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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2019
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to             
Commission file number 000-22418
ITRON, INC.
(Exact name of registrant as specified in its charter)
Washington
 
91-1011792
(State of Incorporation)
 
(I.R.S. Employer Identification Number)
2111 N Molter Road, Liberty Lake, Washington 99019
(509) 924-9900
(Address and telephone number of registrant's principal executive offices) 
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer
 
Accelerated filer
 
 
Non-accelerated filer
(Do not check if a smaller reporting company)
Smaller reporting company
 
 
 
 
 
Emerging growth company
 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common stock, no par value
 
ITRI
 
NASDAQ Global Select Market
As of July 31, 2019, there were outstanding 39,458,595 shares of the registrant's common stock, no par value, which is the only class of common stock of the registrant.
 


Table of Contents

Itron, Inc.
Table of Contents
 
 
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 1A: Risk Factors
 
 
 
 
 
 
Item 6: Exhibits
 
 
 
 


Table of Contents

PART I: FINANCIAL INFORMATION
Item 1:    Financial Statements (Unaudited)
ITRON, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
In thousands, except per share data
2019
 
2018
 
2019
 
2018
Revenues
 
 
 
 
 
 
 
Product revenues
$
566,047

 
$
515,914

 
$
1,110,897

 
$
1,053,024

Service revenues
68,990

 
69,976

 
138,716

 
140,087

Total revenues
635,037

 
585,890

 
1,249,613

 
1,193,111

Cost of revenues
 
 
 
 
 
 
 
Product cost of revenues
401,033

 
366,542

 
787,135

 
749,392

Service cost of revenues
42,790

 
42,771

 
84,001

 
87,287

Total cost of revenues
443,823

 
409,313

 
871,136

 
836,679

Gross profit
191,214

 
176,577

 
378,477

 
356,432

 
 
 
 
 
 
 
 
Operating expenses
 
 
 
 
 
 
 
Sales, general and administrative
88,259

 
88,863

 
180,974

 
243,277

Research and development
49,449

 
54,775

 
99,939

 
115,059

Amortization of intangible assets
16,117

 
17,999

 
32,090

 
35,739

Restructuring
(6,169
)
 
(5,623
)
 
1,093

 
82,242

Total operating expenses
147,656

 
156,014

 
314,096

 
476,317

 
 
 
 
 
 
 
 
Operating income (loss)
43,558

 
20,563

 
64,381

 
(119,885
)
Other income (expense)
 
 
 
 
 
 
 
Interest income
534

 
633

 
862

 
1,294

Interest expense
(13,496
)
 
(14,645
)
 
(27,031
)
 
(30,149
)
Other income (expense), net
(2,060
)
 
1,003

 
(3,704
)
 
(164
)
Total other income (expense)
(15,022
)
 
(13,009
)
 
(29,873
)
 
(29,019
)
 
 
 
 
 
 
 
 
Income (loss) before income taxes
28,536

 
7,554

 
34,508

 
(148,904
)
Income tax benefit (provision)
(8,419
)
 
(3,781
)
 
(14,540
)
 
7,407

Net income (loss)
20,117

 
3,773

 
19,968

 
(141,497
)
Net income attributable to noncontrolling interests
671

 
1,116

 
2,429

 
1,512

Net income (loss) attributable to Itron, Inc.
$
19,446

 
$
2,657

 
$
17,539

 
$
(143,009
)
 
 
 
 
 
 
 
 
Net income (loss) per common share - Basic
$
0.49

 
$
0.07

 
$
0.44

 
$
(3.66
)
Net income (loss) per common share - Diluted
$
0.49

 
$
0.07

 
$
0.44

 
$
(3.66
)
 
 
 
 
 
 
 
 
Weighted average common shares outstanding - Basic
39,389

 
39,243

 
39,523

 
39,095

Weighted average common shares outstanding - Diluted
39,686

 
39,789

 
39,875

 
39,095

The accompanying notes are an integral part of these condensed consolidated financial statements.

1

Table of Contents

ITRON, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)

 
Three Months Ended June 30,
 
Six Months Ended June 30,
In thousands
2019
 
2018
 
2019
 
2018
Net income (loss)
$
20,117

 
$
3,773

 
$
19,968

 
$
(141,497
)
 
 
 
 
 
 
 
 
Other comprehensive income (loss), net of tax:
 
 
 
 
 
 
 
Foreign currency translation adjustments
5,187

 
(34,160
)
 
2,801

 
(17,860
)
Net unrealized gain (loss) on derivative instruments, designated as cash flow hedges
(1,634
)
 
486

 
(1,499
)
 
1,655

Pension benefit obligation adjustment
183

 
401

 
654

 
815

Total other comprehensive income (loss), net of tax
3,736

 
(33,273
)
 
1,956

 
(15,390
)
 
 
 
 
 
 
 
 
Total comprehensive income (loss), net of tax
23,853

 
(29,500
)
 
21,924

 
(156,887
)
 
 
 
 
 
 
 
 
Comprehensive income (loss) attributable to noncontrolling interests, net of tax
671

 
1,116

 
2,429

 
1,512

 
 
 
 
 
 
 
 
Comprehensive income (loss) attributable to Itron, Inc.
$
23,182

 
$
(30,616
)
 
$
19,495

 
$
(158,399
)
The accompanying notes are an integral part of these condensed consolidated financial statements.

2

Table of Contents

ITRON, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
In thousands
June 30, 2019
 
December 31, 2018
ASSETS
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
135,736

 
$
120,221

Accounts receivable, net
466,366

 
437,161

Inventories
229,910

 
220,674

Other current assets
130,584

 
118,085

Total current assets
962,596

 
896,141

 
 
 
 
Property, plant, and equipment, net
228,513

 
226,551

Deferred tax assets, net
60,977

 
64,830

Restricted cash
2,066

 
2,056

Other long-term assets
40,918

 
45,288

Operating lease right-of-use assets, net
79,456

 

Intangible assets, net
221,767

 
257,583

Goodwill
1,110,061

 
1,116,533

Total assets
$
2,706,354

 
$
2,608,982

 
 
 
 
LIABILITIES AND EQUITY
 
 
 
Current liabilities
 
 
 
Accounts payable
$
320,582

 
$
309,951

Other current liabilities
69,139

 
70,136

Wages and benefits payable
102,577

 
88,603

Taxes payable
17,115

 
14,753

Current portion of debt
26,563

 
28,438

Current portion of warranty
38,987

 
47,205

Unearned revenue
95,197

 
93,621

Total current liabilities
670,160

 
652,707

 
 
 
 
Long-term debt
969,710

 
988,185

Long-term warranty
18,125

 
13,238

Pension benefit obligation
92,073

 
91,522

Deferred tax liabilities, net
1,514

 
1,543

Operating lease liabilities
68,387

 

Other long-term obligations
139,786

 
127,739

Total liabilities
1,959,755

 
1,874,934

 
 
 
 
Commitments and contingencies (Note 11)

 

 
 
 
 
Equity
 
 
 
Preferred stock, no par value, 10,000 shares authorized, no shares issued or outstanding

 

Common stock, no par value, 75,000 shares authorized, 39,395 and 39,498 shares issued and outstanding
1,325,508

 
1,334,364

Accumulated other comprehensive loss, net
(194,349
)
 
(196,305
)
Accumulated deficit
(407,857
)
 
(425,396
)
Total Itron, Inc. shareholders' equity
723,302

 
712,663

Noncontrolling interests
23,297

 
21,385

Total equity
746,599

 
734,048

Total liabilities and equity
$
2,706,354

 
$
2,608,982

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

Table of Contents

ITRON, INC.
CONSOLIDATED STATEMENTS OF EQUITY
(UNAUDITED)
 
Common Stock
 
Accumulated Other Comprehensive Loss
 
Accumulated Deficit
 
Total Itron, Inc. Shareholders' Equity
 
Noncontrolling Interests
 
Total Equity
In thousands
Shares
 
Amount
 
 
 
 
 
Balances at January 1, 2019
39,498

 
$1,334,364
 
$
(196,305
)
 
$
(425,396
)
 
$
712,663

 
$
21,385

 
$
734,048

Net income (loss)
 
 
 
 
 
 
(1,907
)
 
(1,907
)
 
1,758

 
(149
)
Other comprehensive income (loss), net of tax
 
 
 
 
(1,780
)
 
 
 
(1,780
)
 
 
 
(1,780
)
Distributions to noncontrolling interests
 
 
 
 
 
 
 
 

 
(517
)
 
(517
)
Stock issues and repurchases:
 
 
 
 
 
 
 
 
 
 
 
 
 
Options exercised
20

 
889

 
 
 
 
 
889

 
 
 
889

Restricted stock awards released net of repurchased shares for taxes
319

 
(720
)
 
 
 
 
 
(720
)
 
 
 
(720
)
Issuance of stock-based compensation awards
2

 
157

 
 
 
 
 
157

 
 
 
157

Employee stock purchase plan
19

 
869

 
 
 
 
 
869

 
 
 
869

Stock-based compensation expense
 
 
7,048

 
 
 
 
 
7,048

 
 
 
7,048

Shares repurchased
(165
)
 
(7,814
)
 
 
 
 
 
(7,814
)
 
 
 
(7,814
)
Balances at March 31, 2019
39,693

 
$
1,334,793

 
$
(198,085
)
 
$
(427,303
)
 
$
709,405

 
$
22,626

 
$
732,031

Net income (loss)
 
 
 
 
 
 
19,446

 
19,446

 
671

 
20,117

Other comprehensive income (loss), net of tax
 
 
 
 
3,736

 
 
 
3,736

 
 
 
3,736

Distributions to noncontrolling interests
 
 
 
 
 
 
 
 

 

 

Stock issues and repurchases:
 
 
 
 
 
 
 
 

 
 
 

Options exercised
39

 
1,501

 
 
 
 
 
1,501

 
 
 
1,501

Restricted stock awards released net of repurchased shares for taxes
7

 
(920
)
 
 
 
 
 
(920
)
 
 
 
(920
)
Issuance of stock-based compensation awards
3

 
158

 
 
 
 
 
158

 
 
 
158

Employee stock purchase plan
17

 
742

 
 
 
 
 
742

 
 
 
742

Stock-based compensation expense
 
 
6,420

 
 
 
 
 
6,420

 
 
 
6,420

Shares repurchased
(364
)
 
(17,186
)
 
 
 
 
 
(17,186
)
 
 
 
(17,186
)
Balances at June 30, 2019
39,395

 
$
1,325,508

 
$
(194,349
)
 
$
(407,857
)
 
$
723,302

 
$
23,297

 
$
746,599


4

Table of Contents

 
Common Stock
 
Accumulated Other Comprehensive Loss
 
Accumulated Deficit
 
Total Itron, Inc. Shareholders' Equity
 
Noncontrolling Interests
 
Total Equity
In thousands
Shares
 
Amount
 
 
 
 
 
Balances at January 1, 2018
38,771

 
$1,294,767
 
$
(170,478
)
 
$
(337,873
)
 
$
786,416

 
$
19,216

 
$
805,632

Net Income (loss)
 
 
 
 
 
 
(145,666
)
 
(145,666
)
 
396

 
(145,270
)
Cumulative effect of accounting change
 
 
 
 
 
 
11,727

 
11,727

 
 
 
11,727

Other comprehensive income (loss), net of tax
 
 
 
 
17,883

 
 
 
17,883

 
 
 
17,883

Distributions to noncontrolling interests
 
 
 
 
 
 
 
 

 
(981
)
 
(981
)
Stock issues and repurchases:
 
 
 
 
 
 
 
 
 
 
 
 
 
Options exercised
62

 
2,883

 
 
 
 
 
2,883

 
 
 
2,883

Restricted stock awards released
338

 

 
 
 
 
 

 
 
 

Issuance of stock-based compensation awards
2

 
207

 
 
 
 
 
207

 
 
 
207

Employee stock purchase plan
8

 
501

 
 
 
 
 
501

 
 
 
501

Stock-based compensation expense
 
 
7,888

 
 
 
 
 
7,888

 
 
 
7,888

Registration fee
 
 
(7
)
 
 
 
 
 
(7
)
 
 
 
(7
)
SSNI acquisition adjustments, net
 
 
4,140

 
 
 
 
 
4,140

 
 
 
4,140

Balances at March 31, 2018
39,181

 
$
1,310,379

 
$
(152,595
)
 
$
(471,812
)
 
$
685,972

 
$
18,631

 
$
704,603

Net income (loss)
 
 
 
 
 
 
2,657

 
2,657

 
1,116

 
3,773

Other comprehensive income (loss), net of tax
 
 
 
 
(33,273
)
 
 
 
(33,273
)
 
 
 
(33,273
)
Contribution from noncontrolling interests
 
 
 
 
 
 
 
 

 
481

 
481

Stock issues and repurchases:
 
 
 
 
 
 
 
 

 
 
 

Options exercised
26

 
655

 
 
 
 
 
655

 
 
 
655

Restricted stock awards released
60

 

 
 
 
 
 

 
 
 

Issuance of stock-based compensation awards
2

 
207

 
 
 
 
 
207

 
 
 
207

Employee stock purchase plan
10

 
627

 
 
 
 
 
627

 
 
 
627

Stock-based compensation expense
 
 
8,317

 
 
 
 
 
8,317

 
 
 
8,317

Registration Fee
 
 
(16
)
 
 
 
 
 
(16
)
 
 
 
(16
)
SSNI acquisition adjustments, net
 
 
(2,388
)
 
 
 
 
 
(2,388
)
 
 
 
(2,388
)
Balances at June 30, 2018
39,279

 
$
1,317,781

 
$
(185,868
)
 
$
(469,155
)
 
$
662,758

 
$
20,228

 
$
682,986


The accompanying notes are an integral part of these condensed consolidated financial statements.


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ITRON, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 
Six Months Ended June 30,
In thousands
2019
 
2018
Operating activities
 
 
 
Net income (loss)
$
19,968

 
$
(141,497
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
Depreciation and amortization of intangible assets
57,068

 
61,979

Amortization of operating lease right-of-use assets
9,481

 

Stock-based compensation
13,783

 
16,619

Amortization of prepaid debt fees
2,402

 
4,602

Deferred taxes, net
2,076

 
(15,319
)
Restructuring, non-cash
(5,295
)
 
624

Other adjustments, net
(3,471
)
 
1,205

Changes in operating assets and liabilities, net of acquisitions:
 
 
 
Accounts receivable
(29,121
)
 
12,804

Inventories
(9,202
)
 
3,385

Other current assets
(14,413
)
 
(1,921
)
Other long-term assets
6,616

 
4,514

Accounts payable, other current liabilities, and taxes payable
(2,801
)
 
(16,994
)
Wages and benefits payable
13,484

 
762

Unearned revenue
14,961

 
31,156

Warranty
(3,270
)
 
3,756

Other operating, net
5,797

 
51,204

Net cash provided by operating activities
78,063

 
16,879

 
 
 
 
Investing activities
 
 
 
Acquisitions of property, plant, and equipment
(26,511
)
 
(29,309
)
Business acquisitions, net of cash equivalents acquired

 
(802,488
)
Other investing, net
9,773

 
(543
)
Net cash used in investing activities
(16,738
)
 
(832,340
)
 
 
 
 
Financing activities
 
 
 
Proceeds from borrowings
50,000


761,938

Payments on debt
(72,188
)
 
(242,234
)
Issuance of common stock
4,001

 
4,927

Repurchase of common stock
(25,000
)
 

Prepaid debt fees
(175
)
 
(24,042
)
Other financing, net
(3,165
)
 
(2,580
)
Net cash provided by (used in) financing activities
(46,527
)
 
498,009

 
 
 
 
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash
727

 
(4,841
)
Increase (decrease) in cash, cash equivalents, and restricted cash
15,525

 
(322,293
)
Cash, cash equivalents, and restricted cash at beginning of period
122,328

 
487,335

Cash, cash equivalents, and restricted cash at end of period
$
137,853

 
$
165,042

 
 
 
 
Supplemental disclosure of cash flow information:
 
 
 
Cash paid during the period for:
 
 
 
Income taxes, net
$
6,571

 
$
3,426

Interest
23,333

 
15,383


The accompanying notes are an integral part of these condensed consolidated financial statements.

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ITRON, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2019
(UNAUDITED)
In this Quarterly Report on Form 10-Q, the terms "we," "us," "our," "Itron," and the "Company" refer to Itron, Inc.

Note 1:    Summary of Significant Accounting Policies

Financial Statement Preparation
The condensed consolidated financial statements presented in this Quarterly Report on Form 10-Q are unaudited and reflect entries necessary for the fair presentation of the Consolidated Statements of Operations, the Consolidated Statements of Comprehensive Income (Loss), Consolidated Statements of Equity, and Consolidated Statements of Cash Flows for the three and six months ended June 30, 2019 and 2018, and the Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018, of Itron, Inc. and its subsidiaries. All entries required for the fair presentation of the financial statements are of a normal recurring nature, except as disclosed. The results of operations for the three and six months ended June 30, 2019 are not necessarily indicative of the results expected for the full year or for any other period.

Certain information and notes normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) regarding interim results. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto for the fiscal year ended December 31, 2018 filed with the SEC in our Annual Report on Form 10-K on February 28, 2019 (2018 Annual Report). There have been no significant changes in financial statement preparation or significant accounting policies since December 31, 2018 other than the adoption of Accounting Standards Codification (ASC) 842, Leases.

Restricted Cash and Cash Equivalents
Cash and cash equivalents that are contractually restricted from operating use are classified as restricted cash and cash equivalents.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Consolidated Statements of Cash Flows:
In thousands
June 30, 2019
 
December 31, 2018
 
June 30, 2018
Cash and cash equivalents
$
135,736

 
$
120,221

 
$
162,882

Restricted cash included in other current assets
51

 
51

 
51

Long-term restricted cash
2,066

 
2,056

 
2,109

Total cash, cash equivalents, and restricted cash
$
137,853

 
$
122,328

 
$
165,042



Subsequent to the issuance of our June 30, 2018 consolidated financial statements, we determined $150 million of proceeds from borrowings and payments on debt, originally transacted during the first quarter of 2018, had been improperly netted within the financing activities section of the Consolidated Statements of Cash Flows for the first three quarters of 2018. We corrected this presentation for the 2018 Annual Report on Form 10‑K. The accompanying Consolidated Statement of Cash Flows for the six months ended June 30, 2018 has been revised from amounts previously reported to separately present the $150 million of proceeds from borrowings and the payments on debt. We assessed the significance of the misstatement and concluded that it was not material to any prior periods. There were no changes to net cash flows from operating, investing, or financing activities as a result of this change.

Leases
We determine if an arrangement is a lease at inception. A lease exists when a contract conveys to the customer the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration. The definition of a lease embodies two conditions: (1) there is an identified asset in the contract that is land or a depreciable asset (i.e., property, plant, and equipment), and (2) the customer has the right to control the use of the identified asset.

Operating leases are included in operating lease right-of-use ("ROU") assets, other current liabilities, and operating lease liabilities on our Consolidated Balance Sheets. Finance leases are included in property, plant, and equipment, other current liabilities, and other long-term obligations on our Consolidated Balance Sheets.


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ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. We use the implicit rate when readily determinable. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The Operating lease ROU asset also includes any lease payments made and excludes lease incentives received and initial direct costs incurred. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term.

We have lease agreements, which include lease and nonlease components. For each of our existing asset classes, we have elected the practical expedient to account for the lease and nonlease components as a single lease component when the nonlease components are fixed.

We have not elected to utilize the short-term lease exemption for any leased asset class. All leases with a lease term that is greater than one month will be subject to recognition and measurement on the balance sheet.

Lease expense for variable lease payments, where the timing or amount of the payment is not fixed, are recognized when the obligation is incurred. Variable lease payments generally arise in our net lease arrangements where executory and other lease-related costs are billed to Itron when incurred by the lessor.

Recently Adopted Accounting Standards

In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, Leases (Topic 842) (ASU 2016-02), which required substantially all leases be recognized by lessees on their balance sheet as a right-of-use asset and corresponding lease liability, including leases previously accounted for as operating leases. The new standard also resulted in enhanced quantitative and qualitative disclosures, including significant judgments made by management, to provide greater insight into the extent of revenue and expense recognized and expected to be recognized from existing leases. The standard required modified retrospective adoption and was effective for annual reporting periods beginning after December 15, 2018, with early adoption permitted. We adopted ASC 842, as amended, on January 1, 2019, and it resulted in an increase to operating lease right-of-use assets, other current liabilities, and operating lease liabilities of $74.6 million, $14.5 million, and $61.5 million, respectively, and a decrease in other current assets and other long-term obligations of $1.5 million and $2.9 million, respectively.

In August 2018, the FASB issued ASU 2018-15, Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The amendments in this ASU align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). Accordingly, the amendments require an entity (customer) in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. The amendments also require us to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement, which includes reasonably certain renewals. We adopted ASU 2018-15 as of January 1, 2019, and it did not have a material impact on our financial condition, results of operations, or cash flows.

In October 2018, the FASB issued ASU 2018-16, Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes. We adopted this standard on January 1, 2019, and it did not materially impact our consolidated financial statements. This update establishes OIS rates based on SOFR as an approved benchmark interest rate in addition to existing rates such as the LIBOR swap rate.

Recent Accounting Standards Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) (ASU 2016-13), which replaces the incurred loss impairment methodology in current GAAP with a methodology based on expected credit losses. This estimate of expected credit losses uses a broader range of reasonable and supportable information. This change will result in earlier recognition of credit losses. ASU 2016-13, as amended, will be effective as of January 1, 2020 for us. We are currently evaluating the impact of this standard on our consolidated financial statements, as well as our accounting policies, processes, and systems.

In August 2018, the FASB issued ASU 2018-13, Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement (ASU 2018-13), which amends the disclosure requirements under ASC 820, Fair Value Measurements. ASU 2018-13 is effective for us beginning with our interim financial reports for the first quarter of 2020. We are currently evaluating the impact

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this standard will have on our consolidated financial statement disclosures related to assets and liabilities subject to fair value measurement.

In August 2018, the FASB issued ASU 2018-14, Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans (ASU 2018-14), which amends the disclosure requirements under ASC 715-20, Compensation-Retirement Benefits-Defined Benefit Plans. ASU 2018-14 is effective for our financial reporting in 2020. We are currently evaluating the impact this standard will have on our financial statement disclosures for our defined benefit plans.

Note 2:    Earnings Per Share

The following table sets forth the computation of basic and diluted earnings (loss) per share (EPS):
 
Three Months Ended June 30,
 
Six Months Ended June 30,
In thousands, except per share data
2019
 
2018
 
2019
 
2018
Net income (loss) available to common shareholders
$
19,446

 
$
2,657

 
$
17,539

 
$
(143,009
)
 
 
 
 
 
 
 
 
Weighted average common shares outstanding - Basic
39,389

 
39,243

 
39,523

 
39,095

Dilutive effect of stock-based awards
297

 
546

 
352

 

Weighted average common shares outstanding - Diluted
39,686

 
39,789

 
39,875

 
39,095

Net income (loss) per common share - Basic
$
0.49

 
$
0.07

 
$
0.44

 
$
(3.66
)
Net income (loss) per common share - Diluted
$
0.49

 
$
0.07

 
$
0.44

 
$
(3.66
)


Stock-based Awards
For stock-based awards, the dilutive effect is calculated using the treasury stock method. Under this method, the dilutive effect is computed as if the awards were exercised at the beginning of the period (or at time of issuance, if later) and assumes the related proceeds were used to repurchase common stock at the average market price during the period. Related proceeds include the amount the employee must pay upon exercise and the future compensation cost associated with the stock award. Approximately 0.5 million and 0.6 million stock-based awards were excluded from the calculation of diluted EPS for the three and six months ended June 30, 2019 because they were anti-dilutive. Approximately 0.7 million and 1.1 million stock-based awards were excluded from the calculation of diluted EPS for the three and six months ended June 30, 2018 because they were anti-dilutive. These stock-based awards could be dilutive in future periods.

Note 3:    Certain Balance Sheet Components

A summary of accounts receivable from contracts with customers is as follows:
Accounts receivable, net
 
 
 
In thousands
June 30, 2019
 
December 31, 2018
Trade receivables (net of allowance of $4,360 and $6,331)
$
426,936

 
$
416,503

Unbilled receivables
39,430

 
20,658

Total accounts receivable, net
$
466,366

 
$
437,161



Allowance for doubtful accounts activity
Three Months Ended June 30,
 
Six Months Ended June 30,
In thousands
2019
 
2018
 
2019
 
2018
Beginning balance
$
4,046

 
$
4,774

 
$
6,331

 
$
3,957

Provision for doubtful accounts, net
365

 
334

 
(1,738
)
 
1,254

Accounts written-off
(80
)
 
(247
)
 
(272
)
 
(505
)
Effect of change in exchange rates
29

 
(309
)
 
39

 
(154
)
Ending balance
$