-----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, PmQDEnosD5iANrdbBFjjHwcToIAgKghyL94ZzxlkZ1DZfr+KYeGnZd+fxuPVNmCs B4plYMArEc5+kFWYVp97lQ== 0001157523-06-004046.txt : 20060425 0001157523-06-004046.hdr.sgml : 20060425 20060425160017 ACCESSION NUMBER: 0001157523-06-004046 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20060425 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060425 DATE AS OF CHANGE: 20060425 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ITRON INC /WA/ CENTRAL INDEX KEY: 0000780571 STANDARD INDUSTRIAL CLASSIFICATION: INSTRUMENTS FOR MEAS & TESTING OF ELECTRICITY & ELEC SIGNALS [3825] 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: 06778141 BUSINESS ADDRESS: STREET 1: 2818 N SULLIVAN RD CITY: SPOKANE VALLEY STATE: WA ZIP: 99216 BUSINESS PHONE: 5099249900 MAIL ADDRESS: STREET 1: 2818 NORTH SULLIVAN ROAD CITY: SPOKANE VALLEY STATE: WA ZIP: 99216 FORMER COMPANY: FORMER CONFORMED NAME: ITRON INC DATE OF NAME CHANGE: 19920724 8-K 1 a5132102.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 April 25, 2006 -------------------------------------- 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 File No.) (IRS Employer of Incorporation) Identification No.) 2818 N. Sullivan Road, Spokane Valley, 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 April 25, 2006, Itron, Inc. issued a press release announcing the financial results for the three months ending March 31, 2006. 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 April 25, 2006. 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: April 25, 2006 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 April 25, 2006. EX-99.1 2 a5132102ex99_1.txt EXHIBIT 99.1 Exhibit 99.1 Itron Announces Record First Quarter Revenue and Earnings; GAAP EPS of 27 cents and Pro Forma EPS of 58 cents on Revenues of $155.6 Million; $206 Million in New Orders Signed During the Quarter SPOKANE, Wash.--(BUSINESS WIRE)--April 25, 2006--Itron, Inc. (NASDAQ:ITRI), today reported financial results for its first quarter ended March 31, 2006. Revenues for the first quarter 2006 were $155.6 million, 34% higher than first quarter 2005 revenues of $116.5 million. The increased revenues were mainly due to higher shipments of Itron Automatic Meter Reading (AMR) technology. -- Itron AMR technology includes standalone AMR modules for electricity, gas or water meters and electricity meters with embedded Itron AMR. We shipped 2.4 million units of Itron AMR technology during the quarter compared with 1.3 million during the same period in 2005, an 81% increase. -- Meter Data Collection (MDC) segment revenues of $61.8 million in the quarter increased 24% from $49.7 million in the first quarter of 2005. The increased revenue was primarily due to higher shipments of gas AMR modules. -- Electricity Metering segment revenues were $80.4 million in the quarter compared with $54.1 million in the first quarter of 2005. The 49% increase in revenues was primarily related to shipments of electricity meters with AMR to Progress Energy. The Progress Energy contract, which calls for delivery of 2.7 million electricity meters with embedded AMR over approximately 15 months, was signed in the third quarter of 2005. Progress Energy represented 22% of total company revenues, and 42% of Electricity Metering segment revenues during the quarter. -- Software revenues were $13.4 million during the quarter, 6% higher than $12.7 million in the first quarter of 2005. Increased software revenues reflect increased software license sales for a number of products. GAAP net income was $7.1 million, or 27 cents per diluted share, for the quarter, compared with net income of $817,000, or 4 cents per diluted share, for the first quarter of 2005. On January 1, 2006, the Company adopted Statement of Financial Accounting Standard No. 123(R), Share-Based Payment (SFAS 123 (R)), which requires the expensing of share-based compensation. Total stock-based compensation in the quarter was $2.1 million, of which $1.9 million was due to the adoption of SFAS 123(R) and had a 4 cent effect on GAAP earnings per share during the quarter. Pro forma net income was $15.1 million or 58 cents per diluted share for the quarter, compared with $7.3 million, or 32 cents per diluted share, in the first quarter of 2005. Pro forma net income excludes intangible asset and debt fee amortization expenses in 2005 and 2006, restructuring charges in 2005 and SFAS 123(R) stock option compensation expenses in 2006. New order bookings for the three months ended March 31, 2006 were $206 million, compared with $117 million in the first quarter of 2005, and were the second highest level of quarterly new order bookings in the company's history. Twelve month backlog, which represents the portion of backlog that will be earned over the next twelve months, was $241 million at March 31, 2006, compared with $188 million at December 31, 2005 and $116 million one year ago. Total backlog was $387 million at March 31, 2006, up from $324 million at December 31, 2005, and $190 million at March 31, 2005. "We are very pleased with our financial results for the first quarter," said LeRoy Nosbaum, chairman and CEO. "Revenue, earnings and cash flow are all up compared with the first quarter of last year. Our strength in new order bookings this quarter helps solidify our expectations for 2006 and, since a number of new orders signed this quarter represent multi-year contracts, it also begins to build a base of business beyond 2006." Gross margins were 43% for the quarter compared with 44% in the first quarter of 2005 and 41% in the fourth quarter of 2005. Highlights of gross margin by segment are as follows: -- MDC gross margin was 46% in the quarter compared to 42% in the first quarter of 2005. The higher margin in 2006 results from increased shipments of gas AMR modules in 2006. -- Electricity Metering gross margin was 40% during the quarter compared with 45% during the first quarter of 2005. Most of the decrease from 2005 to 2006 was driven by lower margin meter installation revenue associated with the Progress Energy contract. -- Software Solutions gross margin was 46% for the first quarter of 2006, comparable with the 45% gross margin in the same period last year. Pro forma operating income, which excludes intangible asset amortization expenses in both 2006 and 2005, minor restructuring charges in 2005 and SFAS 123(R) stock option compensation expense in 2006, was $28.1 million, or 18.1 % of revenues for the quarter, compared with $15.9 million, or 13.6%, in the first quarter of 2005. The improved operating margin in 2006 reflects lower operating expenses as a percentage of revenues in all operating expense areas. Total interest expense for the three months ended March 31, 2006 was $1.2 million higher than the same period in 2005. The increase was due to accelerated amortization expense of debt placement fees caused by prepaying the variable-rate term loan. Interest expense without amortization was $882,000 lower in 2006 than 2005. We generated $37.4 million of cash from operations during the quarter compared with $23.7 million during the first quarter of 2005. Capital expenditures were $6.3 million in the quarter compared to $1.7 million in the first quarter of last year, with the increase this year related to our enterprise software upgrade. EBITDA (earnings before interest, income taxes, depreciation and amortization) was $29.5 million in the first three months of 2006, compared with $18.9 million in the same period in 2005. Adjusted EBITDA, which excludes the effect of non-cash stock option compensation expense, was $31.3 million. During the quarter we prepaid in full our variable-rate term loan, which had a remaining balance at December 31, 2005 of $24.7 million and also prepaid $10.0 million of our variable-rate real estate term loan. Subsequent to March 31, 2006 we prepaid the remaining $4.8 million in real estate term debt and also prepaid in full $3.0 million in project financing debt. Forward-Looking Statements: This release contains forward-looking statements concerning our expectations about our 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, our dependence on new product development and intellectual property, future acquisitions, changes in estimates for stock based compensation and other factors which are more fully described in our Annual Report on Form 10-K for the year ended December 31, 2005 on file with the Securities and Exchange Commission. Itron undertakes no obligation to update publicly or revise any forward-looking statements, including our business outlook. Business Outlook: The outlook information provided below and elsewhere in this release is based on information available today and Itron assumes no obligation to update it. Our future performance involves risks and uncertainties. For the full year 2006, we expect: -- Revenues between $610 and $620 million. -- GAAP net income between $29 and $31 million. -- Pro forma net income between $57 and $59 million, excluding approximately $9 million of pre-tax stock option compensation expenses and approximately $33 million of pre-tax intangible asset and debt fee amortization expenses. -- Pro forma EPS between $2.17 and $2.23 per diluted share, which is based on an estimated 26.4 million in diluted shares. -- Adjusted EBITDA, which excludes $9 million of stock option compensation expenses, between $116 and $120 million. We expect revenue for the second quarter to be between $150 and $155 million. Use of Non-GAAP Financial Information: To supplement our consolidated financial statements presented in accordance with GAAP, we use certain non-GAAP financial measures, including pro forma operating income, pro forma net income and EPS, and EBITDA and Adjusted EBITDA. Management believes these non-GAAP financial measures provide useful information to both management and investors by excluding certain expenses, gains and losses that may not be indicative of our core results and provides for consistency in our financial reporting. We provide these non-GAAP financial measures because we believe they provide greater transparency with respect to supplemental information used by management in its financial and operational decision making. Specifically, these non-GAAP financial measures are provided to enhance investors' overall understanding of our current financial performance and our future anticipated performance. Non-GAAP performance measures should be considered in addition to, and not as a substitute for, results prepared in accordance with GAAP. Finally, our non-GAAP financial measures may be different from those reported by other companies. Reconciliations between GAAP and non-GAAP financial measures are included in this press release. Earnings Conference Call: Itron will host a conference call to discuss the financial results contained in this release at 1:45 p.m. (PST) on April 25, 2006. 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 1:45 p.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 # 9425890. 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 non-GAAP 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 March 31, ------------------- 2006 2005 --------- --------- Revenues Sales $142,934 $104,202 Service 12,619 12,268 --------- --------- Total revenues 155,553 116,470 Cost of revenues Sales 81,842 59,199 Service 6,937 6,273 --------- --------- Total cost of revenues 88,779 65,472 --------- --------- Gross profit 66,774 50,998 Operating expenses Sales and marketing 15,481 13,239 Product development 12,870 11,914 General and administrative 12,122 9,966 Amortization of intangible assets 7,313 9,716 Restructurings - 390 --------- --------- Total operating expenses 47,786 45,225 --------- --------- Operating income 18,988 5,773 Other income (expense) Interest income 362 4 Interest expense (5,746) (4,567) Other income (expense), net (448) 101 --------- --------- Total other income (expense) (5,832) (4,462) --------- --------- Income before income taxes 13,156 1,311 Income tax provision (6,087) (494) --------- --------- Net income $7,069 $817 ========= ========= Earnings per share Basic net income per share $0.28 $0.04 ========= ========= Diluted net income per share $0.27 $0.04 ========= ========= Weighted average number of shares outstanding Basic 25,057 21,451 Diluted 26,071 22,737 ITRON, INC. RECONCILIATIONS BETWEEN GAAP AND PRO FORMA (Unaudited, in thousands, except per share data) Three Months Ended March 31, 2006 --------------------------------- Pro Forma Reported Entries Pro Forma ----------------------------- Revenues $155,553 $- $155,553 Cost of revenues 88,779 (252)(a) 88,527 ----------------- --------- Gross profit 66,774 252 67,026 Operating expenses 47,786 (1,564)(a) 38,909 (7,313)(b) Operating income 18,988 9,129 28,117 Other income (expense) (5,832) 2,735 (d) (3,097) ----------------- --------- Income before income taxes 13,156 11,864 25,020 Income tax provision (6,087) (3,848)(e) (9,935) ----------------- --------- Net income $7,069 $8,016 $15,085 ================= ========= Earnings per share Basic net income per share $0.28 $0.60 ========= ========= Diluted net income per share $0.27 $0.58 ========= ========= Weighted average number of shares outstanding Basic 25,057 25,057 Diluted 26,071 26,071 Three Months Ended March 31, 2005 --------------------------------- Pro Forma Reported Entries Pro Forma ----------------------------- Revenues $116,470 $- $116,470 Cost of revenues 65,472 - 65,472 ----------------- --------- Gross profit 50,998 - 50,998 Operating expenses 45,225 (9,716)(b) 35,119 (390)(c) Operating income 5,773 10,106 15,879 Other income (expense) (4,462) 676(d) (3,786) ----------------- --------- Income before income taxes 1,311 10,782 12,093 Income tax provision (494) (4,309)(e) (4,803) ----------------- --------- Net income $817 $6,473 $7,290 ================= ========= Earnings per share Basic net income per share $0.04 $0.34 ========= ========= Diluted net income per share $0.04 $0.32 ========= ========= Weighted average number of shares outstanding Basic 21,451 21,451 Diluted 22,737 22,737 Pro Forma Adjustments - --------------------- (a) Non-cash stock option compensation expense. (b) Amortization of intangible assets. (c) Restructurings. (d) Debt fee amortization. (e) Income taxes associated with pro forma entries. ITRON, INC. SEGMENT INFORMATION (Unaudited, in thousands) Three Months Ended March 31, ------------------- 2006 2005 --------- --------- Revenues Hardware Solutions Meter Data Collection $61,751 $49,676 Electricity Metering 80,378 54,106 --------- --------- Total Hardware Solutions 142,129 103,782 Software Solutions 13,424 12,688 --------- --------- Total Company $155,553 $116,470 ========= ========= Gross profit Hardware Solutions Meter Data Collection $28,703 $21,044 Electricity Metering 31,909 24,277 --------- --------- Total Hardware Solutions 60,612 45,321 Software Solutions 6,162 5,677 --------- --------- Total Company $66,774 $50,998 ========= ========= Operating income (loss) Hardware Solutions Meter Data Collection $23,133 $16,028 Electricity Metering 28,575 19,889 Other unallocated costs (8,727) (6,021) --------- --------- Total Hardware Solutions 42,981 29,896 Software Solutions (2,489) (2,652) Corporate unallocated (21,504) (21,471) --------- --------- Total Company $18,988 $5,773 ========= ========= Three Months Ended March 31, ------------------- 2006 2005 --------- --------- Supplemental Information Unit Shipments by Segment Meter Data Collection AMR standalone modules 1,075 775 Licensed AMR (other vendors' meters) 125 175 Electricity Metering Total meters 1,725 1,050 With Itron AMR 1,200 375 With other AMR 150 200 (1)Total units Itron AMR 2,400 1,325 Growth in total Itron AMR shipments 81% (1) Includes Itron AMR standalone modules, Itron meters with Itron AMR and other vendors' electronic electricity meters with Itron AMR. ITRON, INC. CONSOLIDATED BALANCE SHEETS (Unaudited, in thousands) March 31, Dec. 31, 2006 2005 --------- --------- ASSETS Current assets Cash and cash equivalents $40,661 $33,638 Accounts receivable, net 83,637 104,428 Inventories 52,514 49,456 Deferred income taxes, net 20,659 23,194 Other 23,260 10,941 --------- --------- Total current assets 220,731 221,657 Property, plant and equipment, net 69,651 77,623 Intangible assets, net 115,980 123,293 Goodwill 116,037 116,032 Deferred income taxes, net 51,262 48,955 Other 7,920 11,324 --------- --------- Total assets $581,581 $598,884 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable and accrued expenses $46,990 $46,215 Wages and benefits payable 18,634 23,732 Current portion of debt 3,836 4,376 Current portion of warranty 7,162 8,497 Unearned revenue 24,140 22,758 --------- --------- Total current liabilities 100,762 105,578 Long-term debt 126,090 160,186 Project financing debt 2,142 2,367 Warranty 7,949 6,779 Other obligations 6,048 6,440 --------- --------- Total liabilities 242,991 281,350 Shareholders' equity Preferred stock - - Common stock 326,143 312,046 Accumulated other comprehensive income, net 761 871 Retained earnings 11,686 4,617 --------- --------- Total shareholders' equity 338,590 317,534 --------- --------- Total liabilities and shareholders' equity $581,581 $598,884 ========= ========= ITRON, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited, in thousands) Three Months Ended March 31, ----------------- 2006 2005 -------- -------- Operating activities Net income $7,069 $817 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 10,938 12,980 Employee stock plans income tax benefits 5,366 1,129 Excess tax benefits from stock-based compensation (4,280) - Stock-based compensation 2,053 149 Amortization of prepaid debt fees 2,772 710 Deferred income tax provision (benefit) 236 (1,618) Impairment of investments 242 - Realized currency translation gains - (195) Other, net 182 (223) Changes in operating assets and liabilities, net of acquisitions: Accounts receivable 20,791 16,196 Inventories (3,058) 2,638 Accounts payable and accrued expenses 2,644 (4,963) Wages and benefits payable (4,612) 1,566 Unearned revenue 1,452 (3,065) Warranty (165) (288) Other long-term obligations (470) (200) Other, net (3,768) (1,895) -------- -------- Cash provided by operating activities 37,392 23,738 Investing activities Acquisition of property, plant and equipment (6,251) (1,720) Proceeds from the sale of an investment in affiliate 1,000 - Business acquisitions, net of cash and cash equivalents acquired - 33 Other, net (705) 86 -------- -------- Cash used by investing activities (5,956) (1,601) Financing activities Payments on debt (34,885) (20,657) Issuance of common stock 6,192 2,609 Excess tax benefits from stock-based compensation 4,280 - Prepaid debt fees - (73) Other, net - (12) -------- -------- Cash used by financing activities (24,413) (18,133) Increase in cash and cash equivalents 7,023 4,004 Cash and cash equivalents at beginning of period 33,638 11,624 -------- -------- Cash and cash equivalents at end of period $40,661 $15,628 ======== ======== Non-cash transactions: Fixed assets purchased but not yet paid $2,531 $- ITRON, INC. RECONCILIATIONS BETWEEN GAAP NET INCOME AND EBITDA (Unaudited, in thousands) Three Months Ended March 31, ----------------- 2006 2005 -------- -------- GAAP net income $7,069 $817 Adjustments to GAAP net income Interest income (362) (4) Interest expense 5,746 4,567 Income tax provision 6,087 494 Depreciation and amortization 10,938 12,980 -------- -------- Total adjustments 22,409 18,037 EBITDA $29,478 $18,854 ======== ======== Non-cash stock option compensation expense 1,816 - -------- -------- ADJUSTED EBITDA $31,294 $18,854 ======== ======== CONTACT: Itron, Inc. Mima Scarpelli, Vice President, Investor Relations and Corporate Communications 509-891-3565 mima.scarpelli@itron.com -----END PRIVACY-ENHANCED MESSAGE-----