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Itron Announces Third Quarter 2012 Financial Results

Non-GAAP Financial Information:

To supplement our consolidated financial statements presented in accordance with GAAP, we use certain non-GAAP financial measures, including non-GAAP operating expense, non-GAAP operating income, non-GAAP net income, non-GAAP diluted EPS, adjusted EBITDA, and free cash flow. We provide these non-GAAP financial measures because we believe they provide greater transparency and represent 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 by excluding infrequent or non-cash costs, particularly those associated with acquisitions. We exclude certain costs in our non-GAAP financial measures as we believe the net result is a measure of our core business. Non-GAAP performance measures should be considered in addition to, and not as a substitute for, results prepared in accordance with GAAP. Our non-GAAP financial measures may be different from those reported by other companies. A more detailed discussion of why we use non-GAAP financial measures, the limitations of using such measures, and reconciliations between non-GAAP and the nearest GAAP financial measures are included in this press release.

Statements of operations, segment information, balance sheets, cash flow statements and reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures follow.

ITRON, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
                     
(Unaudited, in thousands, except per share data)
Three Months Ended September 30, Nine Months Ended September 30,
2012 2011 2012 2011
Revenues $ 504,063 $ 615,555 $ 1,654,843 $ 1,791,647
Cost of revenues   332,266     438,559     1,103,196     1,237,722  
Gross profit 171,797 176,996 551,647 553,925
 
Operating expenses
Sales and marketing 44,913 44,870 145,616 138,019
Product development 43,299 38,377 134,295 119,147
General and administrative 30,743 33,492 100,763 104,627
Amortization of intangible assets 11,929 16,013 35,867 47,807
Restructuring expense (5,054 ) 1,096 3,455 3,003
Goodwill impairment   -     540,400     -     540,400  
Total operating expenses   125,830     674,248     419,996     953,003  
 
Operating income (loss) 45,967 (497,252 ) 131,651 (399,078 )
Other income (expense)
Interest income 297 155 667 631
Interest expense (2,551 ) (10,796 ) (7,594 ) (34,330 )
Other income (expense), net   (1,269 )   (1,402 )   (4,224 )   (4,342 )
Total other income (expense)   (3,523 )   (12,043 )   (11,151 )   (38,041 )
 
Income (loss) before income taxes 42,444 (509,295 ) 120,500 (437,119 )
Income tax provision   (6,547 )   (6,042 )   (26,740 )   (15,529 )
Net income (loss) 35,897 (515,337 ) 93,760 (452,648 )
Net income (loss) attributable to non-controlling interests   550     1,745     1,445     2,878  
Net income (loss) attributable to Itron, Inc. $ 35,347   $ (517,082 ) $ 92,315   $ (455,526 )
 
 
Earnings per common share - Basic $ 0.90   $ (12.70 ) $ 2.32   $ (11.21 )
Earnings per common share - Diluted $ 0.89   $ (12.70 ) $ 2.31   $ (11.21 )
 
 
Weighted average common shares outstanding - Basic 39,472 40,725 39,756 40,648
Weighted average common shares outstanding - Diluted 39,791 40,725 40,042 40,648
 

ITRON, INC.
SEGMENT INFORMATION
                       
(Unaudited, in thousands)
Three Months Ended September 30, Nine Months Ended September 30,
2012 2011 2012 2011
Revenues
Energy
Electricity $ 226,552 $ 313,728 $ 794,496 $ 880,529
Gas   150,937     170,020     465,338     509,450  
Total Energy $ 377,489 $ 483,748 $ 1,259,834 $ 1,389,979
Water   126,574     131,807     395,009     401,668  
Total Company $ 504,063   $ 615,555   $ 1,654,843   $ 1,791,647  
 
Gross profit
Energy $ 125,503 $ 144,120 $ 409,057 $ 426,457
Water   46,294     32,876     142,590     127,468  
Total Company $ 171,797   $ 176,996   $ 551,647   $ 553,925  
 
Operating income (loss)
Energy $ 30,978 $ (166,197 ) $ 116,211 $ (77,566 )
Water 22,293 (321,191 ) 49,896 (290,582 )
Corporate unallocated   (7,304 )   (9,864 )   (34,456 )   (30,930 )
Total Company $ 45,967   $ (497,252 ) $ 131,651   $ (399,078 )
 
 
METER AND MODULE SUMMARY
 
(Units in thousands)
Three Months Ended September 30,   Nine Months Ended September 30,
2012 2011 2012 2011
Meters
Standard 4,110 4,910 13,610 14,850
Advanced and Smart   1,700     2,380     6,110     6,310  
Total meters   5,810     7,290     19,720     21,160  
 
Stand-alone communication modules
Advanced and Smart   1,500     1,560     5,050     4,840  
 

ITRON, INC.
CONSOLIDATED BALANCE SHEETS
             
(Unaudited, in thousands)
September 30, 2012 December 31, 2011
ASSETS
Current assets
Cash and cash equivalents $ 91,474 $ 133,086
Accounts receivable, net 363,111 371,641
Inventories 201,775 195,837
Deferred tax assets current, net 58,866 58,172
Other current assets   102,195     81,618  
Total current assets 817,421 840,354
 
Property, plant, and equipment, net 251,703 262,670
Deferred tax assets noncurrent, net 13,268 22,144
Other long-term assets 29,875 62,704
Intangible assets, net 247,636 239,500
Goodwill   687,432     636,910  
Total assets $ 2,047,335   $ 2,064,282  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 219,945 $ 246,775
Other current liabilities 62,250 53,734
Wages and benefits payable 82,405 93,730
Taxes payable 8,754 11,526
Current portion of debt 16,875 15,000
Current portion of warranty 32,834 52,588
Unearned revenue   41,255     37,369  
Total current liabilities 464,318 510,722
 
Long-term debt 404,375 437,502
Long-term warranty 22,853 26,948
Pension plan benefit liability 63,041 62,449
Deferred tax liabilities noncurrent, net 21,307 31,699
Other long-term obligations   81,199     73,417  
Total liabilities 1,057,093 1,142,737
 
Commitments and contingencies
 
Equity
Preferred stock - -
Common stock 1,294,990 1,319,222
Accumulated other comprehensive loss, net (38,100 ) (37,160 )
Accumulated deficit   (282,822 )   (375,137 )
Total Itron, Inc. shareholders' equity 974,068 906,925
Non-controlling interests   16,174     14,620  
Total equity   990,242     921,545  
Total liabilities and equity $ 2,047,335   $ 2,064,282  
 

ITRON, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
             
(Unaudited, in thousands)
Nine Months Ended September 30,
2012 2011
Operating activities
Net income (loss) $ 93,760 $ (452,648 )

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 81,856 96,919
Stock-based compensation 14,319 12,401
Amortization of prepaid debt fees 1,176 5,365
Amortization of convertible debt discount - 5,336
Deferred taxes, net 1,505 (1,410 )
Goodwill impairment - 540,400
Restructuring expense, non-cash (4,841 ) -
Other adjustments, net (119 ) (917 )
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable 46,493 (21,940 )
Inventories (4,619 ) (32,750 )
Other current assets (21,525 ) (8,672 )
Other long-term assets 1,624 (17,499 )
Accounts payables, other current liabilities, and taxes payable (39,368 ) 12,347
Wages and benefits payable (16,869 ) (28,018 )
Unearned revenue 9,201 22,862
Warranty (23,610 ) 28,028
Other operating, net   (1,980 )   (6,003 )
Net cash provided by operating activities 137,003 153,801
 
Investing activities
Acquisitions of property, plant, and equipment (34,278 ) (45,799 )
Business acquisitions, net of cash equivalents acquired (79,874 ) (14,635 )
Other investing, net   4,005     634  
Net cash used in investing activities (110,147 ) (59,800 )
 
Financing activities
Proceeds from borrowings 70,000 670,000
Payments on debt (101,252 ) (804,304 )
Issuance of common stock 3,778 3,512
Repurchase of common stock (40,700 ) -
Other financing, net   (342 )   (5,319 )
Net cash used in financing activities (68,516 ) (136,111 )
 
Effect of foreign exchange rate changes on cash and cash equivalents   48     2,147  
Increase (decrease) in cash and cash equivalents (41,612 ) (39,963 )
Cash and cash equivalents at beginning of period   133,086     169,477  
Cash and cash equivalents at end of period $ 91,474   $ 129,514  
 




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