Good day, everyone, and welcome to today’s KVH Industries Second Quarter 2013 Earnings Announcement. As a reminder today’s call is being recorded. At this time I would like to turn the conference over to your host for today, Mr. Peter Rendall, Chief Financial Officer. Please go ahead, sir.

Thank you, and good morning, everyone. I’m Peter Rendall, and with me is Martin Kits Van Heyningen, Chief Executive Officer of KVH Industries. This call will address the second quarter earnings release that we issued earlier today. Copies of the release are available on our website and also from our Investor Relations department. This call is being simulcast on the Internet, and will be archived on our website for future reference. If you are listening via the web, feel free to submit questions to ir@kvh.com, and we will answer them following this call. This conference call will contain certain forward-looking statements that involve risk and uncertainty. For example, statements regarding financial and product development goals are forward-looking. The company’s future results may differ materially from the projections described in today’s discussion. Factors that might cause these differences include, but are not limited to, those mentioned in today’s call and risk factors described in our Annual Report on Form 10-K, which was filed with the SEC on April 2, 2013. The company’s SEC filings are directly available from us, from the SEC, or from the Investor Information section of our website. Now, I would turn it over to Martin for today’s discussion of results. Martin?

Thanks, Peter, and thank you all for joining us today. I’m pleased to report that we achieved record top line results during the second quarter, our fourth record quarter in a row. Revenues of $43.2 million, were up 35% from the same period last year. Non-GAAP EPS for the quarter was $0.15, up $0.03 per share from the second quarter of 2012. Headland Media’s contribution to our revenues in the second quarter totaled $1.9 million, since the acquisition in mid-May and added approximately $0.01 to our EPS. But even without Headland Media, we still would have achieved record results with both revenues and earnings for the second quarter above our guidance. Our continued strong revenue growth during the quarter was a result of increased shipments for our guidance in Stabilization business up a 100% from the second quarter of 2012, and continued strong growth in our Maritime VSAT Airtime business, which was up 35% from the same period last year. Our TACNAV business continues to benefit from our large ongoing contract with the Saudi Arabia National Guard. Our fiber optic gyro sales were also solid, especially commercial sales of our Inertial Measurement Unit used in dynamic mapping systems and our autonomist navigation. For the second quarter in a row, our commercial FOG sales were larger than our military FOG sales. Looking at each segment in greater detail, our overall mobile broadband revenues, including Headland Media were $27.3 million, up 13% year-over-year. The mini-VSAT broadband portion of the business was up 17% overall reflecting strong airtime growth of 35% year-over-year, which was partially offset by a decline in hardware sales primarily in Europe. We believe our European sales continue to be down due to the continuing poor economic conditions in the EU particularly in Southern Europe. On a positive note, we…

Thank you, Martin. So this morning, we reported record company revenues of $43.2 million for the second quarter, which included $1.9 million of Headland Media revenue. Excluding this Headland Media revenue contribution, revenues were at the high end of our expectations and the guidance we previously gave. As Martin stated earlier, our mobile communication revenues which include Headland Media were $27.3 million, representing a 13% increase year-over-year, while our guidance and stabilization business grew 100% year-over-year to $15.9 million. Our mini-VSAT business recorded $17.2 million in quarterly revenues of which airtime services represented $11.3 million, which was 35% higher than the second quarter last year. Total VSAT product and service revenue increased 17% year-over-year, while the ARPUs for by-the-megabyte plans continue to be in the $600 to $700 per month range and ARPUs for our fixed rate plans continue to be around the $1900 per month level. The mix of VSAT unit sales for the quarter was 38% V3, 51% V7, and 11% V11. All other marine SATCOM revenue including TV Systems and Inmarsat Systems in airtime was $8.1 million. Within that amount as previously discussed, we saw a slight decrease of 4% in marine satellite TV sales year-over-year to $4.2 million. And as expected the LAN based systems declined by 27% to $1.3 million. TACNAV product revenues of $5 million saw a more than three-fold increase year-over-year and included $3.6 million related to the final product delivery under the Saudi Arabian National Guard Program. He also reported $2.3 million in revenues under this program related to equipment installations and program management services, and the finalization of the building of the installation facility. : In terms of the split between products and services, our current quarter revenues of $43.2 million included over $17 million, which was classified as service revenue.…

Thank you. (Operator Instructions) We’ll go first to Chris Quilty of Raymond James. Chris Quilty – Raymond James & Associates, Inc.: Good morning, gentlemen. Congratulations on the results.

Hey, thanks, Chris. Chris Quilty – Raymond James & Associates, Inc.: I wanted to follow-up a little bit on the mini-VSAT business and what you are seeing in terms of rate of antenna shipments trial and activity with some of the larger shipping companies?

Sure. Yeah, so this quarter was generally in line with last quarter, so if sales were from a hardware perspective were flat. As I said in my prepared remarks, it was actually a sequentially sort of year-over-year there was a slight decline. Part of that is that, because the numbers are still fairly small, we’re still in that $250 to $300 per quarter range. So in the earlier period, we are doing three big rollouts on fleets like NYK and Varun, and this quarter we are doing that across one. So that can be a little bit lumpy. We don’t expect that to continue this quarter. So there is a little bit of up and down there, because you get these binary contract wins. But we are seeing good activity. We’ve got a lot of stuff in the pipeline, some big RFPs out in the street now that we are bidding on. So we see continued strong interest. And I think if you look at our sort of steady state daily bookings kind of business, we are seeing good growth there. Chris Quilty – Raymond James & Associates, Inc.: And regarding the mix between what you’d classify as leisure versus commercial, clearly the V11 is a commercial product. Can you characterize, first of all, the mix and how it has changed, and second of all, the type of customers that you see adopting the V11?

Yeah. So, you’re right, the V11 is more focused on commercial. Although we have had some nice uptake by some boatbuilders like Westport and Sunseeker, who are putting the 11s on with a matching HD-11 dome. But the V11 is really targeted at the larger shipping companies and natural gas companies. We’ve had some good fleet wins there with LNG companies. So it’s really about the higher value platforms and the ones that are going global. So the big advantage is that you don’t need to have a backup carrier and that the V11 has both C and Ku, so in a fact it’s internally redundant and fully global which is a unique feature. So companies that have vessels they go anywhere really like the V11. Chris Quilty – Raymond James & Associates, Inc.: And regarding Headland, have you yet previewed for some of your customers what the pricing models will look like for distribution? And what do you expect either for your existing customers, what their adoption rate will look like, say, a year out?

No, we haven’t rolled out anything yet, in terms of the new service. So what we started doing immediately after acquisition is to start cross-selling. So we’ve been training their folks on our products and our folks on their product. So we want to sell what they have today as we prepare for this new for this new service launch, which will be really quite different from their product offerings what they have today. So this will be an all new service. And we have come up with some internal price points that we are testing amongst ourselves before we show to customers. And that really will be rolled out in the fall. So… Chris Quilty – Raymond James & Associates, Inc.: Can you talk about maybe philosophically, if a customer is currently paying a couple hundred dollars for movies a month to a vessel, would the concept it be to charge less because you are costs are less or to charge more because of the convenience of the service?

Yeah. At a high level I think that we would charge roughly the same, meaning that they buy the content. So if you’re buying a movie for $20 and we beam it to you or you buy the mail on DVD, the value to you is roughly the same, so the cost to you will be roughly the same. Where we hope to increase revenues is that, we’ll be offering a lot of other things that aren’t available today. So that there will be additional packages that you can buy to size just movies, more timely to live news and sports and things like that. Chris Quilty – Raymond James & Associates, Inc.: Gotcha. Shifting gears to the FOG business, the 1750 had a real slow roll in terms of its adoption. Are you happy with where you are at now with that product line?

The sensor side has been a little bit slow. But the IMU has been going faster than we expected. So the integrated product, which is a higher value product as well, has had a very exciting start. So we’re optimistic about that product. Chris Quilty – Raymond James & Associates, Inc.: Great. I’ll bow out and back into the queue, if I have more questions. Thank you.

Thank you.

(Operator Instructions) From Chardan Capital we’ll go next to Jim McIlree. Jim McIlree – Chardan Capital: Good morning.

Mr. McIlree, your line is open. Jim McIlree – Chardan Capital: Yeah. I’m on. Can you hear me?

Yeah.

Yes, sir. Please go ahead. Jim McIlree – Chardan Capital: Right. Yeah, thanks, good morning.

Good morning. Jim McIlree – Chardan Capital: For the increase in the revenue guidance, is that mostly attributable to the addition of Headland Media?

Well, it’s – certainly that’s part of it. Their revenues are on the order of $3 million a quarter. So for the balance of the year, that’s going to be roughly $3 million in each of the next two quarters in round numbers. So we anticipate that that will also be accretive, and we’re hoping that that they’re expecting rather that that would cover also the one-time acquisition costs that we incurred in the second quarter. So should be a little bit better than a wash for the full-year on the EPS basis as well as contributing to the top line. So a wash, by that, I mean, it’s covering the one-time acquisition cost, it is accretive in each of the next few quarters. Jim McIlree – Chardan Capital: Okay. And then this transaction expense of $865,000, where does that show up in the income statement?

Jim, this is Peter….

Ladies and gentlemen, please stay on the line as we attempt to reconnect with our speakers. Gentlemen, you may continue. Gentlemen you are back in conference.

Okay, great. Thank you.

Sorry about that, Jim. Jim McIlree – Chardan Capital: We got disconnected there.

Could you repeat the question Jim? Jim McIlree – Chardan Capital: Yeah. What was the question? The $865,000 in transaction expense, where does that show up in the income statement?

That all in general and administrative. Jim McIlree – Chardan Capital: Okay. So Peter, going forward, what’s kind of a normalized OpEx in Q3? So we are going to take out the $865,000, but we need to put in a full quarter of Headland OpEx. So what’s the normalized OpEx going forward?

It’s broadly around the $15 million a month like obviously there will be some ups and downs. Jim McIlree – Chardan Capital: Okay, great. And is there any – in order to rollout the Headland products, is there is a significant increase in R&D or any other items?

No. I wouldn’t say a significant, there are definitely costs associated with that, there are no bandwidth costs, because we are using our existing network. But there are some ground-based infrastructure costs, some CapEx, and some incremental spending that we baked into the numbers. So – but it’s not significant compared to rolling out the C-band network for example. Jim McIlree – Chardan Capital: Okay, great. Thanks a lot.

Yeah.

(Operator instructions) Up next from Needham & Company, we’ll hear from Rich Valera. Rich Valera – Needham & Company: Thank you. Good morning.

Hi, Rich. Rich Valera – Needham & Company: Hi. Martin, could you just talk about the diversity of the V11 sales? I know you had one large customer that was sort of looming out there with kind of a backlog. Have you secured other meaningful wins? Was it fairly diverse?

Yes, it is for pre diverse. So we’ve gotten some a good win or two that’s being rolled out and we have some projects that we’re bidding right now, which are primarily all V11, which is a little bit from what we were thinking before we were thinking that across the fleet, it might be a mix. But we’re seeing now as some of the big fleets, it’s just really focusing on V11 for everything. So that might skew the numbers a little bit going forward in a good way. Rich Valera – Needham & Company: Of course, and with respect to the unit sales in the quarter, is it safe to say you were within the 250 to 300 range albeit it’s likely at the low-end in this quarter?

Yes, yeah. We’re still in that range and we haven’t broken out consistently over the 300 mark. So we’re still in that range. Rich Valera – Needham & Company: Great, and then with the TACNAV, in the past, you’ve given a little bit of color, was that too much specificity on the pipeline there kind of given us some sense of the magnitude of potentially deals out there. Is there any color you can give us on what that pipeline looks like over the next year or so?

Yeah, I think we’re pretty much for full-year TACNAV book what we expect to get. So there’s no rise in exposure for 2013. We have some projects that we expect to be awarded in Q4, which will impact 2014. So we’re optimistic about that with these are projects with existing customers and system integrators that we have worked with for many years. So we feel pretty good about our chances there. So generally our visibility is I would say moderate for 2014 on TACNAV, but so far I think we are in pretty good shape. Rich Valera – Needham & Company: Great. And then with FOG, relative to – I’m not sure how to – I guess sort of maybe relative to the $8 million run rate you saw in 2Q, how we should think about that business going forward. How much of the recent weakness in CROWS and remote weapon station is factored into 2Q? Or should we expect some level of kind of step down in 3Q as you factor in some of that CROWS-related weakness?

I think, broadly speaking the $8 million, we did see a decline from what we were thinking for the Kongsberg and CROWS for U.S. which was on the order of under $1 million for the second half, but we believe we can make that up another program. So right now we are thinking, $8 million on average is a pretty good number. Rich Valera – Needham & Company: Okay. And looking out, I know it’s early, but looking into next year, I mean, I would assume commercial you would think continues to grow. Not sure what the outlook would be for defense-related stuff there. But any color at all you’d be willing to give on that trajectory as we move into next year?

No, that would be tough. I think, some of the design wins that we are getting with the 1750 IMU that has an average selling price of around $18,000. So it’s a nice high margin, big dollar sale for us, compared to selling the sensors the CROWS, which are a lot less expensive and tighter margins. So, we think that’s going to be a good solid business for us. Customers like NovAtel are doing very well with their product, which integrates our IMU. So Google and Microsoft are big customers in their mapping systems. So, I’d say at this point, we expect that businesses to continue to grow next year. Rich Valera – Needham & Company: Great, that’s helpful. And one final one from me, with respect to the Headland acquisition, have you tried – have you gotten a sense of what percentage of your existing mini-VSAT customers subscribe to the Headland service now, i.e. sort of what percent is sort of opportunity versus ones that maybe you could do the multicast with, but you don’t necessarily get the incremental revenue from the content itself?

Yeah, the overlap is surprisingly small. So it’s actually – we did the cross reference and it’s actually very small. So the good news is that almost all of it is greenfield from both customers perspective. Rich Valera – Needham & Company: That’s great. And then in terms of the actual timing of the multicast, I mean, you mentioned this year, but it sounds like, is it late this year, kind of late 4Q, or any other timing on that?

Yeah, it’s going to be late this year. We are going to start rolling out the network improvements within the next, call it 30 to 60 days and those will be – have to be tested and then there is hardware and software that’s going on the vessels and content. There is new content that we are acquiring, so it might be a little bit of a stage rollout as well where we start to rollout some of their services as opposed to doing a big bang. Rich Valera – Needham & Company: Great, look forward to hearing about that.

Okay. Thanks, Rich.

(Operator Instructions) And gentlemen, it appears we have no further questions at this time.

Okay, great. We’ll sign off, and as always, feel free to contact Peter or myself directly if you have any follow-up questions.