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Itron Announces Fourth Quarter and Fiscal 2012 Financial Results



  Itron Announces Fourth Quarter and Fiscal 2012 Financial Results

Business Wire

LIBERTY LAKE, Wash. -- February 13, 2013

Itron, Inc. (NASDAQ:ITRI) announced today financial results for its fourth
quarter and full year ended December 31, 2012. Highlights include:

  * Quarterly and full year revenues of $523 million and $2.2 billion;
  * Quarterly and full year GAAP diluted net earnings per share of 40 cents
    and $2.71;
  * Quarterly and full year non-GAAP diluted net earnings per share of 58
    cents and $3.62;
  * Full year cash flow from operations and free cash flow of $205 million and
    $155 million;
  * Quarterly and full year adjusted EBITDA of $44 million and $260 million;
  * Twelve-month backlog of $568 million and total backlog of $1.0 billion;
    and
  * Quarterly bookings of $467 million.

“Our fourth quarter results reflect transition in Itron’s business as we
successfully complete more than $1.5 billion of OpenWay projects in North
America and begin new electricity, gas and water smart system pilots and
deployments around the world,” said Philip Mezey, Itron’s president and chief
executive officer. “While total revenues declined in the quarter compared to
last year, our base business revenues excluding these large OpenWay contracts
grew six percent. Non-GAAP earnings for the quarter were impacted by higher
product development, sales and marketing expenses as we prepare for new
projects developing in nearly every major geographic region.”

“Itron has a solid, profitable financial foundation,” continued Mr. Mezey.
“With our financial strength, large customer base and next-generation
technologies for electricity, gas and water applications, Itron is
well-positioned to lead a transformation in the utility sector. In 2013, we
will accelerate our commitment to innovation and we will continue to invest in
new solutions to help our customers build the smart cities of the next decade.
I am excited to lead our company at a time when we can truly make a difference
in our industry.”

Financial Results

Revenues were $523 million for the quarter and $2.2 billion for the full year,
compared with $642 million and $2.4 billion in the same periods in 2011.
Changes in foreign currency exchange rates unfavorably impacted revenue by $9
million for the quarter and $92 million for the year. Excluding the impact
from foreign currency, revenues for the quarter and year decreased $110
million and $164 million compared with the same periods in 2011. Higher
revenue in the Water segment was offset by lower revenue in the Energy segment
due to the completion of several OpenWay projects in North America. Itron
Cellular Solutions, which was acquired in May 2012, added $10 million and $22
million in revenue in the fourth quarter and full year 2012, respectively.

Gross margin for the quarter was 31.2 percent compared with the prior year
period margin of 30.0 percent. Gross margin for the Energy segment improved
due to lower warranty costs and manufacturing efficiencies, partially offset
by the impact of lower volumes and product mix. The gross margin for the Water
segment decreased primarily due to higher service costs. For the year, gross
margin was 32.8 percent compared with 30.7 percent in 2011. Gross margin
improvement over the prior year was driven by lower warranty costs in both the
Energy and Water segments, which positively impacted gross margin by 1.7
percentage points. Additionally, benefits from our restructuring actions and
manufacturing efficiencies offset the impact of decreased volumes.

GAAP operating expenses were $144 million in the quarter compared with $253
million in the same period last year. The decrease in expenses was primarily
due to lower restructuring and goodwill impairment charges. For the year,
operating expenses were $565 million compared with $1.2 billion in 2011. The
decrease was due to a favorable impact of $25 million from changes in foreign
currency rates, lower restructuring expenses, goodwill impairment and
intangible asset amortization costs partially offset by increased sales and
marketing activity and product development efforts to position us for upcoming
global smart grid opportunities. GAAP operating income for the quarter and
year was $19 million and $151 million, compared with an operating loss of $60
million and $459 million in the respective 2011 periods. Itron Cellular
Solutions negatively impacted GAAP operating income by $2.3 million and $12.4
million in the fourth quarter and full year 2012, respectively.

Net interest expense was $2.2 million for the quarter and $9.2 million for the
year compared with $2.2 million and $35.9 million in the same periods last
year. The decrease in net interest expense in the year was due to a reduced
principal balance and lower effective interest rates due to a refinancing of
bank debt in August 2011.

GAAP net income and diluted EPS for the fourth quarter and year were $16
million, or 40 cents per share, and $108 million, or $2.71 per share,
respectively. This compares to a net loss of $55 million, or $1.35 per share,
and $510 million, or $12.56 per share in the same periods in 2011,
respectively. The 2012 net income for the quarter was positively impacted by a
tax benefit. The net income for the year was positively impacted by decreased
interest expense which was partially offset by an increase in tax expense
driven by discrete tax benefits recognized in the prior year.

Non-GAAP operating expenses exclude amortization of intangibles, restructuring
charges, acquisition related expenses and the impairment of goodwill. Non-GAAP
operating expenses for the quarter and year increased $6 million and $20
million over the 2011 respective periods. Foreign currency favorably impacted
non-GAAP operating expenses by $2 million in the quarter and $19 million in
the year. Excluding the impact of foreign currency, non-GAAP operating
expenses increased for both periods due to increased global sales and
marketing activity and product development. Non-GAAP operating income was $30
million and $206 million for the quarter and year, compared with $65 million
and $257 million in the same periods in 2011. Itron Cellular Solutions
negatively impacted non-GAAP operating income by $1.4 million and $8.3 million
in the fourth quarter and full year 2012, respectively.

Non-GAAP net income and diluted EPS for the quarter and year were $23 million,
or 58 cents per share, and $145 million, or $3.62 per share, respectively.
This compares with $49 million, or $1.19 cents per share, and $176 million, or
$4.29 per share, respectively, in the same periods in 2011. The decrease in
non-GAAP net income for the quarter was due to lower gross profit and
increased operating expenses, partially offset by decreased tax expense. The
decrease in non-GAAP net income for the year was due to lower gross profit,
higher operating expenses and increased tax expense, partially offset by
decreased interest expense.

The company repurchased 157,772 shares of Itron common stock during the
quarter at an average price of $42.73 per share pursuant to Board
authorization to repurchase up to $100 million of Itron common stock beginning
October 2011 through the expiration date of February 15, 2013. As of December
31, 2012 the company had repurchased approximately 2 million shares of Itron
common stock at an average price of $37.96 per share since inception of the
program, representing approximately 5.0 percent of total shares outstanding as
of October 2011.

Financial Guidance

Itron’s guidance for the full-year 2013 is as follows:

• Revenue between $2.0 billion and $2.1 billion

• Non-GAAP diluted EPS between $3.00 and $3.25

The company’s guidance assumes a gross margin of approximately 33.5 percent, a
Euro to U.S. dollar average exchange rate of $1.34, average shares outstanding
of approximately 40 million for the year and a non-GAAP effective tax rate for
the year of 25 percent.

Earnings Conference Call:

Itron will host a conference call to discuss the financial results and
guidance contained in this release at 5:00 p.m. Eastern Time (ET) on February
13, 2013. The call will be webcast in a listen-only mode. Webcast information
and conference call materials will be made available 15 minutes before the
start of the call and are accessible on Itron’s website at www.itron.com under
the Investors page. The webcast replay will begin after the conclusion of the
live call and will be available for two weeks. A telephone replay of the call
will also be available 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 4441088.

About Itron

Itron is a global technology company. We build solutions that help utilities
measure, monitor and manage energy and water. Our broad product portfolio
includes electricity, gas, water and thermal energy measurement and control
technology; communications systems; software; and professional services. With
thousands of employees supporting nearly 8,000 utilities in more than one
hundred countries, Itron empowers utilities to responsibly and efficiently
manage energy and water resources. Join us in creating a more resourceful
world, start here: www.itron.com.

Forward Looking Statements:

This release contains forward-looking statements concerning our expectations
about operations, financial performance, sales, earnings and cash flows. These
statements reflect our current plans and expectations and are based on
information currently available. The statements 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 our 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 and bonus
compensation, increasing volatility in foreign exchange rates, international
business risks and other factors that are more fully described in our Annual
Report on Form 10-K for the year ended December 31, 2011 and other reports 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.

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           Twelve Months Ended December
                    December 31,                 31,
                      2012          2011           2012            2011       
Revenues            $ 523,335     $ 642,477      $ 2,178,178     $ 2,434,124
Cost of revenues      359,835       449,944        1,463,031       1,687,666  
Gross profit          163,500       192,533        715,147         746,458
                                                                  
Operating
expenses
  Sales and           51,987        47,086         197,603         185,105
  marketing
  Product             44,358        42,158         178,653         161,305
  development
  General and         37,527        38,281         138,290         142,908
  administrative
  Amortization of
  intangible          11,943        15,587         47,810          63,394
  assets
  Restructuring       (1,790  )     65,079         1,665           68,082
  expense
  Goodwill            -             44,447         -               584,847    
  impairment
      Total
      operating       144,025       252,638        564,021         1,205,641  
      expenses
                                                                  
Operating income      19,475        (60,105 )      151,126         (459,183  )
(loss)
Other income
(expense)
  Interest income     285           231            952             862
  Interest            (2,521  )     (2,464  )      (10,115   )     (36,794   )
  expense
  Other income        (1,520  )     (2,309  )      (5,744    )     (6,651    )
  (expense), net
      Total other
      income          (3,756  )     (4,542  )      (14,907   )     (42,583   )
      (expense)
                                                                  
Income (loss)
before income         15,719        (64,647 )      136,219         (501,766  )
taxes
Income tax
benefit               745           11,099         (25,995   )     (4,430    )
(provision)
Net income (loss)     16,464        (53,548 )      110,224         (506,196  )
  Net income
  attributable to     504           1,083          1,949           3,961      
  non-controlling
  interests
Net income (loss)
attributable to     $ 15,960      $ (54,631 )    $ 108,275       $ (510,157  )
Itron, Inc.
                                                                  
                                                                  
Earnings per
common share -      $ 0.41        $ (1.35   )    $ 2.73          $ (12.56    )
Basic
Earnings per
common share -      $ 0.40        $ (1.35   )    $ 2.71          $ (12.56    )
Diluted
                                                                  
                                                                  
Weighted average
common shares         39,233        40,506         39,625          40,612
outstanding -
Basic
Weighted average
common shares         39,619        40,506         39,934          40,612
outstanding -
Diluted
                                                                              

ITRON, INC.
SEGMENT INFORMATION
                                                                 
(Unaudited, in
thousands)
                      Three Months Ended          Twelve Months Ended December
                      December 31,                31,
                        2012          2011          2012            2011       
Revenues
   Energy
     Electricity      $ 229,844     $ 358,899     $ 1,024,340     $ 1,239,428
     Gas                161,855       163,549       627,193         672,999    
        Total         $ 391,699     $ 522,448     $ 1,651,533     $ 1,912,427
        Energy
   Water                131,636       120,029       526,645         521,697    
     Total            $ 523,335     $ 642,477     $ 2,178,178     $ 2,434,124  
     Company
                                                                   
Gross profit
   Energy             $ 121,339     $ 152,118     $ 530,396       $ 578,575
   Water                42,161        40,415        184,751         167,883    
     Total            $ 163,500     $ 192,533     $ 715,147       $ 746,458    
     Company
                                                                   
Operating income
(loss)
   Energy             $ 19,158      $ (35,265 )   $ 135,369       $ (112,831  )
   Water                9,314         (13,190 )     59,210          (303,772  )
   Corporate            (8,997  )     (11,650 )     (43,453   )     (42,580   )
   unallocated
     Total            $ 19,475      $ (60,105 )   $ 151,126       $ (459,183  )
     Company
                                                                   
                                                                   
METER AND MODULE SUMMARY
                                                                   
(Units in
thousands)
                      Three Months Ended          Twelve Months Ended December
                      December 31,                31,
                        2012          2011          2012            2011       
Meters
   Standard             4,310         4,720         17,920          19,570
   Advanced and         1,920         3,010         8,030           9,320      
   Smart
     Total              6,230         7,730         25,950          28,890     
     meters
                                                                   
Stand-alone
communication
modules
     Advanced           1,410         1,490         6,460           6,330      
     and Smart
                                                                               

ITRON, INC.
CONSOLIDATED BALANCE SHEETS
                                                            
(Unaudited, in thousands)
                                         December 31, 2012   December 31, 2011
         ASSETS
Current assets
     Cash and cash equivalents           $   136,411         $   133,086
     Accounts receivable, net                375,326             371,641
     Inventories                             170,719             195,837
     Deferred tax assets current, net        33,536              58,172
     Other current assets                    104,958             81,618      
         Total current assets                820,950             840,354
                                                              
Property, plant, and equipment, net          255,212             262,670
Deferred tax assets noncurrent, net          44,584              22,144
Other long-term assets                       28,908              62,704
Intangible assets, net                       238,771             239,500
Goodwill                                     701,016             636,910     
         Total assets                    $   2,089,441       $   2,064,282   
                                                              
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
     Accounts payable                    $   227,739         $   246,775
     Other current liabilities               49,950              53,734
     Wages and benefits payable              91,802              93,730
     Taxes payable                           9,305               11,526
     Current portion of debt                 18,750              15,000
     Current portion of warranty             27,115              52,588
     Unearned revenue                        42,712              37,369      
         Total current liabilities           467,373             510,722
                                                              
Long-term debt                               398,750             437,502
Long-term warranty                           26,490              26,948
Pension plan benefit liability               90,533              62,449
Deferred tax liabilities noncurrent,         16,682              31,699
net
Other long-term obligations                  80,100              73,417      
         Total liabilities                   1,079,928           1,142,737
                                                              
Commitments and contingencies
                                                              
Equity
     Preferred stock                         -                   -
     Common stock                            1,294,213           1,319,222
     Accumulated other comprehensive         (34,384    )        (37,160    )
     loss, net
     Accumulated deficit                     (266,862   )        (375,137   )
         Total Itron, Inc.                   992,967             906,925
         shareholders' equity
     Non-controlling interests               16,546              14,620      
         Total equity                        1,009,513           921,545     
         Total liabilities and equity    $   2,089,441       $   2,064,282   
                                                              

ITRON, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                               
(Unaudited, in thousands)
                                              Twelve Months Ended December 31,
                                                 2012               2011      
Operating activities
   Net income (loss)                          $  110,224         $  (506,196 )
   Adjustments to reconcile net income to
   net cash provided by operating
   activities:
           Depreciation and amortization         109,471            129,466
           Stock-based compensation              19,512             16,411
           Amortization of prepaid debt          1,597              5,715
           fees
           Amortization of convertible debt      -                  5,336
           discount
           Deferred taxes, net                   (6,775    )        (12,985  )
           Goodwill impairment                   -                  584,847
           Restructuring expense, non-cash       (4,839    )        25,144
           Other adjustments, net                (189      )        (44      )
Changes in operating assets and
liabilities, net of acquisition:
   Accounts receivable                           36,300             (22,770  )
   Inventories                                   28,253             6,389
   Other current assets                          (20,052   )        (3,859   )
   Other long-term assets                        10,578             (17,401  )
   Accounts payables, other current              (47,367   )        22,715
   liabilities, and taxes payable
   Wages and benefits payable                    (8,967    )        (19,813  )
   Unearned revenue                              12,009             19,070
   Warranty                                      (25,919   )        29,616
   Other operating, net                          (8,746    )        (9,283   )
           Net cash provided by operating        205,090            252,358
           activities
                                                                  
Investing activities
   Acquisitions of property, plant, and          (50,543   )        (60,076  )
   equipment
   Business acquisitions, net of cash            (79,017   )        (20,092  )
   equivalents acquired
   Other investing, net                          4,115              1,427     
           Net cash used in investing            (125,445  )        (78,741  )
           activities
                                                                  
Financing activities
   Proceeds from borrowings                      80,000             670,000
   Payments on debt                              (115,002  )        (848,054 )
   Issuance of common stock                      4,781              4,625
   Repurchase of common stock                    (47,441   )        (29,428  )
   Other financing, net                          134                (6,596   )
           Net cash used in financing            (77,528   )        (209,453 )
           activities
                                                                  
Effect of foreign exchange rate changes on       1,208              (555     )
cash and cash equivalents
Increase (decrease) in cash and cash             3,325              (36,391  )
equivalents
Cash and cash equivalents at beginning of        133,086            169,477   
period
Cash and cash equivalents at end of period    $  136,411         $  133,086   
                                                                  

                                 Itron, Inc.

                      About Non-GAAP Financial Measures

The accompanying press release contains non-GAAP financial measures. To
supplement our consolidated financial statements, which are prepared and
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. The
presentation of this financial information is not intended to be considered in
isolation or as a substitute for, or superior to, the financial information
prepared and presented in accordance with GAAP. For more information on these
non-GAAP financial measures please see the table captioned “Reconciliations of
Non-GAAP Financial Measures to Most Directly Comparable GAAP Financial
Measures.”

We use these non-GAAP financial measures for financial and operational
decision making and as a means for determining executive compensation.
Management believes that these non-GAAP financial measures provide meaningful
supplemental information regarding our performance and ability to service debt
by excluding certain expenses that may not be indicative of our recurring core
operating results. These non-GAAP financial measures facilitate management’s
internal comparisons to our historical performance as well as comparisons to
our competitors’ operating results. Our executive compensation plans exclude
non-cash charges related to amortization of intangibles and non-recurring
discrete cash and non-cash charges that are infrequent in nature such as
purchase accounting adjustments, restructuring charges or goodwill impairment
charges. We believe that both management and investors benefit from referring
to these non-GAAP financial measures in assessing our performance and when
planning, forecasting and analyzing future periods. We believe these non-GAAP
financial measures are useful to investors because they provide greater
transparency with respect to key metrics used by management in its financial
and operational decision making and because they are used by our institutional
investors and the analyst community to help them analyze the health of our
business.

Non-GAAP operating expense and non-GAAP operating income – We define non-GAAP
operating expense as operating expense excluding certain expenses related to
the amortization of intangible assets, restructuring, acquisitions and
goodwill impairment. We define non-GAAP operating income as operating income
excluding the expenses related to the amortization of intangible assets,
restructuring, acquisitions and goodwill impairment. We consider these
non-GAAP financial measures to be useful metrics for management and investors
because they exclude the effect of expenses that are related to previous
acquisitions and restructurings. By excluding these expenses we believe that
it is easier for management and investors to compare our financial results
over multiple periods and analyze trends in our operations. For example,
expenses related to amortization of intangible assets are decreasing, which is
improving GAAP operating margins, yet the improvement in GAAP operating
margins due to this lower expense is not necessarily reflective of an
improvement in our core business. There are some limitations related to the
use of non-GAAP operating expense and non-GAAP operating income versus
operating expense and operating income calculated in accordance with GAAP.
Non-GAAP operating expense and non-GAAP operating income exclude some costs
that are recurring. Additionally, the expenses that we exclude in our
calculation of non-GAAP operating expense and non-GAAP operating income may
differ from the expenses that our peer companies exclude when they report the
results of their operations. We compensate for these limitations by providing
specific information about the GAAP amounts we have excluded from our non-GAAP
operating expense and non-GAAP operating income and evaluating non-GAAP
operating expense and non-GAAP operating income together with GAAP operating
expense and GAAP operating income.

Non-GAAP net income and non-GAAP diluted EPS – We define non-GAAP net income
as net income excluding the expenses associated with amortization of
intangible assets, restructuring, acquisitions, goodwill impairment,
amortization of debt placement fees and amortization of convertible debt
discount. We define non-GAAP diluted EPS as non-GAAP net income divided by the
weighted average shares, on a diluted basis, outstanding during each period.
We consider these financial measures to be useful metrics for management and
investors for the same reasons that we use non-GAAP operating income. The same
limitations described above regarding our use of non-GAAP operating income
apply to our use of non-GAAP net income and non-GAAP diluted EPS. We
compensate for these limitations by providing specific information regarding
the GAAP amounts excluded from these non-GAAP measures and evaluating non-GAAP
net income and non-GAAP diluted EPS together with GAAP net income and GAAP
diluted EPS.

Adjusted EBITDA – We define adjusted EBITDA as net income (a) minus interest
income, (b) plus interest expense, depreciation and amortization of intangible
asset expenses, restructuring expense, acquisition related expenses and
goodwill impairment and (c) exclude the tax expense or benefit. We believe
that providing this financial measure is important for management and
investors to understand our ability to service our debt as it is a measure of
the cash generated by our core business. Management uses adjusted EBITDA as a
performance measure for executive compensation. A limitation to using adjusted
EBITDA is that it does not represent the total increase or decrease in the
cash balance for the period and the measure includes some non-cash items and
excludes other non-cash items. Additionally, the items that we exclude in our
calculation of adjusted EBITDA may differ from the items that our peer
companies exclude when they report their results. Management compensates for
this limitation by providing a reconciliation of this measure to GAAP net
income.

Free cash flow – We define free cash flow as net cash provided by operating
activities less cash used for acquisitions of property, plant, and equipment.
We believe free cash flow provides investors with a relevant measure of
liquidity and a useful basis for assessing our ability to fund our operations
and repay our debt. The same limitations described above regarding our use of
non-GAAP operating income apply to our use of free cash flow. We compensate
for these limitations by providing specific information regarding the GAAP
amounts and reconciling to free cash flow.

The accompanying tables have more detail on the GAAP financial measures that
are most directly comparable to the non-GAAP financial measures and the
related reconciliations between these financial measures.

ITRON, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
TO THE MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASURES
                                                                
(Unaudited, in
thousands, except
per share data)
                      Three Months Ended           Twelve Months Ended
                      December 31,                 December 31,
                        2012          2011           2012          2011       
NON-GAAP OPERATING
INCOME - ENERGY
  Energy - GAAP
  operating income    $ 19,158      $ (35,265 )    $ 135,369     $ (112,831  )
  (loss)
     Amortization
     of intangible      8,688         11,304         34,765        45,951
     assets
     Restructuring      (2,219  )     49,939         1,317         51,873
     expense
     Acquisition
     related            667           -              2,495         -
     expenses
     Goodwill           -             38,650         -             254,735    
     impairment
  Energy - Non-GAAP   $ 26,294      $ 64,628       $ 173,946     $ 239,728    
  operating income
                                                                  
NON-GAAP OPERATING
INCOME - WATER
  Water - GAAP
  operating income    $ 9,314       $ (13,190 )    $ 59,210      $ (303,772  )
  (loss)
     Amortization
     of intangible      3,255         4,283          13,045        17,443
     assets
     Restructuring      106           14,765         (765    )     15,321
     expense
     Goodwill           -             5,797          -             330,112    
     impairment
  Water - Non-GAAP    $ 12,675      $ 11,655       $ 71,490      $ 59,104     
  operating income
                                                                  
NON-GAAP OPERATING
LOSS - CORPORATE
UNALLOCATED
  Corporate
  unallocated -       $ (8,997  )   $ (11,650 )    $ (43,453 )   $ (42,580   )
  GAAP operating
  loss
     Restructuring      323           375            1,113         888
     expense
     Acquisition
     related            -             -              2,962         -          
     expenses
  Corporate
  unallocated -       $ (8,674  )   $ (11,275 )    $ (39,378 )   $ (41,692   )
  Non-GAAP
  operating loss
                                                                  
NON-GAAP OPERATING
INCOME
  GAAP operating      $ 19,475      $ (60,105 )    $ 151,126     $ (459,183  )
  income (loss)
     Amortization
     of intangible      11,943        15,587         47,810        63,394
     assets
     Restructuring      (1,790  )     65,079         1,665         68,082
     expense
     Acquisition
     related            667           -              5,457         -
     expenses
     Goodwill           -             44,447         -             584,847    
     impairment
  Non-GAAP            $ 30,295      $ 65,008       $ 206,058     $ 257,140    
  operating income
                                                                  
NON-GAAP OPERATING
EXPENSE
  Total Company -
  GAAP operating      $ 144,025     $ 252,638      $ 564,021     $ 1,205,641
  expense
     Amortization
     of intangible      (11,943 )     (15,587 )      (47,810 )     (63,394   )
     assets
     Restructuring      1,790         (65,079 )      (1,665  )     (68,082   )
     expense
     Acquisition
     related            (667    )     -              (5,457  )     -
     expenses
     Goodwill           -             (44,447 )      -             (584,847  )
     impairment
  Total Company -
  Non-GAAP            $ 133,205     $ 127,525      $ 509,089     $ 489,318    
  operating expense
                                                                  
NON-GAAP NET INCOME
& DILUTED EPS
  GAAP net income     $ 15,960      $ (54,631 )    $ 108,275     $ (510,157  )
  (loss)
     Amortization
     of intangible      11,943        15,587         47,810        63,394
     assets
     Amortization
     of debt            397           349            1,558         5,435
     placement fees
     Amortization
     of convertible     -             -              -             5,336
     debt discount
     Restructuring      (1,790  )     65,079         1,665         68,082
     expense
     Acquisition
     related            667           -              5,457         -
     expenses
     Goodwill           -             44,447         -             584,847
     impairment
     Income tax
     effect of          (4,238  )     (22,319 )      (20,185 )     (40,986   )
     non-GAAP
     adjustments
  Non-GAAP net        $ 22,939      $ 48,512       $ 144,580     $ 175,951    
  income
                                                                  
  Non-GAAP diluted    $ 0.58        $ 1.19         $ 3.62        $ 4.29       
  EPS
                                                                  
  Weighted average
  common shares         39,619        40,805         39,934        40,985     
  outstanding -
  Diluted
                                                                  
ADJUSTED EBITDA
  GAAP net income     $ 15,960      $ (54,631 )    $ 108,275     $ (510,157  )
  (loss)
     Interest           (285    )     (231    )      (952    )     (862      )
     income
     Interest           2,521         2,464          10,115        36,794
     expense
     Income tax         (745    )     (11,099 )      25,995        4,430
     provision
     Depreciation
     and                27,615        32,547         109,471       129,466
     amortization
     Restructuring      (1,790  )     65,079         1,665         68,082
     expense
     Acquisition
     related            667           -              5,457         -
     expenses
     Goodwill           -             44,447         -             584,847    
     impairment
  Adjusted EBITDA     $ 43,943      $ 78,576       $ 260,026     $ 312,600    
                                                                  
FREE CASH FLOW
     Net cash
     provided by      $ 68,087      $ 98,557       $ 205,090     $ 252,358
     operating
     activities
     Acquisitions
     of property,       (16,265 )     (14,277 )      (50,543 )     (60,076   )
     plant, and
     equipment
  Free Cash Flow      $ 51,822      $ 84,280       $ 154,547     $ 192,282    

Contact:

Itron, Inc.
Barbara Doyle, 509-891-3443
Vice President, Investor Relations
barbara.doyle@itron.com
or
Marni Pilcher, 509-891-3847
Director, Investor Relations
marni.pilcher@itron.com
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