Welcome to the Agilysys Fiscal Third Quarter 2012 Conference Call. Some statements made on today's call will be predictive and are intended to be made as forward-looking within the Safe Harbor protections of the Private Securities Litigation Reform Act of 1995. Although the company believes that its forward-looking statements are based on reasonable assumptions, such statements are subject to risks and uncertainties that could cause results to differ materially. Important factors that could cause actual results to differ materially from those in the forward-looking statements are set forth in the company's reports on Form 10-K and 10-Q and news releases filed with the Securities and Exchange Commission. Today's live broadcast will be archived and available on Agilysys' website. At this time, I would like to introduce your host for today's call, Agilysys' President and CEO, James Dennedy. Please go ahead, Mr. Dennedy.

Thank you, Valerie. Good morning and thanks to everyone listening on today's call to review our unaudited fiscal 2012 third quarter results. Joining me today is Chief Financial Officer Robb Ellis. Before we get started, I'd like to remind our call participants that we will be using a slide presentation as the basis for this review. And if they've not already done so, they can access the slide deck from the Investor Relations section of our website at www.agilysys.com. Also during today's conference call, we will be discussing non-GAAP financial data, namely adjusted EBITDA. Reconciliations to GAAP are provided at the end of the presentation, as well as in the press release issued this morning. Before we begin a discussion of our quarterly results, I'd like to remind you also that as in previous quarters, we are reporting TSG's operating results, including the gain on the sale and its assets and liabilities as elements of a discontinued operation. Turning to the quarterly results, consolidated revenue from continuing operations declined during the quarter to $51.6 million from last year's $59 million, primarily due to lower hardware related revenue. The quarter was characterized by continued positive results from initiatives to shift the business into higher-quality revenues and into more recurring revenues. This initiative delivered an overall revenue mix containing a higher proportion of recurring revenue contracts. Secondly, this initiative drove gross margin expansion by 620 basis points during the quarter to 38.6%. In addition, we managed the expense side of our business more effectively and realized lower cost on the services we provided during the period. As a result of improved expense management, selling, general and administrative expenses decreased $2 million to $20.4 million from $22.4 million last year. Depreciation and amortization increased $1.3 million due to the acceleration of depreciation related to our property and equipment located in Solon, Ohio, which we will be vacating by fiscal year end. On an operating basis, the company reported a loss of $7 million for the quarter compared with a loss of $5.3 million in the same quarter last year. Excluding $3.2 million in restructuring charges and the $1.3 million in extraordinary depreciation and amortization during the quarter, the operating loss from continued operations for the fiscal 2012 third quarter would have narrowed to $2.5 million, a $2.8 million improvement over the same quarter last year. Adjusted EBITDA, excluding restructuring and one-time charges, was breakeven versus last year's $3.1 million loss. The loss from continuing operations, including the $3.2 million of restructuring charges, was $5.8 million or $0.26 per share, compared with a loss of $2.3 million or $0.10 per share last year. The one-time items account for $0.20 per share of the reported $0.26 per share loss. With that, I'll turn the call over to Robb for a review of the segments, balance sheet, and fiscal year-to-date results.

Thanks, Jim, and good morning, everyone. The Hospitality business reported a 12% revenue decline during the quarter, primarily due to a decrease in product volume. As Jim mentioned, sales efforts continue to be concentrated on higher quality product offerings and selling our products under a subscription model, both of which have contributed to the revenue decline. As a result of those efforts, although we have seen a decrease in our revenues quarter-over-quarter, gross profit has increased 5% to $14 million, pushing our gross margins from 54% to 64%. This increase can be attributed not only to the product mix and overall quality of our revenue streams, but improved labor efficiencies in our service offerings as well. Selling, general and administrative expenses, excluding depreciation and amortization, increased as developers that were working on capitalizable software and maintenance projects in the previous year were moved to research and development projects in the current year. Operating income for the current quarter was $1.7 million versus last year's $2 million and adjusted EBITDA was essentially flat versus last year's third quarter. Moving on to the Retail Solutions Group, revenues in the Retail Solutions Group declined 13% from last year as a result of 2 significant hardware deals that occurred in fiscal year 2011 and not replaced in fiscal year 2012. Gross margin improved from 17% to 20% year-over-year due to labor efficiencies within our services offerings and the change in our product mix. Operating income grew 30% to $1.3 million from $1 million last year on the gross margin expansion and cost reductions. Adjusted EBITDA also increased to $1.5 million from $1.1 million for the same reasons. At Corporate, we reduced the selling, general, and administrative expenses, excluding depreciation and amortization, to $4.2 million from $6.4 million. This decrease was a result of expenditures…

Thanks, Robb. Switching to our longer-term focus and strategy, the results we reported today reflect the longer-term strategic direction of the company. The principal objectives of our longer-term business strategy are to deliver market-leading growth and peer-beating performance metrics. We intend to achieve these objectives by targeting the highest-margin revenue opportunities in the end markets we serve. These objectives shape the business we pursue, the products and solutions we develop, the personnel we recruit and retain, our sales and marketing investment, and how we deploy our balance sheet capital. The selling environment for Hospitality and Retail remains competitive with large capital expenditure projects taking longer to commission. That said, customers are embracing our flexibility to sell, deliver, and support our solutions in a subscription-based model. Looking forward, there are no clear catalysts which materially change our views on the growth rate or technology investments for the markets we service, nor do we see or anticipate any events which would dramatically pinch technology consumption patterns. As a result, our confidence in the stability of the Hospitality and Retail markets remains optimistic. This past quarter reinforces our belief, as evidenced by the success we experienced across the segments in those markets. The food service management segment provided several important wins with new business in large cafeterias, stadia and arenas, and health care, a growing segment for us. In the casino segment, the market continues to respond favorably to the Casino1 offering. In the quarter, customers validated this offering, highlighted by important customer wins including Revel Entertainment Group, Hilton Grand Vacations, the Gold Nugget, and Bordertown Bingo and Casino. Our international business continues to expand with key wins with the NEC Group in Birmingham, United Kingdom; Citysuper in Hong Kong; and the Connexion at Farrer Park in Singapore. The NEC Group is the…

[Operator instructions] The first question comes from Shai Dardashti of DCM.

I'm looking at the -- looking at the quarterly PowerPoint presentation, Slide 4, noticed that -- on Slide 4, there is a 13.3% EBITDA margin, looking at a $2.9 million EBITDA versus $21.7 million of sales on the Hospitality segment. When I look at the DEF 14A proxy filings from June 25, 2010, on page 21 there is an 18.8% EBITDA target for bonus payout. I'm wondering what holds back the company from being -- what holds back -- is the 18.8% segment EBITDA still possible, given the business now versus the way it was 2 years ago?

Shai, I'm not sure I understand the question. You want to know whether the 18% target?

Yes. Is that target still relevant on a forward basis given the way the company is now versus the way it used to be? Is that still realistic or is that completely the past?

Well, if it's 18% for that segment specifically -- you are talking about the Hospitality segment specifically and the 18% target margin for that?

Correct. Only Hospitality, correct.

Yes, it's still relevant. We -- that's a contribution -- that's a EBITDA contribution percentage that we get from that industry or business. So when we provide incentives to management and bonuses that aren’t based on sales commission, the bonus structure is that EBITDA contribution is more important than the gross profit contribution, which is more important than revenue. So those are the 3 elements on which we bonus. And there is a defined percentage or objective for both EBITDA, gross profit and revenue production against which we assign bonus allocation. So that percentage, it changes from year to year based on the budget; and in this year, that percentage is modestly different than in past, but each year we revisit and target these 3 elements for bonus opportunity.

I guess my question is, is there any reason why 18% is incredulously high? Is 18% still possible or is the business like completely different? I'm assuming it should be possible unless the business is different than used to be.

No, it's possible, Shai. And in the business, the Hospitality segment itself, the one element I think that's probably most different from 2010 -- fiscal 2010 to where we are today in '12 and what we are targeting for fiscal '13 is the revenue composition is showing and our bookings are showing an increased percentage of subscription-based software sales. However, the EBITDA expectations we have for the contribution by that industry are -- have actually grown.

So what's holding you back? I mean, why can't EBITDA be a 20% margin in 2 or 3 years on that segment? What's the major headwinds that you face?

Well, the biggest headwind ,and I think we talked about this going back to our first quarter results, which I was -- it was my first time presenting the results of the company to shareholders, was primarily that we hadn't fully integrated the operations of the acquired businesses comprising the Hospitality segment prior to really the initiatives we've taken on this year. So we had somewhat unlevered operations in the Hospitality segment. We've taken that on as a fiscal year 2012 initiative in addition to restructuring the business. So we are getting more efficient within the OpEx lines of sales and marketing, product development, and the other general and administrative expenses, that will enable us to achieve higher EBITDA contributions from that industry. But up until this point, we had effectively unlevered operations in that business unit.

If I start doing analysis of revenue per employee, is revenue per employee in 2013, 2014 completely different because you have a different business model with subscription services? Should I kind of stop doing that analysis completely or is there actually -- are there any rules of thumb that might help me in terms of what one employee could be doing to revenue if he's doing a great job?

But -- you were going to have to get into a booking discussion, but yes. So as we increase the percentage of our bookings to more subscription-based software sales, you are going to have to evaluate our bookings numbers in consort with reported revenues to get a more effective measure of overall revenue or sales production per employee. To give you an example, I look at bookings very closely on a monthly basis, and we evaluate performance of the business internally on a quarterly basis based on these bookings numbers. Bookings fiscal year-to-date in '12 over FY '11 are up approximately 20%. Now, how do you reconcile that with the revenue numbers within Hospitality? Well, approximately 1/3 of the total bookings this year were subscription-based software sales, anywhere from 3 to 5-year contracts. So this creates some backlog that will be recognized over future periods, but these are then revenue opportunities that don't get accounted for in their totality within the current quarter or current fiscal year. Now, we haven't reported -- we haven't reported numbers like this, Shai. However, in the past, we haven't really been a software and services-focused company. We have heard from investors like you and others who want reporting more clearly aligned with the way they would compare a software company reporting, and we have expressed previously that that is an initiative that we are intending to deliver in our fiscal '13 presentation. So you will see fiscal '13 and '12 year-over-year comparisons that'll look a lot more like a software company -- a software and services company reporting.

[Operator Instructions] And at this time, I'm showing no further questions and I would like to turn the call back to Mr. Dennedy for any closing remarks.

Thank you, Valerie. In closing, the transition to a smaller business and the realignment to a smaller cost structure are nearly complete. We remain confident in our ability to execute in our chosen markets. Our investment in the restructuring activities is producing the expected results, using less cash to achieve the planned results. I am confident that Agilysys has the requisite personnel, leadership team, technology, development capabilities, and financial strength to execute our strategy and increase shareholder value. Looking forward, investors should expect continued emphasis on revenue quality, expense management, and select investments to grow the business. This emphasis will allow us to grow the business in line with the market rate of growth, while achieving our planned financial and operating performance. Thank you.

That concludes today's presentation. You may now disconnect.