Segment Information (Text Block)

6 Months Ended

Jun. 30, 2017

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. This structure allows each segment 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 each segment. Our product development and manufacturing operations are managed on a worldwide basis to promote a global perspective in our operations and processes and yet still maintain alignment with the segments.

We have three GAAP 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 internally established allocation methodologies. Corporate operating expenses, interest income, interest expense, other income (expense), and income tax provision 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; smart metering solutions that include one or several of the following: smart electricity meters; smart electricity communication modules; prepayment systems, including smart key, keypad, and smart card communication technologies; smart systems including handheld, mobile, and fixed network collection technologies; smart network technologies; meter data management software; knowledge application solutions; installation; implementation; and professional services including consulting and analysis.
Gas	Standard gas meters; smart metering solutions that include one or several of the following: smart gas meters; smart gas communication modules; prepayment systems, including smart key, keypad, and smart card communication technologies; smart systems, including handheld, mobile, and fixed network collection technologies; smart network technologies; meter data management software; knowledge application solutions installation; implementation; and professional services including consulting and analysis.
Water	Standard water and heat meters; smart metering solutions that include one or several of the following: smart water meters and communication modules; smart heat meters; smart systems including handheld, mobile, and fixed network collection technologies; meter data management software; knowledge application solutions; installation; implementation; and professional services including consulting and analysis.

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

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
	(in thousands)
Revenues
Electricity	$	250,332		$	232,823		$	489,083		$	450,118
Gas	138,700			150,266			262,911			289,522
Water	114,050			129,935			228,680			270,974
Total Company	$	503,082		$	513,024		$	980,674		$	1,010,614
Gross profit
Electricity	$	78,595		$	70,892		$	145,787		$	135,478
Gas	50,272			53,483			100,776			102,060
Water	48,993			45,330			88,522			95,370
Total Company	$	177,860		$	169,705		$	335,085		$	332,908
Operating income (loss)
Electricity	$	17,653		$	20,008		$	34,515		$	30,640
Gas	16,563			25,376			37,819			41,675
Water	16,686			14,177			25,421			32,253
Corporate unallocated	(14,080		)	(24,088		)	(30,891		)	(45,521		)
Total Company	36,822			35,473			66,864			59,047
Total other income (expense)	(5,255		)	(2,778		)	(10,236		)	(6,942		)
Income before income taxes	$	31,567		$	32,695		$	56,628		$	52,105

For the three and six months ended June 30, 2017, one customer represented 22% and 20%, respectively, of total Electricity segment revenues. For the three months ended June 30, 2017, one customer represented 11% of total company revenues. For the six months ended June 30, 2017, no single customer represented more than 10% of total company revenues. For the three and six months ended June 30, 2017, no single customer represented more than 10% of the Gas or Water operating segment revenues.

For the three and six months ended June 30, 2016, one customer represented 12% and 13%, respectively, of total Electricity segment revenues. For the three and six months ended June 30, 2016, no single customer represented more than 10% of the Gas or Water operating segment revenues, or total company revenues.

During the three months ended June 30, 2017, we recognized an insurance recovery in our Water segment associated with warranty costs recognized as a result of our 2015 product replacement notification to customers who had purchased certain communication modules. As a result, gross profit increased $8.0 million for the three and six months ended June 30, 2017. After adjusting for the tax impact, the recovery resulted in an increase of $0.13 and $0.12 to basic and diluted earnings per share, respectively, for the three months ended June 30, 2017, and $0.13 for both basic and diluted earnings per share for the six months ended June 30, 2017.

Revenues by region were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
	(in thousands)
United States and Canada	$	295,737	$	278,315	$	564,834	$	540,352
Europe, Middle East, and Africa	158,766		187,848		321,581		383,558
Other(1)	48,579		46,861		94,259		86,704
Total revenues	$	503,082	$	513,024	$	980,674	$	1,010,614

⁽¹⁾  The Other region includes our operations in Latin America and Asia Pacific.

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
	(in thousands)
Electricity	$	5,774	$	7,771	$	11,085	$	15,033
Gas	4,503		4,968		8,747		9,889
Water	3,887		4,636		7,846		9,018
Corporate unallocated	926		1,432		1,790		1,541
Total Company	$	15,090	$	18,807	$	29,468	$	35,481