-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, O+uPNpAchLnqzptTamrSvqFdfsJBKqYqCuTFUyQS+kjrjujwCgB/+Wqro3utYFv2 Ud0AFYpGh9MqReghg81ZRw== 0001157523-05-009360.txt : 20051028 0001157523-05-009360.hdr.sgml : 20051028 20051028070027 ACCESSION NUMBER: 0001157523-05-009360 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20051028 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20051028 DATE AS OF CHANGE: 20051028 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ITRON INC /WA/ CENTRAL INDEX KEY: 0000780571 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 911011792 STATE OF INCORPORATION: WA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-22418 FILM NUMBER: 051161364 BUSINESS ADDRESS: STREET 1: 2818 N SULLIVAN RD CITY: SPOKANE STATE: WA ZIP: 99216 BUSINESS PHONE: 5099249900 MAIL ADDRESS: STREET 1: 2818 NORTH SULLIVAN ROAD CITY: SPOKANE STATE: WA ZIP: 99216 FORMER COMPANY: FORMER CONFORMED NAME: ITRON INC DATE OF NAME CHANGE: 19920724 8-K 1 a5006690.txt ITRON, INC. 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------------------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 October 28, 2005 -------------------------- Date of Report (Date of Earliest Event Reported) ITRON, INC. -------------------------------------------------------------- (Exact Name of Registrant as Specified in its Charter) Washington 000-22418 91-1011792 - ---------------------------- --------------- ------------------- (State or Other Jurisdiction (Commission IRS Employer of Incorporation) File No.) Identification No.) 2818 N. Sullivan Road, Spokane, WA 99216 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices, Zip Code) (509) 924-9900 - -------------------------------------------------------------------------------- (Registrant's Telephone Number, Including Area Code) None - -------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02 Results of Operations and Financial Condition. On October 28, 2005, Itron, Inc. issued a press release announcing the financial results for the three and nine months ending September 30, 2005. A copy of this press release and accompanying financial statements are attached as Exhibit 99.1. Item 9.01 Financial Statements and Exhibits. (c) Exhibits. The following exhibit is filed as part of this report: Exhibit Number Description - -------------- ------------------------------------------------------------- 99.1 Press Release dated October 28, 2005. The information presented in this Current Report on Form 8-K may contain forward-looking statements and certain assumptions upon which such forward-looking statements are in part based. Numerous important factors, including those factors identified in Itron, Inc.'s Annual Report on Form 10-K and other of the Company's filings with the Securities and Exchange Commission, and the fact that the assumptions set forth in this Current Report on Form 8-K could prove incorrect, could cause actual results to differ materially from those contained in such forward-looking statements. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized. ITRON, INC. Dated: October 28, 2005 By: /s/ STEVEN M. HELMBRECHT ------------------------ Steven M. Helmbrecht Sr. Vice President and Chief Financial Officer EXHIBIT INDEX Exhibit Number Description - -------------- ------------------------------------------------------------- 99.1 Press release dated October 28, 2005. EX-99.1 2 a5006690ex99-1.txt EXHIBIT 99.1 Exhibit 99.1 Itron Reports Third Quarter 2005 Financial Results; Third Quarter Revenues Increase 15%; Third Quarter GAAP Net Income $6.0 Million verses $1.7 Million Last Year SPOKANE, Wash.--(BUSINESS WIRE)--Oct. 28, 2005-- Third Quarter Pro Forma Net Income Increases 78% to $12.6 Million; Record New Order Bookings of $212 Million Itron, Inc. (Nasdaq:ITRI) today reported its financial results for the quarter and year-to-date periods ended September 30, 2005. Third quarter results for both 2005 and 2004 include our Electricity Metering business acquired July 1, 2004. Year-to-date results in 2005 include nine months of Electricity Metering operations compared with three months in 2004. Third quarter revenues were $141.1 million, 15% higher than third quarter 2004 revenues of $122.5 million. Year-to-date, revenues were $392.7 million in 2005 compared with $267.7 million in 2004. Revenue highlights by segment for the quarter and year-to-date periods are as follows: Meter Data Collection (MDC) -- MDC revenues were $70.6 million in the quarter, an increase of $13.8 million, or 24%, compared with the third quarter of 2004, due to increased shipments of gas AMR modules, increased handheld sales outside of North America and increased contract manufacturing services related to embedding our AMR technology into other electricity meter vendors' solid-state meters. Offsetting those increases were lower implementation revenues and sales of third-party hardware. -- Year-to-date, MDC revenues were $182.5 million compared with $178.7 million in 2004. Unit shipments of standalone AMR modules increased 8.5% year-to-date in 2005 compared with the same period in 2004, while related revenues for the same periods increased by approximately 4% due to lower average selling prices for standalone AMR modules, in particular electric. On a year-to-date basis in 2005, increased handheld sales and contract manufacturing services were partially offset by lower implementation revenues and sales of third-party hardware. -- Standalone AMR module shipments were approximately 1.2 million and 3.1 million during the quarter and year-to-date periods in 2005, compared with approximately 900,000 and 2.8 million for the same periods in 2004. In the third quarter and year-to-date periods in 2005, we produced approximately 250,000 and 550,000 Itron AMR products for other vendors' solid-state electricity meters compared with approximately 50,000 and 125,000 in the same periods in 2004. Electricity Metering -- Electricity Metering revenues in the quarter were $58.6 million compared with $54.2 million in 2004. Residential meter sales increased approximately $9.2 million in 2005 compared with 2004, offset by slightly lower commercial and industrial meter sales in the 2005 quarter. Also offsetting the increase in residential meter sales was the phasing out during the last half of 2004 of contract manufacturing services for a former affiliate, which were approximately $4.2 million in the third quarter of 2004. Year-to-date in 2005, Electricity Metering revenues were $173.3 million. -- We shipped approximately 1.2 million electricity meters in the quarter compared with approximately 850,000 in the third quarter of 2004. The growth in unit shipments of 39% is approximately twice the revenue growth due to the higher mix of residential meters as well as lower average selling prices in 2005. Year-to-date in 2005, electricity meter shipments were approximately 3.4 million. -- Approximately 48% of meters shipped during the quarter, and 40% for the year-to-date period in 2005, were equipped with Itron AMR technology compared with 32% in the third quarter of 2004. In addition, 13% of shipments in the third quarter and 17% in the first nine months of 2005 were equipped with other vendors' AMR technology compared with 25% in the third quarter of 2004. Software -- Software revenues increased $400,000 in the quarter and $2.1 million year-to-date in 2005, compared with the same periods in 2004, due to higher licenses and maintenance offset by lower professional services revenues. GAAP net income was $6.0 million, or 23 cents per diluted share for the quarter, compared with $1.7 million, or 8 cents per diluted share in the third quarter of 2004. GAAP net income in the first nine months of 2005 was $16.1 million, or 66 cents per diluted share, compared with $1.8 million, or 8 cents per diluted share, in 2004. Year-to-date GAAP net income in 2005 includes a $5.9 million tax benefit for additional R&D tax credits for the years 1997 through 2004, which was recognized in the second quarter of 2005. Pro forma net income was $12.6 million, or 49 cents per diluted share for the quarter, compared with $7.1 million, or 32 cents per diluted share in the third quarter of 2004. Year-to-date pro forma net income was $30.3 million, or $1.24 per diluted share, compared with $11.4 million, or 52 cents per diluted share in 2004. Pro forma net income excludes the amortization of intangible assets and debt placement fees, restructurings and the benefit of the prior year R&D tax credits. "By virtually every financial measure, Itron is having a remarkable year," commented LeRoy Nosbaum, chairman and CEO. "Our record revenue performance is the result of upward momentum across many fronts. Higher volumes and operating efficiencies are resulting in even stronger earnings growth. We are quite pleased with how this year is progressing and look forward to similar progress in 2006." Gross margins were 43% for the quarter and first nine months of 2005, compared with 40% and 43% in the same periods in 2004. -- MDC gross margin improved to 45% in the quarter, compared with 42% in the third quarter of 2004 due primarily to the higher mix of gas AMR and higher handheld systems revenues. Year-to-date MDC gross margin was 44% compared with 46% in 2004, due to lower average selling prices for standalone AMR modules, in particular electric, and lower implementation margins offset by the higher mix of gas AMR. -- Electricity Metering gross margin was 41% during the quarter compared with 39% during the third quarter of 2004. Gross margin in the third quarter of 2004 was lower than normal due to a $2.2 million purchase accounting adjustment to write-up acquired finished goods inventory to the expected net sales price, and due to approximately $4.2 million of contract manufacturing services during the quarter to a former affiliate, which were very low margin. For the first nine-months of 2005, Electricity Metering gross margin was 42%. The impact of lower average selling prices for residential meters in 2005 has been partially offset by lower manufacturing costs. -- Software Solutions gross margins were 39% for the quarter and 41% year-to-date in 2005, compared with 36% and 35% for the same 2004 periods. The higher margins in 2005 reflect the higher mix of license and maintenance fees. Intangible asset amortization expenses have increased in 2005 as a result of the Electricity Metering acquisition on July 1, 2004, and were $9.7 million and $29.1 million in the quarter and year-to-date periods in 2005, compared with $7.2 million and $11.3 million for the same 2004 periods. Excluding intangible asset amortization expenses and restructurings, operating income was $23.9 million, or 16.9% of revenues for the quarter, compared with $16.3 million, or 13.3% in the third quarter of 2004, and $59.8 million, or 15.2% of revenues year-to-date in 2005, compared with $26.5 million, or 9.9% year-to-date in 2004. The improved operating margin in 2005 reflects the lower level of spending required for Electricity Metering marketing and product development, as well as operating efficiencies and cost savings from headcount reductions in 2004 and higher volumes of meters and AMR products in 2005. We had another record quarter for new order bookings and backlog. Details for new order bookings and quarter-end backlog (neither of which includes maintenance revenues) are as follows: New order bookings during the quarter were $212 million, compared with $98 million in the third quarter of last year. New order bookings in the first nine months of 2005 were $506 million, compared with $230 million in the first nine months of 2004. Significant orders during the quarter included: -- An order from Progress Energy for approximately 2.7 million solid-state electricity meters with AMR, worth approximately $120 million; -- An order for approximately 500,000 gas AMR modules to be delivered over five years; and -- An agreement to provide the U.S. Department of the Navy with enterprise energy management software and services. Total backlog increased to $325 million at September 30, 2005. By comparison, total backlog was $243 million at June 30, 2005, and $177 million at September 30, 2004. Twelve-month backlog, which represents the estimated portion of backlog that will be earned over the next twelve months, was $198 million at September 30, 2005, compared with $151 million at June 30, 2005 and $104 million at September 30, 2004. We generated $13.0 million of cash from operations during the quarter compared with $20.4 million during the third quarter of last year. We used cash during the quarter to begin building inventories for the Progress Energy order signed in July and expect to continue to build inventories for that order in the fourth quarter of this year as the installation rate increases throughout that quarter. Accounts receivable also increased during the quarter driven by higher revenues. Cash flow from operations was $49.6 million for the nine months ended September 30, 2005, compared with $27.5 million for the same period in 2004. Net capital expenditures were approximately $5.0 million and $10.3 million for the quarter and year-to-date periods in 2005, compared with approximately $3.2 million and $10.0 million for the same periods in 2004. We made $14.0 million in optional repayments on our term bank debt during the quarter, bringing the outstanding term-loan balance to $28.0 million at September 30, 2005. We made another $3.0 million in optional repayments subsequent to quarter-end, resulting in our having repaid $160.0 million of the $185 million term bank debt borrowed on July 1, 2004, in connection with the Electricity Metering acquisition. On October 27, 2005, we signed an agreement with the owners of Telect, Inc., a privately-held telecommunications company, to purchase their 200,000 square foot headquarters building for approximately $20 million, which we expect to partially finance with a loan. Our existing 141,000 square foot headquarters facility will be listed for sale. Closing is expected to occur by December 31, 2005. We expect to take possession of the building in April 2006 and to begin moving operations in the third quarter of 2006. Itron's headquarters operations include marketing, research and development, customer service, information technology and financial and corporate functions. Itron has experienced strong growth over the last few years, partially as a result of acquisitions. Total staffing in Spokane has increased by approximately 25% over the last four years. Itron's existing Spokane facility was built more than twenty years ago and was initially designed for manufacturing operations. Manufacturing operations previously performed in Spokane have since been moved to our Waseca, Minnesota, location or outsourced. "Our existing facility requires significant investment in order to adapt to our current use of the building, accommodate our existing employee base and provide for future growth and expansion," said LeRoy Nosbaum, chairman and CEO. "Purchasing this building is a much better option than spending money to renovate our existing facility. We are very fortunate to have found a close-by facility in Liberty Lake that is in excellent condition and that meets our current and future space requirements." Business Outlook: Our outlook for 2005 and 2006 does not include any impact related to the expensing of stock options. We expect to implement FASB's Statement 123R, which requires the expensing of stock options and ESPP shares issued at a discount, in 2006. While we have not yet completed our analysis of the effects of the adoption of 123R, the expensing of stock options will decrease gross margin, increase operating expenses and influence our effective tax rate and could materially impact GAAP net income. For the full year 2005, we expect: -- Revenues to be between $535 and $540 million (previous guidance was $535 to $545 million). -- Pro forma diluted earnings per share between $1.70 and $1.75 (previous guidance was $1.65 to $1.70). While still preliminary, the Company issued an early outlook for 2006, based primarily on the strength of new order bookings so far in 2005. For the full year 2006, we expect revenue growth of approximately 10% over 2005, with pro forma earnings growth of almost twice that. Use of Non-GAAP Financial Information: To supplement our consolidated financial statements presented in accordance with GAAP, we use certain non-GAAP measures, including pro forma earnings and EPS and EBITDA. Pro forma earnings and EPS are adjusted from GAAP-based results to exclude certain expenses or gains that we believe are not indicative of our core operating results. Pro forma results are one of the primary indicators management uses for evaluating historical results and for planning and forecasting future periods. We believe pro forma results provide consistency in our financial reporting which enhances our investor's understanding of our current financial performance as well as our future prospects. Pro forma results along with EBITDA measures should be viewed in addition to, and not in lieu of, GAAP results. Earnings Conference Call: Itron will host a conference call to discuss the financial results contained in this release at 6:00 a.m. PST on October 28, 2005. The call will be webcast in a listen-only mode and can be accessed online at www.itron.com, "About Itron -- Investor Events." The live webcast will begin at 6:00 a.m. (PST). The webcast replay will begin shortly after the conclusion of the live call and will be available for two weeks. A telephone replay of the call will also be available approximately one hour after the conclusion of the live call, for 48 hours, and is accessible by dialing 888-203-1112 (Domestic) or 719-457-0820 (International), entering passcode #5349308. Forward-Looking Statements: This release contains forward-looking statements concerning Itron's operations, financial performance, sales, earnings and cash flow. These statements reflect our current plans and expectations and are based on information currently available. They rely on a number of assumptions and estimates, which could be inaccurate, and which are subject to risks and uncertainties that could cause our actual results to vary materially from those anticipated. Risks and uncertainties include the rate and timing of customer demand for the Company's products, rescheduling of current customer orders, changes in estimated liabilities for product warranties, changes in laws and regulations and other factors which are more fully described in our Annual Report on Form 10-K for the year ended December 31, 2004, and our Form 10-Qs for the quarters ended March 31, 2005, and June 30, 2005, on file with the Securities and Exchange Commission. Itron undertakes no obligation to update publicly or revise any forward-looking statements. About Itron: Itron is a leading technology provider and critical source of knowledge to the global energy and water industries. Nearly 3,000 utilities worldwide rely on Itron technology to deliver the knowledge they require to optimize the delivery and use of energy and water. Itron delivers value to its clients by providing industry-leading solutions for electricity metering, meter data collection, energy information management, demand side management and response, load forecasting, analysis and consulting services, transmission and distribution system design and optimization, Web-based workforce automation, commercial and industrial customer care and residential energy management. To know more, start here: www.itron.com. Statements of operations, reconciliations between GAAP and pro forma results, segment information, balance sheets and cash flows follow. ITRON, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, in thousands, except per share data) Three Months Ended Nine Months Ended September 30, September 30, --------------------- --------------------- 2005 2004 2005 2004 ---------- ---------- ---------- ---------- Revenues Sales $ 128,683 $ 107,327 $ 355,696 $ 230,358 Service 12,462 15,177 37,042 37,390 ---------- ---------- ---------- ---------- Total revenues 141,145 122,504 392,738 267,748 Cost of revenues Sales 73,179 63,534 203,188 130,993 Service 6,936 9,485 20,783 21,140 ---------- ---------- ---------- ---------- Total cost of revenues 80,115 73,019 223,971 152,133 ---------- ---------- ---------- ---------- Gross profit 61,030 49,485 168,767 115,615 Operating expenses Sales and marketing 13,688 12,045 40,456 31,971 Product development 11,807 11,893 35,135 32,669 General and administrative 11,645 9,201 33,381 24,479 Amortization of intangible assets 9,712 7,217 29,143 11,271 Restructurings -- 1,571 390 4,005 ---------- ---------- ---------- ---------- Total operating expenses 46,852 41,927 138,505 104,395 ---------- ---------- ---------- ---------- Operating income 14,178 7,558 30,262 11,220 Other income (expense) Interest income 69 24 167 152 Interest expense (4,328) (5,147) (15,280) (8,162) Other income (expense), net (535) 261 20 (474) ---------- ---------- ---------- ---------- Total other income (expense) (4,794) (4,862) (15,093) (8,484) ---------- ---------- ---------- ---------- Income before income taxes 9,384 2,696 15,169 2,736 Income tax (provision) benefit (3,382) (1,026) 963 (986) ---------- ---------- ---------- ---------- Net income $ 6,002 $ 1,670 $ 16,132 $ 1,750 ========== ========== ========== ========== Earnings per share Basic net income per share $ 0.25 $ 0.08 $ 0.70 $ 0.08 ========== ========== ========== ========== Diluted net income per share $ 0.23 $ 0.08 $ 0.66 $ 0.08 ========== ========== ========== ========== Weighted average number of shares outstanding Basic 24,441 20,978 22,912 20,827 Diluted 25,919 22,050 24,471 22,005 ITRON, INC. RECONCILIATIONS BETWEEN GAAP AND PRO FORMA (Unaudited, in thousands, except per share data) Three Months Ended Nine Months Ended September 30, September 30, ------------------- -------------------- 2005 2004 2005 2004 --------- --------- ---------- --------- PRO FORMA OPERATING INCOME GAAP basis operating income $ 14,178 $ 7,558 $ 30,262 $ 11,220 Adjustments to GAAP basis operating income before income taxes Amortization of intangible assets 9,712 7,217 29,143 11,271 Restructurings -- 1,571 390 4,005 --------- --------- ---------- --------- Total adjustments 9,712 8,788 29,533 15,276 -------- -------- --------- -------- Pro forma operating income $ 23,890 $ 16,346 $ 59,795 $ 26,496 ========= ========= ========== ========= PRO FORMA NET INCOME GAAP basis income before income taxes $ 9,384 $ 2,696 $ 15,169 $ 2,736 Adjustments to GAAP basis income before income taxes Amortization of intangible assets 9,712 7,217 29,143 11,271 Amortization of debt placement fees 1,245 714 4,223 1,112 Restructurings -- 1,571 390 4,005 Non-cash stock compensation -- -- 73 -- --------- --------- ---------- --------- Total adjustments 10,957 9,502 33,829 16,388 Adjusted income before income taxes 20,341 12,198 48,998 19,124 Income tax provision(a) (7,721) (5,099) (18,688) (7,688) --------- --------- ---------- --------- Pro forma net income $ 12,620 $ 7,099 $ 30,310 $ 11,436 ========= ========= ========== ========= PRO FORMA EARNINGS PER SHARE Basic Weighted average number of basic shares outstanding 24,441 20,978 22,912 20,827 Basic pro forma net income per share $ 0.52 $ 0.34 $ 1.32 $ 0.55 ========= ========= ========== ========= Diluted Weighted average number of basic shares outstanding 24,441 20,978 22,912 20,827 Employee stock option shares 1,478 1,072 1,559 1,178 --------- --------- ---------- --------- Weighted average number of diluted shares outstanding 25,919 22,050 24,471 22,005 Diluted pro forma net income per share $ 0.49 $ 0.32 $ 1.24 $ 0.52 ========= ========= ========== ========= (a) The pro forma tax provision excludes the $5.9 million research and development tax credit reported for GAAP during the second quarter of 2005. ITRON, INC. RECONCILIATIONS BETWEEN GAAP NET INCOME AND EBITDA (Unaudited, in thousands) Three Months Ended Nine Months Ended September 30, September 30, ------------------- ------------------- 2005 2004 2005 2004 --------- --------- --------- --------- GAAP basis net income $ 6,002 $ 1,670 $ 16,132 $ 1,750 Adjustments to GAAP basis net income Interest income (69) (24) (167) (152) Interest expense 4,328 5,147 15,280 8,162 Income tax provision (benefit) 3,382 1,026 (963) 986 Depreciation and amortization 12,661 10,430 38,785 19,260 --------- --------- --------- --------- Total adjustments 20,302 16,579 52,935 28,256 EBITDA $ 26,304 $ 18,249 $ 69,067 $ 30,006 ========= ========= ========= ========= ITRON, INC. SEGMENT INFORMATION (Unaudited, in thousands) Three Months Ended Nine Months Ended September 30, September 30, --------------------- --------------------- 2005 2004 2005 2004 ---------- ---------- ---------- ---------- Revenues Hardware Solutions Meter Data Collection $ 70,638 $ 56,798 $ 182,506 $ 178,714 Electricity Metering 58,598 54,195 173,326 54,195 ---------- ---------- ---------- ---------- Total Hardware Solutions 129,236 110,993 355,832 232,909 Software Solutions 11,909 11,511 36,906 34,839 ---------- ---------- ---------- ---------- Total Company $ 141,145 $ 122,504 $ 392,738 $ 267,748 ========== ========== ========== ========== Gross profit Hardware Solutions Meter Data Collection $ 32,091 $ 24,129 $ 80,418 $ 82,215 Electricity Metering 24,236 21,183 73,223 21,183 ---------- ---------- ---------- ---------- Total Hardware Solutions 56,327 45,312 153,641 103,398 Software Solutions 4,703 4,173 15,126 12,217 ---------- ---------- ---------- ---------- Total Company $ 61,030 $ 49,485 $ 168,767 $ 115,615 ========== ========== ========== ========== Operating income (loss) Hardware Solutions Meter Data Collection $ 26,667 $ 18,878 $ 64,607 $ 66,605 Electricity Metering 20,178 17,322 60,504 17,322 Other unallocated costs (5,938) (5,291) (18,143) (12,696) ---------- ---------- ---------- ---------- Total Hardware Solutions 40,907 30,909 106,968 71,231 Software Solutions (3,007) (5,119) (8,576) (17,011) Corporate unallocated (23,722) (18,232) (68,130) (43,000) ---------- ---------- ---------- ---------- Total Company $ 14,178 $ 7,558 $ 30,262 $ 11,220 ========== ========== ========== ========== ITRON, INC. CONSOLIDATED BALANCE SHEETS (Unaudited, in thousands) September 30, December 31, 2005 2004 ------------ ------------ ASSETS Current assets Cash and cash equivalents $ 11,896 $ 11,624 Accounts receivable, net 94,983 90,097 Inventories 50,658 45,459 Deferred income taxes, net 8,018 22,733 Other 9,530 5,477 ------------ ------------ Total current assets 175,085 175,390 Property, plant and equipment, net 55,411 59,690 Intangible assets, net 132,996 162,137 Goodwill 116,079 117,471 Deferred income taxes, net 58,426 27,252 Other 11,963 15,211 ------------ ------------ Total assets $ 549,960 $ 557,151 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable and accrued expenses $ 38,000 $ 37,439 Wages and benefits payable 21,569 13,947 Current portion of debt 2,139 35,647 Current portion of warranty 5,323 7,243 Unearned revenue 20,256 22,991 ------------ ------------ Total current liabilities 87,287 117,267 Long-term debt 150,871 239,361 Project financing debt 2,588 3,227 Warranty 5,928 6,331 Other obligations 5,706 6,535 ------------ ------------ Total liabilities 252,380 372,721 Shareholders' equity Preferred stock -- -- Common stock 308,841 211,920 Accumulated other comprehensive income, net 1,051 954 Accumulated deficit (12,312) (28,444) ------------ ------------ Total shareholders' equity 297,580 184,430 ------------ ------------ Total liabilities and shareholders' equity $ 549,960 $ 557,151 ============ ============ ITRON, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited, in thousands) Nine Months Ended September 30, ----------------------- 2005 2004 ----------- ----------- Operating activities Net income $ 16,132 $ 1,750 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 38,785 19,260 Employee stock plan income tax benefits 14,399 1,366 Amortization of prepaid debt fees 4,330 1,165 Realized currency translation gains (391) (279) Deferred income tax benefit (16,313) (1,278) Other, net 2,178 1,560 Changes in operating assets and liabilities, net of acquisitions: Accounts receivable (4,738) 25,711 Inventories (5,199) (9,013) Accounts payable and accrued expenses 360 (860) Wages and benefits payable 7,605 437 Unearned revenue (3,085) (1,130) Warranty (194) (9,211) Other long-term obligations (436) (808) Other, net (3,879) (1,126) ----------- ----------- Cash provided by operating activities 49,554 27,544 Investing activities Proceeds from the sale of property, plant and equipment 2,627 12 Acquisition of property, plant and equipment (10,264) (10,001) Acquisitions, net of cash and cash equivalents -- (251,829) Payment of contingent purchase price for acquisition -- (1,957) Other, net (847) 525 ----------- ----------- Cash used by investing activities (8,484) (263,250) Financing activities New borrowings -- 309,081 Change in short-term borrowings, net -- (10,000) Payments on debt (122,704) (49,591) Issuance of common stock 82,269 4,776 Prepaid debt fees (391) (13,470) Other, net 28 (6) ----------- ----------- Cash provided (used) by financing activities (40,798) 240,790 Increase in cash and cash equivalents 272 5,084 Cash and cash equivalents at beginning of period 11,624 6,240 ----------- ----------- Cash and cash equivalents at end of period $ 11,896 $ 11,324 =========== =========== CONTACT: Itron, Inc., Spokane Mima Scarpelli, 509-891-3565 mima.scarpelli@itron.com -----END PRIVACY-ENHANCED MESSAGE-----