-----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, Hrq9LF9TQaS+Avq6O1epPIihJb6Me5S3Op25ntOBrhm39EoBCi9oEtrhI4uWALbS r6VU4kKGvApLQcXacHdeKA== 0001157523-06-007375.txt : 20060726 0001157523-06-007375.hdr.sgml : 20060726 20060726160128 ACCESSION NUMBER: 0001157523-06-007375 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20060630 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060726 DATE AS OF CHANGE: 20060726 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: 06981666 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 a5196415.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 June 30, 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 July 26, 2006, Itron, Inc. issued a press release announcing the financial results for the three and six months ending June 30, 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 July 26, 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: July 26, 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 July 26, 2006. EX-99.1 2 a5196415-ex991.txt EXHIBIT 99.1 EXHIBIT 99.1 Itron Announces Record Second Quarter Results SPOKANE, Wash.--(BUSINESS WIRE)--July 26, 2006--Itron, Inc. (NASDAQ:ITRI), today reported financial results for its second quarter ended June 30, 2006. Highlights of the results include: -- Record quarter and year-to-date revenues of $163.8 million and $319.4 million; -- Automated Meter Reading (AMR) unit shipments in 2006 up 40% for the quarter and 58% year-to-date over 2005; -- GAAP diluted EPS of 39 cents and 66 cents for the quarter and year-to-date in 2006 vs. 38 cents and 43 cents for the same periods in 2005; -- Pro forma diluted EPS of 62 cents for the quarter and $1.20 year-to-date, an increase of 48% and 60% over the same periods in 2005; -- Cash flow from operations of $56.8 million for the first six months of 2006, up from $36.6 million last year; -- New order bookings of $313 million year-to-date in 2006, up 6% over 2005. "We are excited about our results for both the quarter and six month periods," said LeRoy Nosbaum, Chairman and CEO. "Our operating groups' results are strong and once again we have achieved a record level of revenue and earnings, giving us confidence that our 2006 expectations are on track and that we are executing well on our business plans for the year. The economic drivers for Itron solutions remain strong and we are pleased with the level of industry-wide activity." Revenues for the second quarter of 2006 were $163.8 million, 21% higher than second quarter 2005 revenues of $135.1 million. Revenues for the six months ended June 30, 2006 were $319.4 million, which reflects a 27% increase over revenues of $251.6 million in the first six months of 2005. The increased revenues in 2006 were primarily due to higher shipments of Itron AMR technology. -- We shipped more than 2.3 million meters and modules with Itron AMR technology during the quarter compared with 1.7 million in the second quarter of 2005, a 40% increase. For the six month period ended June 30, 2006 we shipped over 4.7 million meters and modules with Itron AMR technology compared to 3.0 million during the same period last year, which reflects a 58% increase year over year. -- Meter Data Collection (MDC) segment revenues of $60.1 million in the quarter were down slightly from $62.2 million in the second quarter of 2005. Year-to-date 2006 MDC revenues of $121.9 million were 9% higher than the $111.9 million year-to-date in 2005. Lower volumes of stand alone electric AMR modules were offset by increased shipments of gas AMR modules in 2006. Sales of stand alone electric AMR modules have decreased in 2006 as customers are purchasing new Itron electricity meters with embedded AMR technology. Revenues for this embedded AMR technology are reflected in Electricity Metering revenue. -- Electricity Metering segment revenues were a record $88.5 million in the quarter compared with $60.6 million in the second quarter of 2005. For the six months ended June 30, Electricity Metering revenues were $168.8 million in 2006 compared with $114.7 million in 2005. The 46% and 47% respective increases in revenues were primarily driven by shipments of electricity meters with embedded 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. -- Software revenues were $15.2 million during the second quarter or 24% higher than $12.3 million in the comparable quarter of 2005. For the six months ended June 30, 2006, Software revenues of $28.7 million were 15% higher than 2005 revenues of $25.0 million. Software revenues have increased in 2006 primarily due to increased software license sales for a broad mix of products. New order bookings for the quarter and year-to-date periods in 2006 were $107 million and $313 million, compared with $177 million and $294 million in 2005. Twelve month backlog, which represents the portion of backlog that will be earned over the next twelve months, was $225 million at June 30, 2006, compared with $151 million one year ago. Total backlog was $351 million at June 30, 2006, down 9% from the record backlog of $387 million at March 31, 2006, but up 44% from $243 million one year ago. Total company gross margins were 42% for the second quarter of 2006 and 2005 and 43% for the year-to-date periods in 2006 and 2005. Fluctuations in Hardware Solutions Operating Group gross margins in 2006, compared with 2005, were primarily due to changes in the mix of product sold and manufacturing volumes. Software Solutions gross margins increased in 2006, compared with 2005, due to a higher mix of software licenses. Pro forma operating income, which excludes intangible asset amortization expenses in both 2006 and 2005, restructuring charges in 2005 and SFAS 123(R) stock option compensation expense in 2006, was $27.1 million and $55.2 million, or 16.5% and 17.3% respectively of revenues for the three and six months ended June 30, 2006. Pro forma operating income in the second quarter and first six months of 2005 was $20.0 million and $35.9 million respectively, or 14.8% and 14.3% of revenues. The improved operating margin in 2006 reflects lower operating expenses as a percentage of revenues in almost all operating expense areas. GAAP net income was $10.2 million, or 39 cents per diluted share, for the current quarter, compared with net income of $9.3 million, or 38 cents per diluted share, for the second quarter of 2005. For the six months ended June 30, 2006, GAAP net income was $17.3 million, or 66 cents per diluted share, compared with $10.1 million, or 43 cents per diluted share for the same period in 2005. GAAP net income in the three and six month periods in 2005 included a $5.9 million tax benefit for additional research and development (R&D) credits for the years 1997 through 2004. 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 and year to date periods was $2.1 million and $4.1 million respectively, of which $1.8 million and $3.6 million was due to the adoption of SFAS 123(R) for our stock options. Pro forma net income was $16.4 million, or 62 cents per diluted share, for the current quarter and $31.5 million, or $1.20 per diluted share, for the six months ended June 30, 2006, compared with $10.4 million, or 42 cents per diluted share, in the second quarter of 2005 and $17.6 million or 75 cents per diluted share for the six months ended June 30, 2005. Pro forma net income excludes intangible asset and debt fee amortization expenses in 2005 and 2006, restructuring charges and the benefit of R&D tax credits in 2005 and SFAS 123(R) stock option compensation expenses in 2006. During the first six months of 2006 we prepaid in full our variable-rate term loan and a variable-rate real estate term loan, which had balances at December 31, 2005 of $24.7 million and $14.8 million, respectively. Additionally we prepaid in full $3.2 million in project financing debt. Interest expense for the three and six months ended June 30, 2006 decreased $3.8 million and $2.6 million compared with the same periods in 2005 due to the lower debt levels in 2006. We generated $56.8 million of cash from operations during the first six months of 2006 compared with $36.6 million in 2005. Capital expenditures were $14.4 million in the first six months of 2006 compared with $5.3 million in the first six months of 2005. The increase this year is primarily related to an enterprise software upgrade and capital improvements associated with our new headquarters building. EBITDA (earnings before interest, income taxes, depreciation and amortization) was $28.8 million in the current quarter and $58.3 million in the first six months of 2006, compared with $23.9 million and $42.8 million in the comparable periods of 2005. Adjusted EBITDA, which excludes the effect of non-cash stock option compensation expense in 2006, was $30.6 million for the three months and $61.9 million for the six months ended June 30, 2006. 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 $625 and $635 million. -- GAAP net income between $31 and $33 million. -- Pro forma net income between $59 and $61 million, excluding approximately $9 million of pre-tax stock option compensation expenses and approximately $34 million of pre-tax intangible asset and debt fee amortization expenses. -- Pro forma EPS between $2.25 and $2.30 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 $118 and $120 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. (PDT) on July 26, 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. (PDT). 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 #3682406. 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 Six Months Ended June 30, June 30, ------------------- ------------------- 2006 2005 2006 2005 -------- -------- -------- -------- Revenues Sales $151,977 $122,811 $294,911 $227,013 Service 11,833 12,312 24,452 24,580 -------- -------- -------- -------- Total revenues 163,810 135,123 319,363 251,593 Cost of revenues Sales 88,118 70,810 169,960 130,009 Service 6,660 7,574 13,597 13,847 -------- -------- -------- -------- Total cost of revenues 94,778 78,384 183,557 143,856 -------- -------- -------- -------- Gross profit 69,032 56,739 135,806 107,737 Operating expenses Sales and marketing 16,321 13,529 31,802 26,768 Product development 14,920 11,414 27,790 23,328 General and administrative 12,519 11,770 24,641 21,736 Amortization of intangible assets 7,612 9,715 14,925 19,431 Restructurings - - - 390 -------- -------- -------- -------- Total operating expenses 51,372 46,428 99,158 91,653 -------- -------- -------- -------- Operating income 17,660 10,311 36,648 16,084 Other income (expense) Interest income 360 94 722 98 Interest expense (2,585) (6,385) (8,331) (10,952) Other income (expense), net (241) 454 (689) 555 -------- -------- -------- -------- Total other income (expense) (2,466) (5,837) (8,298) (10,299) -------- -------- -------- -------- Income before income taxes 15,194 4,474 28,350 5,785 Income tax (provision) benefit (4,990) 4,839 (11,077) 4,345 -------- -------- -------- -------- Net income $ 10,204 $ 9,313 $ 17,273 $ 10,130 -------- -------- -------- -------- Earnings per share Basic net income per share $ 0.40 $ 0.41 $ 0.68 $ 0.46 -------- -------- -------- -------- Diluted net income per share $ 0.39 $ 0.38 $ 0.66 $ 0.43 -------- -------- -------- -------- Weighted average number of shares outstanding Basic 25,415 22,811 25,237 22,135 Diluted 26,360 24,416 26,216 23,677 ITRON, INC. RECONCILIATIONS BETWEEN GAAP AND PRO FORMA (Unaudited, in thousands, except per share data) Three Months Ended June 30, 2006 ------------------------------------- Reported Pro Forma Pro Forma Entries ----------- ------------- ----------- Revenues $ 163,810 $ - $ 163,810 Cost of revenues 94,778 (275)(a) 94,503 ---------- -------- ---------- Gross profit 69,032 275 69,307 Operating expenses 51,372 (1,538)(a) 42,222 (7,612)(b) Operating income 17,660 9,425 27,085 Other income (expense) (2,466) 301 (d) (2,165) ---------- -------- ---------- Income before income taxes 15,194 9,726 24,920 Income tax (provision) benefit (4,990) (3,552)(e) (8,542) ---------- -------- ---------- Net income $ 10,204 $ 6,174 $ 16,378 ---------- -------- ---------- Earnings per share Basic net income per share $ 0.40 $ 0.64 ---------- ----------- Diluted net income per share $ 0.39 $ 0.62 ---------- ----------- Weighted average number of shares outstanding Basic 25,415 25,415 Diluted 26,360 26,360 Three Months Ended June 30, 2005 ------------------------------------ Reported Pro Forma Pro Forma Entries ------------------------------------ Revenues $ 135,123 $ - $ 135,123 Cost of revenues 78,384 - 78,384 --------- ---------- ---------- Gross profit 56,739 - 56,739 Operating expenses 46,428 (9,715)(b) 36,713 Operating income 10,311 9,715 20,026 Other income (expense) (5,837) 2,302 (d) (3,535) --------- ---------- ---------- Income before income taxes 4,474 12,017 16,491 Income tax (provision) benefit 4,839 (10,975)(e) (6,136) --------- ---------- ---------- Net income $ 9,313 $ 1,042 $ 10,355 --------- ---------- ---------- Earnings per share Basic net income per share $ 0.41 $ 0.45 -------- ---------- Diluted net income per share $ 0.38 $ 0.42 -------- ---------- Weighted average number of shares outstanding Basic 22,811 22,811 Diluted 24,416 24,416 Six Months Ended June 30, 2006 ------------------------------------- Reported Pro Forma Pro Forma Entries ------------------------------------- Revenues $ 319,363 $ - $ 319,363 Cost of revenues 183,557 (526)(a) 183,031 ----------- --------- ---------- Gross profit 135,806 526 136,332 Operating expenses 99,158 (3,101)(a) 81,132 (14,925)(b) Operating income 36,648 18,552 55,200 Other income (expense) (8,298) 3,036 (d) (5,262) ----------- --------- ---------- Income before income taxes 28,350 21,588 49,938 Income tax (provision) benefit (11,077) (7,400)(e) (18,477) ----------- --------- ---------- Net income $ 17,273 $ 14,188 $ 31,461 ----------- --------- ---------- Earnings per share Basic net income per share $ 0.68 $ 1.25 ---------- ---------- Diluted net income per share $ 0.66 $ 1.20 ---------- ---------- Weighted average number of shares outstanding Basic 25,237 25,237 Diluted 26,216 26,216 Six Months Ended June 30, 2005 ------------------------------------- Reported Pro Forma Pro Forma Entries ------------------------------------- Revenues $ 251,593 $ - $ 251,593 Cost of revenues 143,856 - 143,856 ----------- ---------- ---------- Gross profit 107,737 - 107,737 Operating expenses 91,653 (19,431)(b) 71,832 (390)(c) Operating income 16,084 19,821 35,905 Other income (expense) (10,299) 2,978 (d) (7,321) ----------- ---------- ---------- Income before income taxes 5,785 22,799 28,584 Income tax (provision) benefit 4,345 (15,284)(e) (10,939) ----------- ---------- ---------- Net income $ 10,130 $ 7,515 $ 17,645 ----------- ---------- ---------- Earnings per share Basic net income per share $ 0.46 $ 0.80 ---------- ---------- Diluted net income per share $ 0.43 $ 0.75 ---------- ---------- Weighted average number of shares outstanding Basic 22,135 22,135 Diluted 23,677 23,677 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 Six Months Ended June 30, June 30, ------------------- ------------------- 2006 2005 2006 2005 -------- -------- -------- -------- Revenues Hardware Solutions Meter Data Collection $ 60,110 $ 62,192 $121,861 $111,868 Electricity Metering 88,467 60,622 168,845 114,728 -------- -------- -------- -------- Total Hardware Solutions 148,577 122,814 290,706 226,596 Software Solutions 15,233 12,309 28,657 24,997 -------- -------- -------- -------- Total Company $163,810 $135,123 $319,363 $251,593 -------- -------- -------- -------- Gross profit Hardware Solutions Meter Data Collection $ 25,464 $ 27,288 $ 54,167 $ 48,332 Electricity Metering 37,017 24,710 68,926 48,987 -------- -------- -------- -------- Total Hardware Solutions 62,481 51,998 123,093 97,319 Software Solutions 6,551 4,741 12,713 10,418 -------- -------- -------- -------- Total Company $ 69,032 $ 56,739 $135,806 $107,737 -------- -------- -------- -------- Operating income (loss) Hardware Solutions Meter Data Collection $ 19,658 $ 21,917 $ 42,791 $ 37,945 Electricity Metering 33,199 20,437 61,774 40,326 Other unallocated costs (9,706) (6,184) (18,433) (12,205) -------- -------- -------- -------- Total Hardware Solutions 43,151 36,170 86,132 66,066 Software Solutions (3,335) (2,922) (5,824) (5,574) Corporate unallocated (22,156) (22,937) (43,660) (44,408) -------- -------- -------- -------- Total Company $ 17,660 $ 10,311 $ 36,648 $ 16,084 -------- -------- -------- -------- Three Months Ended Six Months Ended June 30, June 30, ------------------- ------------------- 2006 2005 2006 2005 -------- -------- -------- -------- Supplemental Information (Units in thousands) Unit Shipments by Segment Meter Data Collection AMR standalone modules 1,000 1,125 2,075 1,900 Licensed AMR (other vendors' meters) 50 125 175 300 Electricity Metering Total meters 1,850 1,125 3,575 2,200 With Itron AMR 1,300 425 2,500 800 With other AMR 225 225 375 425 (1)Total units with Itron AMR 2,350 1,675 4,750 3,000 Growth in total Itron AMR shipments 40% 58% (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) June 30, December 31, 2006 2005 ---------- ---------- ASSETS Current assets Cash and cash equivalents $ 46,587 $ 33,638 Accounts receivable, net 89,046 104,428 Inventories 59,979 49,456 Deferred income taxes, net 20,627 23,194 Other 23,598 10,941 ---------- ---------- Total current assets 239,837 221,657 Property, plant and equipment, net 75,475 77,623 Intangible assets, net 118,161 123,293 Goodwill 119,504 116,032 Deferred income taxes, net 52,330 48,955 Other 8,664 11,324 ---------- ---------- Total assets $ 613,971 $ 598,884 ---------- ---------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable and accrued expenses $ 49,418 $ 46,215 Wages and benefits payable 20,058 23,732 Current portion of debt - 4,376 Current portion of warranty 7,927 8,497 Unearned revenue 26,376 22,758 ---------- ---------- Total current liabilities 103,779 105,578 Long-term debt 124,274 160,186 Project financing debt - 2,367 Warranty 9,027 6,779 Contingent purchase price 5,882 - Other obligations 7,927 6,440 ---------- ---------- Total liabilities 250,889 281,350 Shareholders' equity Preferred stock - - Common stock 339,640 312,046 Accumulated other comprehensive income, net 1,552 871 Retained earnings 21,890 4,617 ---------- ---------- Total shareholders' equity 363,082 317,534 ---------- ---------- Total liabilities and shareholders' equity $ 613,971 $ 598,884 ---------- ---------- ITRON, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited, in thousands) Six Months Ended June 30, -------------------- 2006 2005 -------- --------- Operating activities Net income $ 17,273 $ 10,130 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 22,291 26,124 Employee stock plans income tax benefits 11,686 7,047 Excess tax benefits from stock-based compensation (8,371) - Stock-based compensation 4,096 220 Amortization of prepaid debt fees 3,155 3,048 Deferred income taxes, net (953) (12,380) Other, net 435 828 Changes in operating assets and liabilities, net of acquisitions: Accounts receivable 18,038 4,324 Inventories (9,575) (892) Accounts payable and accrued expenses 1,142 2,179 Wages and benefits payable (3,623) 2,696 Unearned revenue 4,230 (4,110) Warranty 1,678 (181) Other long-term obligations (181) (644) Other, net (4,550) (1,800) -------- --------- Net cash provided by operating activities 56,771 36,589 Investing activities Acquisition of property, plant and equipment (14,420) (5,276) Proceeds from the sale of property, plant and equipment 109 2,642 Proceeds from the sale of an investment in affiliate 1,000 - Business acquisitions, net of cash and cash equivalents acquired (7,778) - Other, net 335 478 -------- --------- Net cash used in investing activities (20,754) (2,156) Financing activities Payments on debt (42,703) (108,178) Issuance of common stock 11,326 72,318 Excess tax benefits from stock-based compensation 8,371 - Prepaid debt fees (62) (267) Other, net - 28 -------- --------- Net cash used in financing activities (23,068) (36,099) Increase (decrease) in cash and cash equivalents 12,949 (1,666) Cash and cash equivalents at beginning of period 33,638 11,624 -------- --------- Cash and cash equivalents at end of period $ 46,587 $ 9,958 -------- --------- Non-cash transactions: Fixed assets purchased but not yet paid $ 3,103 $ - ITRON, INC. RECONCILIATIONS BETWEEN GAAP NET INCOME, EBITDA AND ADJUSTED EBITDA (Unaudited, in thousands) Three Months Six Months Ended Ended June 30, June 30, ----------------- ----------------- 2006 2005 2006 2005 ------- ------- ------- ------- GAAP net income $10,204 $ 9,313 $17,273 $10,130 Adjustments to GAAP net income Interest income (360) (94) (722) (98) Interest expense 2,585 6,385 8,331 10,952 Income tax provision (benefit) 4,990 (4,839) 11,077 (4,345) Depreciation and amortization 11,353 13,144 22,291 26,124 ------- ------- ------- ------- Total adjustments 18,568 14,596 40,977 32,633 EBITDA $28,772 $23,909 $58,250 $42,763 ------- ------- ------- ------- Non-cash stock option compensation expense 1,813 - 3,627 - -------- ------- -------- ------- ADJUSTED EBITDA $30,585 $23,909 $61,877 $42,763 ------- ------- ------- ------- CONTACT: Itron, Inc. Deloris Duquette, 509-891-3523 deloris.duquette@itron.com -----END PRIVACY-ENHANCED MESSAGE-----