x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Washington | 91-1011792 | |
(State of Incorporation) | (I.R.S. Employer Identification Number) |
Large accelerated filer | x | Accelerated filer | ¨ | ||
Non-accelerated filer | o (Do not check if a smaller reporting company) | Smaller reporting company | ¨ |
Page | |
Item 1: Financial Statements (Unaudited) | |
Item 4: Controls and Procedures | |
Item 1: Legal Proceedings | |
Item 1A: Risk Factors | |
Item 5: Other Information | |
Item 6: Exhibits | |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(in thousands, except per share data) | |||||||||||||||
Revenues | $ | 482,175 | $ | 579,140 | $ | 929,711 | $ | 1,150,780 | |||||||
Cost of revenues | 322,587 | 382,395 | 630,000 | 770,930 | |||||||||||
Gross profit | 159,588 | 196,745 | 299,711 | 379,850 | |||||||||||
Operating expenses | |||||||||||||||
Sales and marketing | 46,182 | 50,847 | 94,398 | 100,703 | |||||||||||
Product development | 43,481 | 46,640 | 87,689 | 90,996 | |||||||||||
General and administrative | 38,317 | 33,450 | 71,912 | 70,020 | |||||||||||
Amortization of intangible assets | 10,247 | 12,025 | 20,991 | 23,938 | |||||||||||
Restructuring expense | 3,385 | 7,720 | 4,398 | 8,509 | |||||||||||
Total operating expenses | 141,612 | 150,682 | 279,388 | 294,166 | |||||||||||
Operating income | 17,976 | 46,063 | 20,323 | 85,684 | |||||||||||
Other income (expense) | |||||||||||||||
Interest income | 194 | 177 | 1,255 | 370 | |||||||||||
Interest expense | (2,336 | ) | (2,606 | ) | (4,674 | ) | (5,043 | ) | |||||||
Other income (expense), net | (1,742 | ) | (779 | ) | (2,559 | ) | (2,955 | ) | |||||||
Total other income (expense) | (3,884 | ) | (3,208 | ) | (5,978 | ) | (7,628 | ) | |||||||
Income before income taxes | 14,092 | 42,855 | 14,345 | 78,056 | |||||||||||
Income tax benefit (provision) | (1,896 | ) | (10,564 | ) | 1,347 | (20,193 | ) | ||||||||
Net income | 12,196 | 32,291 | 15,692 | 57,863 | |||||||||||
Net income (loss) attributable to noncontrolling interests | (203 | ) | 676 | 723 | 895 | ||||||||||
Net income attributable to Itron, Inc. | $ | 12,399 | $ | 31,615 | $ | 14,969 | $ | 56,968 | |||||||
Earnings per common share - Basic | $ | 0.31 | $ | 0.79 | $ | 0.38 | $ | 1.43 | |||||||
Earnings per common share - Diluted | $ | 0.31 | $ | 0.79 | $ | 0.38 | $ | 1.42 | |||||||
Weighted average common shares outstanding - Basic | 39,431 | 39,887 | 39,426 | 39,900 | |||||||||||
Weighted average common shares outstanding - Diluted | 39,678 | 40,126 | 39,724 | 40,170 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(in thousands) | |||||||||||||||
Net income | $ | 12,196 | $ | 32,291 | $ | 15,692 | $ | 57,863 | |||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||
Foreign currency translation adjustments | 7,180 | (52,331 | ) | (24,120 | ) | (23,790 | ) | ||||||||
Net unrealized gain (loss) on derivative instruments, designated as cash flow hedges | 845 | (849 | ) | 772 | (849 | ) | |||||||||
Pension plan benefit liability adjustment | 183 | 22 | (197 | ) | 45 | ||||||||||
Total other comprehensive income (loss), net of tax | 8,208 | (53,158 | ) | (23,545 | ) | (24,594 | ) | ||||||||
Total comprehensive income (loss), net of tax | 20,404 | (20,867 | ) | (7,853 | ) | 33,269 | |||||||||
Comprehensive income (loss) attributable to noncontrolling interests, net of tax: | |||||||||||||||
Net income (loss) attributable to noncontrolling interests | (203 | ) | 676 | 723 | 895 | ||||||||||
Foreign currency translation adjustments | 5 | 40 | — | 40 | |||||||||||
Amounts attributable to noncontrolling interests | (198 | ) | 716 | 723 | 935 | ||||||||||
Comprehensive income (loss) attributable to Itron, Inc. | $ | 20,602 | $ | (21,583 | ) | $ | (8,576 | ) | $ | 32,334 |
June 30, 2013 | December 31, 2012 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 103,662 | $ | 136,411 | |||
Accounts receivable, net | 372,240 | 375,326 | |||||
Inventories | 190,414 | 170,719 | |||||
Deferred tax assets current, net | 33,138 | 33,536 | |||||
Other current assets | 112,014 | 104,958 | |||||
Total current assets | 811,468 | 820,950 | |||||
Property, plant, and equipment, net | 249,372 | 255,212 | |||||
Deferred tax assets noncurrent, net | 55,397 | 44,584 | |||||
Other long-term assets | 26,607 | 28,908 | |||||
Intangible assets, net | 210,849 | 238,771 | |||||
Goodwill | 696,215 | 701,016 | |||||
Total assets | $ | 2,049,908 | $ | 2,089,441 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities | |||||||
Accounts payable | $ | 203,092 | $ | 227,739 | |||
Other current liabilities | 54,988 | 49,950 | |||||
Wages and benefits payable | 84,831 | 91,802 | |||||
Taxes payable | 15,481 | 9,305 | |||||
Current portion of debt | 22,500 | 18,750 | |||||
Current portion of warranty | 24,709 | 27,115 | |||||
Unearned revenue | 50,799 | 42,712 | |||||
Total current liabilities | 456,400 | 467,373 | |||||
Long-term debt | 387,500 | 398,750 | |||||
Long-term warranty | 25,923 | 26,490 | |||||
Pension plan benefit liability | 89,948 | 90,533 | |||||
Deferred tax liabilities noncurrent, net | 11,235 | 16,682 | |||||
Other long-term obligations | 81,229 | 80,100 | |||||
Total liabilities | 1,052,235 | 1,079,928 | |||||
Commitments and contingencies | |||||||
Equity | |||||||
Preferred stock | — | — | |||||
Common stock | 1,290,226 | 1,294,213 | |||||
Accumulated other comprehensive loss, net | (57,929 | ) | (34,384 | ) | |||
Accumulated deficit | (251,893 | ) | (266,862 | ) | |||
Total Itron, Inc. shareholders' equity | 980,404 | 992,967 | |||||
Noncontrolling interests | 17,269 | 16,546 | |||||
Total equity | 997,673 | 1,009,513 | |||||
Total liabilities and equity | $ | 2,049,908 | $ | 2,089,441 |
Six Months Ended June 30, | |||||||
2013 | 2012 | ||||||
(in thousands) | |||||||
Operating activities | |||||||
Net income | $ | 15,692 | $ | 57,863 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 49,031 | 54,271 | |||||
Stock-based compensation | 10,122 | 9,256 | |||||
Amortization of prepaid debt fees | 829 | 763 | |||||
Deferred taxes, net | (11,543 | ) | 628 | ||||
Restructuring expense, non-cash | 27 | 1,487 | |||||
Other adjustments, net | 324 | (11 | ) | ||||
Changes in operating assets and liabilities, net of acquisition: | |||||||
Accounts receivable | (4,278 | ) | 8,046 | ||||
Inventories | (25,124 | ) | (2,786 | ) | |||
Other current assets | (9,408 | ) | (13,663 | ) | |||
Other long-term assets | 4,489 | 3,559 | |||||
Accounts payable, other current liabilities, and taxes payable | (10,280 | ) | (5,817 | ) | |||
Wages and benefits payable | (5,661 | ) | (11,244 | ) | |||
Unearned revenue | 10,497 | 5,627 | |||||
Warranty | (1,797 | ) | (11,991 | ) | |||
Other operating, net | (3,946 | ) | (3,598 | ) | |||
Net cash provided by operating activities | 18,974 | 92,390 | |||||
Investing activities | |||||||
Acquisitions of property, plant, and equipment | (28,895 | ) | (23,547 | ) | |||
Business acquisitions, net of cash and cash equivalents acquired | (860 | ) | (79,605 | ) | |||
Other investing, net | 241 | 3,993 | |||||
Net cash used in investing activities | (29,514 | ) | (99,159 | ) | |||
Financing activities | |||||||
Proceeds from borrowings | 15,000 | 70,000 | |||||
Payments on debt | (22,500 | ) | (67,502 | ) | |||
Issuance of common stock | 2,590 | 2,407 | |||||
Repurchase of common stock | (16,126 | ) | (25,976 | ) | |||
Other financing, net | 2,220 | (271 | ) | ||||
Net cash used in financing activities | (18,816 | ) | (21,342 | ) | |||
Effect of foreign exchange rate changes on cash and cash equivalents | (3,393 | ) | (2,175 | ) | |||
Decrease in cash and cash equivalents | (32,749 | ) | (30,286 | ) | |||
Cash and cash equivalents at beginning of period | 136,411 | 133,086 | |||||
Cash and cash equivalents at end of period | $ | 103,662 | $ | 102,800 | |||
Non-cash transactions: | |||||||
Property, plant, and equipment purchased but not yet paid | $ | 7,284 | $ | 4,364 | |||
Supplemental disclosure of cash flow information: | |||||||
Cash paid during the period for: | |||||||
Income taxes, net | $ | 8,200 | $ | 20,173 | |||
Interest, net of amounts capitalized | 3,804 | 4,275 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(in thousands, except per share data) | |||||||||||||||
Net income available to common shareholders | $ | 12,399 | $ | 31,615 | $ | 14,969 | $ | 56,968 | |||||||
Weighted average common shares outstanding - Basic | 39,431 | 39,887 | 39,426 | 39,900 | |||||||||||
Dilutive effect of stock-based awards | 247 | 239 | 298 | 270 | |||||||||||
Weighted average common shares outstanding - Diluted | 39,678 | 40,126 | 39,724 | 40,170 | |||||||||||
Earnings per common share - Basic | $ | 0.31 | $ | 0.79 | $ | 0.38 | $ | 1.43 | |||||||
Earnings per common share - Diluted | $ | 0.31 | $ | 0.79 | $ | 0.38 | $ | 1.42 |
Accounts receivable, net | June 30, 2013 | December 31, 2012 | |||||
(in thousands) | |||||||
Trade receivables (net of allowance of $6,948 and $7,372) | $ | 330,956 | $ | 329,352 | |||
Unbilled receivables | 41,284 | 45,974 | |||||
Total accounts receivable, net | $ | 372,240 | $ | 375,326 |
Allowance for doubtful account activity | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(in thousands) | |||||||||||||||
Beginning balance | $ | 6,144 | $ | 5,983 | $ | 7,372 | $ | 6,049 | |||||||
Provision (release) of doubtful accounts, net | 1,075 | (230 | ) | 171 | (290 | ) | |||||||||
Accounts written-off | (198 | ) | (22 | ) | (303 | ) | (261 | ) | |||||||
Effects of change in exchange rates | (73 | ) | (350 | ) | (292 | ) | (117 | ) | |||||||
Ending balance | $ | 6,948 | $ | 5,381 | $ | 6,948 | $ | 5,381 |
Inventories | June 30, 2013 | December 31, 2012 | |||||
(in thousands) | |||||||
Materials | $ | 104,283 | $ | 92,038 | |||
Work in process | 13,879 | 12,568 | |||||
Finished goods | 72,252 | 66,113 | |||||
Total inventories | $ | 190,414 | $ | 170,719 |
Property, plant, and equipment, net | June 30, 2013 | December 31, 2012 | |||||
(in thousands) | |||||||
Machinery and equipment | $ | 290,500 | $ | 287,791 | |||
Computers and software | 88,186 | 84,980 | |||||
Buildings, furniture, and improvements | 143,420 | 146,191 | |||||
Land | 24,663 | 25,318 | |||||
Construction in progress, including purchased equipment | 33,529 | 26,097 | |||||
Total cost | 580,298 | 570,377 | |||||
Accumulated depreciation | (330,926 | ) | (315,165 | ) | |||
Property, plant, and equipment, net | $ | 249,372 | $ | 255,212 |
Depreciation expense and capitalized interest | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(in thousands) | |||||||||||||||
Depreciation expense | $ | 14,027 | $ | 15,019 | $ | 28,040 | $ | 30,333 | |||||||
Capitalized interest | 21 | — | 64 | — |
June 30, 2013 | December 31, 2012 | ||||||||||||||||||||||
Gross Assets | Accumulated Amortization | Net | Gross Assets | Accumulated Amortization | Net | ||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Core-developed technology | $ | 420,055 | $ | (338,145 | ) | $ | 81,910 | $ | 407,024 | $ | (332,763 | ) | $ | 74,261 | |||||||||
Customer contracts and relationships | 281,644 | (159,231 | ) | 122,413 | 292,252 | (154,890 | ) | 137,362 | |||||||||||||||
Trademarks and trade names | 71,356 | (64,897 | ) | 6,459 | 72,770 | (65,090 | ) | 7,680 | |||||||||||||||
Other | 11,091 | (11,024 | ) | 67 | 11,094 | (11,026 | ) | 68 | |||||||||||||||
Total intangible assets subject to amortization | 784,146 | (573,297 | ) | 210,849 | 783,140 | (563,769 | ) | 219,371 | |||||||||||||||
In-process research and development | — | — | 19,400 | 19,400 | |||||||||||||||||||
Total intangible assets | $ | 784,146 | $ | (573,297 | ) | $ | 210,849 | $ | 802,540 | $ | (563,769 | ) | $ | 238,771 |
Six Months Ended June 30, | |||||||
2013 | 2012 | ||||||
(in thousands) | |||||||
Beginning balance, intangible assets, gross | $ | 802,540 | $ | 749,194 | |||
Intangible assets acquired | (1,500 | ) | 43,400 | ||||
Effect of change in exchange rates | (16,894 | ) | (13,835 | ) | |||
Ending balance, intangible assets, gross | $ | 784,146 | $ | 778,759 |
Years ending December 31, | Estimated Annual Amortization | ||
(in thousands) | |||
2013 (amount remaining at June 30, 2013) | $ | 20,734 | |
2014 | 43,434 | ||
2015 | 34,800 | ||
2016 | 27,345 | ||
2017 | 20,314 | ||
Beyond 2017 | 64,222 | ||
Total intangible assets, net | $ | 210,849 |
Energy | Water | Total Company | |||||||||
(in thousands) | |||||||||||
Balance at January 1, 2013 | |||||||||||
Goodwill before impairment | $ | 859,454 | $ | 414,394 | $ | 1,273,848 | |||||
Accumulated impairment losses | (249,502 | ) | (323,330 | ) | (572,832 | ) | |||||
Goodwill, net | 609,952 | 91,064 | 701,016 | ||||||||
Adjustments of previous acquisition | 3,958 | — | 3,958 | ||||||||
Effect of change in exchange rates | (7,551 | ) | (1,208 | ) | (8,759 | ) | |||||
Balance at June 30, 2013 | |||||||||||
Goodwill before impairment | 851,471 | 407,497 | 1,258,968 | ||||||||
Accumulated impairment losses | (245,112 | ) | (317,641 | ) | (562,753 | ) | |||||
Goodwill, net | $ | 606,359 | $ | 89,856 | $ | 696,215 |
June 30, 2013 | December 31, 2012 | ||||||
(in thousands) | |||||||
Credit facility: | |||||||
USD denominated term loan | $ | 270,000 | $ | 277,500 | |||
Multicurrency revolving line of credit | 140,000 | 140,000 | |||||
Total debt | 410,000 | 417,500 | |||||
Less: current portion of debt | 22,500 | 18,750 | |||||
Long-term debt | $ | 387,500 | $ | 398,750 |
Six Months Ended June 30, | |||||||
2013 | 2012 | ||||||
(in thousands) | |||||||
Term loan | $ | 7,500 | $ | 7,502 | |||
Multicurrency revolving line of credit (1) | 15,000 | 60,000 | |||||
Total credit facility repayments | $ | 22,500 | $ | 67,502 |
(1) | We borrowed $15.0 million and $70.0 million under the multicurrency revolving line of credit during the six months ended June 30, 2013 and 2012. |
June 30, 2013 | December 31, 2012 | ||||||
(in thousands) | |||||||
Unamortized prepaid debt fees | $ | 4,588 | $ | 5,367 |
Fair Value | ||||||||||
Balance Sheet Location | June 30, 2013 | December 31, 2012 | ||||||||
(in thousands) | ||||||||||
Asset Derivatives | ||||||||||
Derivatives not designated as hedging instruments under ASC 815-20 | ||||||||||
Foreign exchange forward contracts | Other current assets | $ | 122 | $ | 146 | |||||
Liability Derivatives | ||||||||||
Derivatives designated as hedging instruments under ASC 815-20 | ||||||||||
Interest rate swap contracts | Other current liabilities | $ | 1,348 | $ | 629 | |||||
Interest rate swap contracts | Other long-term obligations | 134 | 2,096 | |||||||
Derivatives not designated as hedging instruments under ASC 815-20 | ||||||||||
Foreign exchange forward contracts | Other current liabilities | 108 | 114 | |||||||
Total liability derivatives | $ | 1,590 | $ | 2,839 |
Offsetting of Derivative Assets | |||||||||||||||
Gross Amounts Not Offset in the Consolidated Balance Sheets | |||||||||||||||
Gross Amounts of Recognized Assets Presented in the Consolidated Balance Sheets | Derivative Financial Instruments | Cash Collateral Received | Net Amount | ||||||||||||
(in thousands) | |||||||||||||||
June 30, 2013 | $ | 122 | $ | (122 | ) | $ | — | $ | — | ||||||
December 31, 2012 | $ | 146 | $ | (135 | ) | $ | — | $ | 11 |
Offsetting of Derivative Liabilities | |||||||||||||||
Gross Amounts Not Offset in the Consolidated Balance Sheets | |||||||||||||||
Gross Amounts of Recognized Liabilities Presented in the Consolidated Balance Sheets | Derivative Financial Instruments | Cash Collateral Pledged | Net Amount | ||||||||||||
(in thousands) | |||||||||||||||
June 30, 2013 | $ | 1,590 | $ | (122 | ) | $ | — | $ | 1,468 | ||||||
December 31, 2012 | $ | 2,839 | $ | (135 | ) | $ | — | $ | 2,704 |
2013 | 2012 | ||||||
(in thousands) | |||||||
Net unrealized loss on hedging instruments at January 1, | $ | (16,069 | ) | $ | (14,380 | ) | |
Unrealized gain (loss) on derivative instruments | 772 | (849 | ) | ||||
Net unrealized loss on hedging instruments at June 30, | $ | (15,297 | ) | $ | (15,229 | ) |
Derivatives in ASC 815-20 Cash Flow Hedging Relationships | Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion) | Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | Gain (Loss) Recognized in Income on Derivative (Ineffective Portion) | |||||||||||||||||||||||||
Location | Amount | Location | Amount | |||||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||||||
(in thousands) | (in thousands) | (in thousands) | ||||||||||||||||||||||||||
Three Months Ended June 30, | ||||||||||||||||||||||||||||
Interest rate swap contracts | $ | 1,336 | $ | (1,365 | ) | Interest expense | $ | — | $ | — | Interest expense | $ | — | $ | — | |||||||||||||
Six Months Ended June 30, | ||||||||||||||||||||||||||||
Interest rate swap contracts | $ | 1,244 | $ | (1,365 | ) | Interest expense | $ | — | $ | — | Interest Expense | $ | — | $ | — |
Derivatives Not Designated as Hedging Instrument under ASC 815-20 | Gain (Loss) Recognized on Derivatives in Other Income (Expense) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
(in thousands) | ||||||||||||||||
Foreign exchange forward contracts | $ | (971 | ) | $ | (244 | ) | $ | (757 | ) | $ | (421 | ) |
June 30, 2013 | December 31, 2012 | ||||||
(in thousands) | |||||||
Assets | |||||||
Plan assets in other long-term assets | $ | 226 | $ | 227 | |||
Liabilities | |||||||
Current portion of pension plan liability in wages and benefits payable | 3,157 | 2,899 | |||||
Long-term portion of pension plan liability | 89,948 | 90,533 | |||||
Net pension plan benefit liability | $ | 92,879 | $ | 93,205 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(in thousands) | |||||||||||||||
Service cost | $ | 1,011 | $ | 676 | $ | 1,992 | $ | 1,414 | |||||||
Interest cost | 786 | 909 | 1,586 | 1,835 | |||||||||||
Expected return on plan assets | (79 | ) | (82 | ) | (158 | ) | (167 | ) | |||||||
Settlements and other | — | — | (814 | ) | — | ||||||||||
Amortization of actuarial net loss | 246 | 2 | 497 | 4 | |||||||||||
Amortization of unrecognized prior service costs | 17 | 17 | 34 | 34 | |||||||||||
Net periodic benefit cost | $ | 1,981 | $ | 1,522 | $ | 3,137 | $ | 3,120 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(in thousands) | |||||||||||||||
Stock options | $ | 519 | $ | 337 | $ | 992 | $ | 609 | |||||||
Restricted stock units | 4,158 | 4,375 | 8,393 | 7,891 | |||||||||||
Unrestricted stock awards | 205 | 205 | 402 | 410 | |||||||||||
ESPP | 144 | 141 | 335 | 346 | |||||||||||
Total stock-based compensation | $ | 5,026 | $ | 5,058 | $ | 10,122 | $ | 9,256 | |||||||
Related tax benefit | $ | 1,391 | $ | 1,375 | $ | 2,755 | $ | 2,564 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2013(1) | 2012(1) | 2013 | 2012 | ||||||||
Dividend yield | — | % | — | % | — | % | — | % | |||
Expected volatility | — | % | — | % | 38.1 | % | 42.7 | % | |||
Risk-free interest rate | — | % | — | % | 1.0 | % | 0.9 | % | |||
Expected term (years) | — | — | 5.45 | 5.14 |
(1) | There were no employee stock options granted for the three months ended June 30, 2013 and 2012. |
Shares | Weighted Average Exercise Price per Share | Weighted Average Remaining Contractual Life | Aggregate Intrinsic Value (1) | Weighted Average Grant Date Fair Value | ||||||||||||
(in thousands) | (years) | (in thousands) | ||||||||||||||
Outstanding, January 1, 2012 | 1,109 | $ | 55.97 | 4.51 | $ | 2,323 | ||||||||||
Granted | 54 | 48.23 | $ | 18.64 | ||||||||||||
Exercised | (28 | ) | 20.32 | $ | 576 | |||||||||||
Expired | (32 | ) | 69.69 | |||||||||||||
Outstanding, June 30, 2012 | 1,103 | $ | 56.10 | 4.32 | $ | 3,090 | ||||||||||
Outstanding, January 1, 2013 | 1,137 | $ | 54.06 | 4.81 | $ | 3,815 | ||||||||||
Granted | 128 | 42.76 | $ | 15.44 | ||||||||||||
Exercised | (32 | ) | 23.36 | $ | 639 | |||||||||||
Expired | (8 | ) | 49.92 | |||||||||||||
Outstanding, June 30, 2013 | 1,225 | $ | 53.71 | 4.99 | $ | 2,388 | ||||||||||
Exercisable, June 30, 2013 | 901 | $ | 57.52 | 3.43 | $ | 2,186 | ||||||||||
Expected to vest, June 30, 2013 | 304 | $ | 43.17 | 9.32 | $ | 190 |
(1) | The aggregate intrinsic value of outstanding stock options represents amounts that would have been received by the optionees had all in- the-money options been exercised on that date. Specifically, it is the amount by which the market value of Itron’s stock exceeded the exercise price of the outstanding in-the-money options before applicable income taxes, based on our closing stock price on the last business day of the period. The aggregate intrinsic value of stock options exercised during the period is calculated based on our stock price at the date of exercise. |
Three Months Ended June 30, 2013 | Six Months Ended June 30, 2013 | ||||||
Dividend yield | — | % | — | % | |||
Expected volatility | 39.1 | % | 39.1 | % | |||
Risk-free interest rate | 0.3 | % | 0.3 | % | |||
Expected term (years) | 2.53 | 2.53 | |||||
Weighted-average fair value | $ | 45.70 | $ | 45.03 |
Number of Restricted Stock Units | Weighted Average Grant Date Fair Value | Aggregate Intrinsic Value(1) | ||||||||
(in thousands) | (in thousands) | |||||||||
Outstanding, January 1, 2012 | 625 | |||||||||
Granted(2) | 443 | $ | 47.33 | |||||||
Released | (176 | ) | $ | 11,536 | ||||||
Forfeited | (28 | ) | ||||||||
Outstanding, June 30, 2012 | 864 | |||||||||
Outstanding, January 1, 2013 | 774 | |||||||||
Granted(2) | 255 | $ | 42.51 | |||||||
Released | (253 | ) | $ | 13,562 | ||||||
Forfeited | (11 | ) | ||||||||
Outstanding, June 30, 2013 | 765 | |||||||||
Vested but not released, June 30, 2013 | 29 | $ | 1,244 | |||||||
Expected to vest, June 30, 2013 | 672 | $ | 28,496 |
(1) | The aggregate intrinsic value is the market value of the stock, before applicable income taxes, based on the closing price on the stock release dates or at the end of the period for restricted stock units expected to vest. |
(2) | Restricted stock units granted in 2012 and 2013 do not include awards under the Performance Award Agreement for the respective years, as these awards are not granted until final attainment of performance goals has been determined at the conclusion of the performance period, which had not occurred as of June 30, 2012 and 2013, respectively. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Shares of unrestricted stock granted | 4,518 | 4,526 | 8,847 | 9,979 | |||||||||||
Weighted average grant date fair value per share | $ | 45.37 | $ | 45.26 | $ | 45.40 | $ | 41.05 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Shares of stock sold to employees(1) | 27,489 | 30,619 | 47,308 | 53,676 | |||||||||||
Weighted average fair value per ESPP award(2) | $ | 6.37 | $ | 6.19 | $ | 6.69 | $ | 6.55 |
(1) | Stock sold to employees during each fiscal quarter under the ESPP is associated with the offering period ending on the last day of the previous fiscal quarter. |
(2) | Relating to awards associated with the offering period during the three and six months ended June 30. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(in thousands) | |||||||||||||||
Net interest and penalties expense | $ | 168 | $ | (22 | ) | $ | 339 | $ | 265 |
June 30, 2013 | December 31, 2012 | ||||||
(in thousands) | |||||||
Accrued interest | $ | 3,251 | $ | 3,095 | |||
Accrued penalties | 3,009 | 3,030 |
June 30, 2013 | December 31, 2012 | ||||||
(in thousands) | |||||||
Unrecognized tax benefits related to uncertain tax positions | $ | 26,853 | $ | 26,433 | |||
The amount of unrecognized tax benefits that, if recognized, would affect our effective tax rate | 26,141 | 25,852 |
June 30, 2013 | December 31, 2012 | ||||||
(in thousands) | |||||||
Credit facilities(1) | |||||||
Multicurrency revolving line of credit | $ | 660,000 | $ | 660,000 | |||
Long-term borrowings | (140,000 | ) | (140,000 | ) | |||
Standby LOCs issued and outstanding | (47,037 | ) | (54,328 | ) | |||
Net available for additional borrowings and LOCs | $ | 472,963 | $ | 465,672 | |||
Unsecured multicurrency revolving lines of credit with various financial institutions | |||||||
Multicurrency revolving lines of credit | $ | 97,456 | $ | 67,308 | |||
Standby LOCs issued and outstanding | (29,581 | ) | (29,906 | ) | |||
Short-term borrowings(2) | (2,731 | ) | (851 | ) | |||
Net available for additional borrowings and LOCs | $ | 65,144 | $ | 36,551 | |||
Unsecured surety bonds in force | $ | 136,934 | $ | 164,820 |
(1) | See Note 6 for details regarding our secured credit facilities. |
(2) | Short-term borrowings are included in "Other current liabilities" on the Consolidated Balance Sheets. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(in thousands) | |||||||||||||||
Beginning balance | $ | 50,754 | $ | 77,251 | $ | 53,605 | $ | 79,536 | |||||||
New product warranties | 1,961 | 3,507 | 2,822 | 5,636 | |||||||||||
Other changes/adjustments to warranties | 3,611 | (3,770 | ) | 5,638 | 2,061 | ||||||||||
Claims activity | (5,289 | ) | (8,255 | ) | (10,388 | ) | (19,575 | ) | |||||||
Effect of change in exchange rates | (405 | ) | (2,365 | ) | (1,045 | ) | (1,290 | ) | |||||||
Ending balance | 50,632 | 66,368 | 50,632 | 66,368 | |||||||||||
Less: current portion of warranty | 24,709 | 42,861 | 24,709 | 42,861 | |||||||||||
Long-term warranty | $ | 25,923 | $ | 23,507 | $ | 25,923 | $ | 23,507 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(in thousands) | |||||||||||||||
Total warranty expense | $ | 5,572 | $ | (263 | ) | $ | 8,460 | $ | 7,697 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(in thousands) | |||||||||||||||
Beginning balance | $ | 32,363 | $ | 27,140 | $ | 31,960 | $ | 24,448 | |||||||
Unearned revenue for new extended warranties | 1,664 | 2,243 | 2,625 | 5,189 | |||||||||||
Unearned revenue recognized | (525 | ) | (331 | ) | (995 | ) | (631 | ) | |||||||
Effect of change in exchange rates | (107 | ) | (41 | ) | (195 | ) | 5 | ||||||||
Ending balance | 33,395 | 29,011 | 33,395 | 29,011 | |||||||||||
Less: current portion of unearned revenue for extended warranty | 2,472 | 1,572 | 2,472 | 1,572 | |||||||||||
Long-term unearned revenue for extended warranty within Other long-term obligations | $ | 30,923 | $ | 27,439 | $ | 30,923 | $ | 27,439 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(in thousands) | |||||||||||||||
Plan costs | $ | 5,662 | $ | 7,217 | $ | 10,500 | $ | 12,878 |
June 30, 2013 | December 31, 2012 | ||||||
(in thousands) | |||||||
IBNR accrual | $ | 2,345 | $ | 2,552 |
Total Expected Costs at June 30, 2013 | Costs Recognized in Prior Periods | Costs Recognized During the Six Months Ended June 30, 2013 | Remaining Costs to be Recognized at June 30, 2013 (1) | ||||||||||||
(in thousands) | |||||||||||||||
Employee severance costs | $ | 46,850 | $ | 44,196 | $ | 2,654 | $ | — | |||||||
Asset impairments | 20,332 | 20,305 | 27 | — | |||||||||||
Other restructuring costs | 6,963 | 5,246 | 1,717 | — | |||||||||||
Total | $ | 74,145 | $ | 69,747 | $ | 4,398 | $ | — | |||||||
Segments: | |||||||||||||||
Energy | $ | 53,385 | $ | 53,190 | $ | 195 | $ | — | |||||||
Water | 15,675 | 14,556 | 1,119 | — | |||||||||||
Corporate unallocated | 5,085 | 2,001 | 3,084 | — | |||||||||||
Total | $ | 74,145 | $ | 69,747 | $ | 4,398 | $ | — |
(1) | There are no significant restructuring costs expected to be incurred after June 30, 2013 for these restructuring projects. |
Accrued Employee Severance | Asset Impairments & Net Loss on Sale or Disposal | Other Accrued Costs | Total | ||||||||||||
(in thousands) | |||||||||||||||
Beginning balance, January 1, 2013 | $ | 14,498 | $ | — | $ | 3,216 | $ | 17,714 | |||||||
Costs incurred and charged to expense | 2,654 | 27 | 1,717 | 4,398 | |||||||||||
Cash payments | (3,155 | ) | — | (833 | ) | (3,988 | ) | ||||||||
Non-cash items | — | (27 | ) | — | (27 | ) | |||||||||
Effect of change in exchange rates | (447 | ) | — | (28 | ) | (475 | ) | ||||||||
Ending balance, June 30, 2013 | $ | 13,550 | $ | — | $ | 4,072 | $ | 17,622 |
Net Carrying Value | Fair Value Measurement (Level 3) | Total Loss Recognized in Period | |||||||||
(in thousands) | |||||||||||
June 30, 2013 | |||||||||||
Long-lived assets held for sale | $ | 3,128 | $ | 3,128 | $ | — | |||||
December 31, 2012 | |||||||||||
Long-lived assets held for sale | $ | 3,184 | $ | 3,184 | $ | 2 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(in thousands) | |||||||||||||||
Before-tax amount | |||||||||||||||
Foreign currency translation adjustment | $ | 6,798 | $ | (52,847 | ) | $ | (20,649 | ) | $ | (24,145 | ) | ||||
Net unrealized gain (loss) on derivative instruments designated as cash flow hedges | 1,336 | (1,365 | ) | 1,244 | (1,365 | ) | |||||||||
Pension plan benefits liability adjustment | 263 | 19 | (283 | ) | 38 | ||||||||||
Total other comprehensive income (loss), before tax | 8,397 | (54,193 | ) | (19,688 | ) | (25,472 | ) | ||||||||
Tax (provision) benefit | |||||||||||||||
Foreign currency translation adjustment | 377 | 476 | (3,471 | ) | 315 | ||||||||||
Net unrealized gain (loss) on derivative instruments designated as cash flow hedges | (491 | ) | 516 | (472 | ) | 516 | |||||||||
Pension plan benefits liability adjustment | (80 | ) | 3 | 86 | 7 | ||||||||||
Total other comprehensive income (loss) tax (provision) benefit | (194 | ) | 995 | (3,857 | ) | 838 | |||||||||
Net-of-tax amount | |||||||||||||||
Foreign currency translation adjustment | 7,175 | (52,371 | ) | (24,120 | ) | (23,830 | ) | ||||||||
Net unrealized gain (loss) on derivative instruments designated as cash flow hedges | 845 | (849 | ) | 772 | (849 | ) | |||||||||
Pension plan benefits liability adjustment | 183 | 22 | (197 | ) | 45 | ||||||||||
Total other comprehensive income (loss), net of tax | $ | 8,203 | $ | (53,198 | ) | $ | (23,545 | ) | $ | (24,634 | ) |
Foreign Currency Translation Adjustments | Net Unrealized Gain (Loss) on Derivative Instruments | Net Unrealized Gain (Loss) on Nonderivative Instruments | Pension Plan Benefit Liability Adjustments | Total | |||||||||||||||
(in thousands) | |||||||||||||||||||
Balances at January 1, 2012 | $ | (24,718 | ) | $ | — | $ | (14,380 | ) | $ | 1,938 | $ | (37,160 | ) | ||||||
OCI before reclassifications | (23,830 | ) | (849 | ) | — | — | (24,679 | ) | |||||||||||
Amounts reclassified from AOCI | — | — | — | 45 | 45 | ||||||||||||||
Total other comprehensive income (loss) | (23,830 | ) | (849 | ) | — | 45 | (24,634 | ) | |||||||||||
Balances at June 30, 2012 | $ | (48,548 | ) | $ | (849 | ) | $ | (14,380 | ) | $ | 1,983 | $ | (61,794 | ) | |||||
Balances at January 1, 2013 | $ | (3,313 | ) | $ | (1,689 | ) | $ | (14,380 | ) | $ | (15,002 | ) | $ | (34,384 | ) | ||||
OCI before reclassifications | (24,120 | ) | 772 | — | (566 | ) | (23,914 | ) | |||||||||||
Amounts reclassified from AOCI | — | — | — | 369 | 369 | ||||||||||||||
Total other comprehensive income (loss) | (24,120 | ) | 772 | — | (197 | ) | (23,545 | ) | |||||||||||
Balances at June 30, 2013 | $ | (27,433 | ) | $ | (917 | ) | $ | (14,380 | ) | $ | (15,199 | ) | $ | (57,929 | ) |
Amount Reclassified from AOCI(1) | ||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | Affected Line Item in the Income Statement | ||||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||||
(in thousands) | ||||||||||||||||||
Amortization of defined benefit pension items | ||||||||||||||||||
Prior-service costs | $ | (17 | ) | $ | (17 | ) | (34 | ) | (34 | ) | (2) | |||||||
Actuarial losses | (246 | ) | (2 | ) | (497 | ) | (4 | ) | (2) | |||||||||
Total, before tax | (263 | ) | (19 | ) | (531 | ) | (38 | ) | Income before income taxes | |||||||||
Tax benefit (provision) | 80 | (3 | ) | 162 | (7 | ) | Income tax provision | |||||||||||
Total, net of tax | (183 | ) | (22 | ) | (369 | ) | (45 | ) | Net income | |||||||||
Total reclassifications for the period, net of tax | $ | (183 | ) | $ | (22 | ) | $ | (369 | ) | $ | (45 | ) | Net income |
(1) | Amounts in parenthesis indicate debits to the Statements of Operations. |
(2) | These AOCI components are included in the computation of net periodic pension cost. Refer to Note 8 for additional details. |
June 30, 2013 | December 31, 2012 | ||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||
(in thousands) | |||||||||||||||
Assets | |||||||||||||||
Cash and cash equivalents | $ | 103,662 | $ | 103,662 | $ | 136,411 | $ | 136,411 | |||||||
Foreign exchange forwards | 122 | 122 | 146 | 146 | |||||||||||
Liabilities | |||||||||||||||
Credit facility | |||||||||||||||
USD denominated term loan | $ | 270,000 | $ | 268,219 | $ | 277,500 | $ | 275,365 | |||||||
Multicurrency revolving line of credit | 140,000 | 138,930 | 140,000 | 138,751 | |||||||||||
Interest rate swaps | 1,482 | 1,482 | 2,725 | 2,725 | |||||||||||
Foreign exchange forwards | 108 | 108 | 114 | 114 |
Energy | Standard electricity (electromechanical and electronic) and gas meters; advanced electricity and gas meters and communication modules; smart electricity meters; smart electricity and gas communication modules; prepayment systems, including smart key, keypad, and smart card communication technologies; advanced systems including handheld, mobile, and fixed network collection technologies; smart network technologies; meter data management software; knowledge application solutions; and professional services including implementation, installation, consulting, and analysis. |
Water | Standard water and heat meters; advanced and smart water meters and communication modules; advanced systems including handheld, mobile, and fixed network collection technologies; meter data management software; knowledge application solutions; and professional services including implementation, installation, consulting, analysis, and system management. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(in thousands) | |||||||||||||||
Revenues | |||||||||||||||
Energy | $ | 349,623 | $ | 444,598 | $ | 662,301 | $ | 882,345 | |||||||
Water | 132,552 | 134,542 | 267,410 | 268,435 | |||||||||||
Total Company | $ | 482,175 | $ | 579,140 | $ | 929,711 | $ | 1,150,780 | |||||||
Gross profit | |||||||||||||||
Energy | $ | 112,673 | $ | 148,951 | $ | 208,227 | $ | 283,554 | |||||||
Water | 46,915 | 47,794 | 91,484 | 96,296 | |||||||||||
Total Company | $ | 159,588 | $ | 196,745 | $ | 299,711 | $ | 379,850 | |||||||
Operating income (loss) | |||||||||||||||
Energy | $ | 14,764 | $ | 47,069 | $ | 15,244 | $ | 85,233 | |||||||
Water | 15,389 | 11,666 | 27,964 | 27,603 | |||||||||||
Corporate unallocated | (12,177 | ) | (12,672 | ) | (22,885 | ) | (27,152 | ) | |||||||
Total Company | 17,976 | 46,063 | 20,323 | 85,684 | |||||||||||
Total other income (expense) | (3,884 | ) | (3,208 | ) | (5,978 | ) | (7,628 | ) | |||||||
Income before income taxes | $ | 14,092 | $ | 42,855 | $ | 14,345 | $ | 78,056 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(in thousands) | |||||||||||||||
United States and Canada | $ | 211,565 | $ | 292,999 | $ | 388,771 | $ | 577,586 | |||||||
Europe, Middle East, and Africa | 215,250 | 215,899 | 427,145 | 436,855 | |||||||||||
Other | 55,360 | 70,242 | 113,795 | 136,339 | |||||||||||
Total revenues | $ | 482,175 | $ | 579,140 | $ | 929,711 | $ | 1,150,780 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(in thousands) | |||||||||||||||
Energy | $ | 18,348 | $ | 20,488 | $ | 36,819 | $ | 41,144 | |||||||
Water | 5,909 | 6,539 | 12,178 | 13,095 | |||||||||||
Corporate Unallocated | 17 | 17 | 34 | 32 | |||||||||||
Total Company | $ | 24,274 | $ | 27,044 | $ | 49,031 | $ | 54,271 |
ITEM 2: | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||
2013 | 2012 | % Change | 2013 | 2012 | % Change | ||||||||||||||
(in thousands) | (in thousands) | ||||||||||||||||||
Revenues | $ | 482,175 | $ | 579,140 | (17)% | $ | 929,711 | $ | 1,150,780 | (19)% | |||||||||
Gross Profit | $ | 159,588 | $ | 196,745 | (19)% | $ | 299,711 | $ | 379,850 | (21)% | |||||||||
Gross Margin | 33.1 | % | 34.0 | % | 32.2 | % | 33.0 | % |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(in thousands) | |||||||||||||||
Revenues by Region | |||||||||||||||
United States and Canada (North America) | $ | 211,565 | $ | 292,999 | $ | 388,771 | $ | 577,586 | |||||||
Europe, Middle East, and Africa (EMEA) | 215,250 | 215,899 | 427,145 | 436,855 | |||||||||||
Other | 55,360 | 70,242 | 113,795 | 136,339 | |||||||||||
Total revenues | $ | 482,175 | $ | 579,140 | $ | 929,711 | $ | 1,150,780 |
• | Standard metering – no built-in remote reading communication technology |
• | Advanced metering – one-way communication of meter data |
• | Smart metering – two-way communication including remote meter configuration and upgrade (consisting primarily of our OpenWay® technology) |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||
(units in thousands) | |||||||||||
Meters | |||||||||||
Standard | 4,730 | 4,620 | 9,170 | 9,500 | |||||||
Advanced and smart | 1,340 | 2,160 | 2,970 | 4,410 | |||||||
Total meters | 6,070 | 6,780 | 12,140 | 13,910 | |||||||
Stand-alone communication modules | |||||||||||
Advanced and smart | 1,350 | 1,960 | 2,690 | 3,550 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||
2013 | 2012 | % Change | 2013 | 2012 | % Change | ||||||||||||||||||||||
Segment Revenues | (in thousands) | (in thousands) | |||||||||||||||||||||||||
Energy | |||||||||||||||||||||||||||
Electricity | $ | 213,612 | $ | 283,484 | (25)% | $ | 389,375 | $ | 567,944 | (31)% | |||||||||||||||||
Gas | 136,011 | 161,114 | (16)% | 272,926 | 314,401 | (13)% | |||||||||||||||||||||
Total Energy | 349,623 | 444,598 | (21)% | 662,301 | 882,345 | (25)% | |||||||||||||||||||||
Water | 132,552 | 134,542 | (1)% | 267,410 | 268,435 | —% | |||||||||||||||||||||
Total revenues | $ | 482,175 | $ | 579,140 | (17)% | $ | 929,711 | $ | 1,150,780 | (19)% | |||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||||||||||||
Gross Profit | Gross Margin | Gross Profit | Gross Margin | Gross Profit | Gross Margin | Gross Profit | Gross Margin | ||||||||||||||||||||
Segment Gross Profit and Margin | (in thousands) | (in thousands) | (in thousands) | (in thousands) | |||||||||||||||||||||||
Energy | $ | 112,673 | 32.2% | $ | 148,951 | 33.5% | $ | 208,227 | 31.4% | $ | 283,554 | 32.1% | |||||||||||||||
Water | 46,915 | 35.4% | 47,794 | 35.5% | 91,484 | 34.2% | 96,296 | 35.9% | |||||||||||||||||||
Total gross profit and margin | $ | 159,588 | 33.1% | $ | 196,745 | 34.0% | $ | 299,711 | 32.2% | $ | 379,850 | 33.0% | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||||||||||||
Operating Income (Loss) | Operating Margin | Operating Income (Loss) | Operating Margin | Operating Income (Loss) | Operating Margin | Operating Income (Loss) | Operating Margin | ||||||||||||||||||||
Segment Operating Income (Loss) and Operating Margin | (in thousands) | (in thousands) | (in thousands) | (in thousands) | |||||||||||||||||||||||
Energy | $ | 14,764 | 4% | $ | 47,069 | 11% | $ | 15,244 | 2% | $ | 85,233 | 10% | |||||||||||||||
Water | 15,389 | 12% | 11,666 | 9% | 27,964 | 10% | 27,603 | 10% | |||||||||||||||||||
Corporate unallocated | (12,177 | ) | (12,672 | ) | (22,885 | ) | (27,152 | ) | |||||||||||||||||||
Total Company | $ | 17,976 | 4% | $ | 46,063 | 8% | $ | 20,323 | 2% | $ | 85,684 | 7% |
Quarter Ended | Quarterly Bookings | Ending Total Backlog | Ending 12-Month Backlog | |||||||||
(in millions) | ||||||||||||
June 30, 2013 | $ | 515 | $ | 1,058 | $ | 558 | ||||||
March 31, 2013 | 447 | 1,029 | 565 | |||||||||
December 31, 2012 | 467 | 1,035 | 568 | |||||||||
September 30, 2012 | 459 | 1,079 | 592 | |||||||||
June 30, 2012 | 447 | 1,122 | 637 |
Quarter Ended | Bookings | Energy | Water | |||||||||
(in millions) | ||||||||||||
June 30, 2013 | $ | 515 | $ | 365 | $ | 150 | ||||||
March 31, 2013 | 447 | 305 | 142 | |||||||||
December 31, 2012 | 467 | 345 | 122 | |||||||||
September 30, 2012 | 459 | 341 | 118 | |||||||||
June 30, 2012 | 447 | 330 | 117 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2013 | % of Revenues | 2012 | % of Revenues | 2013 | % of Revenues | 2012 | % of Revenues | ||||||||||||||||
(in thousands) | (in thousands) | (in thousands) | (in thousands) | ||||||||||||||||||||
Sales and marketing | $ | 46,182 | 10% | $ | 50,847 | 9% | $ | 94,398 | 10% | $ | 100,703 | 9% | |||||||||||
Product development | 43,481 | 9% | 46,640 | 8% | 87,689 | 9% | 90,996 | 8% | |||||||||||||||
General and administrative | 38,317 | 8% | 33,450 | 6% | 71,912 | 8% | 70,020 | 6% | |||||||||||||||
Amortization of intangible assets | 10,247 | 2% | 12,025 | 2% | 20,991 | 2% | 23,938 | 2% | |||||||||||||||
Restructuring | 3,385 | 1% | 7,720 | 1% | 4,398 | —% | 8,509 | 1% | |||||||||||||||
Total operating expenses | $ | 141,612 | 29% | $ | 150,682 | 26% | $ | 279,388 | 30% | $ | 294,166 | 26% |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(in thousands) | |||||||||||||||
Interest income | $ | 194 | $ | 177 | $ | 1,255 | $ | 370 | |||||||
Interest expense | (1,920 | ) | (2,191 | ) | (3,845 | ) | (4,280 | ) | |||||||
Amortization of prepaid debt fees | (416 | ) | (415 | ) | (829 | ) | (763 | ) | |||||||
Other income (expense), net | (1,742 | ) | (779 | ) | (2,559 | ) | (2,955 | ) | |||||||
Total other income (expense) | $ | (3,884 | ) | $ | (3,208 | ) | $ | (5,978 | ) | $ | (7,628 | ) |
Six Months Ended June 30, | |||||||
2013 | 2012 | ||||||
(in thousands) | |||||||
Operating activities | $ | 18,974 | $ | 92,390 | |||
Investing activities | (29,514 | ) | (99,159 | ) | |||
Financing activities | (18,816 | ) | (21,342 | ) | |||
Effect of exchange rates on cash and cash equivalents | (3,393 | ) | (2,175 | ) | |||
Decrease in cash and cash equivalents | $ | (32,749 | ) | $ | (30,286 | ) |
October 1, 2012 | |||||||
Reporting Unit | Goodwill | Fair Value Exceeded Carrying Value | |||||
(in thousands) | |||||||
Energy - Electricity | $ | 221,119 | 19 | % | |||
Energy - Gas | 382,563 | 66 | % | ||||
Water | 83,750 | 317 | % |
Item 3: | Quantitative and Qualitative Disclosures about Market Risk |
2013 | 2014 | 2015 | 2016 | 2017 | Total | Fair Value | |||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||
Variable Rate Debt | |||||||||||||||||||||||||||
Principal: U.S. dollar term loan | $ | 11,250 | $ | 26,250 | $ | 30,000 | $ | 202,500 | $ | — | $ | 270,000 | $ | 268,219 | |||||||||||||
Average interest rate | 1.46 | % | 1.63 | % | 2.14 | % | 2.86 | % | — | % | |||||||||||||||||
Principal: Multicurrency revolving line of credit | $ | — | $ | — | $ | — | $ | 140,000 | $ | — | $ | 140,000 | $ | 138,930 | |||||||||||||
Average interest rate | 1.46 | % | 1.63 | % | 2.14 | % | 2.86 | % | — | % | |||||||||||||||||
Interest rate swap on LIBOR based debt | |||||||||||||||||||||||||||
Average interest rate (Pay) | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | |||||||||||||||||||
Average interest rate (Receive) | 0.21 | % | 0.38 | % | 0.89 | % | 1.61 | % | |||||||||||||||||||
Net/Spread | (0.79 | )% | (0.62 | )% | (0.11 | )% | 0.61 | % |
Item 4: | Controls and Procedures |
(a) | Evaluation of disclosure controls and procedures. At June 30, 2013, an evaluation was performed under the supervision and with the participation of our Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e)) under the Securities Exchange Act of 1934, as amended. Based on that evaluation, the Company’s management, including the Chief Executive Officer and Chief Financial Officer, concluded that as of June 30, 2013, the Company’s disclosure controls and procedures were effective to ensure the information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. |
(b) | Changes in internal controls over financial reporting. While we are continuing the process of upgrading our global enterprise resource software systems and information technology infrastructure, there have been no changes in our internal control over financial reporting during the three months ended June 30, 2013 that materially affected, or are reasonably likely to materially affect, internal control over financial reporting. |
Item 1: | Legal Proceedings |
Item 1A: | Risk Factors |
Item 2: | Unregistered Sales of Equity Securities and Use of Proceeds |
Period | Total Number of Shares Purchased(1) | Average Price Paid per Share(2) | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | ||||||||||
(in thousands) | ||||||||||||||
April 1 through April 30 | 52,839 | $ | 44.19 | 52,839 | $ | 47,465 | ||||||||
May 1 through May 31 | 186,307 | 40.90 | 186,307 | 39,845 | ||||||||||
June 1 through June 30 | 141,164 | 42.30 | 141,164 | 33,874 | ||||||||||
Total | 380,310 | $ | 41.88 | 380,310 |
(1) | On March 8, 2013, the Board authorized a twelve-month repurchase program of up to $50 million of our common stock. Repurchases are made in the open market or in privately negotiated transactions, and in accordance with applicable securities laws. No shares were purchased outside of this plan. |
(2) | Includes commissions. |
Item 5: | Other Information |
Item 6: | Exhibits |
Exhibit Number | Description of Exhibits | |
31.1 | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2 | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32.1 | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101.INS | XBRL Instance Document. | |
101.SCH | XBRL Taxonomy Extension Schema. | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase. | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase. | |
101.LAB | XBRL Taxonomy Extension Label Linkbase. | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase. |
ITRON, INC. | |||
August 6, 2013 | By: | /s/ STEVEN M. HELMBRECHT | |
Date | Steven M. Helmbrecht | ||
Executive Vice President and Chief Financial Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of Itron, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and |
b) | Any fraud, whether or not material that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
ITRON, INC. | |||
By: | /s/ PHILIP C. MEZEY | ||
Philip C. Mezey President and Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of Itron, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and |
b) | Any fraud, whether or not material that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
ITRON, INC. | |||
By: | /s/ STEVEN M. HELMBRECHT | ||
Steven M. Helmbrecht Executive Vice President and Chief Financial Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ PHILIP C. MEZEY |
Philip C. Mezey President and Chief Executive Officer |
August 6, 2013 |
/s/ STEVEN M. HELMBRECHT |
Steven M. Helmbrecht Executive Vice President and Chief Financial Officer |
August 6, 2013 |
Commitments and Contingencies Warranty Account Activity (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Warranty Activity [Line Items] | ||||
Beginning balance | $ 50,754 | $ 77,251 | $ 53,605 | $ 79,536 |
New product warranties | 1,961 | 3,507 | 2,822 | 5,636 |
Other changes/adjustments to warranties | 3,611 | (3,770) | 5,638 | 2,061 |
Claims activity | (5,289) | (8,255) | (10,388) | (19,575) |
Effect of change in exchange rates | (405) | (2,365) | (1,045) | (1,290) |
Ending balance | 50,632 | 66,368 | 50,632 | 66,368 |
Less: current portion of warranty | 24,709 | 42,861 | 24,709 | 42,861 |
Long-term warranty | $ 25,923 | $ 23,507 | $ 25,923 | $ 23,507 |
Stock-Based Compensation Stock Option Black Scholes Option Pricing Model Assumptions (Details) (Employee Stock Option [Member])
|
3 Months Ended | 6 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
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Employee Stock Option [Member]
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis, Valuation Techniques [Line Items] | ||||||||
Dividend yield | 0.00% | [1] | 0.00% | [1] | 0.00% | 0.00% | ||
Expected volatility | 0.00% | [1] | 0.00% | [1] | 38.10% | 42.70% | ||
Risk-free interest rate | 0.00% | [1] | 0.00% | [1] | 1.00% | 0.90% | ||
Expected term (years) | 0 years | [1] | 0 years | [1] | 5 years 5 months 11 days | 5 years 1 month 21 days | ||
|
Stock-Based Compensation Long-Term Performance Restricted Stock Unit Award Monte Carlo Pricing Model Assumptions (Details) (Restricted Stock Units (RSUs) [Member], USD $)
|
6 Months Ended | 3 Months Ended | 6 Months Ended | |||||
---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
Long Term Performance Restricted Stock Award [Member]
|
Jun. 30, 2013
Long Term Performance Restricted Stock Award [Member]
|
|||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Dividend yield | 0.00% | 0.00% | ||||||
Expected volatility | 39.10% | 39.10% | ||||||
Risk-free interest rate | 0.30% | 0.30% | ||||||
Expected term (years) | 2 years 6 months 10 days | 2 years 6 months 10 days | ||||||
Weighted-average fair value | $ 42.51 | [1] | $ 47.33 | [1] | $ 45.70 | $ 45.03 | ||
|
Fair Values of Financial Instruments Schedule of Fair Values of Financial Instruments (Details) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
|
Dec. 31, 2012
|
Jun. 30, 2012
|
Dec. 31, 2011
|
---|---|---|---|---|
Assets | ||||
Cash and cash equivalents | $ 103,662 | $ 136,411 | $ 102,800 | $ 133,086 |
Cash and cash equivalents, at fair value | 103,662 | 136,411 | ||
Foreign Exchange Forwards | 122 | 146 | ||
Liabilities | ||||
Interest Rate Swaps | 1,482 | 2,725 | ||
Foreign Exchange Forwards Liability | 108 | 114 | ||
USD Denominated Term Loan [Member]
|
||||
Liabilities | ||||
Term loans | 270,000 | 277,500 | ||
Term loans, at fair value | 268,219 | 275,365 | ||
Line of Credit [Member]
|
||||
Liabilities | ||||
Multicurrency revolving line of credit | 140,000 | 140,000 | ||
Line of Credit Facility, Fair Value of Amount Outstanding | 138,930 | 138,751 | ||
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
|
||||
Assets | ||||
Foreign exchange forwards, asset, at fair value | 122 | 146 | ||
Liabilities | ||||
Interest rate swap contracts | 1,482 | 2,725 | ||
Foreign exchange forwards, liability, at fair value | $ 108 | $ 114 |
Restructuring
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring, Impairment, and Other Activities Disclosure [Text Block] | Restructuring During the fourth quarter of 2011, we announced the approval of projects to restructure our manufacturing operations to increase efficiency and lower our cost of manufacturing. We began implementing these projects in the fourth quarter of 2011. As of June 30, 2013, we have substantially completed these restructuring projects. We do not anticipate substantial expenses related to these restructuring projects to be recognized in the Consolidated Statements of Operations in future periods. The total expected restructuring costs, the costs recognized in prior periods, the restructuring costs recognized during the six months ended June 30, 2013, and the remaining expected restructuring costs as of June 30, 2013 are as follows:
Other restructuring costs include expenses to exit the facilities once the operations in those facilities have ceased. Costs associated with restructuring activities are generally presented as restructuring expense in the Consolidated Statements of Operations, except for certain costs associated with inventory write-downs, which are classified within cost of revenues, and accelerated depreciation expense, which is recognized according to the use of the asset. The following table summarizes the activity within the restructuring related balance sheet accounts during the six months ended June 30, 2013:
The current portions of the restructuring related liability balances were $13.9 million and $13.2 million as of June 30, 2013 and December 31, 2012, respectively. The current portion of the liability is classified within "Other current liabilities" on the Consolidated Balance Sheets. The long-term portions of the restructuring related liability related balances were $3.7 million and $4.5 million as of June 30, 2013 and December 31, 2012, respectively. The long-term portion of the restructuring liability is classified within "Other long-term liabilities" on the Consolidated Balance Sheets. Asset impairments are determined at the asset group level. Assets held for sale are classified within other current assets and are reported at the lower of the carrying amount or the fair value, less costs to sell, and are no longer depreciated or amortized. The following table includes assets that were measured at fair value on a nonrecurring basis as of June 30, 2013 and December 31, 2012, and the related losses recognized during the period:
The fair values of the disposal groups included in long-lived assets held for sale were determined based on the estimated proceeds from their expected sales, net of estimated selling costs. Long-lived assets held for sale at June 30, 2013 and December 31, 2012 consist of one asset group that includes land, a building, and building improvements. Revenues and net operating income from the activities we have exited or will exit under the restructuring plan are not material to our operating segments or consolidated results. |
Certain Balance Sheet Components Depreciation Expense and Capitalized Interest (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Depreciation expense [Line Items] | ||||
Depreciation expense | $ 14,027 | $ 15,019 | $ 28,040 | $ 30,333 |
Capitalized interest | $ 21 | $ 0 | $ 64 | $ 0 |
Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
|
Dec. 31, 2012
|
---|---|---|
ASSETS | ||
Cash and cash equivalents | $ 103,662 | $ 136,411 |
Accounts receivable, net | 372,240 | 375,326 |
Inventories | 190,414 | 170,719 |
Deferred tax assets current, net | 33,138 | 33,536 |
Other current assets | 112,014 | 104,958 |
Total current assets | 811,468 | 820,950 |
Property, plant, and equipment, net | 249,372 | 255,212 |
Deferred tax assets noncurrent, net | 55,397 | 44,584 |
Other long-term assets | 26,607 | 28,908 |
Intangible assets, net | 210,849 | 238,771 |
Goodwill | 696,215 | 701,016 |
Total assets | 2,049,908 | 2,089,441 |
LIABILITIES AND EQUITY | ||
Accounts payable | 203,092 | 227,739 |
Other current liabilities | 54,988 | 49,950 |
Wages and benefits payable | 84,831 | 91,802 |
Taxes payable | 15,481 | 9,305 |
Current portion of debt | 22,500 | 18,750 |
Current portion of warranty | 24,709 | 27,115 |
Unearned revenue | 50,799 | 42,712 |
Total current liabilities | 456,400 | 467,373 |
Long-term debt | 387,500 | 398,750 |
Long-term warranty | 25,923 | 26,490 |
Pension plan benefit liability | 89,948 | 90,533 |
Deferred tax liabilities noncurrent, net | 11,235 | 16,682 |
Other long-term obligations | 81,229 | 80,100 |
Total liabilities | 1,052,235 | 1,079,928 |
Commitments and contingencies | ||
Equity | ||
Preferred stock | 0 | 0 |
Common stock | 1,290,226 | 1,294,213 |
Accumulated other comprehensive loss, net | (57,929) | (34,384) |
Accumulated deficit | (251,893) | (266,862) |
Total Itron, Inc. shareholders' equity | 980,404 | 992,967 |
Noncontrolling interests | 17,269 | 16,546 |
Total equity | 997,673 | 1,009,513 |
Total liabilities and equity | $ 2,049,908 | $ 2,089,441 |
Goodwill (Text Block)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Goodwill Excluding Non Goodwill Intangibles [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill Disclosure [Text Block] | Goodwill The following table reflects the goodwill balance as of June 30, 2013:
During the second quarter of 2013, we finalized the purchase price allocation related to the SmartSynch acquisition, which was completed on May 1, 2012, and recorded certain adjustments that are reflected as Adjustments of previous acquisition. These adjustments primarily affected the fair value calculation of certain accrued liabilities associated with specific contracts. Among these adjustments is the correction of an error associated with a long-term revenue contract acquired from SmartSynch. In May 2013, we determined that certain manufacturing costs were not reflected in the model used to value this contract at acquisition. Once these costs were properly added to the total cost and profitability estimates, we determined the total contract would result in a loss of $2.4 million over the contract term. Therefore, we recognized a liability for this expected loss on the contract and made a corresponding adjustment to goodwill. Further, we had previously recognized a customer relationship intangible asset of $1.5 million associated with this contract, with amortization scheduled to begin in 2014 based on the contract's original projected cash flow. Since the contract is in an overall loss position, we determined that the intangible asset had no value. We reduced the value of this intangible asset to zero with a corresponding adjustment to goodwill. In accordance with relevant accounting guidance, we evaluated the materiality of the error from a qualitative and quantitative perspective. Based on such evaluation, we concluded that recognizing the contract liability and adjusting the intangible asset value would not be material, quantitatively or qualitatively, to our results of operations for the three months ended June 30, 2013 or our expected full year results of operations for 2013 and would not have had a material impact on our results for the year ended December 31, 2012. Because these adjustments were not material individually or in aggregate, we have not retrospectively adjusted the comparative amounts on the Consolidated Balance Sheet as of December 31, 2012. Accumulated impairment losses relate to goodwill impairment charges recorded during 2011 as a result of a significant decline in the price of our shares of common stock at the end of September 2011, which reduced our aggregate market value significantly below the carrying value of our net assets as of September 30, 2011. Goodwill and accumulated impairment losses associated with our international subsidiaries are recorded in their respective functional currency; therefore, the carrying amounts of these balances increase or decrease, with a corresponding change in accumulated OCI, due to changes in foreign currency exchange rates. |
Certain Balance Sheet Components Certain Balance Sheet Components (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Balance Sheet Related Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable, Net [Table Text Block] |
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Allowance for Credit Losses on Financing Receivables [Table Text Block] |
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Inventories [Table Text Block] |
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Property, Plant, and Equipment, Net [Table Text Block] |
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Depreciation Expense and Capitalized interest [Table Text Block] |
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Derivative Financial Instruments Offsetting of Derivative Liabilities (Details) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
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Dec. 31, 2012
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Offsetting Liabilities [Line Items] | ||
Gross Amounts of Recognized Liabilities Presented in the Consolidated Balance Sheets | $ 1,590 | $ 2,839 |
Derivative Financial Instruments Not Offset in the Consolidated Balance Sheets | (122) | (135) |
Cash Collateral Pledged Not Offset in the Consolidated Balance Sheets | 0 | 0 |
Net Amount | $ 1,468 | $ 2,704 |
Intangible Assets Summary of Intangible Asset Account Activity (Details) (USD $)
In Thousands, unless otherwise specified |
6 Months Ended | |
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Jun. 30, 2013
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Jun. 30, 2012
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Intangible Assets [Line Items] | ||
Beginning balance, intangible assets, gross | $ 802,540 | $ 749,194 |
Intangible assets acquired | 43,400 | |
Effect of change in exchange rates | (16,894) | (13,835) |
Ending balance, intangible assets, gross | 784,146 | 778,759 |
Customer contracts and relationships [Member] | Adjustment of Intangible Customer Relationship Asset Acquired [Member]
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Intangible Assets [Line Items] | ||
Intangible assets acquired | $ (1,500) |
Other Comprehensive Income (Loss) (Text Block)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Comprehensive Income (Loss) [Text Block] | Other Comprehensive Income (Loss) OCI is reflected as a net increase (decrease) to Itron, Inc. shareholders’ equity and is not reflected in our results of operations. The before-tax amount, income tax (provision) benefit, and net-of-tax amount related to each component of other comprehensive income (loss) during the reporting periods were as follows:
The changes in the components of accumulated other comprehensive income (loss) (AOCI), net of tax, were as follows:
Details about the AOCI components reclassified to the Consolidated Statements of Operations during the reporting periods are as follows:
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Commitments and Contingencies Warranty Expense (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Total warranty expense | $ 5,572 | $ (263) | $ 8,460 | $ 7,697 |
Certain Balance Sheet Components Accounts Receivable, Net, Additional Information (Details) (USD $)
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Jun. 30, 2013
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Dec. 31, 2012
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Accounts Receivable, Net (Line Items] | ||
Number of months current retainage amounts and unbilled receivables are expected to be collected | 12 months | |
Current retainage contract receivables [Member]
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Accounts Receivable, Net (Line Items] | ||
Contract Receivable Retainage, Due One Year or Less | $ 19,000,000 | $ 20,000,000 |
Unbilled Contracts Receivable | 11,100,000 | 11,100,000 |
Long Term Retainage Contract Receivables [Member]
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Accounts Receivable, Net (Line Items] | ||
Contract Receivable Retainage, Due after Next Rolling Twelve Months | 0 | 0 |
Long-term unbilled retainage receivables | $ 0 | $ 0 |
Stock-Based Compensation Unrestricted Stock Awards Summary (Details) (Unrestricted Stock Award [Member], USD $)
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3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Unrestricted Stock Award [Member]
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[Line Items] | ||||
Shares of unrestricted stock granted | 4,518 | 4,526 | 8,847 | 9,979 |
Weighted average grant date fair value per share | $ 45.37 | $ 45.26 | $ 45.40 | $ 41.05 |
Intangible Assets Intangible Asset Narrative (Details) (USD $)
In Thousands, unless otherwise specified |
6 Months Ended | ||
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Jun. 30, 2012
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Jun. 30, 2013
Core Developed Technology [Member]
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Jun. 30, 2013
Adjustment of Intangible Customer Relationship Asset Acquired [Member]
Customer contracts and relationships [Member]
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Acquired Finite-Lived Intangible Assets [Line Items] | |||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 7 years | ||
Finite-lived Intangible Assets Acquired | $ 43,400 | $ (1,500) |
Property, Plant, and Equipment Policy Additional Information (Details)
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6 Months Ended |
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Jun. 30, 2013
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Building and Building Improvements [Member]
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Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 30 years |
Minimum [Member] | Machinery and Equipment, Computers and Software, and Furniture [Member]
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Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 3 years |
Maximum [Member] | Machinery and Equipment, Computers and Software, and Furniture [Member]
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Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 10 years |
Debt Debt (Tables)
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Jun. 30, 2013
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt [Table Text Block] | The components of our borrowings were as follows:
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Schedule of Long-Term Debt Repayments [Table Text Block] | Total credit facility repayments were as follows:
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Prepaid Debt Fees [Table Text Block] | Unamortized prepaid debt fees were as follows:
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Goodwill Schedule of Goodwill Allocated to Reporting Segments (Tables)
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Jun. 30, 2013
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Goodwill [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill [Table Text Block] | The following table reflects the goodwill balance as of June 30, 2013:
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Other Comprehensive Income Reclassifications from Accumulated Other Comprehensive Income (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||||||||||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Reclassification Out Of Accumulated Other Comprehensive Income [Line Items] | ||||||||||||
Prior-service costs | $ (17) | $ (17) | $ (34) | $ (34) | ||||||||
Actuarial losses | 246 | 2 | 497 | 4 | ||||||||
Income before income taxes | 14,092 | 42,855 | 14,345 | 78,056 | ||||||||
Tax benefit (provision) | (1,896) | (10,564) | 1,347 | (20,193) | ||||||||
Total, net of tax | 12,196 | 32,291 | 15,692 | 57,863 | ||||||||
Reclassification out of Accumulated Other Comprehensive Income [Member]
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Reclassification Out Of Accumulated Other Comprehensive Income [Line Items] | ||||||||||||
Total, net of tax | (183) | [1] | (22) | [1] | (369) | [1] | (45) | [1] | ||||
Accumulated Defined Benefit Plans Adjustment [Member] | Reclassification out of Accumulated Other Comprehensive Income [Member]
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Reclassification Out Of Accumulated Other Comprehensive Income [Line Items] | ||||||||||||
Prior-service costs | (17) | [1],[2] | (17) | [1],[2] | (34) | [1],[2] | (34) | [1],[2] | ||||
Actuarial losses | (246) | [1],[2] | (2) | [1],[2] | (497) | [1],[2] | (4) | [1],[2] | ||||
Income before income taxes | (263) | [1] | (19) | [1] | (531) | [1] | (38) | [1] | ||||
Tax benefit (provision) | 80 | [1] | (3) | [1] | 162 | [1] | (7) | [1] | ||||
Total, net of tax | $ (183) | [1] | $ (22) | [1] | $ (369) | [1] | $ (45) | [1] | ||||
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Certain Balance Sheet Components Accounts Receivable, Net (Details) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
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Dec. 31, 2012
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Accounts Receivable, Net (Line Items] | ||
Trade receivables (net of allowance of $6,948 and $7,372) | $ 330,956 | $ 329,352 |
Unbilled receivables | 41,284 | 45,974 |
Total accounts receivable, net | $ 372,240 | $ 375,326 |
Other Comprehensive Income Other Comprehensive Income (Loss) (Tables)
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Jun. 30, 2013
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Other Comprehensive Income (Loss) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Comprehensive Income (Loss) [Table Text Block] | The before-tax amount, income tax (provision) benefit, and net-of-tax amount related to each component of other comprehensive income (loss) during the reporting periods were as follows:
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Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block] | The changes in the components of accumulated other comprehensive income (loss) (AOCI), net of tax, were as follows:
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Reclassification out of Accumulated Other Comprehensive Income [Table Text Block] | Details about the AOCI components reclassified to the Consolidated Statements of Operations during the reporting periods are as follows:
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Revenue Recognition Policy Additional Information (Details) (USD $)
In Millions, unless otherwise specified |
Jun. 30, 2013
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Dec. 31, 2012
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---|---|---|
Deferred Revenue Arrangement [Line Items] | ||
Deferred Revenue | $ 83.7 | $ 74.9 |
Deferred Costs | $ 27.7 | $ 24.4 |
Certain Balance Sheet Components Summary of the Allowance for Doubtful Accounts (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Summary of Allowance for Doubtful Accounts Activity [Line Items] | ||||
Beginning balance | $ 6,144 | $ 5,983 | $ 7,372 | $ 6,049 |
Provision (release) of doubtful accounts, net | 1,075 | (230) | 171 | (290) |
Accounts written-off | (198) | (22) | (303) | (261) |
Effects of change in exchange rates | (73) | (350) | (292) | (117) |
Ending balance | $ 6,948 | $ 5,381 | $ 6,948 | $ 5,381 |
Income Taxes Income Taxes (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Income Tax Uncertainties [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unrecognized Tax Benefits Related To Uncertain Tax Positions [Table Text Block] | We classify interest expense and penalties related to unrecognized tax liabilities and interest income on tax overpayments as components of income tax expense. The net interest and penalties expense recognized is as follows:
Accrued interest and penalties recorded are as follows:
Unrecognized tax benefits related to uncertain tax positions and the amount of unrecognized tax benefits that, if recognized, would affect our effective tax rate are as follows:
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Debt Credit Facility Additional Information (Details) (USD $)
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6 Months Ended | 6 Months Ended | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
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Jun. 30, 2013
Secured Debt [Member]
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Aug. 05, 2011
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Jun. 30, 2013
Multicurrency revolving line of credit (1)
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Dec. 31, 2012
Multicurrency revolving line of credit (1)
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Jun. 30, 2013
Minimum [Member]
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Jun. 30, 2013
Maximum [Member]
|
Jun. 30, 2013
Alternate base rate (1) [Member]
|
Jun. 30, 2013
Alternate base rate (2) [Member]
|
Jun. 30, 2013
Alternate base rate (3) [Member]
|
Jun. 30, 2013
LIBOR interest rate [Member]
|
Jun. 30, 2013
Multicurrency revolving line of credit (1)
|
Jun. 30, 2012
Multicurrency revolving line of credit (1)
|
Jun. 30, 2013
Scheduled Quarterly Repayments September 2013 through June 2014 [Domain]
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Jun. 30, 2013
Scheduled Quarterly Repayments September 2014 through June 2016 [Domain]
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Debt Instrument [Line Items] | |||||||||||||||
Debt Instrument, Face Amount | $ 300,000,000 | ||||||||||||||
Line of credit facility, maximum borrowing capacity | 660,000,000 | ||||||||||||||
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage | 0.20% | 0.40% | |||||||||||||
Debt Instrument, Collateral | All obligations under the credit facility are guaranteed by Itron, Inc. and material U.S. domestic subsidiaries and are secured by a pledge of substantially all of the assets of Itron, Inc. and material U.S. domestic subsidiaries, including a pledge of 100% of the capital stock of material U.S. domestic subsidiaries and up to 66% of the voting stock (100% of the non-voting stock) of their first-tier foreign subsidiaries. In addition, the obligations of any foreign subsidiary who is a foreign borrower, as defined by the credit facility, are guaranteed by the foreign subsidiary and by its direct and indirect foreign parents. | ||||||||||||||
Repayments of Secured Debt | 5,600,000 | 7,500,000 | |||||||||||||
Debt Instrument, Description of Variable Rate Basis | the prime rate | the Federal Reserve effective rate | one month LIBOR | the LIBOR rate | |||||||||||
Debt Instrument, Basis Spread on Variable Rate | 0.50% | 1.00% | 1.25% | ||||||||||||
Applicable Interest Rate | 1.45% | ||||||||||||||
Proceeds from Lines of Credit | 15,000,000 | 70,000,000 | |||||||||||||
Line of credit facility, amount outstanding | 140,000,000 | 140,000,000 | |||||||||||||
Letters of Credit Outstanding, Amount | 47,000,000 | ||||||||||||||
Line of credit facility, remaining borrowing capacity | $ 473,000,000 |
Defined Benefit Pension Plans Schedule of Amounts Recognized in the Consolidated Balance Sheets (Details) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
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Dec. 31, 2012
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Schedule of Amounts Recognized in the Consolidated Balance Sheets [Line Items] | ||
Plan assets in other long-term assets | $ (226) | $ (227) |
Current portion of pension plan liability in wages and benefits payable | 3,157 | 2,899 |
Long-term portion of pension plan liability | 89,948 | 90,533 |
Net pension plan benefit liability | $ (92,879) | $ (93,205) |
Debt Schedule of Unamortized Prepaid Debt Fees (Details) (Secured Debt [Member], USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
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Dec. 31, 2012
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---|---|---|
Secured Debt [Member]
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Debt Instrument [Line Items] | ||
Unamortized prepaid debt fees | $ 4,588 | $ 5,367 |
Earnings Per Share and Capital Structure Stock-based Awards (Details)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Stock-based awards excluded from diluted EPS calculation (antidilutive) | 1.1 | 1.4 | 1.2 | 1.3 |
Derivative Financial Instruments Derivative Financial Instruments Narrative (Details) (USD $)
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6 Months Ended | 6 Months Ended | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
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Dec. 31, 2012
|
Jun. 30, 2013
Forward Contracts [Member]
|
Jun. 30, 2013
Secured Debt [Member]
|
Dec. 31, 2012
Secured Debt [Member]
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Jun. 30, 2013
Interest Rate Swap [Member]
contracts
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Jun. 30, 2013
Foreign Exchange Contract [Member]
Not Designated as Hedging Instrument [Member]
Minimum [Member]
|
Jun. 30, 2013
Foreign Exchange Contract [Member]
Not Designated as Hedging Instrument [Member]
Maximum [Member]
|
Jun. 30, 2013
Accumulated Other Comprehensive Income, Net Unrealized Gain (Loss) on Nonderivative Instruments [Member]
|
Dec. 31, 2012
Accumulated Other Comprehensive Income, Net Unrealized Gain (Loss) on Nonderivative Instruments [Member]
|
Jun. 30, 2012
Accumulated Other Comprehensive Income, Net Unrealized Gain (Loss) on Nonderivative Instruments [Member]
|
Dec. 31, 2011
Accumulated Other Comprehensive Income, Net Unrealized Gain (Loss) on Nonderivative Instruments [Member]
|
Jun. 30, 2012
Accumulated Other Comprehensive Income, Net Unrealized Gain (Loss) on Nonderivative Instruments [Member]
Net Investment Hedging [Member]
|
Jun. 30, 2013
Accumulated Net Gain (Loss) from Derivative Instruments Designated as Hedging Instruments [Member]
|
Dec. 31, 2012
Accumulated Net Gain (Loss) from Derivative Instruments Designated as Hedging Instruments [Member]
|
Jun. 30, 2012
Accumulated Net Gain (Loss) from Derivative Instruments Designated as Hedging Instruments [Member]
|
Dec. 31, 2011
Accumulated Net Gain (Loss) from Derivative Instruments Designated as Hedging Instruments [Member]
|
Jun. 30, 2013
Number of Counterparties [Member]
|
|
Description of Derivative Activity Volume | a total of 247 contracts were entered into | Our derivative assets and liabilities consist of foreign exchange forward and interest rate swap contracts with nine counterparties at June 30, 2013 and eight counterparties at December 31, 2012. | ||||||||||||||||
Net unrealized loss on hedging instruments | $ 57,929,000 | $ 34,384,000 | $ 14,380,000 | $ 14,380,000 | $ 14,380,000 | $ 14,380,000 | $ 14,400,000 | $ 15,297,000 | $ 16,069,000 | $ 15,229,000 | $ 14,380,000 | |||||||
Number of Interest Rate Derivatives Held | 6 | |||||||||||||||||
Derivative, Notional Amount | 200,000,000 | 251,000 | 11,000,000 | |||||||||||||||
Pay fixed interest rate in interst rate swap | 1.00% | |||||||||||||||||
Interest Rate Cash Flow Hedge Gain (Loss) to be Reclassified During Next 12 Months, Net | (1,300,000) | |||||||||||||||||
Long-term Debt | $ 410,000,000 | $ 417,500,000 |
Restructuring Restructuring Related Balance Sheet Activity (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
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Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
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Restructuring Cost and Reserve [Line Items] | ||||
Beginning balance, January 1, 2013 | $ 17,714 | |||
Costs incurred and charged to expense | 3,385 | 7,720 | 4,398 | 8,509 |
Cash payments | (3,988) | |||
Non-cash items | (27) | |||
Effect of change in exchange rates | (475) | |||
Ending balance, June 30, 2013 | 17,622 | 17,622 | ||
Accrued Employee Severance [Member]
|
||||
Restructuring Cost and Reserve [Line Items] | ||||
Beginning balance, January 1, 2013 | 14,498 | |||
Costs incurred and charged to expense | 2,654 | |||
Cash payments | (3,155) | |||
Non-cash items | 0 | |||
Effect of change in exchange rates | (447) | |||
Ending balance, June 30, 2013 | 13,550 | 13,550 | ||
Asset Impairment and Net (Gain) Loss on Sale or Disposal [Member]
|
||||
Restructuring Cost and Reserve [Line Items] | ||||
Beginning balance, January 1, 2013 | 0 | |||
Costs incurred and charged to expense | 27 | |||
Cash payments | 0 | |||
Non-cash items | (27) | |||
Effect of change in exchange rates | 0 | |||
Ending balance, June 30, 2013 | 0 | 0 | ||
Other Accrued Costs [Member]
|
||||
Restructuring Cost and Reserve [Line Items] | ||||
Beginning balance, January 1, 2013 | 3,216 | |||
Costs incurred and charged to expense | 1,717 | |||
Cash payments | (833) | |||
Non-cash items | 0 | |||
Effect of change in exchange rates | (28) | |||
Ending balance, June 30, 2013 | $ 4,072 | $ 4,072 |
Restructuring Restructuring Additional Information (Details) (USD $)
In Millions, unless otherwise specified |
Jun. 30, 2013
|
Dec. 31, 2012
|
---|---|---|
Restructuring Cost and Reserve [Line Items] | ||
Restructuring Reserve, Current | $ 13.9 | $ 13.2 |
Restructuring Reserve, Noncurrent | $ 3.7 | $ 4.5 |
Other Comprehensive Income Other Comprehensive Income (Loss) (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Before-tax amount [Abstract] | ||||
Foreign currency translation adjustment | $ 6,798 | $ (52,847) | $ (20,649) | $ (24,145) |
Net unrealized gain (loss) on derivative instruments designated as cash flow hedges | 1,336 | (1,365) | 1,244 | (1,365) |
Pension plan benefits liability adjustment | 263 | 19 | (283) | 38 |
Total other comprehensive income (loss), before tax | 8,397 | (54,193) | (19,688) | (25,472) |
Tax (provision) benefit [Abstract] | ||||
Foreign currency translation adjustment | 377 | 476 | (3,471) | 315 |
Net unrealized gain (loss) on derivative instruments designated as cash flow hedges | (491) | 516 | (472) | 516 |
Pension plan benefits liability adjustment | (80) | 3 | 86 | 7 |
Total other comprehensive income (loss) tax (provision) benefit | (194) | 995 | (3,857) | 838 |
Net-of-tax amount [Abstract] | ||||
Foreign currency translation adjustment | 7,175 | (52,371) | (24,120) | (23,830) |
Net unrealized gain (loss) on derivative instruments designated as cash flow hedges | 845 | (849) | 772 | (849) |
Pension plan benefits liability adjustment | 183 | 22 | (197) | 45 |
Total other comprehensive income (loss), net of tax | $ 8,203 | $ (53,198) | $ (23,545) | $ (24,634) |
Intangible Assets Schedule of Intangible Assets (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Schedule of Intangible Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Intangible Assets by Major Class [Table Text Block] | The gross carrying amount and accumulated amortization of our intangible assets, other than goodwill, are as follows:
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Summary of Intangible Asset Account Activity [Table Text Block] | A summary of the intangible asset account activity is as follows:
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Schedule of Intangible Assets, Future Amortization Expense [Table Text Block] | Estimated future annual amortization expense is as follows:
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Summary of Significant Accounting Policies (Text Block)
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6 Months Ended |
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Jun. 30, 2013
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Accounting Policies [Abstract] | |
Significant Accounting Policies [Text Block] | Summary of Significant Accounting Policies We were incorporated in the state of Washington in 1977. We provide a portfolio of products and services to utilities for the energy and water markets throughout the world. Financial Statement Preparation The condensed consolidated financial statements presented in this Quarterly Report on Form 10-Q are unaudited and reflect entries necessary for the fair presentation of the Consolidated Statements of Operations and the Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 2013 and 2012, the Consolidated Balance Sheets as of June 30, 2013 and December 31, 2012, and the Consolidated Statements of Cash Flows for the six months ended June 30, 2013 and 2012 of Itron, Inc. and its subsidiaries. All entries required for the fair presentation of the financial statements are of a normal recurring nature, except as disclosed. Certain information and notes normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) regarding interim results. These condensed consolidated financial statements should be read in conjunction with the 2012 audited financial statements and notes included in our Annual Report on Form 10-K filed with the SEC on February 22, 2013. The results of operations for the three and six months ended June 30, 2013 are not necessarily indicative of the results expected for the full fiscal year or for any other fiscal period. Basis of Consolidation We consolidate all entities in which we have a greater than 50% ownership interest or in which we exercise control over the operations. We use the equity method of accounting for entities in which we have a 50% or less investment and exercise significant influence. Entities in which we have less than a 20% investment and where we do not exercise significant influence are accounted for under the cost method. Intercompany transactions and balances are eliminated upon consolidation. Noncontrolling Interests In several of our consolidated international subsidiaries, we have joint venture partners, who are minority shareholders. Although these entities are not wholly-owned by Itron, we consolidate them because we have a greater than 50% ownership interest or because we exercise control over the operations. The noncontrolling interest balance is adjusted each period to reflect the allocation of net income (loss) and other comprehensive income (loss) attributable to the noncontrolling interests, as shown in our Consolidated Statements of Operations and our Consolidated Statements of Comprehensive Income (Loss). The noncontrolling interest balance in our Consolidated Balance Sheets represents the proportional share of the equity of the joint venture entities, which is attributable to the minority shareholders. Business Acquisitions On May 1, 2012, we completed the acquisition of SmartSynch, Inc. (SmartSynch). SmartSynch provides smart grid solutions that utilize cellular networks for communications. In January 2011, we completed the acquisition of a software and consulting services company in France, which included contingent and deferred consideration amounts that were paid in the first quarters of 2012 and 2013. See Business Combinations policy below. Cash and Cash Equivalents We consider all highly liquid instruments with remaining maturities of three months or less at the date of acquisition to be cash equivalents. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are recorded for invoices issued to customers in accordance with our contractual arrangements. Interest and late payment fees are minimal. Unbilled receivables are recorded when revenues are recognized upon product shipment or service delivery and invoicing occurs at a later date. We record an allowance for doubtful accounts representing our estimate of the probable losses in accounts receivable at the date of the balance sheet based on our historical experience of bad debts and our specific review of outstanding receivables. Accounts receivable are written-off against the allowance when we believe an account, or a portion thereof, is no longer collectible. Inventories Inventories are stated at the lower of cost or market using the first-in, first-out method. Cost includes raw materials and labor, plus applied direct and indirect costs. Derivative Instruments All derivative instruments, whether designated in hedging relationships or not, are recorded on the Consolidated Balance Sheets at fair value as either assets or liabilities. The components and fair values of our derivative instruments are determined using the fair value measurements of significant other observable inputs (Level 2), as defined by GAAP. The net fair value of our derivative instruments may switch between a net asset and a net liability depending on market circumstances at the end of the period. We include the effect of our counterparty credit risk based on current published credit default swap rates when the net fair value of our derivative instruments are in a net asset position and the effect of our own nonperformance risk when the net fair value of our derivative instruments are in a net liability position. For any derivative designated as a fair value hedge, the changes in the fair value of the derivative and of the hedged item attributable to the hedged risk are recognized in earnings. For any derivative designated as a cash flow hedge, the effective portions of changes in the fair value of the derivative are recorded as a component of other comprehensive income (loss) (OCI) and are recognized in earnings when the hedged item affects earnings. Ineffective portions of cash flow hedges are recognized in other income (expense) in the Consolidated Statements of Operations. For a hedge of a net investment, the effective portion of any unrealized gain or loss from the foreign currency revaluation of the hedging instrument is reported in OCI as a net unrealized gain or loss on derivative instruments. Upon termination of a net investment hedge, the net derivative gain/loss will remain in accumulated OCI until such time when earnings are impacted by a sale or liquidation of the associated operations. Ineffective portions of fair value changes or the changes in fair value of derivative instruments that do not qualify for hedging activities are recognized in other income (expense) in the Consolidated Statements of Operations. We classify cash flows from our derivative programs as cash flows from operating activities in the Consolidated Statements of Cash Flows. Derivatives are not used for trading or speculative purposes. Our derivatives are with credit-worthy multinational commercial banks, with whom we have master netting agreements; however, our derivative positions are not disclosed on a net basis. There are no credit-risk-related contingent features within our derivative instruments. Refer to Note 7 and Note 13 for further disclosures of our derivative instruments and their impact on OCI. Property, Plant, and Equipment Property, plant, and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally 30 years for buildings and improvements and three to ten years for machinery and equipment, computers and software, and furniture. Leasehold improvements are capitalized and depreciated over the term of the applicable lease, including renewable periods if reasonably assured, or over the useful lives, whichever is shorter. Construction in process represents capital expenditures incurred for assets not yet placed in service. Costs related to internally developed software and software purchased for internal uses are capitalized and are amortized over the estimated useful lives of the assets. Repair and maintenance costs are expensed as incurred. We have no major planned maintenance activities. We review long-lived assets for impairment whenever events or circumstances indicate the carrying amount of an asset group may not be recoverable. Assets held for sale are classified within other current assets in the Consolidated Balance Sheets, are reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. Gains and losses from asset disposals and impairment losses are classified within the Consolidated Statement of Operations according to the use of the asset, except those gains and losses recognized in conjunction with our restructuring activities, which are classified as restructuring expense. Prepaid Debt Fees Prepaid debt fees represent the capitalized direct costs incurred related to the issuance of debt and are recorded as noncurrent assets. These costs are amortized to interest expense over the lives of the respective borrowings, including contingent maturity or call features, using the effective interest method, or straight-line method when associated with a revolving credit facility. When debt is repaid early, the related portion of unamortized prepaid debt fees is written off and included in interest expense. Business Combinations On the date of acquisition, the assets acquired, liabilities assumed, and any noncontrolling interests in the acquiree are recorded at their fair values. The acquiree's results of operations are also included as of the date of acquisition in our consolidated results. Intangible assets that arise from contractual/legal rights, or are capable of being separated, as well as in-process research and development (IPR&D), are measured and recorded at fair value, and amortized over the estimated useful life. IPR&D is not amortized until such time as the associated development projects are completed or terminated. If a development project is completed, the IPR&D is reclassified as a core technology intangible asset and amortized over its estimated useful life. If the development project is terminated, the recorded value of the associated IPR&D is immediately expensed. If practicable, assets acquired and liabilities assumed arising from contingencies are measured and recorded at fair value. If not practicable, such assets and liabilities are measured and recorded when it is probable that a gain or loss has occurred and the amount can be reasonably estimated. The residual balance of the purchase price, after fair value allocations to all identified assets and liabilities, represents goodwill. Acquisition-related costs are expensed as incurred. Restructuring costs associated with an acquisition are generally expensed in periods subsequent to the acquisition date, and changes in deferred tax asset valuation allowances and acquired income tax uncertainties, including penalties and interest, after the measurement period are recognized as a component of the provision for income taxes. Our acquisitions may include contingent consideration, which require us to recognize the fair value of the estimated liability at the time of the acquisition. Subsequent changes in the estimate of the amount to be paid under the contingent consideration arrangement are recognized in the consolidated statements of operations. Cash payments for contingent or deferred consideration are classified within cash flows from investing activities within the consolidated statements of cash flows. Goodwill and Intangible Assets Goodwill and intangible assets may result from our acquisitions. We use estimates, including estimates of useful lives of intangible assets, the amount and timing of related future cash flows, and fair values of the related operations, in determining the value assigned to goodwill and intangible assets. Our finite-lived intangible assets are amortized over their estimated useful lives based on estimated discounted cash flows. IPR&D is considered an indefinite-lived intangible asset and is not subject to amortization until the associated projects are completed or terminated. Finite-lived intangible assets are tested for impairment at the asset group level when events or changes in circumstances indicate the carrying value may not be recoverable. Indefinite-lived intangible assets are tested for impairment annually, when events or changes in circumstances indicate the asset may be impaired, or at the time when their useful lives are determined to be no longer indefinite. Goodwill is assigned to our reporting units based on the expected benefit from the synergies arising from each business combination, determined by using certain financial metrics, including the forecasted discounted cash flows associated with each reporting unit. We test goodwill for impairment each year as of October 1, or more frequently should a significant impairment indicator occur. As part of the impairment test, we may elect to perform an assessment of qualitative factors. If this qualitative assessment indicates that it is more likely than not that the fair value of a reporting unit, including goodwill, is less than its carrying amount, or if we elect to bypass the qualitative assessment, we would then proceed with the two-step impairment test. The impairment test involves comparing the fair values of the reporting units to their carrying amounts. If the carrying amount of a reporting unit exceeds its fair value, a second step is required to measure the goodwill impairment loss amount. This second step determines the current fair values of all assets and liabilities of the reporting unit and then compares the implied fair value of the reporting unit's goodwill to the carrying amount of that goodwill. If the carrying amount of the reporting unit's goodwill exceeds the implied fair value of the goodwill, an impairment loss is recognized in an amount equal to the excess. Determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions. We forecast discounted future cash flows at the reporting unit level using risk-adjusted discount rates and estimated future revenues and operating costs, which take into consideration factors such as existing backlog, expected future orders, supplier contracts, and expectations of competitive and economic environments. We also identify similar publicly traded companies and develop a correlation, referred to as a multiple, to apply to the operating results of the reporting units. These combined fair values are then reconciled to the aggregate market value of our common stock on the date of valuation, while considering a reasonable control premium. Contingencies A loss contingency is recorded if it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated. We evaluate, among other factors, the degree of probability of an unfavorable outcome and our ability to make a reasonable estimate of the amount of the ultimate loss. Loss contingencies that we determine to be reasonably possible, but not probable, are disclosed but not recorded. Changes in these factors and related estimates could materially affect our financial position and results of operations. Legal costs to defend against contingent liabilities are expensed as incurred. Bonus and Profit Sharing We have various employee bonus and profit sharing plans, which provide award amounts for the achievement of annual financial and nonfinancial targets. If management determines it is probable that the targets will be achieved, and the amounts can be reasonably estimated, a compensation accrual is recorded based on the proportional achievement of the financial and nonfinancial targets. Although we monitor and accrue expenses quarterly based on our progress toward the achievement of the annual targets, the actual results at the end of the year may require awards that are significantly greater or less than the estimates made in earlier quarters. Warranty We offer standard warranties on our hardware products and large application software products. We accrue the estimated cost of new product warranties based on historical and projected product performance trends and costs during the warranty period. Testing of new products in the development stage helps identify and correct potential warranty issues prior to manufacturing. Continuing quality control efforts during manufacturing reduce our exposure to warranty claims. When our quality control efforts fail to detect a fault in one of our products, we experience an increase in warranty claims. We track warranty claims to identify potential warranty trends. If an unusual trend is noted, an additional warranty accrual may be assessed and recorded when a failure event is probable and the cost can be reasonably estimated. When new products are introduced, our process relies on historical averages of similar products until sufficient data is available. As actual experience becomes available, it is used to modify the original estimate to ensure the expected warranty costs are within a range of likely outcomes. Management continually evaluates the sufficiency of the warranty provisions and makes adjustments when necessary. The warranty allowances may fluctuate due to higher than anticipated material, labor, and other costs we may incur to repair or replace projected product failures, and we may incur additional warranty and related expenses in the future with respect to new or established products, which could adversely affect our financial position and results of operations. The long-term warranty balance includes estimated warranty claims beyond one year. Warranty expense is classified within cost of revenues. Restructuring and Asset Impairments We record a liability for costs associated with an exit or disposal activity at its fair value in the period in which the liability is incurred. Employee termination benefits considered postemployement benefits are accrued when the obligation is probable and estimable, such as benefits stipulated by human resource policies and practices or statutory requirements. One-time termination benefits are expensed at the date the employee is notified. If the employee must provide future service greater than 60 days, such benefits are expensed ratably over the future service period. For contract termination costs, we record a liability upon the later of when we terminate a contract in accordance with the contract terms or when we cease using the rights conveyed by the contract. Asset impairments are determined at the asset group level. An impairment may be recorded for assets that are to be abandoned, are to be sold for less than net book value, or are held for sale in which the estimated proceeds less costs to sell are less than the net book value. We may also recognize impairment on an asset group, which is held and used, when the carrying value is not recoverable and exceeds the asset group's fair value. If an asset group is considered a business, a portion of the Company's goodwill balance is allocated to it based on relative fair value. Defined Benefit Pension Plans We sponsor both funded and unfunded defined benefit pension plans for certain international employees. We recognize a liability for the projected benefit obligation in excess of plan assets or an asset for plan assets in excess of the projected benefit obligation. We also recognize the funded status of our defined benefit pension plans on our Consolidated Balance Sheets and recognize as a component of OCI, net of tax, the actuarial gains or losses and prior service costs or credits, if any, that arise during the period but that are not recognized as components of net periodic benefit cost. Share Repurchase Plan We may repurchase up to $50 million of shares of Itron common stock under a twelve-month program, which was authorized by our Board of Directors on March 8, 2013. Share repurchases are made in the open market or in privately negotiated transactions and in accordance with applicable securities laws. Under applicable Washington State law, shares repurchased are retired and not displayed separately as treasury stock on the financial statements; the value of the repurchased shares is deducted from common stock. Revenue Recognition Revenues consist primarily of hardware sales, software license fees, software implementation, project management services, installation, consulting, and post-sale maintenance support. Revenues are recognized when (1) persuasive evidence of an arrangement exists, (2) delivery has occurred or services have been rendered, (3) the sales price is fixed or determinable, and (4) collectability is reasonably assured. The majority of our revenue arrangements involve multiple deliverables, which combine two or more of the following: hardware, meter reading system software, installation, and/or project management services. Revenue arrangements with multiple deliverables are divided into separate units of accounting if the delivered item(s) has value to the customer on a standalone basis and delivery/performance of the undelivered item(s) is probable. The total arrangement consideration is allocated among the separate units of accounting based on their relative fair values and the applicable revenue recognition criteria considered for each unit of accounting. The amount allocable to a delivered item is limited to the amount that we are entitled to collect and that is not contingent upon the delivery/performance of additional items. Revenues for each deliverable are then recognized based on the type of deliverable, such as 1) when the products are shipped, 2) services are delivered, 3) percentage-of-completion when implementation services are essential to other deliverables in the arrangement, 4) upon receipt of customer acceptance, or 5) transfer of title and risk of loss. The majority of our revenue is recognized when products are shipped to or received by a customer or when services are provided. If, among other factors, the data collection system does not use standard internet protocols and network design services are deemed complex and extensive, hardware revenues are recognized at the time of shipment, receipt by customer, or, if applicable, upon completion of customer acceptance provisions. Revenue from network software and services is recognized using the units-of-delivery method of contract accounting, as network design services and network software are essential to the functionality of the related hardware (network). This methodology results in the deferral of costs and revenues as professional services and software implementation commence prior to deployment of hardware. In all other instances, hardware revenues are recognized at the time of shipment, receipt by customer, or, if applicable, upon completion of customer acceptance provisions. Network software is recognized when shipped if all other revenue recognition criteria are met and services are not essential to the functionality of the software. If implementation services are essential to the functionality of the network software, software and implementation revenues are recognized using the percentage-of-completion methodology of contract accounting when project costs are reliably estimated. We also enter into multiple deliverable software arrangements that do not include hardware. For this type of arrangement, revenue recognition is dependent upon the availability of vendor specific objective evidence (VSOE) of fair value for each of the deliverables. The lack of VSOE, or the existence of extended payment terms or other inherent risks, may affect the timing of revenue recognition for multiple deliverable software arrangements. Certain of our revenue arrangements include an extended or noncustomary warranty provision that covers all or a portion of a customer's replacement or repair costs beyond the standard or customary warranty period. Whether or not the extended warranty is separately priced in the arrangement, a portion of the arrangement's total consideration is allocated to this extended warranty deliverable. This revenue is deferred and recognized over the extended warranty coverage period. Extended or noncustomary warranties do not represent a significant portion of our revenue. We allocate consideration to each deliverable in an arrangement based on its relative selling price. We determine selling price using VSOE, if it exists, otherwise we use third-party evidence (TPE). We define VSOE as a median price of recent standalone transactions that are priced within a narrow range. TPE is determined based on the prices charged by our competitors for a similar deliverable when sold separately. If neither VSOE nor TPE of selling price exists for a unit of accounting, we use estimated selling price (ESP) to determine the price at which we would transact if the product or service were regularly sold by us on a standalone basis. Our determination of ESP involves a weighting of several factors based on the specific facts and circumstances of the arrangement. The factors considered include the cost to produce the deliverable, the anticipated margin on that deliverable, our ongoing pricing strategy and policies, and the characteristics of the varying markets in which the deliverable is sold. We analyze the selling prices used in our allocation of arrangement consideration on an annual basis. Selling prices are analyzed on a more frequent basis if a significant change in our business necessitates a more timely analysis or if we experience significant variances in our selling prices. Unearned revenue is recorded when a customer pays for products or services, but the criteria for revenue recognition have not been met as of the balance sheet date. Unearned revenues of $83.7 million and $74.9 million at June 30, 2013 and December 31, 2012 related primarily to professional services and software associated with our smart metering contracts, extended or noncustomary warranty, and prepaid post-contract support. Deferred costs are recorded for products or services for which ownership (typically defined as title and risk of loss) has transferred to the customer, but the criteria for revenue recognition have not been met as of the balance sheet date. Deferred costs were $27.7 million and $24.4 million at June 30, 2013 and December 31, 2012 and are recorded within other assets in the Consolidated Balance Sheets. Hardware and software post-sale maintenance support fees are recognized ratably over the life of the related service contract. Shipping and handling costs and incidental expenses billed to customers are recorded as revenue, with the associated cost charged to cost of revenues. We record sales, use, and value added taxes billed to our customers on a net basis. Product and Software Development Costs Product and software development costs primarily include employee compensation and third party contracting fees. We do not capitalize product development costs, and we do not generally capitalize software development expenses as the costs incurred are immaterial for the relatively short period of time between technological feasibility and the completion of software development. Stock-Based Compensation We measure and recognize compensation expense for all stock-based awards made to employees and directors, including stock options, stock sold pursuant to our Employee Stock Purchase Plan (ESPP), and the issuance of restricted stock units and unrestricted stock awards, based on estimated fair values. The fair value of stock options is estimated at the date of grant using the Black-Scholes option-pricing model, which includes assumptions for the dividend yield, expected volatility, risk-free interest rate, and expected term. For ESPP awards, the fair value is the difference between the market close price of our common stock on the date of purchase and the discounted purchase price. For performance-based restricted stock units and unrestricted stock awards with no market conditions, the fair value is the market close price of our common stock on the date of grant. For restricted stock units with market conditions, the fair value is estimated at the date of award using a Monte Carlo simulation model, which includes assumptions for dividend yield and expected volatility for our common stock and the common stock for companies within the Russell 3000 index, as well as the risk-free interest rate and expected term of the awards. We expense stock-based compensation at the date of grant for unrestricted stock awards. For awards with only a service condition, we expense stock-based compensation, adjusted for estimated forfeitures, using the straight-line method over the requisite service period for the entire award. For awards with performance and service conditions, if vesting is probable, we expense the stock-based compensation, adjusted for estimated forfeitures, on a straight-line basis over the requisite service period for each separately vesting portion of the award. For awards with a market condition, we expense the fair value over the requisite service period. Excess tax benefits are credited to common stock when the deduction reduces cash taxes payable. When we have tax deductions in excess of the compensation cost, they are classified as financing cash inflows in the Consolidated Statements of Cash Flows. Income Taxes We compute our interim income tax provision through the use of an estimated annual effective tax rate (ETR) applied to year-to-date operating results and specific events that are discretely recognized as they occur. In determining the estimated annual ETR, we analyze various factors, including the forecasted mix of earnings in domestic and international jurisdictions, new or revised tax legislation and accounting pronouncements, tax credits, state income taxes, adjustments to valuation allowances, and uncertain tax positions, amount other items. Discrete items, including the effect of changes in tax laws, tax rates, and certain circumstances with respect to valuation allowances or other unusual or non-recurring tax adjustments, are reflected in the period in which they occur as an addition to, or reduction from, the income tax provision, rather than included in the estimated annual ETR. Deferred tax assets and liabilities are recognized based upon anticipated future tax consequences, in each of the jurisdictions in which we operate, attributable to: (1) the differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases; and (2) operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The calculation of our tax liabilities involves applying complex tax regulations in different jurisdictions to our tax positions. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. A valuation allowance is recorded to reduce the carrying amount of deferred tax assets if it is more likely than not that such assets will not be realized. We do not record tax liabilities on undistributed earnings of international subsidiaries that are permanently reinvested. We utilize a two step approach to account for uncertain tax positions. A tax position is first evaluated for recognition based on its technical merits. Tax positions that have a greater than fifty percent likelihood of being realized upon ultimate settlement are then measured to determine amounts to be recognized in the financial statements. This measurement incorporates information about potential settlements with taxing authorities. A previously recognized tax position is derecognized in the first period in which the position no longer meets the more-likely-than-not recognition threshold or upon expiration of the statute of limitations. We classify interest expense and penalties related to uncertain tax positions and interest income on tax overpayments as part of income tax expense. Foreign Exchange Our consolidated financial statements are reported in U.S. dollars. Assets and liabilities of international subsidiaries with non-U.S. dollar functional currencies are translated to U.S. dollars at the exchange rates in effect on the balance sheet date, or the last business day of the period, if applicable. Revenues and expenses for each subsidiary are translated to U.S. dollars using a weighted average rate for the relevant reporting period. Translation adjustments resulting from this process are included, net of tax, in OCI. Gains and losses that arise from exchange rate fluctuations for monetary asset and liability balances that are not denominated in an entity’s functional currency are included within other income (expense), net in the Consolidated Statements of Operations. Currency gains and losses of intercompany balances deemed to be long-term in nature or designated as a hedge of the net investment in international subsidiaries are included, net of tax, in OCI. Fair Value Measurements For assets and liabilities measured at fair value, the GAAP fair value hierarchy prioritizes the inputs used in different valuation methodologies, assigning the highest priority to unadjusted quoted prices for identical assets and liabilities in actively traded markets (Level 1) and the lowest priority to unobservable inputs (Level 3). Level 2 inputs consist of quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in non-active markets; and model-derived valuations in which significant inputs are corroborated by observable market data either directly or indirectly through correlation or other means. Inputs may include yield curves, volatility, credit risks, and default rates. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Due to various factors affecting future costs and operations, actual results could differ materially from these estimates. New Accounting Pronouncements The Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2013.11, "Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists" on July 18, 2013. The ASU concludes an unrecognized tax benefit should be presented as a reduction of a deferred tax asset when settlement in this manner is available under the law. We will adopt this amendment as of January 2014. The result of adoption may be to reclassify certain long term liabilities to long term deferred tax assets, and the adoption will not result in a change to the tax provision. Management does not believe that the impact on the balance sheet will be significant. |
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Certain Balance Sheet Components [Text Block] | Certain Balance Sheet Components
At June 30, 2013 and December 31, 2012, $19.0 million and $20.0 million were recorded within trade receivables as billed but not yet paid by customers, in accordance with contract retainage provisions. At June 30, 2013 and December 31, 2012, contract retainage amounts that were unbilled and classified as unbilled receivables were $11.1 million. We had no long-term unbilled receivables or long-term retainage contract receivables at June 30, 2013 and December 31, 2012, as we expect to collect all contract retainage receivables within the following 12 months.
Our inventory levels may vary period to period as a result of our factory scheduling and the timing of contract fulfillments, which may include the buildup of finished goods for shipment. Consigned inventory is held at third-party locations; however, we retain title to the inventory until purchased by the third-party. Consigned inventory, consisting of raw materials and finished goods, was $5.7 million and $5.0 million at June 30, 2013 and December 31, 2012, respectively.
In conjunction with the upgrade of our global enterprise resource planning software systems, we have capitalized $11.1 million within construction in progress at June 30, 2013. Amounts capitalized include internal labor costs and related benefits, software, third-party consulting fees, and $21,000 and $64,000 of interest for the three and six months ended June 30, 2013, respectively. |
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Debt [Text Block] | Debt The components of our borrowings were as follows:
Credit Facility Our credit facility is dated August 5, 2011. The credit facility consists of a $300 million U.S. dollar term loan (the term loan) and a multicurrency revolving line of credit (the revolver) with a principal amount of up to $660 million. Both the term loan and the revolver mature on August 8, 2016, and amounts borrowed under the revolver are classified as long-term. Amounts borrowed under the revolver during the credit facility term may be repaid and reborrowed until the revolver's maturity, at which time the revolver will terminate, and all outstanding loans, together with all accrued and unpaid interest, must be repaid. Amounts not borrowed under the revolver are subject to a commitment fee, which is paid in arrears on the last day of each fiscal quarter, ranging from 0.20% to 0.40% per annum depending on our total leverage ratio as of the most recently ended fiscal quarter. Amounts repaid on the term loan may not be reborrowed. The credit facility permits us and certain of our foreign subsidiaries to borrow in U.S. dollars, euros, British pounds, or, with lender approval, other currencies readily convertible into U.S. dollars. All obligations under the credit facility are guaranteed by Itron, Inc. and material U.S. domestic subsidiaries and are secured by a pledge of substantially all of the assets of Itron, Inc. and material U.S. domestic subsidiaries, including a pledge of 100% of the capital stock of material U.S. domestic subsidiaries and up to 66% of the voting stock (100% of the non-voting stock) of their first-tier foreign subsidiaries. In addition, the obligations of any foreign subsidiary who is a foreign borrower, as defined by the credit facility, are guaranteed by the foreign subsidiary and by its direct and indirect foreign parents. The credit facility includes debt covenants, which contain certain financial ratios and place certain restrictions on the incurrence of debt, investments, and the issuance of dividends. We were in compliance with the debt covenants under the credit facility at June 30, 2013. Scheduled principal repayments for the term loan are due quarterly in the amounts of $5.6 million from September 2013 through June 2014 and $7.5 million from September 2014 through June 2016, with the remainder due at maturity on August 8, 2016. The term loan may be repaid early in whole or in part, subject to certain minimum thresholds, without penalty. Under the credit facility, we elect applicable market interest rates for both the term loan and any outstanding revolving loans. We also pay an applicable margin, which is based on our total leverage ratio (as defined in the credit agreement). The applicable rates per annum may be based on either: (1) the LIBOR rate, plus an applicable margin, or (2) the Alternate Base Rate, plus an applicable margin. The Alternate Base Rate election is equal to the greatest of three rates: (i) the prime rate, (ii) the Federal Reserve effective rate plus 1/2 of 1%, or (iii) one month LIBOR plus 1%. At June 30, 2013, the interest rate for both the term loan and the revolver was 1.45% (the LIBOR rate plus a margin of 1.25%). Total credit facility repayments were as follows:
At June 30, 2013, $140.0 million was outstanding under the credit facility revolver, and $47.0 million was utilized by outstanding standby letters of credit, resulting in $473.0 million available for additional borrowings. Unamortized prepaid debt fees were as follows:
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Defined Benefit Pension Plans Schedule of Net Periodic Pension Benefit Costs (Details) (USD $)
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Service cost | $ 1,011 | $ 676 | $ 1,992 | $ 1,414 |
Interest cost | 786 | 909 | 1,586 | 1,835 |
Expected return on plan assets | (79) | (82) | (158) | (167) |
Settlements and other | 0 | 0 | (814) | 0 |
Amortization of actuarial net loss | 246 | 2 | 497 | 4 |
Amortization of unrecognized prior service costs | 17 | 17 | 34 | 34 |
Net periodic benefit cost | $ 1,981 | $ 1,522 | $ 3,137 | $ 3,120 |
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Intangible Assets, Net (Excluding Goodwill) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets [Text Block] | Intangible Assets The gross carrying amount and accumulated amortization of our intangible assets, other than goodwill, are as follows:
A summary of the intangible asset account activity is as follows:
Intangible assets acquired in 2012 were related to the SmartSynch acquisition on May 1, 2012, including IPR&D assets that consisted primarily of projects to upgrade the hardware components of cellular communication modules to be compatible with 3G cellular network standards. Upon completion of these projects in March 2013, we performed a qualitative assessment and determined that it was more than likely that the carrying amount of IPR&D was not impaired. Accordingly, the carrying amount of IPR&D was reclassified as core-developed technology and will be amortized over its expected useful life of seven years based on the SmartSynch acquisition discounted cash flow valuation model. For the six months ended June 30, 2013, the adjustment of $1.5 million to intangible assets acquired is associated with the correction of an error for a long-term revenue contract from the SmartSynch acquisition. See Note 5 for further discussion of the correction of the error and its impact on goodwill. Intangible assets of our international subsidiaries are recorded in their respective functional currency; therefore, the carrying amounts of intangible assets increase or decrease, with a corresponding change in accumulated OCI, due to changes in foreign currency exchange rates. Estimated future annual amortization expense is as follows:
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Income Tax Policy Additional Information (Details) (Minimum [Member])
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6 Months Ended |
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Jun. 30, 2013
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Minimum [Member]
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Income Tax Contingency [Line Items] | |
Income Tax Examination Likelihood Of Favorable Settlement Minimum For Recognition | 50.00% |
Derivative Financial Instruments Derivative Financial Instruments (Tables)
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Jun. 30, 2013
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Derivative Financial Instruments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Table Text Block] | The fair values of our derivative instruments at June 30, 2013 and December 31, 2012 were as follows:
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Offsetting Assets [Table Text Block] |
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Offsetting Liabilities [Table Text Block] |
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Accumulated OCI for Derivative and Nonderivative Instruments Designated as Hedging Instruments, Net of Tax [Table Text Block] | OCI during the reporting periods for our derivative hedging instruments, net of tax, was as follows:
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Effect of Cash Flow Derivatives on the Balance Sheet and Income Statement, Before Tax [Table Text Block] | The before-tax effect of our cash flow derivative instruments on the Consolidated Balance Sheets and the Consolidated Statements of Operations for the three and six months ended June 30 were as follows:
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Foreign Exchange Derivatives Not Designated As Hedging Instruments [Table Text Block] | The effect of our foreign exchange forward derivative instruments on the Consolidated Statements of Operations for the three and six months ended June 30 was as follows:
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Commitments and Contingencies Commitments and Contingencies (Tables)
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Jun. 30, 2013
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Line of Credit Facilities [Table Text Block] | Our available lines of credit, outstanding standby LOCs, and bonds are as follows:
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Schedule of Warranty Accruals [Table Text Block] | A summary of the warranty accrual account activity is as follows:
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Warranty Expense [Table Text Block] | Warranty expense for the three and six months ended June 30 is as follows:
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Schedule of Changes to Unearned Revenue for Extended Warranty [Table Text Block] | A summary of changes to unearned revenue for extended warranty contracts is as follows:
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Health Benefit Plan Costs and Incurred But Not Reported Accrual Balance [Table Text Block] | Each reporting period, we expense the costs of our health insurance plan including paid claims, the change in the estimate of incurred but not reported (IBNR) claims, taxes, and administrative fees (collectively, the plan costs). Plan costs are as follows:
The IBNR accrual, which is included in wages and benefits payable, is as follows:
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Derivative Financial Instruments Derivatives Not Designated as Hedging Relationships (Details) (Other Income (Expense) [Member], USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Other Income (Expense) [Member]
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Derivative Instruments Not Designated as Hedging Instruments [Abstract] | ||||
Foreign exchange forward contracts | $ (971) | $ (244) | $ (757) | $ (421) |
Segment Information Major Customers (Details)
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6 Months Ended |
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Jun. 30, 2013
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Revenue, Major Customer [Line Items] | |
Segment Reporting, Disclosure of Major Customers | For the three and six months ended June 30, 2013, no single customer represented more than 10% of the total Company, the Energy operating segment, or the Water operating segment revenues. For the three and six months ended June 30, 2012, one customer from the Energy operating segment accounted for 11% of the total Company revenues. During the same periods, one customer accounted for 15% of the Energy operating segment revenues, and no single customer accounted for more than 10% of the Water operating segment revenues. |
Basis of Consolidation Policy Additional Information (Details)
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3 Months Ended | 6 Months Ended |
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Jun. 30, 2013
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Jun. 30, 2013
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Maximum [Member]
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Ownership Interest to be Held for Consolidation [Line Items] | ||
Ownership Interest To Use Equity Method | 50.00% | |
Ownership Interest To Use Cost Method | 20.00% | |
Minimum [Member]
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Ownership Interest to be Held for Consolidation [Line Items] | ||
Ownership Interest to be Held for Consolidation | 50.00% | 50.00% |
Ownership Interest to be Held for Consolidation - Noncontrolling Interests | 50.00% | 50.00% |
Derivative Financial Instruments Effect of Cash Flow Derivatives on the Balance Sheet and Income Statement, Before Tax (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Interest Rate Swap Contracts [Abstract] | ||||
Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion) | $ 1,336 | $ (1,365) | $ 1,244 | $ (1,365) |
Interest Expense [Member]
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Interest Rate Swap Contracts [Abstract] | ||||
Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | 0 | 0 | 0 | 0 |
Gain (Loss) Recognized in Income on Derivative (Ineffective Portion) | $ 0 | $ 0 | $ 0 | $ 0 |
Restructuring Restructuring Long-lived Assets Measured at Fair Value (Details) (USD $)
In Thousands, unless otherwise specified |
6 Months Ended | 12 Months Ended |
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Jun. 30, 2013
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Dec. 31, 2012
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Long Lived Assets Held-for-sale [Line Items] | ||
Assets Held-for-sale, Long Lived | $ 3,128 | $ 3,184 |
Impairment of Long-Lived Assets to be Disposed of | 0 | 2 |
Fair Value, Inputs, Level 3 [Member]
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Long Lived Assets Held-for-sale [Line Items] | ||
Assets Held-for-sale, Long Lived, Fair Value Disclosure | $ 3,128 | $ 3,184 |
Intangible Assets Gross Carrying Amount and Accumulated Amortization (Details) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
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Dec. 31, 2012
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Jun. 30, 2012
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Dec. 31, 2011
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Intangible Assets [Line Items] | ||||
Gross Assets | $ 784,146 | $ 783,140 | ||
Accumulated Amortization | (573,297) | (563,769) | ||
Net | 210,849 | 219,371 | ||
Gross Assets (including IPR&D) | 784,146 | 802,540 | 778,759 | 749,194 |
Net (including IPR&D) | 210,849 | 238,771 | ||
Core-developed technology [Member]
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Intangible Assets [Line Items] | ||||
Gross Assets | 420,055 | 407,024 | ||
Accumulated Amortization | (338,145) | (332,763) | ||
Net | 81,910 | 74,261 | ||
Customer contracts and relationships [Member]
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Intangible Assets [Line Items] | ||||
Gross Assets | 281,644 | 292,252 | ||
Accumulated Amortization | (159,231) | (154,890) | ||
Net | 122,413 | 137,362 | ||
Trademarks and trade names [Member]
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Intangible Assets [Line Items] | ||||
Gross Assets | 71,356 | 72,770 | ||
Accumulated Amortization | (64,897) | (65,090) | ||
Net | 6,459 | 7,680 | ||
Other [Member]
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Intangible Assets [Line Items] | ||||
Gross Assets | 11,091 | 11,094 | ||
Accumulated Amortization | (11,024) | (11,026) | ||
Net | 67 | 68 | ||
In-process research and development
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Intangible Assets [Line Items] | ||||
In-process research and development | $ 0 | $ 19,400 |