Commitments and Contingencies (Text Block)

3 Months Ended

Mar. 31, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies [Text Block]

Commitments and Contingencies

Guarantees and Indemnifications

We are often required to obtain standby letters of credit (LOCs) or bonds in support of our obligations for customer contracts. These standby LOCs or bonds typically provide a guarantee to the customer for future performance, which usually covers the installation phase of a contract and may, on occasion, cover the operations and maintenance phase of outsourcing contracts.

Our available lines of credit, outstanding standby LOCs, and performance bonds were as follows:

	March 31, 2016			December 31, 2015
	(in thousands)
Credit facilities(1)
Multicurrency revolving line of credit	$	500,000		$	500,000
Long-term borrowings	(132,572		)	(151,837		)
Standby LOCs issued and outstanding	(45,928		)	(46,574		)
Net available for additional borrowings under the multi-currency revolving line of credit	$	321,500		$	301,589
Net available for additional standby LOCs under sub-facility(2)	254,072			253,426
Unsecured multicurrency revolving lines of credit with various financial institutions
Multicurrency revolving lines of credit	$	100,424		$	97,989
Standby LOCs issued and outstanding	(26,392		)	(31,122		)
Short-term borrowings(3)	(1,373		)	(3,884		)
Net available for additional borrowings and LOCs	$	72,659		$	62,983
Unsecured surety bonds in force	$	131,617		$	87,558

⁽¹⁾ Refer to Note 6 for details regarding our secured credit facilities.

⁽²⁾  Subsequent to March 31, 2016, as a result of entering into the first and second amendments to the 2015 credit facility, the maximum limit available for additional standby LOCs under sub-facility was reduced from $300 million to $250 million.

⁽³⁾  Short-term borrowings are included in “Other current liabilities” on the Consolidated Balance Sheets.

In the event any such standby LOC or bond is called, we would be obligated to reimburse the issuer of the standby LOC or bond; however, we do not believe that any outstanding LOC or bond will be called.

We generally provide an indemnification related to the infringement of any patent, copyright, trademark, or other intellectual property right on software or equipment within our sales contracts, which indemnifies the customer from and pays the resulting costs, damages, and attorney’s fees awarded against a customer with respect to such a claim provided that: 1) the customer promptly notifies us in writing of the claim and 2) we have the sole control of the defense and all related settlement negotiations. We may also provide an indemnification to our customers for third party claims resulting from damages caused by the negligence or willful misconduct of our employees/agents in connection with the performance of certain contracts. The terms of our indemnifications generally do not limit the maximum potential payments. It is not possible to predict the maximum potential amount of future payments under these or similar agreements.

Legal Matters

We are subject to various legal proceedings and claims of which the outcomes are subject to significant uncertainty. Our policy is to assess the likelihood of any adverse judgments or outcomes related to legal matters, as well as ranges of probable losses. A determination of the amount of the liability required, if any, for these contingencies is made after an analysis of each known issue. A liability is recorded and charged to operating expense when we determine that a loss is probable and the amount can be reasonably estimated. Additionally, we disclose contingencies for which a material loss is reasonably possible, but not probable.

On July 14, 2016, we entered into a confidential settlement agreement with Transdata Incorporated (Transdata) under which Transdata agreed to dismiss with prejudice all pending litigation in various United States District Courts against us and certain of our customers. As a part of the settlement, we will receive a patent license from Transdata for the use of the patents in future meter production and sales.

In Brazil, the Conselha Administravo de Defensa Economica commenced an investigation of water meter suppliers, including a subsidiary of the Company, to determine whether such suppliers participated in agreements or concerted practices to coordinate their commercial policy in Brazil. Although the Company is unable to determine the final amount of any fine at this time, we believe that we have made adequate provisions based on information available to us. Consequently, we do not believe that the actual fine and ultimate outcome of this matter will have a material adverse effect on our operations or financial condition.

Itron and its subsidiaries are parties to various employment-related proceedings in jurisdictions where it does business. None of the proceedings are individually material to Itron, and we believe that we have made adequate provision such that the ultimate disposition of the proceedings will not materially affect Itron's business or financial condition.

Warranty

A summary of the warranty accrual account activity is as follows:

	Three Months Ended March 31,
	2016			2015
	(in thousands)
Beginning balance	$	54,512		$	36,548
New product warranties	2,404			1,800
Other changes/adjustments to warranties	1,034			3,445
Claims activity	(7,390		)	(2,773		)
Effect of change in exchange rates	182			(1,955		)
Ending balance	50,742			37,065
Less: current portion of warranty	32,244			22,256
Long-term warranty	$	18,498		$	14,809

Total warranty expense is classified within cost of revenues and consists of new product warranties issued, costs related to extended warranty contracts, and other changes and adjustments to warranties. Warranty expense was as follows:

	Three Months Ended March 31,
	2016		2015
	(in thousands)
Total warranty expense	$	3,438	$	5,245

Unearned Revenue Related to Extended Warranty

A summary of changes to unearned revenue for extended warranty contracts is as follows:

	Three Months Ended March 31,
	2016			2015
	(in thousands)
Beginning balance	$	33,654		$	34,138
Unearned revenue for new extended warranties	581			605
Unearned revenue recognized	(857		)	(649		)
Effect of change in exchange rates	120			(194		)
Ending balance	33,498			33,900
Less: current portion of unearned revenue for extended warranty	3,750			2,971
Long-term unearned revenue for extended warranty within other long-term obligations	$	29,748		$	30,929

Health Benefits

We are self insured for a substantial portion of the cost of our U.S. employee group health insurance. We purchase insurance from a third party, which provides individual and aggregate stop-loss protection for these costs. 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 were as follows:

	Three Months Ended March 31,
	2016		2015
	(in thousands)
Plan costs	$	6,774	$	6,513

The IBNR accrual, which is included in wages and benefits payable, was as follows:

	March 31, 2016		December 31, 2015
	(in thousands)
IBNR accrual	$	2,013	$	2,051

Our IBNR accrual and expenses may fluctuate due to the number of plan participants, claims activity, and deductible limits. For our employees located outside of the United States, health benefits are provided primarily through governmental social plans, which are funded through employee and employer tax withholdings.