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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 March 31, 2023
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 No.)
2111 N Molter Road, Liberty Lake, Washington 99019
(509) 924-9900
(Address and telephone number of registrant's principal executive offices) 

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, no par valueITRINASDAQ Global Select Market

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, a 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 filerAccelerated filer
Non-accelerated filer
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  
As of May 1, 2023, there were outstanding 45,422,809 shares of the registrant's common stock, no par value, which is the only class of common stock of the registrant.



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



PART I: FINANCIAL INFORMATION
Item 1:    Financial Statements (Unaudited)
ITRON, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended March 31,
In thousands, except per share data20232022
Revenues
Product revenues$416,324 $399,810 
Service revenues78,294 75,521 
Total revenues494,618 475,331 
Cost of revenues
Product cost of revenues297,343 294,820 
Service cost of revenues40,907 45,287 
Total cost of revenues338,250 340,107 
Gross profit156,368 135,224 
Operating expenses
Sales, general and administrative75,521 76,401 
Research and development49,565 49,596 
Amortization of intangible assets5,048 6,553 
Restructuring36,609 (6,366)
Loss on sale of business18 2,221 
Total operating expenses166,761 128,405 
Operating income (loss)(10,393)6,819 
Other income (expense)
Interest income1,818 217 
Interest expense(2,057)(1,592)
Other income (expense), net(1,475)(689)
Total other income (expense)(1,714)(2,064)
Income (loss) before income taxes(12,107)4,755 
Income tax benefit (provision)70 (3,859)
Net income (loss)(12,037)896 
Net loss attributable to noncontrolling interests(201)(10)
Net income (loss) attributable to Itron, Inc.$(11,836)$906 
Net income (loss) per common share - Basic$(0.26)$0.02 
Net income (loss) per common share - Diluted$(0.26)$0.02 
Weighted average common shares outstanding - Basic45,281 45,018 
Weighted average common shares outstanding - Diluted45,281 45,240 
The accompanying notes are an integral part of these consolidated financial statements.
1

ITRON, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
Three Months Ended March 31,
In thousands20232022
Net income (loss)$(12,037)$896 
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments
7,225 (6,891)
Foreign currency translation adjustment reclassified to net income (loss) on sale of business 55,436 
Pension benefit obligation adjustment
(106)4,270 
Total other comprehensive income (loss), net of tax7,119 52,815 
Total comprehensive income (loss), net of tax(4,918)53,711 
Comprehensive loss attributable to noncontrolling interests, net of tax(201)(10)
Comprehensive income (loss) attributable to Itron, Inc.$(4,717)$53,721 
The accompanying notes are an integral part of these consolidated financial statements.
2

ITRON, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
In thousandsMarch 31, 2023December 31, 2022
ASSETS
Current assets
Cash and cash equivalents$196,013 $202,007 
Accounts receivable, net305,275 280,435 
Inventories265,122 228,701 
Other current assets135,646 118,441 
Total current assets902,056 829,584 
Property, plant, and equipment, net136,397 140,123 
Deferred tax assets, net215,745 211,982 
Other long-term assets37,857 39,901 
Operating lease right-of-use assets, net49,147 52,826 
Intangible assets, net60,052 64,941 
Goodwill1,044,661 1,038,721 
Total assets$2,445,915 $2,378,078 
LIABILITIES AND EQUITY
Current liabilities
Accounts payable$244,820 $237,178 
Other current liabilities44,096 42,869 
Wages and benefits payable77,165 89,431 
Taxes payable21,481 15,324 
Current portion of warranty17,829 18,203 
Unearned revenue131,164 95,567 
Total current liabilities536,555 498,572 
Long-term debt, net453,094 452,526 
Long-term warranty7,002 7,495 
Pension benefit obligation59,127 57,839 
Deferred tax liabilities, net849 833 
Operating lease liabilities40,294 44,370 
Other long-term obligations154,851 124,887 
Total liabilities1,251,772 1,186,522 
Equity
Preferred stock, no par value, 10,000 shares authorized, no shares issued or outstanding
  
Common stock, no par value, 75,000 shares authorized, 45,405 and 45,186 shares issued and outstanding
1,796,005 1,788,479 
Accumulated other comprehensive loss, net(87,555)(94,674)
Accumulated deficit(537,168)(525,332)
Total Itron, Inc. shareholders' equity1,171,282 1,168,473 
Noncontrolling interests22,861 23,083 
Total equity1,194,143 1,191,556 
Total liabilities and equity$2,445,915 $2,378,078 
The accompanying notes are an integral part of these consolidated financial statements.
3

ITRON, INC.
CONSOLIDATED STATEMENTS OF EQUITY
(UNAUDITED)
Common StockAccumulated Other Comprehensive LossAccumulated DeficitTotal Itron, Inc. Shareholders' EquityNoncontrolling InterestsTotal Equity
In thousandsSharesAmount
Balances at January 1, 202345,186 $1,788,479 $(94,674)$(525,332)$1,168,473 $23,083 $1,191,556 
Net income (loss)(11,836)(11,836)(201)(12,037)
Other comprehensive income (loss), net of tax7,119 7,119 7,119 
Distributions to noncontrolling interests(21)(21)
Net stock issued and repurchased219 607 607 607 
Stock-based compensation expense6,919 6,919 6,919 
Balances at March 31, 202345,405$1,796,005 $(87,555)$(537,168)$1,171,282 $22,861 $1,194,143 

Common StockAccumulated Other Comprehensive LossAccumulated DeficitTotal Itron, Inc. Shareholders' EquityNoncontrolling InterestsTotal Equity
In thousandsSharesAmount
Balances at January 1, 202245,152 $1,779,775 $(148,098)$(515,600)$1,116,077 $26,682 $1,142,759 
Net income (loss)906 906 (10)896 
Other comprehensive income (loss), net of tax52,815 52,815 52,815 
Net stock issued and repurchased165 784 784 784 
Stock-based compensation expense6,127 6,127 6,127 
Stock repurchased program(280)(16,629)(16,629)(16,629)
Balances at March 31, 202245,037 $1,770,057 $(95,283)$(514,694)$1,160,080 $26,672 $1,186,752 
The accompanying notes are an integral part of these consolidated financial statements.
4

ITRON, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended March 31,
In thousands20232022
Operating activities
Net income (loss)$(12,037)$896 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization of intangible assets14,463 16,837 
Non-cash operating lease expense3,972 4,113 
Stock-based compensation6,919 6,127 
Amortization of prepaid debt fees889 839 
Deferred taxes, net(4,272)(4,362)
Loss on sale of business18 2,221 
Restructuring, non-cash1,070 390 
Other adjustments, net56 137 
Changes in operating assets and liabilities, net of acquisition and sale of business:
Accounts receivable(22,497)(8,816)
Inventories(34,791)(6,345)
Other current assets(17,129)(11,899)
Other long-term assets3,002 (2,887)
Accounts payable, other current liabilities, and taxes payable15,113 17,778 
Wages and benefits payable(12,895)(26,185)
Unearned revenue34,471 35,320 
Warranty(1,041)(928)
Restructuring33,209 (13,167)
Other operating, net(7,091)(2,478)
Net cash provided by operating activities1,429 7,591 
Investing activities
Net proceeds (payments) related to the sale of business(772)55,933 
Acquisitions of property, plant, and equipment(6,902)(5,369)
Business acquisitions, net of cash and cash equivalents acquired 23 
Other investing, net16 362 
Net cash provided by (used in) investing activities(7,658)50,949 
Financing activities
Issuance of common stock607 784 
Repurchase of common stock (16,972)
Prepaid debt fees(517)(695)
Other financing, net(185)(222)
Net cash used in financing activities(95)(17,105)
Effect of foreign exchange rate changes on cash and cash equivalents330 (17)
Increase (decrease) in cash and cash equivalents(5,994)41,418 
Cash and cash equivalents at beginning of period202,007 162,579 
Cash and cash equivalents at end of period$196,013 $203,997 
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Income taxes, net$1,432 $1,740 
Interest459 514 
The accompanying notes are an integral part of these consolidated financial statements.
5

ITRON, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023
(UNAUDITED)
In this Quarterly Report on Form 10-Q, the terms "we", "us", "our", "Itron", and the "Company" refer to Itron, Inc. and its subsidiaries.

Note 1:    Summary of Significant Accounting Policies

Financial Statement Preparation
The 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 and the Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2023 and 2022, Consolidated Statements of Equity for the three months ended March 31, 2023 and 2022, the Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022, and the Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022, 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 months ended March 31, 2023 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 partially or completely omitted pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC) regarding interim results. These consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto for the fiscal year ended December 31, 2022 filed with the SEC in our Annual Report on Form 10-K on February 27, 2023 (2022 Annual Report). There have been no significant changes in financial statement preparation or significant accounting policies since December 31, 2022.

Risks and Uncertainties
The pandemic has resulted in global economic impacts including disrupting customer demand and global supply chains, resulting in market volatility, which our management continues to monitor. As economies have reopened, global supply chains have struggled to keep pace with rapidly changing demand. The resulting supply constraints have manifested across a variety of areas including mechanical, electrical, and logistics portions of the supply chain, which has impacted our ability to ship products in a timely manner. In particular, our ability to obtain adequate supply of semiconductor components has impacted our ability to service recovering customer demand. While we believe the current imbalance in supply and demand is temporal, the timeline to recovery is uncertain. Efforts are ongoing with suppliers to increase supply, including the approval of alternate sources. Recently, inflation in our raw materials and component costs, freight charges, and labor costs have increased above historical levels, due to, among other things, the continuing impacts of the uncertain economic environment. We may or may not be able to fully recover these increased costs through pricing actions with our customers. At this time, we have not identified any significant decrease in long-term customer demand for our products and services. However, certain of our customer projects have experienced delay in deliveries, with revenues originally forecasted in prior periods shifting to future periods.

While we have limited direct business exposure in Russia, Belarus and Ukraine, the Russian military actions and the resulting sanctions could adversely affect the global economy, as well as further disrupt the supply chain. A major disruption in the global economy and supply chain could have a material adverse effect on our business, prospects, financial condition, results of operations, and cash flows. The extent and duration of the military action, sanctions, and resulting market and/or supply disruptions are impossible to predict, but could be substantial, and our management continues to monitor these events closely.

6

Reclassification
In the Consolidated Statements of Cash Flows, the following reclassifications have been made to prior year amounts to conform to current year presentation of restructuring liabilities:

Three Months Ended March 31, 2022
In thousandsAs Previously ReportedAdjustmentsAs Reclassified
Changes in operating assets and liabilities, net of acquisitions and sale of business:
Accounts payable, other current liabilities, and taxes payable$14,065 $3,713 $17,778 
Restructuring (13,167)(13,167)
Other operating, net(11,932)9,454 (2,478)

Recently Adopted Accounting Standards
In October 2021, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2021-08 amending Business Combination: (Topic 805), which was necessary due to 2014-09, Revenue from Contracts with Customers (Topic 606). The FASB issued this Update to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to (1) recognition of an acquired contract liability and (2) payment terms and their effect on subsequent revenue recognized by the acquirer. We adopted this amendment as of the effective date of January 1, 2023. These amendments are to be applied prospectively to business combinations occurring on or after the effective date of the amendments. We currently plan to apply the practical expedients as needed for any future acquisitions. The practical expedients cover contracts that were modified prior to acquisition date as well as determining which date an acquirer would have to determine the standalone selling price of each performance obligation in an acquired contract.

Note 2:    Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share (EPS):
Three Months Ended March 31,
In thousands, except per share data20232022
Net income (loss) available to common shareholders$(11,836)$906 
Weighted average common shares outstanding - Basic45,281 45,018 
Dilutive effect of stock-based awards 222 
Dilutive effect of convertible notes  
Weighted average common shares outstanding - Diluted45,281 45,240 
Net income (loss) per common share - Basic$(0.26)$0.02 
Net income (loss) per common share - Diluted$(0.26)$0.02 

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 our 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 0.7 million and 0.4 million stock-based awards were excluded from the calculation of diluted EPS for the three months ended March 31, 2023 and 2022 because they were anti-dilutive. These stock-based awards could be dilutive in future periods.

7

Convertible Notes and Warrants
For our convertible notes issued in March 2021, the dilutive effect is calculated using the if-converted method. We are required, pursuant to the indenture governing our convertible notes, to settle the principal amount of the convertible notes in cash and may elect to settle the remaining conversion obligation (stock price in excess of conversion price) in cash, shares, or a combination thereof. Under the if-converted method, we include the number of shares required to satisfy the remaining conversion obligation, assuming all the convertible notes were converted. The average closing prices of our common stock for the quarter ended March 31, 2023 were used as the basis for determining the dilutive effect on EPS. The quarterly average closing prices for our common stock did not exceed the conversion price of $126.00, and therefore all associated shares were anti-dilutive.

In conjunction with the issuance of the convertible notes, we sold warrants to purchase 3.7 million shares of Itron common stock. The warrants have a strike price of $180.00 per share. For calculating the dilutive effect of the warrants, we use the treasury stock method. With this method, we assume exercise of the warrants at the beginning of the period, or at time of issuance if later, and the issuance of common stock upon exercise. Proceeds from the exercise of the warrants are assumed to be used to repurchase shares of our stock at the average market price during the period. The incremental shares, representing the number of shares assumed to be exercised with the warrants less the number of shares repurchased, are included in diluted weighted average common shares outstanding. For periods where the warrants strike price of $180.00 per share is greater than the average share price of Itron stock for the period, the warrants would be anti-dilutive. For the three months ended March 31, 2023, the quarterly average closing prices of our common stock did not exceed the warrant strike price and therefore 3.7 million shares were considered anti-dilutive.

Convertible Note Hedge Transactions
In connection with the issuance of the convertible notes, we entered into privately negotiated call option contracts on our common stock (the convertible note hedge transactions) with certain commercial banks (the Counterparties). The convertible note hedge transactions cover, subject to anti-dilution adjustments substantially similar to those in the convertible notes, approximately 3.7 million shares of our common stock, the same number of shares initially underlying the convertible notes, at a strike price of approximately $126.00, subject to customary adjustments. The convertible note hedge transactions will expire upon the maturity of the convertible notes, subject to earlier exercise or termination. Exercise of the convertible note hedge transactions would reduce the number of shares of our common stock outstanding and therefore would be anti-dilutive.

Note 3:    Certain Balance Sheet Components

A summary of accounts receivable from contracts with customers is as follows:
Accounts receivable, net
In thousandsMarch 31, 2023December 31, 2022
Trade receivables (net of allowance of $4,782 and $4,863)
$259,587 $249,771 
Unbilled receivables45,688 30,664 
Total accounts receivable, net$305,275 $280,435 

Allowance for credit losses account activityThree Months Ended March 31,
In thousands20232022
Beginning balance$4,863 $5,730 
Provision for (release of) doubtful accounts, net(91)(101)
Accounts recovered (written-off), net(66)78 
Effect of change in exchange rates76 (109)
Ending balance$4,782 $5,598 

Inventories
In thousandsMarch 31, 2023December 31, 2022
Raw materials$215,203 $182,118 
Work in process9,239 8,386 
Finished goods40,680 38,197 
Total inventories$265,122 $228,701 
8

Property, plant, and equipment, net
In thousandsMarch 31, 2023December 31, 2022
Machinery and equipment$312,339 $306,699 
Computers and software120,498 119,670 
Buildings, furniture, and improvements130,957 130,301 
Land8,668 8,566 
Construction in progress, including purchased equipment18,232 19,403 
Total cost590,694 584,639 
Accumulated depreciation(454,297)(444,516)
Property, plant, and equipment, net$136,397 $140,123 

Depreciation expenseThree Months Ended March 31,
In thousands20232022
Depreciation expense$9,415 $10,284 

Note 4:    Intangible Assets and Liabilities

The gross carrying amount and accumulated amortization (accretion) of our intangible assets and liabilities, other than goodwill, were as follows:
March 31, 2023December 31, 2022
In thousandsGrossAccumulated
(Amortization) Accretion
NetGrossAccumulated
(Amortization) Accretion
Net
Intangible Assets
Core-developed technology$500,000 $(495,338)$4,662 $498,601 $(492,782)$5,819 
Customer contracts and relationships325,346 (272,107)53,239 322,360 (265,503)56,857 
Trademarks and trade names72,699 (70,727)1,972 72,156 (70,101)2,055 
Other12,018 (11,839)179 12,017 (11,807)210 
Total intangible assets
$910,063 $(850,011)$60,052 $905,134 $(840,193)$64,941 
Intangible Liabilities
Customer contracts and relationships$(23,900)$23,900 $ $(23,900)$23,900 $ 

A summary of intangible assets and liabilities activity is as follows:
Three Months Ended March 31,
In thousands20232022
Intangible assets, gross beginning balance$905,134 $928,422 
Effect of change in exchange rates4,929 (5,578)
Intangible assets, gross ending balance$910,063 $922,844 
Intangible liabilities, gross beginning balance$(23,900)$(23,900)
Effect of change in exchange rates  
Intangible liabilities, gross ending balance$(23,900)$(23,900)

Assumed intangible liabilities reflect the present value of the projected cash outflows for an existing contract where remaining costs are expected to exceed projected revenues.

9

Estimated future annual amortization is as follows:
Year Ending December 31,Estimated Annual Amortization
In thousands
2023 (amount remaining at March 31, 2023)$13,955 
202415,080 
202514,342 
202610,329 
20275,630 
Thereafter716 
Total intangible assets subject to amortization$60,052 

Note 5:    Goodwill

The following table reflects changes in the carrying amount of goodwill for the three months ended March 31, 2023:
In thousandsDevice SolutionsNetworked SolutionsOutcomesTotal Company
Goodwill balance at January 1, 2023$ $899,887 $138,834 $1,038,721 
Effect of change in exchange rates 5,155 785 5,940 
Goodwill balance at March 31, 2023$ $905,042 $139,619 $1,044,661 

Note 6:    Debt

The components of our borrowings were as follows:
In thousandsMarch 31, 2023December 31, 2022
Credit facility
Multicurrency revolving line of credit$ $ 
Convertible notes460,000 460,000 
Total debt460,000 460,000 
Less: unamortized prepaid debt fees - convertible notes6,906 7,474 
Long-term debt, net $453,094 $452,526 

Credit Facility
Our current credit facility, initially entered on January 5, 2018 (as amended, the 2018 credit facility), originally provided for committed credit facilities in the amount of $1.2 billion U.S. dollars. This facility now consists of a multicurrency revolving line of credit (the revolver) with a principal amount of up to $500 million. The revolver also contains a $300 million standby letter of credit sub-facility and a $50 million swingline sub-facility. The $650 million U.S. dollar term loan included in the original facility was fully repaid in August 2021.

The 2018 credit facility permits us and certain of our foreign subsidiaries to borrow in U.S. dollars, euros, or, with lender approval, other currencies readily convertible into U.S. dollars. All obligations under the 2018 credit facility are guaranteed by Itron, Inc. and material U.S. domestic subsidiaries and are secured by a pledge of substantially all of the assets of Itron, Inc. and material U.S. domestic subsidiaries. This includes a pledge of 100% of the capital stock of material U.S. domestic subsidiaries and up to 66% of the voting stock (100% of the non-voting stock) of first-tier foreign subsidiaries. In addition, the obligations of any foreign subsidiary who is a foreign borrower, as defined by the 2018 credit facility, are guaranteed by the foreign subsidiary and by its direct and indirect foreign parents. The 2018 credit facility includes debt covenants, which contain certain financial thresholds and place certain restrictions on the incurrence of debt, investments, and the issuance of dividends. We were in compliance with the debt covenants under the 2018 credit facility at March 31, 2023.

Under the 2018 credit facility, we elect applicable market interest rates for both the term loan and any outstanding revolving loans. We also pay an applicable margin, which is based on our total net leverage ratio as defined in the credit agreement. The applicable rates per annum may be based on either: (1) the LIBOR rate or EURIBOR rate (subject to a floor of 0%), plus an applicable margin, or (2) the Alternate Base Rate, plus an applicable margin. The Alternate Base Rate election is equal to the greatest of three rates: (i) the prime rate, (ii) the Federal Reserve effective rate plus 0.50%, or (iii) one-month LIBOR plus
10

1.00%. The cessation of LIBOR will occur in June 2023. On November 23, 2022, we amended the 2018 credit facility to replace the LIBOR rate with the Term Secured Overnight Financing Rate (SOFR) as the base interest rate.

On February 21, 2023, we entered into a sixth amendment to the 2018 credit facility. This amendment modifies provisions to allow for the addback for debt covenant calculations of non-recurring cash expenses related to restructuring charges to be incurred during the quarter ended March 31, 2023.

At March 31, 2023, there were no outstanding loan balances under the credit facility, and $62.1 million was utilized by outstanding standby letters of credit, resulting in $437.9 million available for additional borrowings or standby letters of credit within the revolver. At March 31, 2023, $237.9 million was available for additional standby letters of credit under the letter of credit sub-facility, and no amounts were outstanding under the swingline sub-facility.

Convertible Notes
On March 12, 2021, we closed the sale of the convertible notes in a private placement to qualified institutional buyers, resulting in net proceeds to us of $448.5 million after deducting initial purchasers’ discounts of the offering. The convertible notes do not bear regular interest, and the principal amount does not accrete. The convertible notes will mature on March 15, 2026, unless earlier repurchased, redeemed, or converted in accordance with their terms. No sinking fund is provided for the convertible notes.

The initial conversion rate of the convertible notes is 7.9365 shares of our common stock per $1,000 principal amount of notes, which is equivalent to an initial conversion price of approximately $126.00 per share. The conversion rate of the convertible notes is subject to adjustment upon the occurrence of certain specified events. In addition, upon the occurrence of a make-whole fundamental change (as defined in the indenture governing the convertible notes) or upon a notice of redemption, we will, in certain circumstances, increase the conversion rate for a holder that elects to convert its convertible notes in connection with such make-whole fundamental change or notice of redemption, as the case may be.

Prior to the close of business on the business day immediately preceding December 15, 2025, the convertible notes are convertible at the option of the holders only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2021 (and only during such calendar quarter), if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business-day period after any five consecutive trading-day period (the measurement period) in which the trading price per $1,000 principal amount of convertible notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the common stock and the conversion rate on each such trading day; (3) upon the occurrence of specified corporate events; or (4) upon redemption by us. On or after December 15, 2025, until the close of business on the second scheduled trading day immediately preceding March 15, 2026, holders of the convertible notes may convert all or a portion of their notes at any time. Upon conversion, we will pay cash up to the aggregate principal amount of convertible notes to be converted and pay and/or deliver, as the case may be, cash, shares of common stock or a combination of cash and shares of common stock, at our election, in respect of the remainder, if any, of our conversion obligation in excess of the aggregate principal amount of the convertible notes being converted.

On or after March 20, 2024 and prior to December 15, 2025, we may redeem for cash all or part of the convertible notes, at our option, if the last reported sales price of common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which we provide notice of redemption, during any 30 consecutive trading days ending on, and including, the trading day immediately before the date we send the related notice of the redemption. The redemption price of each convertible notes to be redeemed will be the principal amount of such note, plus accrued and unpaid special interest, if any. Upon the occurrence of a fundamental change (as defined in the indenture governing the convertible notes), subject to a limited exception described in the indenture governing the convertible notes, holders may require us to repurchase all or a portion of their notes for cash at a price equal to plus accrued and unpaid special interest to, but not including, the fundamental change repurchase date (as defined in the indenture governing the convertible notes).

The convertible notes are senior unsecured obligations and rank equally in right of payment with all of our existing and future unsubordinated debt and senior in right of payment to any future debt that is expressly subordinated in right of payment to the convertible notes. The convertible notes will be effectively subordinated to any of our existing and future secured debt to the extent of the assets securing such indebtedness. The convertible notes will be structurally subordinated to all existing debt and any future debt and any other liabilities of our subsidiaries.
11


Debt Maturities
The amount of required minimum principal payments on our long-term debt in aggregate over the next five years is as follows:
Year Ending December 31,Minimum Payments
In thousands
2023 (amount remaining at March 31, 2023)$ 
2024 
2025 
2026460,000 
2027 
Thereafter 
Total minimum payments on debt$460,000 

Note 7:    Derivative Financial Instruments

As part of our risk management strategy, we use derivative instruments to hedge certain foreign currencies. Refer to Note 13: Shareholders' Equity and Note 14: Fair Value of Financial Instruments for additional disclosures on our derivative instruments.

Derivatives Not Designated as Hedging Relationships
We are exposed to foreign exchange risk when we enter into non-functional currency transactions, both intercompany and third party. At each period-end, non-functional currency monetary assets and liabilities are revalued with the change recognized within other income (expense) in our Consolidated Statements of Operations. We enter into monthly foreign exchange forward contracts, which are not designated for hedge accounting, with the intent to reduce earnings volatility associated with currency exposures. As of March 31, 2023, a total of 38 contracts were offsetting our exposures from the euro, pound sterling, Indonesian rupiah, Canadian dollar, Australian dollar and various other currencies, with notional amounts ranging from $115,000 to $47.0 million.

We will continue to monitor and assess our interest rate and foreign exchange risk and may institute additional derivative instruments to manage such risk in the future.

Note 8:    Defined Benefit Pension Plans

We sponsor both funded and unfunded defined benefit pension plans offering death and disability, retirement, and special termination benefits for certain of our international employees, primarily in Germany, France, Indonesia, India, and Italy. The defined benefit obligation is calculated annually by using the projected unit credit method. The measurement date for the pension plans was December 31, 2022.

Amounts recognized on the Consolidated Balance Sheets consist of:
In thousandsMarch 31, 2023December 31, 2022
Assets
Plan assets in other long-term assets$167 $162 
Liabilities
Current portion of pension benefit obligation in wages and benefits payable$3,562 $3,400 
Long-term portion of pension benefit obligation59,127 57,839 
Pension benefit obligation, net$62,522 $61,077 

Our asset investment strategy focuses on maintaining a portfolio using primarily insurance funds, which are accounted for as investments and measured at fair value, in order to achieve our long-term investment objectives on a risk-adjusted basis. Our general funding policy for these qualified pension plans is to contribute amounts sufficient to satisfy regulatory funding standards of the respective countries for each plan.

12

Net periodic pension benefit cost for our plans includes the following components:
Three Months Ended March 31,
In thousands20232022
Service cost$604 $794 
Interest cost712 443 
Expected return on plan assets(87)(83)
Amortization of prior service costs15 18 
Amortization of actuarial net loss(121)235 
Net periodic benefit cost$1,123 $1,407 

The components of net periodic benefit cost, other than the service cost component, are included in total other income (expense) on the Consolidated Statements of Operations.

Note 9:    Stock-Based Compensation

We grant stock-based compensation awards, including restricted stock units, phantom stock, and unrestricted stock units, under the Second Amended and Restated 2010 Stock Incentive Plan (Stock Incentive Plan). Prior to December 31, 2020, stock options were also granted as part of the stock-based compensation awards. In the Stock Incentive Plan, we have 12,623,538 shares of common stock reserved and authorized for issuance subject to stock splits, dividends, and other similar events, and at March 31, 2023, 3,969,520 shares were available for grant. We issue new shares of common stock upon the exercise of stock options or when vesting conditions on restricted stock units are fully satisfied. These shares are subject to a fungible share provision such that the authorized share available for grant is reduced by (i) one share for every one share subject to a stock option or share appreciation right granted under the Plan and (ii) 1.7 shares for every one share of common stock that was subject to an award other than an option or share appreciation right.

We also award phantom stock units, which are settled in cash upon vesting and accounted for as liability-based awards, with no impact to the shares available for grant.

In addition, we maintain the Employee Stock Purchase Plan (ESPP), for which 58,633 shares of common stock were available for future issuance at March 31, 2023.

ESPP activity and stock-based grants other than stock options and restricted stock units were not significant for the three months ended March 31, 2023 and 2022.

Stock-Based Compensation Expense
Total stock-based compensation expense and the related tax benefit were as follows:
Three Months Ended March 31,
In thousands20232022
Stock options$60 $284 
Restricted stock units6,583 5,584 
Unrestricted stock awards276 259 
Phantom stock units777 190 
Total stock-based compensation$7,696 $6,317 
Related tax benefit$1,703 $1,369 

13

Stock Options
A summary of our stock option activity is as follows:
SharesWeighted
Average Exercise
Price per Share
Weighted Average
Remaining
Contractual Life
Aggregate
Intrinsic Value
Weighted
Average Grant
Date Fair Value
In thousandsYearsIn thousands
Outstanding, January 1, 2022393 $61.18 5.9$4,737 
Granted  $ 
Exercised   
Forfeited(2)87.27 
Outstanding, March 31, 2022391 $61.03 5.5$2,173 
Outstanding, January 1, 2023381 $60.63 4.8$1,892 
Granted  $ 
Exercised   
Forfeited  
Canceled  
Outstanding, March 31, 2023381 $60.63 4.6$2,549 
Exercisable, March 31, 2023378 $60.60 4.6$2,549 

At March 31, 2023, total unrecognized stock-based compensation expense related to nonvested stock options was $42,000, which is expected to be recognized over a weighted average period of approximately 0.6 years.

Restricted Stock Units
The following table summarizes restricted stock unit activity:
In thousands, except fair valueNumber of
Restricted Stock Units
Weighted
Average Grant
Date Fair Value
Aggregate
Intrinsic Value
Outstanding, January 1, 2022430 
Granted332 $53.95 
Released (1)
(149)$8,025 
Forfeited(25)
Outstanding, March 31, 2022588 
Outstanding, January 1, 2023528 $66.39 
Granted411 55.59 
Released (1)
(202)73.74 $14,897 
Forfeited(12)66.19 
Outstanding, March 31, 2023725 58.43 
Vested but not released, March 31, 202313 $719 
(1)    Shares released is presented as gross shares and does not reflect shares withheld by us for employee payroll tax obligations.

At March 31, 2023, total unrecognized compensation exp