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January
24, 2009
Ms.
Cecilia Blye
Chief,
Office of Global Security Risk
United
States Securities and Exchange Commission
100 F
Street, N.E.
Washington,
D.C. 20549-3628
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Re:
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Itron,
Inc.
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Form
10-K for the Fiscal Year Ended December 31,
2007
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Filed
February 26, 2008
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File
No. 0-22418
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Dear Ms.
Blye:
This
letter is submitted on behalf of Itron, Inc. (“Itron,” “we,” “our”) and responds
to the staff’s comment letter of January 15, 2009 relating to our Form 10-K for
our fiscal year ended December 31, 2007. For your convenience, we
have reproduced the staff’s comment below and have provided our response
accordingly.
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1.
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We
note from your response letter that, through your acquisition of Actaris,
you have an 8% equity interest in, and make sales and provide technical
support to, Sherkate Kontorsazi Iran SKI. SKI is 70.5% owned by
an investment company that is part of Bank Melli. As you may
know, Bank Melli is included in the Specially Designated Nationals and
Blocked persons List maintained by the Treasury Department’s Office of
Foreign Assets Control, and is subject to the sanctions program
administered by OFAC. Pursuant to United States Executive Order
13382, all property and interests in property of Bank Melli, including its
offices worldwide, are blocked, and all U.S. persons are prohibited from
engaging in any transactions, directly or indirectly, with Bank
Melli. Please specifically discuss in your materiality analysis
the potential impact of these factors on your U.S. shareholders and on
your reputation and share value.
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As you noted, through Itron’s
acquisition of Actaris in April, 2007, an indirect subsidiary of Actaris holds
an 8% equity interest in SKI. There are no plans to increase the size
of Actaris’ equity ownership in SKI. Actaris has no contractual or
statutory rights to control SKI. Actaris’ 8% equity interest in SKI
is not recorded as an asset with any value on Actaris’ balance sheet; the value
of the equity interest in SKI on Actaris’ books is $0.00. For the
period of April 2007 through year end 2007, Actaris’ sales to SKI were 0.5% of
Itron’s total sales. For the period of January 1, 2008 until
September 30, 2008, Actaris’ sales to SKI were 0.6% of Itron’s total
sales. These de minimis sales were immaterial to Itron’s results of
operation, financial condition and business and, as Actaris’ total sales in Iran
represent only 0.8% of Itron’s sales during these periods, are wholly
insignificant to Itron’s consolidated results of operation, financial condition
and business. We believe these de minimis sales and the 8% equity
interest in SKI are immaterial to a reasonable investor in Itron’s
securities.
The products sold to SKI are electrical
meters used to measure electricity delivered by electric utilities to
residential and light commercial (e.g., retail shops)
customers. There is no industrial use for these
products. Proper and accurate measurement of electricity enables
customers to better manage and conserve electricity, thereby reducing overall
demand and the need for new and larger power generation
facilities. Reducing the demand for new power generation facilities
avoids incremental and potentially harmful air and water emissions.
As noted in your letter, Itron, as a
U.S. person, is prohibited from engaging in any transactions with Bank Melli and
Itron does not have any transactions with Bank Melli. The indirect
Itron subsidiary that holds the small 8% equity interest in SKI, Actaris Zähler,
is incorporated under the laws of Germany. Actaris Zähler’s only
involvement with Bank Melli is limited to the fact that one of the other
shareholders in SKI is an investment company reportedly owned by Bank
Melli. Itron has comprehensive policies and procedures in place
designed to ensure compliance with all U.S. trade and economic sanctions
policies. Given the small equity interest in SKI held by Actaris
Zahler, the de minimis sales involved, and the insignificance thereof to Itron’s
consolidated results of operations, financial condition and business, as well as
the facts that the products sold to SKI promote energy conservation and have no
industrial application, we do not believe a reasonable investor would consider
this to be material or of concern to their investment decisions regarding
Itron’s securities.
The
foregoing information is accurate to the best of our knowledge, understanding
and belief. If you have any questions about this response, please
contact John Holleran, Sr. Vice President, General Counsel, and
Corporate Secretary of Itron.
Very
truly yours,
/s/ John W. Holleran
John W.
Holleran
Sr. Vice
President, General Counsel, and Corporate Secretary