Segment Information (Text Block)

9 Months Ended

Sep. 30, 2014

Segment Reporting [Abstract]

Segment Information [Text Block]

Segment Information

We operate under the Itron brand worldwide and manage and report under three operating segments, Electricity, Gas, and Water. Our Water operating segment includes both our global water and heat solutions.

In March 2013, we separated the management of our Energy operating segment into Electricity and Gas to allow each business line to develop its own go-to-market strategy, prioritize its marketing and product development requirements, and focus on its strategic investments. Our sales, marketing, and delivery functions are managed under three business lines - Electricity, Gas, and Water. Our product development and manufacturing operations are now managed on a worldwide basis to promote a global perspective in our operations and processes while maintaining alignment with the business lines. The transition to the new organizational structure, including changes to operations and financial reporting systems, was completed in the fourth quarter of 2013. Our historical segment information for the three and nine months ended September 30, 2013 has been recast to reflect our new operating segments.

We have three measures of segment performance: revenue, gross profit (margin), and operating income (margin). Our operating segments have distinct products, and, therefore, intersegment revenues are minimal. Certain operating expenses are allocated to the operating segments based upon established allocation methodologies. Corporate operating expenses, interest income, interest expense, other income (expense), and income tax provision (benefit) are not allocated to the segments, nor included in the measure of segment profit or loss. In addition, we allocate only certain production assets and intangible assets to our operating segments. We do not manage the performance of the segments on a balance sheet basis.

Segment Products

Electricity	Standard electricity (electromechanical and electronic) meters; advanced electricity meters and communication modules; smart electricity meters; smart electricity 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.
Gas	Standard gas meters; advanced gas meters and communication modules; smart gas meters; smart 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; smart heat meters; 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.

Revenues, gross profit, and operating income associated with our segments were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
	(in thousands)
Revenues
Electricity	$	203,441		$	216,615		$	567,414		$	605,990
Gas	149,276			143,240			449,707			416,166
Water	143,737			135,636			443,481			403,046
Total Company	$	496,454		$	495,491		$	1,460,602		$	1,425,202
Gross profit
Electricity	$	45,959		$	47,637		$	141,675		$	155,094
Gas	53,492			55,303			168,609			156,073
Water	51,311			47,144			158,054			138,628
Total Company	$	150,762		$	150,084		$	468,338		$	449,795
Operating income (loss)
Electricity	$	(11,196	)	$	(33,756	)	$	(35,412	)	$	(56,923	)
Gas	23,836			24,472			73,889			62,883
Water	19,157			17,225			60,319			45,189
Corporate unallocated	(15,339		)	(14,429		)	(45,872		)	(37,314		)
Total Company	16,458			(6,488		)	52,924			13,835
Total other income (expense)	(4,421		)	(2,859		)	(13,966		)	(8,837		)
Income before income taxes	$	12,037		$	(9,347	)	$	38,958		$	4,998

During the third quarter, in our Electricity segment, we revised our estimate of the cost to complete an OpenWay project in North America. This resulted in a decrease to gross profit of $11.4 million, which decreased basic and diluted earnings per share by $0.18 for the three and nine months ended September 30, 2014. We previously recorded additional costs on this contract in the third quarter of 2013, which decreased gross profit by $13.6 million and decreased basic and diluted earnings per share by $0.22 for the three months ended September 30, 2013 and $0.21 for the nine months ended September 30, 2013.

For the three and nine months ended September 30, 2014 and September 30, 2013, no single customer represented more than 10% of total Company or the Electricity, Gas, or Water operating segment revenues.

Revenues by region were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
	(in thousands)
United States and Canada	$	237,684	$	227,784	$	652,390	$	616,555
Europe, Middle East, and Africa	201,673		208,546		641,434		635,691
Other	57,097		59,161		166,778		172,956
Total revenues	$	496,454	$	495,491	$	1,460,602	$	1,425,202

Depreciation and amortization expense associated with our segments was as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
	(in thousands)
Electricity	$	11,596	$	11,740	$	36,754	$	35,084
Gas	6,486		6,736		19,590		20,211
Water	6,466		6,201		18,679		18,379
Corporate Unallocated	79		41		210		75
Total Company	$	24,627	$	24,718	$	75,233	$	73,749