Iteris Announces Early Retirement of $1.5 Million in Convertible Debt

SANTA ANA, Calif. january 22, 2009: Iteris, Inc. (AMEX: ITI), a leader in the traffic management market that focuses on the application and development of advanced technologies, today announced the early retirement of $1.5 million in convertible debentures for $1.47 million, saving the Company $30,000 in principal and approximately $12,000 in future interest payments.

“Our strong operating income performance and positive operating cash flow over the past several quarters enabled the Company to largely pay down borrowings under our line of credit, and we took advantage of this opportunity to reduce our long-term debt," said Abbas Mohaddes, President and CEO of Iteris. “In today’s environment, it is increasingly important to reduce our debt levels and strengthen our balance sheet, and we are pleased that our financial performance has enabled us to achieve this important goal."

The debentures, originally issued by the Company in May 2004, were due and payable in full in May 2009. The debentures provided for 6.0% annual interest, payable quarterly, and were convertible into the Company’s common stock at an initial conversion price of $3.61 per share, subject to certain adjustments, including adjustments for dilutive issuances. Including this redemption, the Company has retired $9.1 million of the original $9.85 million debentures outstanding through the use of $2.1 million of its own cash and $6.5 million in borrowings on the Company’s new credit facility, saving approximately $500,000 in principal. The Company expects to retire the remaining $750,000 of convertible debentures in May 2009.