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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
October 1, 2004
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Date of Report (Date of Earliest Event Reported)
ITRON, INC.
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(Exact Name of Registrant as Specified in its Charter)
Washington 000-22418 91-1011792
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(State or Other Jurisdiction (Commission File No.) (IRS Employer
of Incorporation) Identification No.)
2818 N. Sullivan Road, Spokane, WA 99216
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(Address of Principal Executive Offices, Zip Code)
(509) 924-9900
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(Registrant's Telephone Number, Including Area Code)
None
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(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 2.03 Creation of a Direct Financial Obligation or an Obligation under
an Off-Balance Sheet Arrangement of a Registrant.
On October 1, 2004, Itron, Inc. ("we," "our" or "the Company") completed a
$30 million interest rate swap with a counterparty whereby we receive variable
interest payments based on three-month London InterBank Offered Rate (LIBOR) and
pay fixed interest payments based on a rate of 3.26%, over a three-year term of
the swap agreement. There were no origination fees or other significant up front
costs in connection with this financing instrument.
In addition, on October 1, 2004, we purchased a 4.00% three-month LIBOR
interest rate cap pertaining to an additional $10 million of floating rate debt.
The interest rate cap commences one year from now on October 1, 2005 and matures
on September 30, 2007. The origination fee in connection with the interest rate
cap was $103,000, which will be amortized over the term of the interest rate
cap.
This interest rate swap was entered into pursuant to our $240 million
senior secured credit facility agreement completed on July 1, 2004, which
requires us to enter into interest rate agreements within 90 days after the
closing of the senior credit facility to substantially fix or hedge the interest
rate on at least 50% of our aggregate principal amount of debt for a period of
not less than three years. The $30 million interest rate swap increases the
percentage of fixed rate debt above the minimum requirement of 50%. The interest
rate cap was not required pursuant to the secured credit facility, but was
considered a prudent purchase by management.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits.
The following exhibits are filed as part of this report:
Exhibit
Number Description
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10.1 Interest Rate Swap Transaction Agreement among Itron, Inc.
and U.S. Bank National Association dated September 29, 2004.
10.2 Rate Cap Transaction Agreement among Itron, Inc. and
KeyBank National Association dated September 29, 2004.
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The information presented in this Current Report on Form 8-K may contain
forward-looking statements and certain assumptions upon which such
forward-looking statements are in part based. Numerous important factors,
including those factors identified in Itron, Inc.'s Annual Report on Form 10-K
and other of the Company's filings with the Securities and Exchange Commission,
and the fact that the assumptions set forth in this Current Report on Form 8-K
could prove incorrect, could cause actual results to differ materially from
those contained in such forward-looking statements.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
ITRON, INC.
Dated: October 1, 2004 By: /s/ DAVID G. REMINGTON
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David G. Remington
Vice President and Chief Financial Officer
EXHIBIT INDEX
Exhibit
Number Description
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10.1 Interest Rate Swap Transaction Agreement among Itron,
Inc. and U.S. Bank National Association dated September 29,
2004.
10.2 Rate Cap Transaction Agreement among Itron, Inc. and KeyBank
National Association dated September 29, 2004.
Exhibit 10.1
September 29, 2004
Itron, Inc.
Attn: Marc Williams
2818 N. Sullivan Road
Spokane, WA 99216
Ph. (509) 891-3484
Fax (509) 891-3334
Re: Swap Transaction between U.S. Bank National Association ("Party A") and
Itron, Inc. ("Party B")
Ladies/Gentlemen:
The purpose of this letter is to set forth the terms and conditions of the
Swap transaction entered into between Party A and Party B on the Trade Date
referred to below. This letter constitutes a "Confirmation" as referred to in
the Agreement specified below.
The definitions and provisions contained in the 2000 ISDA Definitions (as
published by the International Swap Dealers Association, Inc.) are incorporated
into this Confirmation. In the event of any inconsistency between those
definitions and provisions and this Confirmation, this Confirmation will govern.
1. If Party A and Party B are parties to an Interest Rate and Currency
Exchange Agreement that sets forth the general terms and conditions
applicable to Swap Transactions between said parties (a "Swap
Agreement"), this Confirmation supplements, forms a part of, and is
subject to, such Swap Agreement. If Party A and Party B are not yet
parties to a Swap Agreement, this Confirmation will supplement, form a
part of, and be subject to, provisions contained or incorporated by
reference in such Swap Agreement upon its execution by Party A and
Party B. All provisions contained or incorporated by reference in such
Swap Agreement shall govern this Confirmation, except as modified
below. In addition, if a Swap Agreement has not been executed, this
Confirmation will itself evidence a complete binding agreement between
Party A and Party B as to the terms and conditions of the Swap
Transaction to which this Confirmation relates.
2. The terms of the particular Swap Transaction to which this
Confirmation relates are as follows:
Type of Transaction: Interest Rate Swap
Notional Amount: USD 30,000,000.00
Trade Date: September 29, 2004
Effective Date: October 1, 2004
Termination Date: October 1, 2007, subject
to adjustment in
accordance with
the Modified Following
Business Day Convention.
Fixed Rate Payer: Party B
Fixed Rate Payer Payment Dates: Beginning December 31,
2004 and thereafter on
the last day
of each March, June,
September and December,
subject to
adjustment in accordance
with the Modified
Following
Business Day Convention.
Fixed Rate: 3.26%
Fixed Rate Day Count Fraction: Act/360
Floating Rate Payer: Party A
Floating Rate Payer Payment Dates Beginning December 31,
2004 and thereafter on
the last day
of each March, June,
September and December,
subject to
adjustment in accordance
with the Modified
Following
Business Day Convention.
Floating Rate for initial Calculation Period: 2.00563%
Floating Rate Option: USD-LIBOR-BBA
(Telerate 3750)
Floating Rate Day Count Fraction: Act/360
Designated Maturity: 3 Month
Spread: None
Reset Dates: Beginning December 31,
2004 and thereafter on
the last day
of each March, June,
September and December,
subject to
adjustment in accordance
with the Modified
Following
Business Day Convention.
Reset Business Days: London
Calculation Agent: U.S. Bank National
Association
Compounding: Inapplicable
Payments to Fixed Rate Payer: Credit DDA #
(Please Provide)
Payments to Floating Rate Payer: Debit DDA #
(Please Provide)
Payment Business Days: New York and London
3. In connection with this Confirmation, the Transaction to which this
Confirmation relates and any other documentation relating to the
Agreement, each party to this Confirmation represents and acknowledges
to the other party that:
i. it has no recourse and is not relying upon any legal, tax, regulatory,
accounting or other advice, statements or recommendations (whether
written or oral) of the other party regarding such Transaction, other
than the written representations expressly made by that other party in
the Agreement and in the Confirmations in respect of such Transaction;
ii. it has the capacity to evaluate (internally or through independent
professional advice) such Transaction (including decisions regarding
the appropriateness or suitability of such Transaction) and has made
its own decision to enter into such Transaction;
iii. it understands the terms, conditions and risks of such transaction and
is willing to accept those terms and conditions and to assume
(financially and otherwise) those risks;
iv. it is entering into such Transaction as principal and not as agent for
any other party;
v. it acknowledges and agrees that the other party is not acting as a
fiduciary or advisor to it in connection with such Transaction;
vi. it acknowledges that U.S. Bank National Association has advised
counterparty to consult its own tax, accounting and legal advisors in
connection with this transaction evidenced by this confirmation and
that it has done so; and
vii. it is entering into such Transaction for the purpose of managing its
borrowings or investments, hedging its underlying assets or
liabilities or in connection with a line of business, and not for
purposes of speculation.
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us.
U.S. Bank National Association
/s/ Christopher D. Thornton
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By: Christopher D. Thornton
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Title: Treasury Officer
Accepted and confirmed as of the date first above
written:
Itron, Inc.
By: /s/ David G. Remington
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Title: VP & CFO
Exhibit 10.2
KEYBANK NATIONAL ASSOCIATION
CONFIRMATION
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To: ITRON, INC.
2818 N. SULLIVAN RD.
SPOKANE, WA 99216
Attn: Marc Williams
Fax: 509-891-3334
Duplicate
Confirm to:
Client ID: 1000349084~MCMANAMON
From: KEYBANK NATIONAL ASSOCIATION
Date: 30-Sep-04
Our Ref: 117870/117870
The purpose of this letter agreement is to set forth the terms and
conditions of the Swap Transaction entered into between KEYBANK NATIONAL
ASSOCIATION and ITRON, INC. on the Trade Date specified below (the "Swap
Transaction"). This letter agreement constitutes a "Confirmation" as referred to
in the Swap Agreement specified below.
1. The definitions and provisions contained in the 1991 ISDA Definitions
(as supplemented by the 1998 Supplement to the 1991 ISDA Definitions) (the
"Definitions") are incorporated into this Confirmation.
If you and we are parties to an ISDA Master Agreement as published by the
International Swap Dealers Association, Inc. and the Schedule to such agreement
that sets forth the general terms and conditions applicable to Swap Transactions
between us (a "Swap Agreement"), this Confirmation supplements, forms a part of,
and is subject to, such Swap Agreement. If you and we are not yet parties to a
Swap Agreement, this Confirmation will be a complete valid legal binding
agreement between us as supplemented by the general terms and conditions set
forth in the standard form ISDA Master Agreement copyright 1992 by the
International Swap Dealers Association, Inc.("standard ISDA form"). All
provisions contained or incorporated by reference in such Swap Agreement shall
govern this Confirmation except as expressly modified below. In the event of any
inconsistency between this Confirmation and the Definitions or the Swap
Agreement or the standard ISDA form if a Swap Agreement has not been entered
into between us, this Confirmation will govern.
This Confirmation will be governed by and construed in accordance with the
laws of the State of New York, without reference to choice of law doctrine,
provided that this provision will be superseded by any choice of law provision
in the Swap Agreement.
2. This Confirmation constitutes a Rate Cap Transaction under the Swap
Agreement and the terms of the Rate Cap Transaction to which this Confirmation
relates are as follows:
ITRON, INC.
Our Ref: 117870/117870
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Notional Amount: $10,000,000.00 USD
Trade Date: 29-Sep-04
Effective Date: 01-Oct-05
Termination Date: 30-Sep-07
Fixed Amounts
Fixed Rate Payer: ITRON, INC.
Fixed Rate Payer
Payment Dates:
Fixed Amount: $103,000.00
Floating Amounts
Floating Rate Payer: KEYBANK NATIONAL ASSOCIATION
Cap Rate: 4.000 percent per annum
Floating Rate Payer
Payment Dates: Commencing 30-Dec-05 and quarterly
thereafter on the 30th calendar day of
the month up to and including the
Termination Date, subject to
adjustment in accordance with
Modified Following Business Day
Convention.
Floating Rate Option: USD-LIBOR-BBA
Designated Maturity: 3-Month
Spread: None
Floating Rate Day
Count Fraction: Act/360
Reset Dates: The first day of each Floating Rate Payer
Calculation Period.
ITRON, INC.
Our Ref: 117870/117870
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Calculation Agent: KEYBANK NATIONAL ASSOCIATION
Business days: London and New York
Other Terms
and Conditions:
Please remit a wire to KeyBank
ABA 041001039
Payment Instructions: Please Provide
Please confirm the foregoing correctly sets forth the terms of our
Agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us.
Regards,
KEYBANK NATIONAL ASSOCIATION
By:
/s/ Frank Purnell
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Name: Frank Purnell
Accepted and Confirmed as
of the Trade Date
ITRON, INC.
/s/ David G. Remington
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Name: David G. Remington, VP & CFO