEC and our bylaws. Pursuant to Rule 14a-8 of the Exchange Act, some stockholders proposals may be eligible for inclusion in our proxy statement for the 2012 Annual Meeting of Stockholders (the “2012 Annual Meeting”). Stockholder proposals that are intended to be presented at our 2012 Annual Meeting and included in the proxy statement, form of proxy and other proxy solicitation materials related to that meeting must be received by us not later than April 6, 2012. 
+If a stockholder wishes to submit a proposal which is not intended to be included in our proxy statement under Rule 14a-8 of the Exchange Act, or wishes to nominate a person as a candidate for election to the Board, the stockholder must submit the proposal or nomination on or between May 19, 2012 and June 18, 2012. If the date of the 2012 Annual Meeting is called for a date that is not within 30 days before or after the anniversary date of the 2011 Annual Meeting of Stockholders (a situation that we do not anticipate), then the stockholder must submit any such proposal or nomination not later than the close of business of the 10th day following the earlier of (i) the day on which the notice of the meeting was mailed or (ii) public disclosure of the date of such meeting is first made. Stockholders are advised to review our bylaws which contain these advance notice requirements with respect to advance notice of stockholder proposals and director nominations. 
+23 
+In addition, with respect to any proposal that a stockholder presents at the 2012 Annual Meeting that is not submitted for inclusion in our proxy materials pursuant to Rule 14a-8 under the Exchange Act, the proxy solicited by the Board of Directors for such annual meeting will confer discretionary voting authority to vote on such stockholder proposal to the extent permitted under Rule 14a-4 under the Exchange Act. 
+Stockholder proposals must be in writing and should be addressed to our corporate Secretary, at our principal executive offices at 1700 Carnegie Avenue, Suite 100, Santa Ana, California 92705. It is recommended that stockholders submitting proposals direct them to our corporate Secretary and utilize certified mail, return receipt requested in order to provide proof of timely receipt. The presiding officer of the 2012 Annual Meeting reserves the right to reject, rule out of order, or take other appropriate action with respect to any proposal that does not comply with these and other applicable requirements, including conditions set forth in our bylaws and conditions established by the SEC. 
+OTHER BUSINESS 
+The Board of Directors is not aware of any other matter which will be presented for action at the Annual Meeting other than the matters set forth in this proxy statement. If any other matter requiring a vote of the stockholders arise, it is intended that the proxy holders will vote the shares they represent as the Board of Directors may recommend. Discretionary authority with respect to such other matters is granted by the execution of the enclosed proxy card. 
+THE BOARD OF DIRECTORS OF 
+ITERIS, INC. 
+Santa Ana, California 
+July 29, 2011 
+24 
+PROXY 
+ITERIS, INC. 
+THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS 
+The undersigned stockholder of ITERIS, INC. hereby appoints ABBAS MOHADDES and JAMES S. MIELE, and each of them, proxies of the undersigned, each with full power to act without the other and with power of substitution, to represent the undersigned at the Annual Meeting of Stockholders of Iteris to be held at the Company’s principal executive offices located at 1700 Carnegie Avenue, Suite 100, Santa Ana, CA 92705, on September 16, 2011 at 10:00 a.m. Pacific Time, and at any adjournments or postponements thereof, and to vote all shares of common stock of Iteris held of record by the undersigned on July 20, 2011, with all the powers the undersigned would possess if personally present, in accordance with the instructions on this proxy. 
+The undersigned hereby revokes any other proxy to vote at such Annual Meeting of Stockholders and hereby ratifies and confirms all that said proxies, and each of them, may lawfully do by virtue hereof. 
+THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS BELOW, OR IF NO INSTRUCTIONS ARE INDICATED, THIS PROXY WILL BE VOTED FOR ALL PROPOSALS DESCRIBED BELOW, AND IN ACCORDANCE WITH THE DISCRETION OF THE PROXY HOLDERS WITH REGARD TO ANY OTHER MATTERS PROPERLY BROUGHT TO A VOTE AT THE ANNUAL MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF. 
+x Please mark votes as in this example. 
+1. 
+Election of Directors: To elect Richard Char, Kevin C. Daly, Ph.D., Gregory A. Miner, Abbas Mohaddes, Joel Slutzky, Thomas L. Thomas and Mikel Williams to the Board of Directors, each to hold such office until the next annual meeting of stockholders or until his successor is elected and qualified. 
+o FOR o WITHHOLD AUTHORITY to vote for all nominees listed below 
+(Instruction: To withhold authority to vote for any individual nominee, write that nominee’s name in the space provided above.) 
+2. 
+Ratification of McGladrey & Pullen, LLP as the independent registered public accounting firm of Iteris for the fiscal year ending March 31, 2012. 
+o FOR o AGAINST o ABSTAIN 
+MARK HERE FOR ADDRESS CHANGE AND INDICATE NEW ADDRESS o 
+MARK HERE IF YOU PLAN TO ATTEND THE MEETING o 
+Signature: 
+Date: 
+Signature: 
+Date: 
+(This Proxy must be signed exactly as your name appears hereon. Executors, administrators, trustees, etc., should give full title as such. If the stockholder is a corporation, a duly authorized officer should sign on behalf of the corporation and should indicate his or her title.) 
+PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.