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Segment Information
6 Months Ended
Jun. 30, 2018
Segment Reporting [Abstract]  
Segment Information
Segment Information

We operate under the Itron brand worldwide and manage and report under four operating segments: Electricity, Gas, Water, and Networks. Our Water operating segment includes our global water, and heat and allocation solutions. Networks became a new operating segment with the acquisition of SSNI. This structure allows each operating segment to develop its own go-to-market strategy, prioritize its marketing and product development requirements, and focus on its strategic investments. Our sales and marketing function is managed under each operating segment. Our product development, service delivery, 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 operating segments.

We have three GAAP measures of segment performance: revenue, gross profit (margin), and operating income (margin). Intersegment revenues are minimal. Certain operating expenses are allocated to our Electricity, Gas, and Water operating segments based upon internally established allocation methodologies. We will not allocate operating expenses to our Networks operating segment until it is fully integrated and managed centrally. Corporate operating expenses, interest income, interest expense, other income (expense), and income tax provision are not allocated to the operating segments, nor are included in the measure of operating 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 operating segments on a balance sheet basis.

Segment Products
Electricity
Standard electricity (electromechanical and electronic) meters; smart network and data platform 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 network and data platform 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 network and data platform 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.
 
 
Networks
Smart network and data platform solutions for electricity, gas, water and smart cities including advanced metering, distribution automation, demand-side management, and street lights. Solutions include one or several of the following: communications modules, access points, relays and bridges; network operating software, grid management, security and grid analytics managed services and SaaS; installation; implementation; and professional services including consulting and analysis.

Revenues, gross profit, and operating income associated with our operating segments were as follows:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2018
 
2017
 
2018
 
2017
 
(in thousands)
Product revenues
 
 
 
 
 
 
 
Electricity
$
212,236

 
$
215,271

 
$
426,113

 
$
421,174

Gas
129,397

 
130,872

 
259,640

 
247,999

Water
118,574

 
108,570

 
244,161

 
217,905

Networks
55,707

 

 
123,110

 

Total Company
$
515,914

 
$
454,713

 
$
1,053,024

 
$
887,078

 
 
 
 
 
 
 
 
Service revenues
 
 
 
 
 
 
 
Electricity
$
38,342

 
$
35,061

 
$
76,870

 
$
67,909

Gas
7,635

 
7,828

 
15,131

 
14,912

Water
6,063

 
5,480

 
11,670

 
10,775

Networks
17,936

 

 
36,416

 

Total Company
$
69,976

 
$
48,369

 
$
140,087

 
$
93,596

 
 
 
 
 
 
 
 
Total revenues
 
 
 
 
 
 
 
Electricity
$
250,578

 
$
250,332

 
$
502,983

 
$
489,083

Gas
137,032

 
138,700

 
274,771

 
262,911

Water
124,637

 
114,050

 
255,831

 
228,680

Networks
73,643

 

 
159,526

 

Total Company
$
585,890

 
$
503,082

 
$
1,193,111

 
$
980,674

 
 
 
 
 
 
 
 
Gross profit
 
 
 
 
 
 
 
Electricity
$
76,987

 
$
78,645

 
$
146,962

 
$
145,895

Gas
40,543

 
50,536

 
84,014

 
101,351

Water
37,835

 
49,096

 
75,640

 
88,668

Networks
21,212

 

 
49,816

 

Total Company
$
176,577

 
$
178,277

 
$
356,432

 
$
335,914

 
 
 
 
 
 
 
 
Operating income (loss)
 
 
 
 
 
 
 
Electricity
$
28,997

 
$
17,839

 
$
26,229

 
$
34,923

Gas
15,245

 
16,977

 
(13,103
)
 
38,708

Water
8,824

 
16,866

 
(2,886
)
 
25,670

Networks
(28,219
)
 

 
(103,729
)
 

Corporate unallocated
(4,284
)
 
(14,054
)
 
(26,396
)
 
(30,846
)
Total Company
20,563

 
37,628

 
(119,885
)
 
68,455

Total other income (expense)
(13,009
)
 
(6,061
)
 
(29,019
)
 
(11,827
)
Income (loss) before income taxes
$
7,554

 
$
31,567

 
$
(148,904
)
 
$
56,628



For the three and six months ended June 30, 2018, one customer represented 23% and 22%, respectively, of total Electricity operating segment revenues, and another customer represented 16% for the same three and six months periods. For both the three and six months ended June 30, 2018, one customer represented 12% of total Gas operating segment revenues. For the three and six ended June 30, 2018, no single customer represented more than 10% of the Water operating segment revenues. For the three and six months ended June 30, 2018, one customer represented 18% and 13%, respectively, and another customer represented 15% and 13%, respectively, of total Networks operating segment revenues. For the three months ended June 30, 2018, one customer represented 10% of total company revenues, and no single customer represented more than 10% of total company revenues for the six months ended June 30, 2018.

For the three and six months ended June 30, 2017, one customer represented 22% and 20%, respectively, of total Electricity operating 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.

We currently buy a majority of our integrated circuit board assemblies from three suppliers. Management believes that other suppliers could provide similar products, but a change in suppliers, disputes with our suppliers, or unexpected constraints on the suppliers' production capacity could adversely affect operating results.

Revenues by region were as follows:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2018
 
2017
 
2018
 
2017
 
(in thousands)
United States and Canada
$
348,101

 
$
295,737

 
$
704,033

 
$
564,834

Europe, Middle East, and Africa
184,748

 
158,766

 
386,822

 
321,581

Other(1)
53,041

 
48,579

 
102,256

 
94,259

Total revenues
$
585,890

 
$
503,082

 
$
1,193,111

 
$
980,674



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

Depreciation and amortization expense associated with our operating segments was as follows:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2018
 
2017
 
2018
 
2017
 
(in thousands)
Electricity
$
6,419

 
$
5,774

 
$
12,944

 
$
11,085

Gas
4,254

 
4,503

 
8,456

 
8,747

Water
4,008

 
3,887

 
8,117

 
7,846

Networks
15,223

 

 
30,235

 

Corporate unallocated
1,003

 
926

 
2,227

 
1,790

Total Company
$
30,907

 
$
15,090

 
$
61,979

 
$
29,468