Sale of Business

12 Months Ended

Dec. 31, 2021

Discontinued Operations and Disposal Groups [Abstract]

Sale of Businesses

Latin America Divestiture

On June 25, 2020, we closed on the sale of five subsidiaries comprising our manufacturing and sales operations in Latin America to buyers led by Instalación Profesional y Tecnologías del Centro S.A. de C.V., a Mexican company doing business as Accell in Brazil (Accell), through the execution of various definitive stock purchase agreements. The sale of these Latin America-based operations is part of our continued strategy to improve profitability and focus on growing our Networked Solutions and Outcomes businesses in Latin America and throughout the world. We retained the intellectual property rights to our products sold in Latin America. As part of the transaction, we entered into an intellectual property license agreement whereby Accell pays a royalty on certain products manufactured by Accell using licensed Company intellectual property. In addition, Accell serves as the exclusive distributor for our Device Solutions, Networked Solutions, and Outcomes product and service offerings in Latin America.

The total sales price of $35.0 million included deferred payments of $21.1 million for working capital, which was to be paid in full by December 31, 2020, as evidenced by a promissory note, and the remainder in cash ($4.5 million) and other deferred consideration. We recognized a total loss of $59.8 million during the year ended 2020, as the result of the total of the net assets sold (including the cumulative translation adjustment in AOCI) exceeding the sales price.

In January 2021, we agreed to extend the payment terms on the remaining outstanding working capital balance of $18.4 million. Accell had agreed to make monthly payments including interest through September 2022, under which we received full payments for January through March and partial payments in April and May (totaling $3.8 million including $0.7 million in interest). Based on Accell's failure to make timely payments, continued requests to defer payments significantly beyond the original maturity of the working capital note and the unfavorable impact of the COVID-19 pandemic on the Latin American markets, we determined to fully reserve the working capital and other deferred receivables, recognizing a loss on sale of business of $26.8 million for the year ended December 31, 2021.

Sale to Dresser

On November 2, 2021, Itron entered into a definitive securities and asset purchase agreement to sell certain of its Gas device manufacturing and business operations in Europe and North America to Dresser. The sale includes one German subsidiary – Itron GmbH along with its business operations, personnel, and the owned manufacturing facility in Karlsruhe; the business operations, personnel, and assets associated with the leased manufacturing facility in Argenteuil, France; and the business and manufacturing assets maintained at one of our contract manufacturers in North America. The sale of these assets and operations

is part of Itron's continued strategy to improve profitability and focus on growing its higher value businesses throughout the world.

As of the fourth quarter of 2021, we reclassified the assets and liabilities of this asset group as held for sale. Based on the sales price and the carrying value of the assets including the foreign currency translation losses accumulated since the acquisition of the German subsidiary in 2007, we recognized a pre-tax impairment loss of $34.4 million and $3.1 million for professional services in conjunction with the sale to Dresser (classified within Loss on sale of business within the Consolidated Statements of Operations) as of December 31, 2021. The base sale price of this divestiture was $75 million, with adjustments for (1) pension liabilities assumed by Dresser for the active employees and (2) the final working capital balance, which will be determined as of the close date, and, if the balance is outside the targeted amount, the difference will be settled shortly thereafter. Cash proceeds from the sale were estimated at a net $53.9 million ($63.7 million less $9.8 million in cash held for sale) at December 31, 2021. The transaction closed on February 28, 2022, and the final sales price and loss on sale will be determined and recognized during the second quarter of 2022, based on the 90-day working capital validation process.

Current and non-current assets and liabilities included with the sale have been classified as held for sale as of November 2, 2021 and moved to other current assets and liabilities as of December 31, 2021. All balances below are as of December 31, 2021. Final balances will be determined upon transaction closing, including the 90-day working capital review period.

The table below presents the components of the balance sheet accounts reclassified to current assets and liabilities held for sale related to the sale to Dresser.


In thousands	Year Ended December 31,
	2021
Current assets
Cash and cash equivalents	$	9,750
Accounts receivable, net	751
Inventories	15,410
Other current assets	401

Non-current assets
Property, plant, and equipment, net	12,012
Operating lease right-of-use assets, net	1,212
Intangible assets, net	3,436
Goodwill	12,800
Transaction impairment	(34,425)
Total held for sale asset balance	$	21,347

Current liabilities
Accounts payable	$	(4,635)
Other current liabilities	(126)
Wages and benefits payable	(1,271)
Taxes payable	(18)
Current portion of warranty	(50)
Unearned revenue	(12)

Non-current liabilities
Long-term warranty	(40)
Pension benefit obligation	(11,513)
Operating lease liabilities	(480)
Other long-term obligations	(448)
Total held for sale liability balance	$	(18,593)